Profile | Chad Anderson, Managing Director, Space Angels Network
When Chad Anderson initially enrolled in Oxford University to obtain a master’s degree in business administration, his focus was social entrepreneurship.
“I was looking to apply my business skills to do something big, to change the world,” Anderson said. Gradually, he became convinced he could achieve that impact by supporting the entrepreneurial space industry.
During the next few years, commercial suborbital flights planned by Virgin Galactic, XCOR Aerospace and World View Enterprises are expected to give an unprecedented number of people a unique view of Earth. After seeing their home planet from space, astronauts often report a sense of wonder and a desire to safeguard the planet. When this reaction, called “the overview effect,” is applied on a mass scale, it will have “a profound and enlightening impact on mankind,” Anderson said.
Prior to attending Oxford, Anderson worked at JPMorgan Chase & Co. in Seattle, where he helped manage a $50 billion real estate portfolio. He also was a founding partner and finance director for Aeris Direct LLC, a Seattle-based startup aimed at making private jet travel more convenient and affordable.
While still working toward his MBA in 2012, Anderson became managing director of the Space Angels Network, an organization founded in 2006 to connect private investors with aerospace and aviation entrepreneurs. From March 2013 to August 2014, Anderson served as a business adviser for Astrobotic Technology Inc., a leading contender for the Google Lunar X Prize, the race to put the first commercially funded spacecraft on the Moon.
In addition to his work with the Space Angels Network, Anderson is a business innovation manager for Satellite Applications Catapult, a nonprofit research organization focused on promoting space entrepreneurship within the United Kingdom.
Anderson, who is based in London, spoke recently with SpaceNews correspondent Debra Werner.
What brought you to the space business?
I was following the private space movement closely for three or four years. I saw that the industry was maturing to the point where someone like me with a business and strategy background could get involved and have an impact. At the very early stages, you need scientists and engineers building things. Eventually, you need someone to sell those things and manage the growth.
You always seem to have more than one job. Why is that?
I’m always looking to make the biggest impact. I know that I’m just one person and my time is limited, but for some reason that frustrates me.
What is your role at the Space Angels Network?
I develop partnerships, attract sponsorships and bring in new members. Our mission is to facilitate the flow of capital to space startups. We do that by talking to people, putting people in touch, facilitating conversations.
We also work with entrepreneurs. When an entrepreneur submits an application that looks promising but needs support developing a business model, route to market or financials, we help the entrepreneur hone and polish the business plan to use with investors, customers and potential partners.
Is the Space Angels Network growing?
In the last couple of years, our membership has gone from 20 to 50 members. We are now in nine countries on four continents. We also have more deal flow. In 2012, we brought one deal per month to our members. Today, we are bringing in two or three quality deals each month. Things are definitely picking up on the investor side and on the entrepreneur side.
We see three big trends driving this industry: reduced launch costs, miniaturization of technology and standardization. These all bring the space sector within the reach of startups for the first time.
We also see more space business plans that look like regular business plans with a focus on the customer, the business model and making money. We now see business plans with a long-term vision and a strategy for generating revenue along the way. That is attracting investors. The success of Space Exploration Technologies and others is obviously improving public perception. There are a lot of different things feeding into the excitement, the buzz around space. People see well-known investors backing private space companies. All this is combining to get more mainstream investors to pay attention.
How do you select deals to bring to your members?
A company submits an application. We evaluate it and meet with the entrepreneur to get more information, if necessary. If the company meets our criteria, we work to bring that company in front of our members.
What are your criteria?
We are looking for companies that can offer significant returns on investments. If you look at the list of companies that our members are interested in funding, they are typically not incremental innovations, such as a new technology that is going to improve efficiency by 2 or 3 percent. We are talking about market-building innovation, innovation that opens up new markets and provides exciting investment opportunities.
Do your investors have a longer time horizon for return on investment than angels investing in local businesses?
Over time, Silicon Valley venture capital has gotten to the point where it invests in Internet and mobile startups where companies with minimal startup costs get loads of funding to achieve scale. Typically, our investors are looking for more specific innovation. Often they are hardware companies, which is a different proposition. Sometimes the development time can be 10 or 15 years, but it can also be much shorter than that.
How much money do Space Angels invest?
We don’t have an investment minimum. We have members who put $25,000 to $50,000 into a particular deal. We’ll pool those with other angels who are interested in putting in the same amount and make a $500,000 investment in a company, which is one of the benefits of being part of a network. We also have members who are interested in getting more involved with a business and putting in millions of dollars.
Is $500,000 enough?
A lot of companies we see are looking for $1 million or $1.5 million of startup funding. If a pool of investors provides $500,000 or $750,000, the company is halfway there.
How many space companies have you supported?
We’ve founded or funded dozens of companies. Some of our members who have founded companies also make investments in other companies.
In the last two years, the Space Angels Network has set up hubs in New York, Hong Kong, Stockholm and Sydney. Why?
We are a global virtual network and not a local network because there are not enough space companies concentrated in one area to satisfy investors’ needs. Our hubs give us greater access to deal flow and give investors in a region access to global investment opportunities.
There are pockets of space activity all over the world. Not many of them get much attention. But when you visit, you realize these people share the same type of passion. They are trying to bring together all the pieces of the puzzle: government, industry, entrepreneurs and investors. The Space Angels Network helps them complete the puzzle.
We give them a conduit to the global space community. We build connections so that the capital can flow freely. Because at the end of the day, we all want to see this nascent industry take off, and the best way to make sure that happens is to find the best business plans and get them investments.
In September, the Space Angels Network invited members to Southern California to meet with entrepreneurs and visit companies. Why?
We want to give members a platform to come together. It’s fantastic to see what progress you can achieve when you put proactive people in a room together. In addition to networking, it gave members a unique look into what’s happening in commercial space.
Tell me about Satellite Applications Catapult.
The U.K. government is trying to capitalize growth happening in the space sector. It set up Satellite Applications Catapult, a nonprofit, to help identify barriers to entry and make it easier for entrepreneurs to get into space.