ROOM
76
Astronautics
Silicon valley, California
- home for young
NewSpace companies.
Company financing life
cycle.
previous week’s learnings. This couldn’t be more
different from the linear project management
models used by its competitors which literally lay
out critical paths months or years ahead of time.
As well as SpaceX, however, there are literally
hundreds of new space startups addressing
a multitude of industries and disrupting the
traditional space paradigm.
There are several subsectors with the
NewSpace industry, with several attracting the
bulk of the capital in 2016, including launch
companies and those involved in remote sensing
and communications.
New launch entrants include Vector Space,
Rocket Labs, Blue Origin and Relativity Space,
all of which are attempting to optimise a three
variable value equation: availability, reliability
and affordability.
Any two of the three parameters is not enough
to be successful long term, meaning, for example,
having a reliable and affordable platform is not
valuable if you either have no availability or can’t
predict availability. Similarly, being available and
affordable but being seen as unreliable will not
cut it either. It is for this reason that I disagree
with those who predict a glut of supply for launch
capacity in the near to medium term.
In remote sensing, there has been a huge
explosion in company formations. Notable startups
include Planet, OmniEarth, Audacy, LeoLabs, Spire,
Kepler, OneWeb, Astranis and Analytical Space.
These companies are all racing to build
infrastructure for what has been referred to
as the ‘mega-set’ which will ultimately consist
of a vast hyperspectral data set that is both
persistent (always on) and ubiquitous (covering
the whole Earth).
Such a massive data set coupled with innovations
in machine learning and artificial intelligence could
literally create more value than the entire current
space industry combined. Why? Because with
a data set this vast the amount of products and
services, especially products that are predictive in
nature, are essentially unlimited. My view is that as
the implications of the ‘mega-set’ becomes better
understood, the amount of capital attracted to the
space sector will dramatically increase.
Capital sources
As with all industries that have large numbers of
start-ups, access to early stage capital is critical.
The adjoining graph indicates that capital can
be thought of in stages, starting with formation
capital (typically friends and family) to so-called
angel investors, private equity and venture capital
and then, ultimately, public markets.
These capital sources are essentially
sequential and cumulative in the sense that each
stage requires successful deployment of capital
at an earlier stage. For example, if sufficient
capital isn’t attracted at the friends and family
round, the ability to create a proof of concept
and/or an initial product or service that will
attract angel capital could be impacted.
Without angel capital, the ability to generate
client traction and revenue could be impacted
which would likely prohibit the ability to raise
venture capital and without successful venture
capital and other sources of growth capital such
NewSpace
companies are
characterised
by a
scrappiness
and mentality
which is
distinctly
associated
with Silicon
Valley start-
ups
PUBLIC
RISK
SALES
INVESTMENT
VENTURE CAPITAL
SEED CAPITAL
ANGELS
GRANTS/F&F$
ANGEL INVESTORS
• $24.6 billion
• 71,000 deals
• 17,750 seed
• 31,950 early stage
• 19,170 expansion
• 305,000 individuals
VENTURE CAPITAL
• $59.1 billion*
• 4,380 deals
• 186 seed
• 2,219 early stage
• 1,975 later/expansion
• 718 active firms
* Sources “Angel investing Market for 2015, Centre for Venture
Research/ UNH; NVCA 2016 Yearbook; PwC Money Tree
Primaxis Technology Ventures
