London-based Seraphim is no longer the outlier it appeared to be in 2015 when it first announced its intentions to use money from well-known space-industry players to finance startups whose technology ultimately would be useful to the industry’s established companies.
At the time, these included hardware builders Airbus and Surrey Satellites, and satellite services provider Telespazio as well as funding from the European Space Agency and Britain’s Satellite Application Catapult.
As Mark Rigolle, a former CFO of SES and now heading funds-seeking startup LeoSat, likes to say: “Anyone who says it’s easy raising money in this sector has never had to do it.” That proved the case for Seraphim, which struggled to meet its goal of closing with 83 million British pounds, or $123 million at 2015 exchange rates.
Since then, Seraphim has rethought its approach, hired former Google Maps, Earth and Local CTO Michael Jones as a managing partner and bided its time as the European markets woke up to the promise of what was going on in the United States.
Airbus has invested in multibillion-dollar startup OneWeb’s global internet constellation and created Airbus Ventures, which invested in IoT startup ELSE/Astrosat; Thales Alenia Space has invested in Spaceflight Industries’ startup BlackSky Earth observation project; and the European Space Agency’s Business Incubation Centers have begun to yield measurable results.
Europe likely will never be as ready to go as all-in on speculative investments as U.S. investors. But the movement is clear, even if many of the investment levels look modest by U.S. standards.
SES is located in Luxembourg, whose leaders’ language often makes them sound like investment-fund managers rather than politicians.
Luxembourg is putting cash into ventures that want to mine celestial bodies for minerals — not because Luxembourg thinks this market is near-term, but because it believes such investment creates a dynamic that will lure near-term talent and capital.
SES Chief Strategy and Development Officer Christophe De Hauwer said the company, which will have a seat on the Seraphim advisory board, invested in the fund as a way to keep an eye on developments of future use to SES.
“We’ve invested in the Seraphim Space Fund and joined the advisory board to further enhance our ability to identify and engage with innovative developments along our existing value chains, as well as with opportunities adjacent to our core markets,” De Hauwer said in a Sept. 14 statement.
Telespazio Chief Executive Luigi Pasquali, whose space services company is investing alongside Thales Alenia Space in BlackSky, said: “Seraphim is one of the most important nodes of the network we are building to keep up with this transformation and to manage innovation.”
Seraphim said Sept. 14 that it had closed its first two investments, in Spire Global of the United States, which has facilities in Scotland and Singapore; and Iceye Oy of Finland.
Spire, which is developing a network of small satellites for meteorological and maritime-tracking, is no longer a startup. It has raised some $70 million in funding rounds since 2013 and already operates a revenue-generating satellite infrastructure.
Lead backers include RRE Ventures, Promus Ventures, Jump Capital and Bessemer Venture Partners.
Given that it’s well past the starting blocs, Spire might seem an odd choice for Seraphim. But fund manager Mark Boggett said he will not turn down a good investment prospect, even if it is well into development.
Iceye plans to begin launching a constellation of small radar satellites — “small” and “radar” do not usually play together — in 2018. Before the Seraphim investment, whose value was not disclosed, Iceye had raised $18.7 million in several funding rounds since 2015.
Iceye’s backers have included the European Union’s Horizon 2020 fund and the Finnish government. Other supporters are Draper Associates, Draper Nexus, True Ventures, Space Angels and Lifeline Ventures, the latter based in Finland.
Seraphim’s stated focus is companies involved in Earth observation, whether from space or the atmosphere. It is about to close on an investment in an unidentified drone company.
“We find ourselves in a privileged position witin the space market,” said ex-Googler, now-Seraphim Managing Partner Jones. “We are seeing the vast majority of investment opportunities in the sector. By virtue of being a specialist space-tech investor — the only dedicated space-focused VC globally — we are benefitting from a strong, global deal flow….
“Furthermore, as a thematic specialist, we’ve been targeted by many other VCs asking us to participate in space-related transactions they’re working on,” Jones said.
Seraphim’s Boggett, who has been spearheading the space-tech fund since it was founded, addressed questions in a Sept. 17 interview.
Is GBP 70 million an optimal closing amount for the fund?
We set out to raise $100m fund and in the final result reached $90m. Raising for a VC fund is challenging, but is doubly so when thematically focused on an emerging sector like New Space. We are happy that we have sufficient capital for the fund but anticipate that Seraphim Capital will continue raising further space-tech-focused funds in the near future.
I thought your focus was Series A-type startup financing where you could have a significant influence. Spire Global is well beyond that stage.
The fund’s investment policy provides flexibility from Seed through to B series and beyond. We just want to invest in the best businesses we can identify.
However, we are focused on A series for the majority of investments as we consider this the optimal stage to participate at the Seraphim Space fund.
We always set out to include a number of B series investments as these help the returns profile for the LPs [limited partners]. They enable earlier returns than the typical 5-7 years of an A series investment.