why are tech vcs rushing into space investing · why are tech vcs hanging around space? we seek...
TRANSCRIPT
October 12, 2016
Why are Tech VCs Rushing into
Space Investing
Today’s Goal
We Will Not Stop
Accelerate the space ecosystem by providing
a clear picture of the VC model
About Me
How VC works
Why VC works
Implication for Space 2.0 startups
Sunil’s Space 2.0 Wish List
Lifelong space nut
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July 2001:
Waiting on the NASA causeway
to watch the STS-104 launch
November 2013:
Minutes from observing a total solar eclipse
off the coast of Africa (with protective glass in a fun holder)
And I’m creating a space nut
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Bessemer by the Numbers
We have a long history of making mistakes too
"Stamps? Coins? Comic books? You've GOT to be kidding," thought BVP’s David Cowan. "No-brainer pass."
Incredibly, BVP passed on Federal Express seven times.
BVP's Pete Bancroft never quite settled on terms with Bob Noyce, who instead took venture financing from a guy named Arthur Rock.
Cowan’s college friend rented her garage to Sergey and Larry for their first year. In 1999 and 2000 she tried to introduce Cowan to “these two really
smart Stanford students writing a search engine”. Students? A new search engine? In the most important moment ever for Bessemer’s anti-portfolio, Cowan asked her, “How can I get out of this house without going anywhere
near your garage?”
Facebook Co-Founder Eduardo Saverin spent his summer chasing down BVP’s Jeremy Levine who thought, a social network for college
students? Who needs that?!.
bvp.com/portfolio/anti-portfolio
Three space investments to-date
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Small sat imaging constellation to offer
high-res, high-revisit imagery
Open space for business with
weekly launches of 150kg payloads
Small sat constellation to listen to sounds (RF) from Earth,
initially to track marine vessels and gather weather prediction data
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2nd stage Stack Test: link
Launch site: link
About Me
How VC works
Why VC works
Implication for Space 2.0 startups
Sunil’s Space 2.0 Wish List
We steer LP capital into attractive companies
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Sources of capital
Startups
By the numbers: our funnel
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500-1,000
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1-2
Something you should know
I hate jargon
Decisions decisions: Sunil’s framework
Key questions
1) Does anyone want it?
2) Are there a lot of those
people?
3) Can you find them?
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Decisions decisions: Sunil’s framework
Key questions Investment theme
1) Does anyone want it? • Product market fit
2) Are there a lot of those
people?
3) Can you find them?
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Decisions decisions: Sunil’s framework
Key questions Investment theme
1) Does anyone want it? • Product market fit
2) Are there a lot of those
people?
• Market size/TAM
3) Can you find them?
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Decisions decisions: Sunil’s framework
Key questions Investment theme
1) Does anyone want it? • Product market fit
2) Are there a lot of those
people?
• Market size/TAM
3) Can you find them? • Unit economics
• Go-to-market strategy
• Sales effectiveness 17
Startups are actually a set of hypotheses/experiments
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Idea
• Friends & Family / Angel
MVP
• Seed
Product
• Series A
Scaling sales
• Series B
How we help our investments
Strategy
Partnerships
Recruiting
Fundraising
Peer group
…Whatever you need
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How we help our investments
Strategy
Partnerships
Recruiting
Fundraising
Peer group
…Whatever you need
For VCs, this is a ”repeated game”
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About Me
How VC works
Why VC works
Implication for Space 2.0 startups
Sunil’s Space 2.0 Wish List
Why VC works
Portfolio of investments
20% stake in 10 companies
1 winner is responsible for most of the gains
Bimodal outcomes distribution
Cash flow curves
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Cash flow curves
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Cash
Time
Business Type 1
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Cash
Time
Business Type 2
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Cash
Time
Other considerations VCs have
Return threshold
Cash on cash multiple
Dollars returned
IRR
Almost no firms change their hurdle for space vs. tech
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About Me
How VC works
Why VC works
Implication for Space 2.0 startups
Sunil’s Space 2.0 Wish List
Why are tech VCs hanging around space?
We seek companies with a
good chance
of generating a lot of return
very quickly
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• Agile • Iteration • Low-cost
• Shorter lead • More launch • Standards-
based community innovation
• More companies find space strategic
• Big data world loves space
• Winner take all dynamics
Decisions decisions: Sunil’s framework
Key questions
1) Does anyone want it?
2) Are there a lot of those people?
3) Can you find them?
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Decisions decisions: Sunil’s framework
Key questions
1) Does anyone want it?
2) Are there a lot of those people?
3) Can you find them?
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0) Does it work?
4) Is timing realistic?
Space business models
Upfront cash-consumptive period of building, followed by period of harvesting high-margin product
Can iterate quickly
Attractive time to market
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About Me
How VC works
Why VC works
Implication for Space 2.0 startups
Sunil’s Space 2.0 Wish List
Sunil’s Space 2.0 Wish List
Chase new customer wallets
Flywheel of innovation comes to space
Big Aerospace becomes more acquisitive
More collaboration
More diverse talent
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