Field of View (FOV) - August 2023

Approach Venture’s Field of View (or “FOV”) is a monthly newsletter providing space industry participants with key insights, trends, updates and analysis to stay informed. Field of View is produced alongside space industry experts, founders, startup operators as well as commercial and government decision makers.

Approach Venture was formed to enable founding teams building the future of frontier technology to achieve their full potential. Today, Approach supports space companies ranging from stealth to publicly-traded as well as investors looking to participate in their growth potential. Connect with Approach to learn more.

Emerging Trends

As access to space increases and launch costs decrease, space companies are entering the market with missions and product roadmaps catered towards their visions of the ideal buildout of in-space infrastructure. Below contains this month’s emerging trends to keep an eye on as the space economy evolves.

Going Green.
Championed by a combination of AFRL and NASA, ASCENT (Advanced Spacecraft Energetic Non-Toxic) propellant is a topic consistently raised during discussions with early-stage, in-space mobility providers. Regardless of the Company’s propulsion technology (chemical thruster / system or electric system), AFRL and NASA’s sole in-space propulsion interest from a funding perspective is advancing state-of-the-art and increasing flight heritage of ASCENT. With hydrazine as its primary performance reference, the advanced monopropellant has been tested to deliver >10% higher specific impulse and >45% higher density than the legacy propellant. Also of interest to spacecraft operators and missile defense providers, ASCENT can operate as low as -80° Celsius compared to hydrazine which freezes at 2° Celsius; allowing operators to save power for when they really need it. More details on the monopropellant here.

• ASCENT Customers: although adoption is moving slower with lunar lander and orbital transfer vehicle providers who require higher thrust, many satellite operators are either down-selecting or now including ASCENT-based propulsion in their respective trade space

• ASCENT Providers: many legacy and new space propulsion providers are either in the process of testing their thrusters or systems on ASCENT or have successfully achieved flight heritage utilizing the green propellant

• Ground Safety Advantage: ASCENT is safe to ship with commercial freight resulting in much simpler GSE (ground support equipment), fill / drain operations and less personnel required for handling. Conversely, hydrazine is a highly toxic, flammable, colorless propellant and individuals are required to wear SCAPE suits when handling

Hand-Eye Coordination.
As the space industry recognizes a wave of in-space servicing providers announcing upcoming technology demonstration missions, many are including Rendezvous Proximity Operations and Docking / Capture (commonly referred to as “RPOD” or “RPOC”) as part of their initial missions. NASA began conducting RPOD activities in the mid-1960s with the Gemini Program so the concept is nothing new. Rendezvous is a term used for bringing two objects together in space while proximity operations refer to on-orbit activities to maintain a safe, close distance to affect the spacecraft’s relative states. Docking or capture are exactly how they sound: two objects physically touching in space. Further, there are two types of RPO: cooperative and non-cooperative. Cooperative RPO refers to missions where information between the chaser vehicle and the target vehicle are two-way while non-cooperative refers to one-way operations. All ISAM (in-space servicing, assembly and manufacturing) activities require rendezvous operations and we’re recognizing an increasing number of orbital transfer vehicle providers tacking RPOD capabilities onto their respective roadmaps to expand their list of services in space; primarily consisting of hosting and deploying payloads only today. Examples of on-orbit operations that would utilize RPOD capabilities include but are not limited to:

• Space debris cleanup / de-orbiting

• Refueling spacecraft for mission extension

• Performing repairs on functional or non-functional spacecraft

• Spacecraft inspection and imaging

• Space situational awareness

• Orbit repositioning

• Transfer and sorting of materials following in-space manufacturing

• On-orbit assembly

• Onboard perimeter monitoring, decision-making and navigation

• Payload delivery and storage

• Planetary science and exploration

There is a direct relationship between the increasing number of assets in space and the need for more companies to bring RPOD capabilities online. Expect this trend to continue to materialize and result in adjacent emerging markets over the next 2-3 years. This includes in-space observation systems, introduction of novel capture mechanisms and docking systems (not just robotic arms), sensor solutions (EO/IR, RF and Lidar) and more.

Raise Roundup

Monthly overviews of space investment activity help founders, investors, industry decision makers and space enthusiasts stay informed. Below contains data and insights surrounding 2023 YTD (year-to-date) Space Technology Investments with commentary around the current month.

Raise data is as of August 30, 2023 and is inclusive of global Private Equity and Venture Capital activity in space technology.

2023 Total Invested Capital in Space Technology: $3.23 Billion

In August 2023, total invested capital in space technology was ~$541mm from 21 deals. Median pre-$ valuation was $10.3mm (post-$: $12mm) and median deal size was $2.34mm. This month’s invested capital spanned across 11 countries with business models including commercial space stations, launch services, lunar robotics, satellite ground operations, communication systems, spaceplanes, antenna technology, remote sensing, weather and climate data, in-space transportation, advanced manufacturing and more.

August Leader Board:

1. Axiom Space, a US private commercial space station provider, raised $350mm as part of the Company’s Series C led by Aljizira Capital (Saudi Arabian) and Boryung Co. (South Korean)

2. ADASpace, a Chinese satellite operator and remote sensing data company, raised ~$70mm as part of the Company’s Series C

3. Rocket Factory Augsburg (RFA), a German launch services provider, raised ~$33mm led by KKR ahead of the initial RFA ONE rocket

Regulatory Rundown

Our rapid-growth space economy is gaining more visibility across the globe. Regulatory Rundown covers select space policies, evolving legislation updates, licensing requirements and top stories involving regulatory bodies.

