Three investors talk the highs and lows of space investing

The space industry operates in waves: There are massive highs and big lows, but it’s always exhilarating. Three venture capitalists who invest in space joined us onstage at TechCrunch Disrupt on Monday to talk about what’s coming next for this dynamic area. 

Much of the current investing is shadowed by the SPAC boom in 2021 and subsequent bust, which saw many of those companies’ valuations dwindle to a fraction of their former value. But it’s hard to tell whether the industry has recovered from this event, particularly given that the route to exits is unclear, Embedded Ventures co-founder Jordan Noone said. 

“This SPAC wave was, I think, a one-time phenomena, and those lessons are learned where the investors that did go through those some made money, some didn’t, some were spectacular exits, some were catastrophic, but the current market doesn’t support that,” he said. “I do think routes to exits is a big question that’s coming up in the current wave of startups, whether those are growth companies or those are day one companies.” 

Lewis Jones, investment GP at Seraphim Space, said the SPAC phenomenon was ultimately healthy for the industry, however painful it was for investors at the time: “I think people recognize now that you can’t take space companies public prematurely,” he said. “The acquisitions that have been around the last few quarters haven’t necessarily been desirable outcomes, and we haven’t necessarily seen a pathway to a space company going public properly and winning out on that. So hopefully that shake-up means people start thinking about it, and there’ll be some good opportunities in the future.” 

But if the past caused some investors to shy away from investing in space, it didn’t shy away from all of them — Katelin Holloway, founding partner at Seven Seven Six, said that while her firm has only made three investments in space, she expects it to grow in the future. 

“For decades, people have been working deeply and desperately on this advancement in technology, the advancement in funding and getting attention. So you’re seeing NASA giving grants, yes, but they’re very risk averse. And so what you’re seeing now are people who are very into risk, very risk heavy, helping to push things forward,” she said.

Much of the risk doesn’t come from the technical risk, but rather the market risk. As the industry matures, and moves into the application layer, there are a lot of less tech-risky bets to be made in the application layer, Jones said. 

“I’m looking a lot at downstream geospatial startups,” he said. “You’re not necessarily betting on their ability to develop novel AI algorithms. It’s very much, how do you leverage the data? And it becomes a lot more market centric than it does tech-centric.”

Ultimately, Holloway said, the teams that win will be those that ship. 

“The teams that are going to be the ones that win are the ones that are going to outperform by shipping. We’ve had a bevy of companies that dream really big, beautiful, incredible ideas that are very awe-inspiring, but they cannot deliver. And so the companies that are going to be the ones that win are the ones that can ship and ship very quickly.”

In terms of future opportunities for investing, Noone said he’s excited by things that have become economically and technically possible in space as launch costs have gone down, like orbital delivery, manufacturing in space, and a market on the moon.