The commercial space sector made big waves a little over a week ago when NASA sent two astronauts into orbit on a rocket owned, built, and operated by SpaceX, a privately held, venture-backed company.
It was the first commercially-built rocket and spacecraft sent into orbit. And whether the historic launch paves the way for more opportunities to develop space-related tech is uncertain, the event is certainly a welcome boost for those who already invest in the general spacetech sector.
“Human space flight is a really important catalyst for our industry. In addition to excitement, it represents an important transition,” said Chad Anderson, founder and managing partner of Space Capital, who added that NASA is becoming an important customer for the commercial space sector.
Space Capital is in the midst of raising a second fund.
New York-based Space Capital manages two strategies. Space Angels, a consumer-facing product, which invests in space companies through SPVs funded by accredited investors, and Space Capital, a traditional, institutionally backed venture fund.
Space Angels is an investor in several companies, including SpaceX, that directly benefit from NASA’s shift from a provider to a buyer of rockets, spacecraft and various related services.
While Space Capital’s portfolio companies are predominantly focused on satellite technology and related applications and infrastructure, which means that these start-ups are looking back at earth rather than are involved in space exploration, the government is still an important customer for some of these companies, Anderson explained.
“Some of our companies are seeing an increase in demand during the pandemic,” Anderson said. These companies apply geospatial intelligence to help monitor supply chains and facilities, which are otherwise monitored by hand, he explained.
Other investors are taking notice. Three portfolio companies are nearing a raise of their next rounds at a significant valuation step-up, Anderson said.
LPs are also satisfied with the firm’s performance. In fact, Space Capital is expecting to close its second fund later this month, Anderson said.
“We were ready to close a $50 million fund at the end of March, but then the pandemic hit, and we decided to postpone until we have a better picture where things are headed,” he said.
Now that the firm has more clarity on cash needs and revised revenue projections of its current portfolio companies, Space Capital started reaching out to LPs, who committed to its second fund.
“Nobody pulled out of the fund, but some LPs may be committing less capital. We are confident that we can close the fund, but the fund size is still TBD,” Anderson said.
The firm’s LPs are family offices, fund of funds and corporations.
Space Capital was targeting $50 million for its first fund, which was launched in 2017, but the firm ultimately closed it at $35 million. “We were deploying capital in the process of raising it,” Anderson said.
The first fund has 13 portfolio companies including Menlo Park-based LeoLabs, which helps satellites avoid collision with debris and other floating objects in low Earth orbit, and SkyWatch, a Waterloo, Canada-based company that provides developers tools for integrating earth observation data into applications and workflows.
The strategy for Space Capital’s second fund will stay largely the same. The firm intends to continue to write $750,000 to $1.5 million checks for seed and Series A stage companies focused on GPS, geospatial intelligence, and space-based communications.