Bold visions and solid fundamentals are driving investor interest in space

Investors are excited about the opportunities in the space market that are being unlocked by exit events and continued interest and private investment in the biggest and most successful space companies, including SpaceX. During a TC Sessions: Space 2021 panel discussion on the growth-stage investment outlook for startups, Bessemer’s Tess Hatch, Sequoia’s Shaun Maguire and Hemisphere Ventures’ Lisa Rich shared their thoughts on the active year that just passed and on what’s coming next.

We’ve shared highlights from the discussion below, followed by a video of the full discussion, “Backing the Brightest.”

First, in terms of the year that just passed, SPACs obviously played a big role in space startups and generating liquidity for investors.

Hatch:

It’s bringing liquidity back to the investors that invested in those space companies years ago, I think looking back, Skybox, which was one of the first venture backed companies that had an exit was sold to Google for about half a billion dollars in 2014, after it was created in 2010. And not many venture capitalists were investing in space at the time, but they heard half-a-billion four years later— those are good ROI and a short time horizon for my LPs. Then basically every VC invested in one or two space companies, but from 2014 until this year, there weren’t many liquidity events in the industry.

Maguire:

You know, I think direct IPOs are still the gold standard, and a lot of the most marquee companies will try to do that. But SPACs are a very powerful tool in the toolkit, and it’s great to have another path toward liquidity. And in general, I think SPACs are better suited for deep tech companies than for like, enterprise SaaS companies, just where there’s oftentimes it’s hard to tell long-term stories with a traditional IPO process, whereas it’s much easier with SPACs.