Space industry investors are focusing on ensuring their portfolios have the financing they need to support company strategies and development plans.
“We’ve gone through an exercise in the first half of this year to look at all of our portfolio companies and understand what their requirements are, and then reserve capital to make sure that they’re well-supported,” Mark Boggett, CEO of space investor Seraphim Capital, said during the session “The Eye of Venture Capitalists on the Space Business” at the recent World Satellite Business Week in Paris hosted by Euroconsult. “Now we’ve got our portfolio companies, across the board, all nicely financed for 12 to 24 months.”
Retaining human capital is also a focus for investors, noted panel moderator Dara Panahy, partner at law firm Milbank.
“Fortunately, space is quite sexy right now, so a lot of talent coming out of the tech industry is attracted to space,” Dylan Taylor, chairman and chief executive of Voyager Space, said during the session. “But I do think you’re going to see a bifurcation in the industry, where companies that are perceived to have broken [capital] structures, or difficult capital needs, are going to have a hard time recruiting and retaining talent — and the better companies are going to recruit and retain the best people.”
Venture funding
Space-based startups — including those engaging in capital-intensive businesses — are continuing to raise money, Mike Palmer, managing director at investor Cerberus Capital Management, which formed one of the first space-focused special purpose acquisition companies (SPACs), Cerberus Telecom Acquisition. Some have sold minority stakes of 15% or 20%, resulting in high theoretical enterprise valuations, he noted.
SPAC deals happened a little too fast, Palmer added. “I think the SPAC product can work, as long as the fundamentals are there,” he said.
Some space companies acquired by SPACs promised more than they could deliver — which is true of all SPACs, not just those investing in space, Matthew Tuttle, CEO of Tuttle Capital Management, told Connectivity Business News.
“No SPAC, including the space-based ones, has been the exception in what they promised versus what they delivered,” Tuttle said. “Part of this is an indictment on the SPAC market and part is on the market in general.”
