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BlackSky satellite
The latest funding round raised by Spaceflight, up to $25 million, will help support aspects of its BlackSky remote sensing satellite constellation under development. (credit: BlackSky Global)

More money, no problem


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Just a few years ago, any space company that raised money from venture capital (VC) firms would have been big news. Space entrepreneurs, and advocates of commercial space ventures, had long sought to tap into this source of financing, rather they rely on smaller individual investors or self-funding by millionaire or billionaire founders. But VCs, the conventional wisdom went at the time, were not interested in space companies that offered uncertain payoffs that took too long to realize.

“Space is becoming more integrated with other tech sectors,” said Landon.

How much that viewpoint has changed in recent years can be reflected on how little attention a VC-funded round for a space company now gets. On June 21, Seattle-based Spaceflight Industries announced it had raised $18 million in a Series B funding round, a total that the company expects to grow to $25 million. Leading the round was Mithril Capital Management, a fund co-founded by billionaire Peter Thiel, with several existing investors joining the round.

Spaceflight plans to use the funding in part to acquire OpenWhere, a northern Virginia company that processes and analyzes geospatial data. That will support Spaceflight’s efforts to develop BlackSky, a constellation of Earth imaging satellites. That company will also provide Spaceflight with an East Coast office to better work with customers there, such as the US government.

“The additional financing will help us execute on additional strategic initiatives, including this acquisition of OpenWhere,” said Jason Andrews, CEO of Spaceflight Industries, in a statement.

But in the broader commercial space community, the funding round was treated with a shrug. Not because they were skeptical of the company’s plans, but rather because it was just one of a growing number of financing rounds raised by entrepreneurial space companies in recent years, as institutional investors like VC firms became more interested in such companies. Raising a $25-million round, a big deal a few years ago, is less so today.

Indeed, to investors, space is looking increasing like many of the other technology companies they invest in, offering imagery, communications, and other data products, and operating on time scales more like tech startups than traditional aerospace companies. “Space is becoming more integrated with other tech sectors,” said Joe Landon, chairman of the board of the Space Angels Network, in a talk at the NewSpace 2016 conference last month in Seattle.

That became clear in 2015, as the industry saw an avalanche of investment. A report published earlier this year by The Tauri Group concluded that there was a record $2.3 billion invested in space companies in 2015. Of that total, $1.8 billion was venture capital funding, more than the previous 15 years combined.

That figure is skewed somewhat by two major investments: a $500 million investment by several firms in broadband satellite constellation OneWeb, and $1 billion that Google and Fidelity in SpaceX. Even adjusting for that, however, it’s clear that more investors are putting more money into space startups.

Landon, in his conference talk, offered a different set of metrics: the total angel and VC investment in space companies, according to his data, had grown from $150 million in 2011 to more than $800 million in 2015. (He didn’t clarify how his data differed from that in the Tauri Group report.) He said that 70 different VC firms had invested in at least one space company.

“It’s extremely, extremely hard to raise money for these kinds of businesses. Let’s not kid ourselves,” said Firefly’s Blum.

He was also seeing growth in his own network of angel investors, who collaborate to invest in space companies. The Space Angels Network now had more than 200 members, he said in his speech, including 14 who had joined in just the prior 48 hours, when the conference started. (Chad Anderson, managing director of Space Angels Network, said in April that the network had about 160 members.) The network had made four investments so far this year, with two more “in the pipeline,” making 2016 on track to be the busiest year yet for the group.

This influx of capital is turning the tables for companies seeking investment. “Space investment itself has also become more competitive,” Landon said. “Angels and VCs are jockeying and lobbying to be part of the best deals. This is a trend towards more of a sellers’ market, a total flip from just a few years ago.”

“What we’re seeing now is exponential growth across all the different segments of the space economy,” he said, spread out over many companies. “It’s more growth, and it’s not just limited to satellites and launchers.”

He said the market is far different than what existed in the 1990s, when a handful of ventures raised billions of dollars for communications satellite systems—Iridium, Globalstar, Orbcomm, and Teledesic among them—only to go bust around the turn of the century. The broader, more diverse base of companies in the space industry today makes it more attractive to investors. “Sophisticated investors see this and they’re taking the market seriously,” he said.

That doesn’t mean it’s easy for space companies to raise money, only not nearly as difficult than a few years ago. “It’s extremely, extremely hard to raise money for these kinds of businesses. Let’s not kid ourselves,” said Michael Blum, co-founder of Firefly Space Systems, a small launch vehicle developer, in a later panel. However, Firefly has been able to raise “close to the $70 million threshold” to date in several rounds, including institutional investors, he said.

“You read about these private space companies doing big rounds, but they’re probably not spending a lot of that capital. They’re storing it away for the potential of winter,” said Porteous.

Investor education is still an issue, despite growing interest and enthusiasm. “Some people really understand the industry, and it doesn’t really take a lot to know what the opportunity is,” said Christopher Richins, CEO of RBC Signals, which aggregates and resells excess ground station capacity. Others, he said, including potential customers, take more education.

How long can this growth in space investment continue? At the 32nd Space Symposium in Colorado Springs, Colorado, in April, one investor sounded a cautionary note. “We’re in a great spot right now in terms of the way investment dollars are flowing. I don’t think anybody I talk to in this sector takes that for granted,” said Will Porteous, general partner and COO of investment firm RRE Ventures, a firm that has invested in space companies like Spaceflight.

Porteous mentioned of a possible, widely-discussed bubble in overall technology investment that could, if it suddenly bursts, make the climate far more challenging for space ventures. “We counsel all of our companies in this sector to brace themselves for the potential for that,” he said. “You read about these private space companies doing big rounds, but they’re probably not spending a lot of that capital. They’re storing it away for the potential of winter.”

Landon, though, spoke of exponential growth in space investment: just how long can that continue? “I think there’s a lot of upside still remaining in this industry,” he said. “If you compare us to other segments of technology, we’re basically still pretty small. We are also the fastest growing, but there’s a lot of room to catch up.”

One promising sign, he said, is that there are “exits” by companies that take investment, typically when they’re acquired by or merge with another company. Landon cited the OpenWhere deal as one example. “The more acquisitions there are, it reduces risk in the minds of investors” because they feel more comfortable of getting a return of some kind.

“There’s a lot of room for continued, very rapid growth,” Landon concluded. With more companies seeking even more investment, including satellite constellations that will cost hundreds of millions to billions of dollars to develop, that growth will be essential to their business plans, and the overall health of the industry.


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