Venture Capitalists are now targeting the final frontier.
In late May, a London-based investment firm Seraphim Capital plans to launch the very first venture capital fund solely focused on space. The Seraphim Space Fund aims to raise up to $118 million. One of the big opportunities, says Mark Boggett, managing director at Seraphim Capital, is to invest in technologies being developed for other functions that have applications in space that their developers don’t even realize. He cites artificial intelligence as an example.
“We see significant opportunity to employ that technology in activities within the space sector, not currently being used,” he says. “We believe there is a significant number of really exciting businesses out there that don’t currently realize that they—from our perspective—are space-related technologies.”
The fund, which will focus on firms that already have a developed product they are already selling, from so called upstream companies—those that are building the “hardware” that will take people and things into space, to downstream companies producing software and applications used to collect and analyse satellite data.
The fund will focus primarily on UK-based companies, as well as European firms that contribute to the British industry. That may reflect where the fund’s money is coming from. Government agencies have embraced the Space Fund. The British Business Bank is a major investor; it also backs Seraphim Capital’s existing fund, which focuses on technology firms more generally. The UK Space Agency supported Seraphim in the early stages, connecting the firm with senior figures in industry and government, while the European Space Agency will take a seat on the fund’s board. The Space Fund has also received investment from seven giants of the European space industry, including Thales Alenia and Airbus.
“The space industry in the UK is performing very strongly,” Mr Boggett says. “It’s tripled in size since the year 2000. It’s been growing at 8% per annum for the last five years, which [makes it] one of the fastest-growing sectors in the UK market.”
This desire to tap into opportunities in the broader technology sector has prompted Seraphim to move its headquarters to the Old Street area of London, a part of the city that has become so synonymous with tech firms that it is known as Silicon Roundabout.
This also works in the other direction. The fund will look for opportunities to invest in technologies and intellectual property that have been invented or advanced by the space industry, but which could also have applications on earth. Mr Boggett points to a range of earlier innovations in this direction, such as solar cells and light-emitting diodes.
“They’ve found significant markets terrestrially. So we’re looking to do the same—there’ll be hardware and software applications that we’ll be looking to transition from space into terrestrial markets.”
The last decade has seen the rise of ‘New Space’, a phenomenon characterized by the growing power of commercial firms like Elon Musk’s SpaceX. Satellites have become much less expensive to manufacture, creating opportunities for new firms that make hardware and collect and analyse earth observation data. This data can be exploited in a whole host of businesses, from agriculture to insurance.
And while the fund hasn’t started investing yet, it has already identified a number of opportunities. “We think we’ve probably got at least our first six months worth of investments from those that we’ve already engaged with, if not our full first year,” Mr Boggett said.