Exit events, as well as continuous interest and private investment in the largest and most successful space businesses, such as SpaceX, have investors optimistic about the potential in the space sector. Bessemer’s Tess Hatch, Sequoia’s Shaun Maguire, and Hemisphere Ventures’ Lisa Rich spoke about the active year that just passed and what is coming next at a TC Sessions: Space 2021 panel discussion on the growth-stage investment outlook for businesses.
Highlights from the debate are included here, as well as a video of the whole topic, “Backing the Brightest.” To begin with, SPACs clearly played a significant role in space startups and producing liquidity for investors in the previous year.
It is providing liquidity to the investors who put money into those space firms years ago. In fact, Skybox, one of the first venture-backed companies to have an exit, was sold to Google for around half a billion dollars in 2014, after being founded in 2010. In addition, while few venture capitalists were investing in space at the time, they heard half a billion dollars four years later— that is a fair return on investment and a short time horizon for my LPs. Then, almost every VC invested in one or two space firms, but there were not many liquidity events in the field from 2014 until this year.
Direct IPOs, in my opinion, are still the gold standard, and many of the most well-known firms will attempt to do so. SPACs, on the other hand, are a useful tool in the toolbox, and it is nice to have another route to liquidity. In general, I believe SPACs are more suited for deep tech firms than, say, corporate SaaS companies, because typical IPOs make it difficult to communicate long-term stories, but SPACs make it much simpler.
To begin with, SPACs clearly played a significant role in space startups and producing liquidity for investors in the previous year. It is providing liquidity to the investors who put money into those space firms years ago. In fact, Skybox, one of the first venture-backed companies to have an exit, was sold to Google for around half a billion dollars in 2014, after being founded in 2010.
Moreover, while few venture capitalists were investing in space at the time, they heard half a billion dollars four years later— that is a fair return on investment and a short time horizon for my LPs. Then, almost every VC invested in one or two space firms, but there were not many liquidity events in the field from 2014 until this year.
