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Information security. Exciting and digital. Hello and welcome to the Future of Business Podcast.
I'm your host Alison McArthur. Today will be venturing to the final frontier for a very special episode on the future of space.
Once the stuff of science fiction,
more and more companies are getting into the space business led by some big players that you've probably heard of Elon Musk's SpaceX X,
Richard Branson's Virgin Galactic, and Jeff Bezos Blue Origin.
To help us understand how the sector is evolving, we spoke with Chad Anderson,
CEO of Space Angels, an investment firm that specialises in funding space related start-ups.
Todd recently joined us on the podcast via Skype. Welcome to the podcast.
Thank you very much for being here with us remotely today.
So you were once a student here at SBC.
Could you just maybe start by telling us what got you interested in space and how you went from business school to working in space investment?
Yeah, sure. So prior to business school,
I was in banking and just doing commercial real estate and I was spending a lot of time after work doing different things.
I was volunteering my time with Children's Theatre in Seattle and started a non-profit with some friends of mine in Morocco,
focussed on entrepreneurship and economic empowerment.
And these things were really motivating for me and really what was getting me excited and making me want to spend my energy doing so.
I decided to go to Oxford because of this goal centre and because I wanted to focus my career on social entrepreneurship.
So I went in 2012 and while I was there I really focussed my energy on that.
I led the Social Impact Club when I first arrived and yeah, I mean, it was the first time in my life where, you know,
since I was a teenager where I wasn't working two jobs or more and I decided to do
the program full time and spend my time thinking about what I wanted to do next.
And I was following the news and what was happening in commercial space.
SpaceX had launched for the first time a customer to orbit a few years earlier.
And in 2012, when I was at Oxford,
the Space X connected with the space station delivered cargo for NASA to the space station, rather, spacecraft down safely.
And they became the fourth entity in the world to do that.
The others were all national superpowers, space superpowers, so the U.S., Russia and China.
And so we were witnessing, you know, private companies do something that was previously unthinkable.
I had grown up on sci fi and it was an interest of mine space, space exploration, business of space.
This was all very interesting to me and I spending a lot of time following the news,
but I never once considered even the possibility that there would be a role for someone like me in, you know, to make a career out of it.
I do notice this. Yeah. A lot of the people that probably end up working industry, they always wanted to,
you know, they were you love space as a child and they wanted to be an astronaut perhaps.
Or they were just fascinated by the area. So it's it's I guess it's nice that you've managed to, to carve out a living for yourself in that area.
Yeah. I mean, it was really the time off that allowed me that to stop and think and say, you know, what I wanted to do with my career next?
And there was this opportunity opening up.
The biggest barrier probably was everyone that I talked to in the sector had some kind of science, technology, engineering type of background.
And I was, you know, business. I'm an economics finance undergrad and, you know, an MBA.
So I began doing informational interviews and asking people, talking to anybody I could that would talk to me and asking them, you know,
is there a place for someone like me with my background in the sector where everyone has a technical background and they said,
yes, you know, it's just starting to grow. And we it's full of technical people.
We don't have business people to help manage its growth.
Yeah, that's is kind of good to know for I imagine a lot of people that are listening to the podcast that,
you know, are either MBAs or thinking about an MBA or have a business background that,
you know, you can't go into an industry that you're passionate about that might not,
you know, obviously kind of align with your your skill set or background.
So you are currently the CEO of Space Angels.
Could you just give us an overview of what it what it does and how important it is for,
you know, Start-Up Space Start-ups are growing companies to get angel investment.
We're a bit of a unique model of something of our own invention.
And so Space Angels was actually around for a few years before I did.
Joined. It wasn't much of a business model and it was an Angel Network.
So a group of volunteer is kind of loosely formed and it was more of an investing club.
We tried to move as far away from the Angel Network model as possible and essentially re founded the company.
What that meant was we we created what we call an angel fund.
And so we invested in an online platform which allows accredited investor members to come on,
get access to a lot of information about these start-ups and then invest through us.
And then we manage it just like a venture capital fund. And so the Space Angels Angel Fund, we've been growing now since 2015,
and we have almost 30 companies in our portfolio and we've invested 12, 13 million through that Angel Fund.
And in 2017, we launched our venture capital fund, which is a venture capital fund in the truest sense.
It's called space capital and invests the two funds invest alongside of each other.
And so we are in the process of closing that fund now, and it looks like it's going to be somewhere between 16 and $20 million in that fund.
And so really what we do is space specifically.
So we're a sector focussed fund and we focus on seed and series opportunities.
So really early stage companies and we try to be the first check in so we invest globally and so we're looking at companies everywhere.
Just this last quarter we invested in a company in Singapore, in the UK, Switzerland, a couple in the U.S. and a couple in Canada.
It's a really interesting time for the sector and space start-ups in particular.
Prior to Space X first launching in 2009, there wasn't a whole lot of entrepreneurial activity to speak of.
