Space may be the final frontier, but in terms of investment, VCs are just getting started. With that in mind during TC Sessions: Space 2020 last week, we spoke to three investors who’ve been actively funding what could become tomorrow’s biggest companies to learn where they might focus next.
Our guests — Tess Hatch of Bessemer Venture Partners, who has long focused on the commercialization of space; Mike Collett of Promus Ventures, a venture firm that invests in deep tech software and hardware companies; and Chris Boshuizen of the venture firm DCVC and a cofounder of Planet Labs — had a lot of intriguing observations on topics, including the dangers of orbital debris, the merits of space manufacturing, and how they’d rate the U.S. government when it comes to fostering space-related innovations.
For those who missed the event, we’ve posted a video of our conversation below.
Space junk could affect long-term sustainability
Hatch, who recently co-authored an informative piece on the topic, said there’s little consensus about whether space junk is a critical matter that deserves more regulatory attention or an issue that will resolve itself through tech advancements, even while startups like Astroscale and D-Orbit are focused on the issue. The commercial industry’s expectation seems to be that space companies can regulate themselves and launch constellations without leaving pieces of launch vehicles or rocket stages in space, she said.
For her part, Hatch said it’s something to potentially invest in within a “handful of years.” At the moment, she added, “it’s not at the top of my list just due to looking for a shorter return on my investment for my LPs in the fund.”
Collett and the others stressed that in the meantime, sustainability is a major issue for all of their portfolio companies. “Everybody wants to do their job as a corporate citizen to make sure they’re not leaving anything else up there that doesn’t need to be there. Indeed, Boshuizen noted that at Planet Labs, best practices were taken very seriously.
Still, Boshuizen noted concerns about newer capital sources that might be less focused on the issue of space debris. “I don’t think everyone necessarily has the same space background,” he said, explaining that “we’re seeing a lot of outside investment from new people joining the industry, which is exciting, but also they don’t really know how important this is [and] it’s important for people to realize that they’ve got to pay attention to this.”
He also noted that “some of the technologies to fix what’s already happened don’t really exist yet.” Said Boshuizen, “We don’t yet live in the sci-fi future, where you can just fly up, grab a piece of debris and bring it back. That’s really, really hard — I think probably five years away — but something we want to support and see happen.”
The advantage of investing in different geographies
Collett, whose firm invests across the U.S., Europe and New Zealand, observed that it “really is a global market” while adding that there “are advantages to different geographies in terms of how you can really get off the ground.” Some regions, he said, are particularly good about providing nondilutive government financing to get startups up and running so they can attract global investment.
He noted that although Luxembourg is a small EU country, “They’ve come out and said, ‘We actually believe that space could be a large proportion of our GDP,’ and so they’re doing many things to try to support that” goal, including providing bridge financing and other financial support to startups that might not be able to continue on otherwise. Collett also gave props to other “noncorporate types” in many areas of the world, including sovereign wealth funds and, in Europe, both the European Investment Bank and the European Space Agency, the 45-year-old intergovernmental organization of dozens of member states that are dedicated to the exploration of space.
Said Collette, “They all want the same thing — to be able to sell whatever they’re selling in a way to corporates and people all around.”
How they rate the U.S. government on its relationship with space startups
Boshuizen said that, for his part, “I find [it] particularly supportive. There’s a number of programs — whether entities like the Defense Innovation Unit or through In-Q-Tel or other government agencies that want to see some of this stuff alive — and unlike companies maybe that have to have a short-term focus on profitability — [are playing] a long game.
“They want to build infrastructure, they want to solve systemic problems, they want to make investments for the future using their public money to create something of value for the citizens of that country. So here in the United States, I find there’s a lot of programs that are available, even the SBIR program that provides money for companies to solve core technological problems and bring something to life.”
That money is “essential,” he says, because it goes a long way it legitimizing nascent technologies in the eyes of later investors. The government is saying, “‘Look, [this] product might be two or three years away from market, but this money is to say that this is real, and we believe that there’s a need for [what you’re building].’ And I think that there are many companies probably present [at this space event] that have made use of those programs.”
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