Here's why 100 tech firms a month are asking this VC to fund their ventures into space - 'It was a eureka moment for us'
- VC funding for space projects has accelerated in recent years as investors wake up to the disruptive possibilities of space tech.
- Seraphim Capital, one of the world's first space focused funds, says it's been inundated by companies seeking financing for their projects as interest in the industry booms.
- "Space is the nexus of multi-decade trends in major disruptions to the world," Boggett told Business Insider. Everything from climate change, heavy industry, and satellite imaging could be improved by space tech.
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VC funding for space companies is launching into the stratosphere.
There has been a massive increase in VC funding for space related enterprises in the past two years - 182 companies won funding last year compared with 131 in 2017, while in the year from 31 March 2018 there was a 42% year-on-year increase.
"We get requests from 100 companies a month looking for financing," Mark Boggett, CEO of Seraphim Capital, told Business Insider in an interview. "It was a eureka moment for us to focus on space. Space is the nexus of multi-decade trends in major disruptions to the world."
It's a sign that investors are truly waking up to the exciting possibilities of private financing for companies basing their business outside the earth's atmosphere.
London-based Seraphim Capital claims to be the world's first VC fund with a special focus on space. Seraphim Capital's Space Fund launched in 2017 at $100 million. The company posts an index of space funding annually with its figures suggesting total investment grew by 29% during 2018 expanding from $2.5 billion to $3.3 billion.
Boggett says that preventing climate change could be one of the major breakthroughs that space technology can solve, be it from utilizing solar power more effectively from space for electricity, to better water allocation via specialized satellites.
Another key sector is satellites. In the past, satellites cost around $1 billion and weighed three tonnes and were built to last 15 years, predominantly by government agencies. Now satellite manufacturers are building lighter, cheaper, and importantly re-useable devices which has revolutionized the market through bulk production and cutting-edge functionality.
Boggett equates the rise of new satellites being deployed currently as the equivalent of "a new iPhone with all the latest components."
It's part of a reimagining of how global industry could look in the future through space tech. Heavy industry could be moved off world. (Think "Blade Runner.")
Next level satellite imaging will be able to track soil erosion, weather events, and water usage to an extent never seen before.
In short: The applications are limitless, but the funding, as yet, is not.
"This is a market that didn't exist a few years ago," Boggett said. "It's a huge challenge in convincing investors this is a market worth entering, because there aren't that many companies that have been built out and sold and investors are often looking for exit potential."
The burgeoning VC market for space has found some innovative ways to manage these challenges. Unsurprisingly, funding space projects is very capital intensive, so funds tend to collaborate as a syndicate of investors to get the necessary amount together.
Similarly, a number of large space companies and agencies tend to partially fund VCs like Seraphim in order to get involved in the most exciting startups.
Seraphim is currently in talks to launch a new fund in the coming months which will be larger than its previous iteration, Boggett told Business Insider.
There's still a long way to go until VC funding for space tech becomes mainstream, but the signs are that the stars are closer than ever before.
Says Boggett: "We're on the cusp of a ginormous change."