The DOJ Targets SpaceX for Hiring Practices.

The US Department of Justice alleged SpaceX discriminated against refugees and asylum seekers in the Company’s hiring practices. Although SpaceX was not created with the intention to operate as a defense technology provider, their rapid growth, innovation and well, dominance has afforded the United States government the position to lean very heavily on their services to protect our country. To serve as an example of what type of traction SpaceX has gained from a combination of country-agnostic, commercial and defense customers, they generated $1.5 billion in revenue in Q1 2023 alone… With power comes responsibility and one of the responsibilities SpaceX now has includes assistance in protection of our nation’s security and related interests.

DOJ’s mission is to enforce the law and defend the interests of the United States according to the law. DOJ’s accusation came as a surprise and frustration to many in the space industry knowing of SpaceX’s work with the US government and how ITAR (International Traffic in Arms Regulations) compliance forms guard rails around space companies internal hiring practices. This case highlights a perceived MAJOR disconnect between global trade compliance and laws like non-discrimination. We’re just as interested as you are to see how this plays out and potential downstream effects like changes to ITAR compliance and how the government plans to clear up the now widespread confusion across the Aerospace & Defense industry.

Force Multiplier

A commonly referenced term within the DoD, a force multiplier is a tool, strategy or person that, when added to or employed by a team, significantly increases mission success and team potential. Each month, you’ll find select force multipliers enabling space companies to level up as they look to scale.

Footprint Expansion.

Austria-based green propulsion provider, GATE Space, announced expansion into the US with an office now in San Francisco, CA. France-based electric propulsion provider, Exotrail, also announced US expansion with the creation of two separate subsidiaries (Exotrail US Inc. and Exotrail US Federal Inc.) to meet US customer demand. Exotrail US Inc. will sell propulsion systems (product name: spaceware) and software services to US commercial customers to ease export challenges while their Federal entity hones in on US gov’t opportunities. Since the announcement earlier in August, Muon Space down-selected Exotrail prop systems for its Climate Constellation.

Strategic Acquisition.

UK-based Aerospace & Defense firm, BAE Systems, announced a proposed $5.55 billion cash acquisition of US-based Ball Aerospace. Expected to close in H1 2024, the strategic acquisition complements BAE Systems’ suite of products and services addressing US gov’t demand for space systems. Electronic systems, air and maritime were the three revenue drivers for BAE in CY 2022. If the megamerger receives regulatory signoff, it will be interesting to see how Ball’s existing space-related programs (which account for ~70% of 2023E revenue) integrate with BAE’s broader space strategy.

Investment Aperture.

Lockheed Martin Ventures (LM Ventures) announced doubling its venture capital fund to $400 million with majority focus on space. On-orbit logistics and servicing technologies are of particular interest. In 2023, LM Ventures invested in 11 new technology companies including those focused on sensor technology, quantum computing, advanced manufacturing and in-space services. “When we invest it’s a win for national security and a win for the startup. Early-stage technology companies get the freedom to push the boundaries of technology while gaining early access to a potential long-term customer.” - LM Ventures’ website.

Tracked Opportunities

Federal agencies solicit commercial companies for a range of technologies supporting near term or down range space missions. Below contains an illustrative list of opportunities Approach Venture is tracking. To identify more targeted opportunities tied to your respective roadmap, Connect with Approach to learn more.

• NASA’s 2023 SBIR Ignite addresses R&D for ISAM (in-space servicing, assembly and manufacturing), resource extraction, debris remediation and climate change mitigation technology areas. This marks the second ever release of NASA’s Ignite program, which focuses on catalyzing development of high impact commercial technologies

• DARPA’s LunA-10 was unveiled to study system-level lunar technologies and establish an integrated framework for future lunar infrastructure development. LunA-10 further expands DARPA and DoD’s direct funding of activities in xGEO and cislunar space

• AFWERX released their STRATFI/TACFI 2024 notice of opportunity to fund Phase II defense technologies across the TRL “Valley of Death.” This program represents one of the largest discretionary funding opportunities to advance defense and space technologies

• SpaceWERX, in partnership with Space Safari, announced the Tactically Responsive Space (TacRS) challenge to mature capabilities with emphasis on rapidly responding to on-orbit needs

• DIU announced a separate solicitation for Tactically Responsive Space (TacRS) systems for rapidly establishing the end-to-end capabilities to conduct complex RPOD operations

Founder Tip

Nailing down Uses of Funds before shopping to investors.

Stage-agnostic and before pitching your raise total to potential investors, it is imperative to determine and clearly outline where your Company’s fundraise dollars will be allocated once received. This also helps inform what your raise total should be based on cash needs in support of your respective product roadmap and near-term demo missions. Investors will have a difficult time getting to ‘yes’ and providing capital to a Company if the people they are investing in don’t have a detailed explanation of exactly where their money is going.

Building fundraise Uses of Funds is an excellent exercise for founders to conduct together. This tends to spur a deeper dive into actual vs. forecasted costs (contacting service providers and suppliers for quotes is a good call) and helps ensure management team alignment on spend priority and associated timing. The latter will help inform your Company’s cash runway and tentative timing around your next funding round which 10/10 comes up as part of DD (due diligence). For more information including what should go into your Uses of Funds build, Connect with Approach.

Did You Know?

The Space Development Agency (SDA) will review SBIR and STTR proposal submissions by companies which resulted in “Selectable – Not Funded” status to potentially fund them if the SDA has interest in maturing the technology.