Seraphim Spacethe UK-based space technology investment group officially launches its second VC fund after first close with limited partners including Eutelsat, TechCrunch has learned exclusively. The early-stage fund will build a global portfolio of 30 startups that will be backed at the seed and Series A stages.
CEO and director Mark Boggett declined to disclose the percentage achieved and the target size of the fund, but said it should be larger than Seraphim Space’s 2017 £70m VC fund (about $95 million at the time).
Like its predecessor, Seraphim’s second VC fund, SSV II, is backed by major players in the aerospace sector who want to keep pace with innovation.
This time, Seraphim will also be operating in a more crowded and competitive market.
Investors have become increasingly aware of space startups and the broader market, which could be worth $1.8 trillion by 2035, from $630 billion in 2023, according to a recent report by the World Economic Forum and McKinsey. The number of funds willing to invest in space technology 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 set itself apart with its track record. His first fund returned three times the initial investment, which helped dispel the cliché that space investing is “super high-risk and super long-term,” Boggett said.
Returns from its latest fund were fueled in part by five exits – the chip company’s trade sale UltraSoC at Siemens and four IPOs: Arqit, AST SpaceMobile, Nightingale and Spire Global.
However, today’s public market is a different world compared to 2021, especially for tech listings. This affects both Seraphim Space’s publicly traded portfolio companies 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 (about $300 million at the time). After a record low in July 2023, its market lid is now 130 million pounds, or $162 million, despite the fact that SSIT’s largest company, ICEYE, became EBITDA profitable last year.
These market conditions forced the cash bound SSIT yes focus on subsequent investments instead of new deals and suggested funding through the LSE for early-stage, unprofitable bets would be even more difficult.
“With VC funds, we’re able to make mistakes and have failures and high levels of risk for a longer period of time than the public market is comfortable with,” Boggett told TechCrunch. And while it didn’t help that SSIT was trading down, its existence was helpful in other ways.
Through an approach known as a warehouse arrangement, SSIT financed the nine investments SSV II had already made before its first closure. That helped show prospective limited partners that its investment thesis goes beyond what is commonly confused with space — launching rockets and satellites.
Wide space
The market growth expected by the World Economic Forum reflects that space technology has applications in other industries as well.
“All the big trends that are going on are really being amplified by space,” Boggett said, likening it to artificial intelligence in the sense that “it’s really an augmenting ability, an enabling ability for every other field.”
Applying artificial intelligence to space data is one of the main topics SSV II will invest in. In fact, it has already done so by backing insurtech startups Delos and carbon credit verification platform Renoster. Both companies use large amounts of data and models to address issues related to climate change.
Seraphim Space’s excitement for companies like Delos is twofold: The technology could have a real impact beyond tracking, and they have the potential for high valuations (and returns).
“They’re dealing with some of the biggest problems we face.”
The fund’s third area of focus will be on-orbit computing. It sounds a little more abstract, but it also has the potential to impact areas like agriculture and infrastructure. For example, this category includes Aethero, a company developing cutting-edge computers that would eventually support autonomous decision-making in orbit.
SSV II is also targeting space-capable communications, with one holding company so far: Hubble Network, which wants to connect a billion devices through a Bluetooth space network. Its CEO, Alex Haro, knows a thing or two about trackers: He previously co-founded Life360, which acquired Tile in 2021.
SSV II’s fourth theme, microgravity for science, reminded us of a company outside its portfolio: Varda Space Industries, which is making medicine production a reality in orbit and raised a $90 million Series B round just weeks after return of the first capsule from its orbit. In addition to biopharma, other applications include research around new materials, Boggett said.
Defense is not highlighted as an investment theme, despite recent headwinds 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 the commercial market as they move into the broader underlying sectors.”
This story has been updated to correct that Airbus was not involved in the first shutdown. Eutelsat did.
