KOLN, Germany – GENES Venture Services, Germany’s oldest venture management group, this year plans to launch Europe’s first fund dedicated to the space technology sector.
The fund, Ignition SpaceVentures, aims to become world leader in the field of commercial space start-ups. Apart from telecommunications, the commercial potential of space technologies has to date been largely unexploited. This is partly because the international space community has been largely government-funded and therefore has developed a budget-driven, rather than a commercial, mentality, said Jrg Kreisel, a GENES partner. In addition, there are relatively few channels of communication between space scientists and the financial world. However, following the global downsizing of space programs in the early 1990s, the space community is now compelled to take a more commercial approach.
Mr. Kreisel explained that Ignition SpaceVentures will target three principal investment areas: space-related services, infrastructure manufacturing (normally at the subsystem and component level) and spin-offs and technology transfer.
GENES aims to raise ecu 100 million ($118.1 million) for the fund. Initially, GENES intended to attract capital from space agencies, governments and astronautical industries before approaching the mainstream financial sector, Mr. Kreisel said. GENES, however, has revised its strategy and now will primarily target mainstream institutional investors, particularly banks and insurers already involved in funding or underwriting space projects. By raising capital from “neutral” sources, rather than from aeronautical manufacturers, GENES believes that investees in Ignition SpaceVentures will be better positioned to cooperate with a broad range of firms in the space sector.
While Ignition SpaceVentures is undoubtedly a pioneering vehicle, a precedent does exist for venture investment in the space sector. United States-based SpaceVest raised a $50 million vehicle three years ago to invest in pure early-stage space technologies. The fund made 12 investments, all of which are currently doing well, and SpaceVest is preparing to launch a $250 million successor fund.
The GENES fund will invest internationally, with a primary focus on Europe. The group plans to generate deal flow through its own network, cooperative agreements with relevant players such as SpaceVest, space agencies and the space industry, and a vigorous proactive marketing program.
Mr. Kreisel, who heads the Ignition SpaceVentures project, is a former managing director of the Space Research Forum in Aachen, Germany. He also served as a United Nations delegate for the conversion of the aerospace complex in the former Soviet Union and was involved in the scientific management of the German Spacelab Mission D32 and the German hypersonic technology program. During the 1980s, he was a member of the Franco-German space working group Coherence, which masterminded the Hermes, ArianeV and Columbus projects. Before moving into the venture capital sector in 1994, Mr. Kreisel also gained experience as a consultant in international technology management and commercialization.
GENES hopes to attract a number of core investors to Ignition SpaceVentures before marketing the fund more widely during the second half of 1999.