The way the commercial space sector is financed needs to catch up with the huge advances industry has made in its capabilities, venture capitalists at a SATShow business panel said March 24.<\/p>\n
From an investment point of view, the space sector is undergoing the first throes of maturation, with the arrival of major players like sovereign wealth funds, infrastructure investment firms, and even traditionally conservative pension funds, said Mark Boggett, CEO of Seraphim Space<\/strong>.<\/p>\n \u201cWhat we are seeing is that space is now being viewed as a strategic asset class by a much broader range of investors than the past,\u201d he said, adding the new players will \u201creally change the landscape,\u201d creating a new capital base for the space sector that could finance \u201cmore audacious opportunities.\u201d<\/p>\n The SpaceX IPO expected later this year, which could value the company at more than $1.5 trillion, will be a tipping point, in terms of bringing new players to the space investment marketplace, said Raphael Roettgen, founding partner of E2MC Ventures<\/strong>.<\/p>\n \u201cIn terms of the maturation of the financing ecosystem, it\u2019s going to be a giant catalyst. It\u2019s going to accelerate what\u2019s going on, because any investment banker or analyst who thought they didn\u2019t have to look at the space sector, they have to look at it now or lose their job.\u201d The same would be true for asset managers on the buy side, Roettgen added.<\/p>\n Roettgen applauded the idea of more publicly listed space companies, calling U.S. public equity markets one of the nation\u2019s \u201cbiggest strategic assets.\u201d Developing the space economy is a giant undertaking requiring the whole spectrum of financing. The market\u2019s ability to raise \u201cbillions, tens of billions, hundreds of billions of dollars over time,\u201d makes them an essential tool.<\/p>\n He added that \u201cfrom a societal point of view,\u201d public markets are more accessible. Investors in private companies have to be \u201caccredited and qualified\u201d \u2014 which typically translates to wealthier investors, Roettgen said. Public companies allow people of more modest means to invest \u201cin the wealth generation that\u2019s going to happen.\u201d<\/p>\n But one panelist, recalling the failures of several space sector special purpose acquisition companies (SPACs) and previous examples of market exuberance, said he is worried about the ability of retail investors to accurately value space companies in the current climate.<\/p>\n \u201cI am a little concerned about public markets investors looking at the space sector and not understanding the level of risk,\u201d said Michael Mealling, a general partner with Starbridge Venture Capital<\/strong>. The SPAC debacles showed that companies without a viable business plan could capitalize on high profile successes to fleece investors.<\/p>\n \u201cThe dirty little secret was that most of the SPACs were companies that were rejected by venture capital funds,\u201d Mealling said, \u201cNot every company that goes public is a good company. You have to do your own due diligence.\u201d<\/p>\n Having lived through the first dot com bubble of 2000, he joked, \u201cI like things to be a little bubbly, but I hope we don\u2019t rely on that.\u201d<\/p>\n Companies like SpaceX and Anduril have been successful and dominant enough to make their own reality, Mealling said. They have \u201cthe ability to attract enough of the talent to be able to force it to become true,\u201d while being insulated by vertical integration.<\/p>\n \u201cThey\u2018re able to say, \u2018I don\u2019t care how it has been done. I\u2019m going to go into the future and drag the alien dreadnought back with me and murder the entire rest of the competition in a redefined market,\u2019\u201d Mealling said.<\/p>\n But such talent is rare. \u201cAs an investor, do I invest in a company assuming that the CEO is the next Elon Musk? No. There\u2019s a very limited number of people that can do that. But when you see it happening, don\u2019t bet against it.\u201d<\/p>\n Roettgen, a Wharton graduate, acknowledged that the efficient market hypothesis \u2014 the idea that the price of a company\u2019s equity fully and completely represents its value \u2014 \u201cis in the same category as Santa Claus or the Tooth Fairy.\u201d Yet he said that public markets are still better than private ones. \u201cFor the very simple reason that, in the public market you can bet against the company. You can\u2019t do that in a private market,\u201d he said.<\/p>\n The emergence of new financing tools for the space sector is long overdue, noted the only non-VC on the panel.<\/p>\n Shipping is arguably the one of the oldest industries on the planet, said Praveen Vetrivel, CEO of Space Leasing International<\/strong>, yet it is one of the most sophisticated when it comes to financing and investment products. \u201cThere are all kinds of indices and trades and options that you can use to invest in the shipping industry without ever physically dealing with any actual vessel,\u201d he said.<\/p>\n By contrast, three years ago, when SLI first started applying the leasing model used for airliners and shipping to satellites, it found the sector had rather primitive financing arrangements, Vetrivel said.<\/p>\n \u201cThe space industry, which is one of the most forward-looking and technologically advanced [sectors], yet you looked at the financial engineering, and it was people turning up with double bags of cash,\u201d he joked. \u201cThere was this sort of disconnect.\u201d<\/p>\n","protected":false},"excerpt":{"rendered":" The way the commercial space sector is financed needs to catch up with the huge advances industry has made in its capabilities, venture capitalists at a SATShow business panel said March 24. From an investment point of view, the space sector is undergoing the first throes of maturation, with the arrival of major players like […]<\/p>\n","protected":false},"author":1,"featured_media":47292,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"inline_featured_image":false,"footnotes":"","_links_to":"","_links_to_target":""},"categories":[2],"tags":[],"class_list":["post-47291","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-news"],"acf":[],"_links":{"self":[{"href":"https:\/\/starpath.global\/blog\/wp-json\/wp\/v2\/posts\/47291"}],"collection":[{"href":"https:\/\/starpath.global\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/starpath.global\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/starpath.global\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/starpath.global\/blog\/wp-json\/wp\/v2\/comments?post=47291"}],"version-history":[{"count":0,"href":"https:\/\/starpath.global\/blog\/wp-json\/wp\/v2\/posts\/47291\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/starpath.global\/blog\/wp-json\/wp\/v2\/media\/47292"}],"wp:attachment":[{"href":"https:\/\/starpath.global\/blog\/wp-json\/wp\/v2\/media?parent=47291"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/starpath.global\/blog\/wp-json\/wp\/v2\/categories?post=47291"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/starpath.global\/blog\/wp-json\/wp\/v2\/tags?post=47291"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}