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Seraphim Space launches second VC fund with nine investments already under its belt

Seraphim Space, the U.K.-based space technology investment group, is officially launching its second venture capital fund after its first close with limited partners including Airbus, TechCrunch has learned exclusively. The seed fund will build a global portfolio of 30 startups that will be supported at seed and Series A stages.

CEO and manager Mark Boggett declined to disclose the percentage reached and targeted size of the fund, but said it was expected to be larger than Seraphim Space’s £70m venture capital fund in 2017 (approximately 90 million dollars at the time).

Like its predecessor, Seraphim’s second venture fund, SSV II, is backed by major players in the aerospace sector looking to keep pace with innovation.

This time, Seraphim will also operate in a more active and competitive market.

Investors are increasingly aware of space startups and the market as a whole, which could be worth $1.8 trillion by 2035, up from $630 billion in 2023, according to a recent report from the World Economic Forum and McKinsey . The number of funds ready to invest in space technologies has increased compared to 2017, including both generalists and specialists such as Space Capital, SpaceFund, Starbridge Venture Capital and Starburst Aerospace.

Seraphim Space hopes to stand out through its history. Its first fund returned three times the initial investment, which helped dispel the cliché that space investing is “very high risk and very long term,” Boggett said.

Its latest fund’s returns were partly fueled by five exits: the trade sale of chip company UltraSoC to Siemens and four IPOs: Arqit, AST SpaceMobile, Nightingale and Spire Global.

However, today’s public market is a different world than 2021, especially for technology listings. This affects both the Seraphim Space portfolio companies that have gone public and the investment group itself.

The company’s growth fund, Seraphim Space Investment Trust (SSIT), listed on the London Stock Exchange in July 2021 with gross proceeds of £250 million (around $300 million at the time). After an all-time low in July 2023, its market capitalization is now £130 million, or $162 million, despite SSTI’s largest holding, ICEYE, becoming EBITDA profitable last year.

These market conditions forced the cash-strapped SSTI to focus on follow-on investments rather than new deals, and suggested it would be even more difficult to obtain funding through the LSE for bets. early and unprofitable.

“With venture capital funds, we are capable of making mistakes and having failures and high levels of risk over a longer period of time than the public market is comfortable with,” he said. Boggett told TechCrunch. And while it hasn’t helped that SSIT is trading at a discount, its existence has been helpful in other ways.

Through an approach known as a warehouse agreement, SSIT financed the nine investments SSV II had already made before its first close. This helped show potential backers that its investment thesis goes beyond what space is usually confused with. launch rockets and satellites.

Big space

The market growth anticipated by the World Economic Forum reflects the fact that space technology has applications in other sectors.

“All the big trends going on are really being empowered by space,” Boggett said, comparing it to AI in the sense that “it’s really an enhancing capability, a facilitating capability for everyone else.” sectors”.

The application of AI to spatial data is one of the main themes in which SSV II will invest. In fact, it has already done so by backing insurance startup Delos and carbon credit verification platform Renoster. Both companies use large amounts of data and modeling to solve problems related to climate change.

Seraphim Space’s enthusiasm for companies like Delos is twofold: the technology could have real impact beyond control and they have the potential for high valuations (and returns).

“They are tackling some of the biggest problems we face.”

The fund’s third area of ​​focus will be on-orbit computing. This seems a little more abstract, but it can also impact sectors such as agriculture and infrastructure. For example, this category includes Aethero, a company that develops advanced computers that could eventually support autonomous decision-making in orbit.

SSV II also targets space communications, with one company in its portfolio so far: Hubble Network, which wants to connect a billion devices via a space Bluetooth network. Its CEO, Alex Haro, knows a thing or two about locators: he previously co-founded Life360, which acquired Tile in 2021.

The fourth theme of SSV II, microgravity for science, reminded us of a company outside its portfolio: Varda Space Industries, which is making orbital drug manufacturing a reality, and has raised a $90 Series B round. million dollars a few weeks after the return of its first capsule from orbit. . Besides biopharmaceuticals, other applications include research around new materials, Boggett said.

Defense isn’t highlighted as an investment theme, despite its recent tailwinds among funds, but Boggett acknowledged its ubiquity in space technology.

“The vast majority of space companies are dual-use companies,” he said. But, he quickly added, “the biggest market opportunity is in the commercial market, as they move into broader underlying sectors.”

techcrunch

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