Interview: Seraphim Capital’s $250m global fund & the NewSpace ecosystem

Seraphim Capital, the world’s first Venture Capital fund focused on space, is about to launch a new US$250 million Global Fund. This will add to the UK-based company’s existing US$90 million Space Fund, which it has used to invest in six companies including Spire and ICEYE.

Seraphim Capital is backed by large established players including Airbus, SES, Telespazio, Surrey Satellites and Teledyne, and its institutional partners include the UK Space Agency and ESA. Its partners include the founder of Google Earth, co-founder of GeoEye, the former CEO of OneWeb, founder of Qualcomm Ventures EMEA, and the Managing Director of Cisco Investments/M&A EMEA.

SpaceTech Asia speaks to CEO & Managing Partner Mark Boggett and Partner Matt O’Connell, who was formerly CEO of OneWeb and GeoEye. Topics discussed include the Seraphim’s history and activities, the new Global Fund, the Asian space industry, and what NewSpace companies need in order to get funded and grow.

How did Seraphim Space Fund start?

Mark: We were traditionally investing in generalist technology. But for our latest fund, we wanted to do something thematic. And through a very long process, we decided the space technology sector was becoming disruptive. This was back in 2014. So we decided to focus the entire fund on that. We were surprised to find out that no other venture funds globally were focused on this area.

How did Seraphim grow?

Mark Boggett, CEO & Managing Partner, Seraphim Capital

Mark: The UK government became very focused on the space sector and wanted to invest in the industry to drive growth in the UK. And they decided that the way to do that was to invest in innovation, through a venture fund.

Also, we engaged with corporates from the space industry in Europe, and showed them that small, privately-backed early stage space-related companies were being created. So we got investment from Airbus, SES, Telespazio, Teledyne – a whole range of really big corporates in Europe. And the European Space Agency (ESA) became a partner.

In the UK, we also created UK Space Tech Angels, an angel group to whom we can show seed-stage deals that we are interested in, since we are a Series A fund.

One of the other initiatives we’ve recently launched is an accelerator. We introduce companies to our corporate backers so they can do proofs-of-concepts, and demonstrate their technology. So this is creating an ecosystem whereby you’ve got a fund, an angel group, an accelerator, a group of corporates, ESA, and the UK space agency.

What kinds of companies does Seraphim focus on?

Mark: We raised a $90 million fund which we’re operating out of the UK. So far we’ve invested in three constellation companies, and three drone-related businesses. Because we also see drones as a key part of the ecosystem — for us, it’s all about data from above. And from our perspective, it doesn’t matter what the platform is; we believe they’re going to become inter-operable in the future anyway.

It’s all about payloads, gathering data, and serving end-markets with low cost, high resolution, real-time or close to real-time data. This opens up opportunities in a broad range of new verticals that have never before used this kind of data, but we believe there are billion-dollar market opportunities.

What we’re now looking to do with the Global Fund is to replicate [the same model] in different territories, targeting Luxembourg, Asia, and the Middle East.

What do you think of the Asian space startup landscape?

Mark: We believe there are many Asia-related entrepreneurs with great ideas for this market, but currently, there really isn’t any infrastructure to help support them either access customers or capital. Once these companies get to Series A or Series B, then the international investment community becomes interested. And local investors become interested. It’s the stage from going from concept to the Series A, through C, where they need that help and support, and that’s what we’re looking to establish – either here in Singapore or in Japan, or both.

Matt: We think Asia’s a great market to be in because you have so many engineers, and there is such strong interest in growing the economies in some areas. Singapore’s growing, Japan’s not growing as fast, but they are both very receptive to technology companies and we think this will be a great place to help this kind of ecosystem grow, and also the economy.

What advice would you give NewSpace companies?

Matt: I think what’s really important is to focus on the customer more than on the

Matt O’Connell, Partner, Seraphim Capital

technology. You have to have great technology, but you have to ask, “What does the customer really want? How can I solve a real problem for people?” And you’re going to get bigger as you solve a problem that more people have, especially if it’s a daily problem.

Think about Sales & Marketing. And don’t just look for money, look for smart money. Look for people who have faced problems and have solved those problems. So, focus on the customer, have good technology. And when you partner with people, make sure they don’t just have money, they have brains.

Mark: My other recommendation would be to find a technology hub to get involved with. By getting involved with a tech hub, you’ll find mentors, you’ll get access to customers, you’ll get access to capital and you’ll make yourself visible to a much broader audience. In our industry, there aren’t that many space technology hubs that are available, but find the technology hub that’s closest and get involved with it.

The other thing that I recommend is that you look to build up a Board of some good quality Non-Executive Directors. That way, you’re leveraging his experience and his credibility in the market. At the same time, investors and customers will recognize that there must be something of interest about your business. And they act as mentors, and give access to customers, access to capital and so on. There are great tools you can use to do this, like LinkedIn.

Matt: You want to find those kinds of people, and then you want to listen hard. I tell people you have two ears and one mouth, use them in that proportion. Young entrepreneurs believe in their ideas, and they have to believe in their ideas, but they should learn to listen from people with experience. Go seek them out.

What do you look for in NewSpace companies when you invest?

Mark: It’s very easy. We’re venture capitalists. We’re interested in one thing – making money. Whenever we meet somebody, they’ve got to convince us that they’re going to make a lot of money relatively quickly, and in a sustainable manner, and that they’ve got a differentiated product offering.

Matt: And some young companies, frankly, are not really interested in making money. They want to do cool technology, and do something really exciting.

You can see pretty early, does someone want to make money or not, and that’s a very important mental setting. That’s one thing we look for.

Mark: We’re technology investors, but technology is third on our list of things we look for – [We look for] a large addressable market, good people, and the technology. But actually, technology can be bought and sold. If you’ve got the market and the people, that’s the main thing that’s really going to make the success.

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