The Space Angles
Justice Killian
Notes By Paul Fischer
How Entrepreneurship is being brought to space
Where money is being put to work
Where there are gaps
Work with 2 different funds:
Space Angels, 250 individuals around the world, high risk, high reward individuals with flexible time horizons
Space Capital Traditional venture capital, operates on a fixed time horizon, which constrains the opportunities we have
Investing in the final frontier of technology and growth
What is Space?
Space is the foundation of our modenr global economy
Space has enabled a 74 trillion dollar interconnected global economy
Integrating how all industries operate on a scale never before seen in the past
In addition, we create new markets
Eg. GPS
Primarily military, in 2005, GPS became widely availabel to the public
2007 to googlemaps
2008 air bnb
….
You hear alot about unicorn billion dollar plus companies
Allowing you to collect your data and unlock your opportunities, new markets
What has changed in the 60 years space has been around, why invest now
There is an incredible established legacy
Technology that has been developed and milestones allow us to stand on the shoulders of giants
Heavy lauch shuttle, saturn v, moon landing as examples
The first driver of a major change in the market is a change in the barriers to entry
The first space shuttle cost 60,000 dollars per kg to deliver, 1981
The Delta IV Heavy 12157 in 2004
Falcon heavy dropped the price by a factor of 10 last year
Miniaturization in satellites
A few very heavy satellites covered the world’s capabilities in the past
This made an inflexible approach, and now that is not the case
Moving from mainframes in satellites to essentially smartphones
From 1972 to 2007 the weight of the satellites dropped by half to 2800 kg
Planet dove in 2017 was just over 5 kg
Market drivers and launch caust has dropped from 77k to 10k per kg
[This means the price of an operational satellite has gone from 400 million to 50,000 dollars!!!!]
Projecting out means that 10,000 satellites can be reached in just decades
We are seeing exponential growth in lower earth orbit and a plateau in geospace orbit
State of the Industry
Going back to space companies
Morgan stanley has estimated that the space industry will reach 1.1 trillion by 2040, an increase of almost 300% over current levels
Space Investment Quarterly
Equity financing into space, looks at the transactions when money is deployed, allowing a fidelity for what is happening in the market
Dawn of the entrepeneurial space age
Beginning in 2009 saw the first successful launch of the Falcon I
Other attempts had burned through 800 million without a successful launch eg kissler
In 2010, spacex published the pricing to get to orbit, this allowed transparency in pricing
Conequetailly we see an exponential growth in business plans
Not only in the amount of capital flowing into the companies, but also the amount of companies
This makes now an exciting time, where we are just on the beginning of an upward curve
Lets dig into the numbers a little bit more, who are the actors providing capital?
Angels and individuals, as high-risk investors as first money to company with flexible time horizons
The next line is venture capitalists, with fixed time constraints, usually around 10 years
Have been a persistent actor over time
Finally there are corporate venture partners eg boeing and lockheed
Tech and innnovation and desire to keep a close watch on development
A Lot of the capital, 62%, comes from the USA
UK is growing, they hope that in 10 years 5% of GDP will come from space
France has recently become active
Looking at this year, seeing the amount of investment into various industries, only 26% into investment, while satellites are receiving a much larger investment share.
Space X is the largest corporate investor, lead by Fidelity investments, with 500 million in investments
These represent late stage investments directly from space x
Spinlaunch operates primarily in stealth, hoping to use centrifugal force to launch objects into space, we did not invest in them, but a number did 40 million, at series A round
Coming back to the venture capitalists, looking at the dawn of the venture capitalists, investors in space. Every top tier venture capital fund now has space investments.
In addition to this, a number of new actors have come in
Sovereign thinks of this from a national perspective
Philanthropists such as Bill Gates and EarthNow
Looking back at the market and debunking common misconceptions
Particularly early on, that space should require more capital than broader tech investments
The data indicates this is simply not true
The amount of capital raised at each stage of investments is marginally higher, but not double or triple as people think, so you can be entrepreneurially competitive in space.
How can space companies such as Spacex ever justify their value?
The price is not high early on, but tends to skyrocket later on
- Venture capitalists tend to invest in other lower risk tech, the process of getting a tech into orbit and getting to work is challenging and requires risk, so many investors wait through this phase, which later pushes up the price
- How can space companies justify their valuations? Looking at the revenue vs broader tech financing, series C and D sees space outstripping competition. With a 350 billion dollar industry already in place, there are established customers with big check sizes who can purchase tech once it is available, that is called good fundamentals.
Shows up in exit prices, requiring a company to go public, this creates a small subset that we hope will grow to attract investors engineers, scientists and money into industry
I would like to dig into the themes behind these
Starting with heavy launch, as 2017 saw the first commercial equity backed launchers launched more rockets tahn governments around the world
75% of the contracts launched they were able to secure
This means there is not a lot of opportunity in heavy launch, there are some competition, but we will not be putting money there
The opportunity to be able to launch satellites, and to provide internet from space
The value of data and the ability to connect the last several billion to the internet will change the world
Giving google access to these markets, the rockets are there to do this faster than anyone else
Our new frontier is small launch, eg. VECTOR, which took ten years to achieve a milestone, and now we have 50 small launch vehicles registered, and over the next years will deploy
Why use a small launch vehicle?