There was maybe a couple of dozen privately funded space companies globally, and what they did was effectively bring down the barriers to entry.
So they brought the cost way down and they brought transparency to the market and they published the pricing.
So now entrepreneurs could understand how much money they needed to go raise to build a business based on satellite hardware, satellite data.
And so we've seen the market just grow exponentially.
So we've gone from a couple of dozen privately funded companies to now 435 plus today, and they've raised $20 billion over that period of time.
And so really what we do is, as the most established investor in this sector,
we're really out looking for all the best opportunities as they become available.
So as the next barrier to entry falls and there's new opportunity for entrepreneurs,
we want to be there first looking for those gaps in the market and looking for the
entrepreneurs that are best positioned to take advantage of the ageing landscape.
Hmm. Yeah, I know. Certainly I know this space least, at least for me has like really sort of,
you know, brought this space industry, I guess, into into my, my area of awareness.
And, you know, I guess the house like Elon Musk, you know, making these big claims like he wants to like colonise Mars and really exciting things.
But, you know, some amazing things have been achieved recently like the such as like the Falcon heavy launch.
I mean, that was pretty incredible to watch.
And then I guess in terms of as you mention it, I guess it sort of fosters a lot of space related start-ups.
But in terms of investors and people that are sort of investing in these companies he he deal with.
I mean, are they people who are really excited that they're excited about SpaceX and they care more about the,
you know, the opportunities for the space industry to shape the future of humanity?
Or is is it more a commercially, economically motivated decision or is it.
It is a bit of both. That's a great question. And it's dynamic.
So it's changing over time as the industry evolves.
So to do. Does the investor base, so too does the calibre and quality of entrepreneurs that are involved?
When I took over based angels and you know, was it was experimenting with business models and we were already founding the company back then.
It was really difficult to get investors excited about what was happening.
Most of them at that time were or what you said, you know, they're really enthusiasts, people who are investing for impact.
Right. They were really wanted to see their vision of space become a reality.
They were children of the Apollo era and wanted to see, you know, humanity take those steps forward.
They were really investing for impact.
And as things have evolved, as more entrepreneurs have come into the sector, they're they've attracted more capital.
And as they've attracted more capital, we're attracting more sponsors to the sector.
Right. So it's a virtuous cycle that, you know, it's kind of a big wheel that takes.
A lot of energy to get moving. But now that it's moving, it's moving really, really, really quickly.
So today it's much different and that most of, you know, a lot of the investors that we're seeing now are really more mainstream investors.
We're seeing a lot of finance first investors, meaning people who are investing really for financial returns.
They don't really care what they're investing in because they're starting to see the opportunity, the financial and economic opportunity and space.
Yeah, I can imagine this sort of huge upside potential on this sort of thing,
particularly as it becomes more commercialised in the future, maybe long term, long term investment.
So I know you mentioned that you're very interested in sort of social enterprise and
you've spoken about the space industry as like the ultimate social impact area.
What does responsible business look like in the space sector?
There's really two pieces to this. One is the abstract and that every astronaut that's been to space, 99% of them that you speak to,
they will tell you that that when you see Earth from outside, it's a really has a really profound impact on them and their perspective.
And they gain this new enlightened perspective, a sense of responsibility and connectedness.
And I think that, you know, so far we've had 500 people, maybe a few more go to the space station and experience that.
We're now entering an era where we're going to have, you know, thousands, hundreds of thousands,
millions of people going up and and getting this new enlightened perspective.
And so I think, you know, a lot of the big problems that we have here on Earth, you know,
any of the U.N. sustainable development goals like famine, disasters, you know, you name it, all of these are preventable.
And we we have the resources to stop them. It's the will that we lack.
And so I really like space from that perspective that it has that ability to profoundly impact humanity in the abstract,
but then also in a very practical level space, I don't think gets the credit that it deserves,
particularly with regards to how it enables our modern global economy.
Basically, everything that, you know, today wouldn't function without space, without GPS,
particularly, for example, precision timing allows for our financial markets,
GPS enables our global shipping lanes and enables the aircrafts and the volumes of
aircraft and and international airline flights that we have today all the way down to,
you know, how we get around with Uber and Lyft and location based services like food delivery and what have you.
It's hard to imagine in the world today without GPS in it.
And so that's a really sort of foundational layer for space and how it impacts our everyday lives.
But then also all of these new satellites that are going up that are going to be
observing Earth from space are enabling us to do things like precision agriculture,
combating hunger, monitoring our oceans, monitoring our infrastructure, monitoring our forests and making sure that they're safe.
So there's a lot of impact on the Earth observation side as well, which is growing like mad in space at the moment.
Absolutely. And it sounds absolutely fascinating. It's so interesting to see so many private companies come into this space.
And it seems like a lot of them have an international scope, which is quite interesting because the space industry,
I guess, particularly space travel, has historically been seen as a very sort of national thing.
You know, how how is this sort of, you know, given that a lot of these new enterprises sort of maybe have like an international reach?
