Billionaire space race launches new venture capital solar system

The successful launches in July of Richard Branson’s Virgin Galactic spaceflight and Jeff Bezos’ Blue Origin seemed much more of a show made for television than a showcase of scientific advancement. But for the venture capital community, it meant something different. The milestones were a sign to many investors and entrepreneurs that the commercialization of space, which was led by Elon Musk’s SpaceX, was not only possible, but could be bigger and happen sooner than previously thought. originally – and they wanted to get in there.

These private space companies, all of which formed about 20 years ago, have ambitious goals of regular space tourist flights or building factories in orbit. But whatever those ambitions – or even if they succeed – what they have done so far to prepare for has fundamentally changed the role a private company can have in space. “I just like to remind people that people have a hard time but their idea is pretty cool,” said Bill Nye, CEO of The Planetary Society. Forbes. “[Elon] Musk pointed out years ago if you had to do [rocket launches] pretty regularly, launch Falcon 9s and get the thing reliable enough, then it becomes like a commercial plane.

It starts at launch

What established space companies like SpaceX and the Los Angeles Rocket Lab, founded in 2006, have improved the most are rocket launches – the industry’s kryptonite. By lowering the start-up cost, the process can be more frequent and has sparked a spark among entrepreneurs. These companies have inspired others to try and tackle these issues, like Long Beach-based Relativity Space, which is looking to 3D print rockets, and Seattle-based STOKE Space Technologies, which is looking to build a rocket entirely. reusable from Musk partially recyclable machines.

By almost eliminating the main barrier to entry to the industry, start-up companies have built an infrastructure that other entrepreneurs can rely on. In the same way that advances in computers and the large-scale construction of fiber-optic networks sparked the dotcom boom in the 1990s, venture capitalists are predicting the same is set to happen in the world. space economy. Space Capital data shows investors invested nearly $ 15 billion in the industry in the first half of 2021 alone through 230 deals, $ 37 billion since 2013. The market has also started to see a handful of exits. – mainly via the SPACs – which only add fuel to the fire.

“This is a time of rebirth in the space ecosystem,” says Andy Lapsa, co-founder of STOKE. “Space development has become this commercial sector. There has never been a case where the commercial sector has the promise it makes today. Delian Asparouhov, director of Founders Fund, echoed this statement. He adds that now that the industry has this base, other industries can start to take advantage of it. “At the end of the day, no industry succeeds unless it makes money outside of industry, right?” Asparouhov tells Forbes. “The same goes for space. You can’t just sell them to other space companies. We now see the start of Space 2.0. What are other ways to monetize space? “

New opportunities

Before becoming an investor, Asparouhov was himself a founder seeking to jump into the future economy very early on. He says his San Francisco-based startup Varda wouldn’t even have got off the ground if he didn’t think he could stand on “giant shoulders” referring to Blue Origin and SpaceX. Varda, which recently closed a $ 42 million Series A funding round in July, is looking to tap into an area of ​​particular interest to VCs – space manufacturing. Varda plans to offer “microgravity as a service” to businesses to improve manufacturing results by manipulating one of the four forces of nature. This environment can better produce raw materials for use in semiconductors, fiber optics and pharmaceuticals, Asparouhov said, which the International Space Station has tested for the benefits of astronauts on board.

“The space launch industry and the space systems industry have matured to a point where we can now build a layer of abstraction on top of these commoditized services that we will buy a lot of,” said Will Bruey, Founder and CEO by Varda. Forbes. “Varda’s bet is that manufacturing will be the next steady-state revenue driver before space tourism really takes off.” Bruey jokes that while it doesn’t yet have any customers lined up in the block, the company is on track to start making test launches in 2023, just three years after it was founded in November 2020. It’s not just deep technology or science. Targeted VCs who are excited about space manufacturing – although players like Lux Capital have also invested – more generalist VCs including Khosla Ventures and General Catalyst are also seeing the vision.

Another area that VCs are keeping a close eye on are satellites, which saw the second largest share of VC’s dollars after rocket companies – $ 1.9 billion invested in the second quarter of 2021 – according to data from Space Capital. Advances in building smaller, cheaper satellites that can be launched inexpensively have opened the floodgates to a whole host of possibilities surrounding the spacecraft, from new ways to use them by existing companies. or the services that surround them. Asparouhov envisions a whole future economy around satellites alone, from refueling stations to repair robots to satellite taxi services. SpaceX is improving and accelerating satellite manufacturing as well, and companies like Rocket Lab and San Francisco-based Loft Orbital are offering standardized platforms that could serve as a “satellite-as-a-service” business model. This expansion of satellites leads Asparouhov to predict other innovations on the road.

“The best analogy is that the personal automobile has become more popular, justifying the investment in highways made a lot more sense,” Asparouhov said. It was a recurring theme among venture capitalists that this industry is so early on that it has the potential to be a nesting doll of possibilities, with each new advancement leaping from the advancements of the last, all tracing back to the foundations laid by billionaires.

Talent training

This billionaire space race has done more than just provide the platform that startups can rely on as well – it has trained its talent as well. Many of the companies mentioned in this story have founders who were former engineers at Blue Origin or SpaceX. Some like Lapsa, a former engine manager at Blue Origin, say their work at large space companies has helped them find a gap in the needed solution that is worth capitalizing on, or for Bruey, a former operator of spaceship at SpaceX, Varda’s launch in a way allowed him to marry his experience in startups with his passion for space – which he attributes more to “brainwashing” as a child.

Alumni of billionaire space companies are looking to build on what they have learned and apply the next layer to create business opportunities in the same way alumni of places like PayPal and Facebook have built successful businesses like software as a service company Asana or defense firm Palantir, both now public after raising hundreds of millions of dollars in venture capital. “A lot of people want to start their own businesses,” says Josh Wolfe, co-founder and managing partner of space startup funder Lux Capital. “There is going to be a flow of talent that will be observed. The talent that will come out of SpaceX who can recruit peers and recruit teams, all of that is very real. ”

Investors are careful to point out that there are still many areas of space that are more fashionable than reality – at least for now – such as asteroid mining or Musk’s hope for these settlements. on Mars. But sixty years after the original space race, the latest competition is the backbone of a future wave of innovation, and billionaires leading the way are bringing venture capitalists and entrepreneurs to the race. “This whole ecosystem is evolving step by step, if you were to fall asleep today and wake up in ten to twelve years, you would be in awe of the advancements in technology and the wealth that has been made,” says Wolfe.

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