Well the data suggests these vehicles charge higher prices, but the time that it takes to integrate the payload and get onto a rideshare is significantly longer, and customers are willing to pay for the access to integrate into an existing system.
Otherwise the money is lost, like an opportunity cost, as the company must wait an extra 12 months for integration
There is a clear economic value proposition
Rail gun tech, balloons and centrifugal force are all examples of new ideas extant, and for us small-launch is quite simlar to automobile manufacturing.
Therefore our investment is in a company called VECTOR, and it should take 2.5 years to get the first rocket in orbit.
Bringing the auto manufacturers into rocket production, in terms of scale and production is critical to success
Rocket development is not a good business, high risk and difficult, one failure will destroy capability, so the reason we are excited about VECTOR is that designing, building, and manufacturing this launch will serve as a platform that allows us to view this experience as a software to the solutions, and the vehicles will be extant to allow these satellites to get into orbit
Starlight and Softbank -> several billion dollars to continue to provide internet on a global scale
This was an enormous endeavor that venture capitalists and entrepreneurs cannot become involved in.
We are able to get involved in the relay, the ground link, and other options
In a matter of 3 months we can provide the RF downlink in a matter of months
Another option is optical, allowing high throughput optical downlink using laser technology, provision of more from space
Earth Observation - has been around for a very long time, now is an exciting time to be a part of this
There are multiple layers
Data layers - existing instruments optical, SSAR, laser etc now being scaled down and being applied in different constellations creates an abundance of different types of data being generated and there are many ways to view this data
Some companies download the data, clean the data, and build products to sell into multiple industries in what is called a vertically integrated approach
We foresee specialization coming into the industry. We have invested in a company called skywatch, accessible from 150 different data points, through API integration, allowing the data to become ubiquitous into society.
Distribution is therefore the critical layer wer focus on, because this allows people to experiment with it.
Then companies can leverage the data in a very powerful way
Looking ahead, we see 2019 as the year of private manned spaceflight
SpaceX
Virgin
Jeff Bezos
We are seeing private spaceflight as an exciting emerging trend, and it has taken many billionaires a very long time to develope the technology
Debris Tracking and Mitigation
We will need at better understanding of what is floating around in space and associated risk
We invested in a company with a network of arrays planned to track meter objects in realtime across the world, comparable efforts took a long time and cost 2 billion dollars, our project will cost 1% and provide higher fidelity than the others
The baseline is to know what is up there with a higher degree of certainty
On Orbit Manufacturing
MadeInSpace creates products made on orbit and sold into terrestrial markets
Eg fiberoptic cables with greater efficacy
Continuing to take advantage of zero gravity to create monetary opportunities
Cooperation with NASA to enhance practicality
Space Stations
Handful Of actors worth noting
Expandible modules, with a marginal size factor gain, no weight factor
Axiom - hopes to 3D print habitats into space, hoping to reduce cost of space stations to 3 billion dollars, still out of our price range
Nanoracks was our choice for investment, to deploy the first commercial airline on the international space station how can we radically reinvent what it meant to build space stations, so independence 1 hopes to capture floating booster rockets and repurpose them into the first commercial space station, could cost less than 10 billion dollars.
It is a radical idea, but I remind you that skylab was assembled from rocket boosters, so the idea has worked before.
Lunar Transportation
NASA has made a number of successful private partnerships, launched a competition to be able to launch a rover, land it on the moon, capture HD images and beam it back
20 million dollar prize is not a lot to reach the moon, so more capital was made available
Japanese company, iSpace raised 95 million to do this
Israel - Space IL as a non-profit that has similar plans
Our investment is into a firm from carnegie melon that dropped out quite early, and recognized a real commercial opportunity and build partnerships, resulting in winning a 3 million and 10 million dollar contract, the latter is the largest lunar based contract for these services… demand for access to the moon does not only come from governments but from the private sector
Deep Space Platforms
JPF has produced large scale platforms
Commercial actors has performed propulsion technology
Smaller scale solutions, you attach your tech and we will do the rest sort of thing
Lower earth orbit has been democratized, only five companies have been launched into deep space, we wish to push this further out
Ecosystem Development
In-Space Resource mapping, extracting, refining, storage
Big visions of asteroid mining, operation within a very small realm of precious metal mining, stuck at mapping phase
Big idea of value, and process of extraction has not been developed yet
All of these components to the value changes have been missing
More ideas must be identified and the TRL needs to be raised
What is the unique value on orbit manufacturing, what are the components that must be developed, form a scientific and commercial perspective?
In space fuel production, distribution and storage
From water, fission or fusion
There is a gap here
We are looking for opportunities that could have a direct overlap into terrestrial applications
Helping shape what the future looks like, we are going to be part of a number of emerging industries, the policy risks and challenges we are facing
What is the work that NASA as the foundation for commercial development to happen, has been seeded and increased, great examples of how public and private partnerships can take place
Looking at how equity financing are happening
How governmental support has seeded, we hope to continue to foster and grow these opportunities to grow.
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