How does how does that work? Is there some sort of enter country corporation or are there more public private partnerships being established?
How does the how does that all fit together? It's really dynamic and it's happening on a number of different axes.
So in the US, the government has done, you know, it's for decades now it's really been established that there's a handful of companies,
government and defence contractors and one customer, you know,
the government and Nasser has is split on this, but it's slowly starting to come around.
But around 28, 29, there was a few really forward thinking people who enabled this new type of contract where instead
of basically funding the development of hardware like large launch vehicles and things like that,
they would instead say, we don't really want to own or develop a rocket.
What we what we want to do is get people and cargo to the space station.
So if somebody can do that for us, you know, here's a price that we're willing to pay.
And so this transition from them being a.
Benefactor or development funder to a customer is really what's enabled a lot of the the private sector entrepreneurial
approaches to space in the US and we're seeing a number of countries around the world start to piggyback on this.
And so in the US it first started with commercial cargo, which space X in 2012, that's the contract that they were on.
Boeing and SpaceX X have those contracts. Now they're moving on to commercial crew.
You've probably seen some headlines about this, where they're going to, you know, instead of just launching robotic cargo missions now,
they're going to be launching autonomous human missions, taking NASA's astronauts to the space station.
And they're leveraging this same type of contracting approach to the new things that they're trying to do with the moon.
For example, the actual lunar payload services program is two and a half billion dollars over the
next ten years for small and medium lunar landers to basically take NASA's cargo,
which would be small robots and science instruments to the moon, to the lunar surface.
So that's very exciting. And there we're starting to see that play out now with the human lunar landers as well.
You know, tying in with the Jeff Bezos announcement. Yeah, it'll be really exciting to see what happens over the next few years.
I know that you you recently wrote that 2019 is the year of commercial space travel.
So do you think that space travel will reach the masses at some point in the next, I don't know, five, ten years?
What do you think the timeline is for that? And most importantly, do you think you'll be on one of the flights?
Is that what you want? Well, I certainly want to be. That's yeah.
My little secret. The reason why I'm doing all of this is just so I can get a discounted flight.
Oh, yeah. Oh, no. But I think this is happening a lot more quickly than most people realise, and it's not happening overnight.
There's been a lot of time and energy and capital put into these projects,
into these companies that we're just starting to see come to fruition at the same time.
So since the shuttle was retired in 2011, the U.S. has not had a launch capability to take humans to orbit.
The only vehicle that we've had is the Russian Soyuz, and it has taken all astronauts to the space station over this over this period.
That's all starting to change really this year. So we've seen SpaceX and Boeing both have commercial crew contracts with NASA's.
And they are there's there's some struggles with that program.
And as you'd imagine, SpaceX sent up their first Dragon crew capsule to the space station without crew as a demo one mission earlier this year.
And it was a fantastic success. They've had an explosion that they're working through with NASA now and a test vehicle since then.
And but they were supposed to launch in August, I believe, and that might now get pushed out to early next year and Boeing as well.
But that's coming, you know, in the next 6 to 12 months.
We're going to start to see some developments there.
And I wouldn't be surprised if we see astronauts get to the space station on these commercial vehicles.
So that's very exciting.
Then we'd have three vehicles online later this year or early next year, and there's also two suborbital vehicles being developed.
So obviously, Richard Branson's Virgin Galactic has been working on this for quite some time.
Their Spaceship two had a great success earlier this year where they took two pilots, took their astronaut trainer up.
And so they had three people go up and get their astronaut wings. And they've just now moved from the Mojave Desert in California,
which is where they're doing all their testing now over to New Mexico and Spaceport America, where they're going to begin commercial operations.
And so they're looking to start taking passengers later this year.
And obviously they've had I forget the exact number, but it's somewhere around 700 or more people have paid deposits to go.
So they're going to start start taking those people to Space and Blue Origin.
Jeff Bezos space company has launched their new Shepard vehicle now 11 times.
Two boosters, two rockets have flown five times each without incident and are making great progress.
And he's just confirmed that they're going to begin flying people this year.
So we're going to go from one vehicle that can take people to the edge of space or to space to five vehicles later this year or early next year.
And we're now entering an era where instead of a few hundred people who have the right stuff going to space,
people are, you know, you're going to be out at a party and you're going to be talking to somebody who's just gone.
It's expensive still, so on. Blue Origin and Virgin Galactic go to the edge of space is still $250,000.
So it's no it's you know, it's a significant amount of money, but it's much more affordable.
And a lot of people that's in a lot of people's price range that's so interesting to think that you just,
you know, a few years ago, you know, everybody thought that would be possible even in our lifetimes, perhaps.
But now that's so interesting. And we get to keep an eye on that.
Wonderful. Well, Chad, thank you so much for joining us. And that was a really fascinating episode.
I'm sure everyone listening will probably agree. Yeah.
And thank you for taking the time. Thank you. It's been a pleasure.
And thank you for listening to this week's episode of The Future of Business podcast.
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