New Venture Fund Aimed at Europe’s Space Start Ups
LIVERPOOL, England — A British venture-capital company has secured cash investment from five European space-hardware and services companies to launch a venture capital fund to invest in promising European – mainly British – start-up space companies.
London-based Seraphim Capital, using a technique employed in other sectors such as biotechnology and pharmaceuticals, will draw on the expertise of the fund’s founding investors without letting any of them steer investment choices.
Seraphim Managing Partner Mark Boggett said the Space Venture Fund will be capitalized with 83 million British pounds ($123 million), with most of the money coming from institutional investors with no special stake in the space business but who see the same potential Boggett sees.
The five founding investors are well-known European companies, plus one Canadian, all of which have at least a small presence in Britain. Airbus Defence and Space, Telespazio UK, Avanti Communications, Thales Alenia Space UK and Canada-based Com Dev’s British division together have invested an undisclosed sum that Boggett said was less than half of the 83-million-pound objective.
In a July 14 interview here during the UK Space Conference, Boggett expressed confidence that the remaining funding would be secured this fall.
None of the founding companies will have enough of a stake to move the fund in a self-interested direction without the agreement of the fund’s board of directors, whose makeup will be such that no one dominates.
Once started, the fund will establish up to 10 investment themes it should pursue, and then hunt for start-ups struggling for capital. These are companies that have already received initial seed capital but are not yet profitable.
“Typicalliy we would invest in A-round financing of between 2 million and 5 million pounds,” Boggett said. “Our space corporates [the five space companies making the initial investment] will help us with due diligence. At some point we would then take successful start-ups to the board and our investors may wish to acquire them, or to become a customer for them.”
Boggett said he met initial resistance to the idea from colleagues at Seraphim, but won backing after showing how many industries that are not considered part of the space sector are nonetheless “space-enabled,” in the sense that space technology is crucial to their development.
In addition to that, the British government in the past three years has sharply increased is space spending and has targeted its investment in Earth observation and telecommunications technologies that have near-term commercial potential.
Boggett acknowledged the support of the UK Space Agency and the government-backed Satellite Applications Catapult, whose mission is to spur development of space technology companies to meet Britain’s goal of making the space sector a driver of British economic growth over the long term.
European Space Agency Director-General Johann-Dietrich Woerner said here July 14 – his second visit to Britain since assuming his post July 1 – that he has already understood that, for Britain, space spending is mainly about a return on investment.
Seraphim sees the fund as having a 10-year duration, although 5-7 years is more typical.
“We typically get 10-15 ideas per month that come to use from the space sector,” Boggett said. “I expect that with the creation of this fund, that will increase to 40 per month.”