Angel investor: We want to invest in Space 2.0 companies

Funding will flow toward Space 2.0 companies  if they have a decent product with customers and a plan, investor and Keiretsu Forum director Steve Murchie said  at the DaVinci Institute’s “Night With a Futurist” presentation about Space 2.0 Monday evening.

“Most investors, institutional investors, venture capital investors or angels are looking for business opportunities that have a demonstrable probability of success,” Murchie said. That means proven technology, with an identified marketplace and a clear way to monetize it.

Panelists agreed that the conventional wisdom – space is expensive, space is inaccessible, space is a place for very big companies – has slowed the flow of risk capital to aerospace and space tech startups. But that logjam is beginning to break up, in part because the walls between engineering and business are coming down.

Panelist Paul Jerde of the University of Colorado Boulder’s Leeds School of Business recalled a meeting between CU grad students and Bill Reinert of Toyota’s Advanced Technology Group. Reinert, who was one of the early developers of the Prius hybrid,  told the MBA students they would be no use to Toyota unless they understood technology and told the engineers they’d be no use unless they understood business “and none of you are of any use to us unless you understand policy.”

That’s a quantum shift for aerospace engineers whose long-standing career path involves working with government agencies on cost-plus projects. “Engineers used to work in silos,” 8th Continent Director Burke Fort said. The tech and business landscapes change so fast these days that there’s no time to learn a different discipline. “A team approach is necessary when you’re dealing with this kind of complexity.”

Companies focused on Space 1.0 and New Space present a poor business model for risk capital because the dollar amounts are so huge and the customer base in many cases is one: the government. “The moonshot technologies get  fewer investments,”  Murchie said. “It’s the derivative technologies that really create an investment opportunity for most VCs.” Proponents such as Sir Richard Branson, Elon Musk and Paul Allen have poured money into their projects because 1) they have it and 2) they’re committed to the dream, not because they expect ROI.

Other investors haven’t picked up on opportunities in space technologies until recently, panelist John Metzger noted. Two years ago at the Venture Capital in the Rockies conference, media and investors rolled their eyes at the idea of aerospace and alternative energy projects. “This spring, we had a whole track dedicated to renewable energy companies,” Metzger said.