Transcription
Hi everyone, and welcome to another episode of Valley of Depth. I'm your host, Moisl Long. My guest this week is Mark Bogget, CEO of Sarapim Space and one of the earliest dedicated investors in the space economy.
Mark and I discuss where the commercial space market stands today, what has changed over the last decade, and why he believes the real value creation is only just beginning. We also get into how Saraphim was built, how he thinks about backing founders and navigating competition, the emergence of European neoprimes, and the sectors he believes are best positioned for the next wave of growth. Let's get started.
So, um, Mark, if you, uh, zoom out today, what inning do you believe are we in the commercial space economy, in sort of the growth and development of the commercial space economy? Like, where are we right now?
So, we are in the early mid-innings. So, >> I guess I'm also using a baseball analogy from someone who's in the UK. >> Yeah. Well, I guess I was using a cricket analogy, um, to come back to you. >> Yeah. Yeah. >> So, uh, so look, we're in, we're what we are in is the first phase of the new space infrastructure. So, you know, I think that the, what we've seen, the, the, the infrastructure is largely built out in satcom, but it's still nascent in Earth observation. But, but crucially, the, the, the, the value creation of this infrastructure is still at the very beginning, and, and it's only just beginning to compound.
And how long have you been investing in this industry?
So, I've been focused on space for 12 years and investing for the last 10.
Okay. And then, and then in that time period, what's the biggest change and shift that you've seen in the industry?
Well, um, you know, I know that's, I know that's a very lot of ways you can go with that question. So, I mean, well, the first thing is that, um, I now have more confidence when I'm investing into an early-stage company that the two, three, four, $500 million that that company needs to succeed is going to be available. 10 years ago, when I was writing, you know, early checks into ISI and, um, and companies like AS Space Mobile, I had no idea that the, um, that the money was going to be there from the other sources that were, uh, you know, essential for that company to succeed were actually going to be available. So, that, that's the biggest thing. And now, I think that pendulum has really swung so that we're, we're now really confidently making investments into companies where, you know, that can raise two or $300 million in the future to deliver against this. You know, that's much less of a consideration now.
Well, um, tell me a little bit about how you kind of got into this industry, because you mentioned 12 years, but investing for 10. Uh, what prompted you to start taking these early bets in, you know, this within the space industry? Like, what did, what did you see, and why did you want to be so focused in your investment style?
Yeah. So, um, you know, I'd spent, um, the previous 10 years as a, as a, as a deep tech investor, um, investing very broadly in frontier technologies, very from life sciences right the way through, uh, to AI, 3D printing, um, new materials. So, I've always been on that side of, um, of investment. And, um, what was sort of increasingly apparent to me was that there's just a massive advantage with becoming a thematic specialist. And, um, when the time came to set up my own firm, and, and the reason that that happened was the firm that I was working for started transitioning more to private equity away from venture, and they really wanted to sort of move away from, you know, home run returns through a technology. They'd rather get, you know, a consistent 3x, and that sort of, you know, really wasn't my area of interest. So, I, uh, myself and two, two of the guys I was working with, Rob and James. So, we've been working together since 2006. You know, decided to actually go and establish Saraphim and, um, and focus it. So, uh, because I had a 12-month period of transition, we actually had a lot of time to, to really think about this carefully. And actually, we were actually starting off with an AI fund because AI was one of the areas that we'd had good success in the past, and, um, you know, we were really, really comfortable with investing into. But we had the time to really go and look, uh, more broadly and, and really be thoughtful about how we were going to do this. And space kept on coming up as an area of interest. And we were watching what was happening with, um, SpaceX at the time. You know, they weren't, they weren't yet sort of, um, you know, returning rockets. The reusability element wasn't there. Um, um, the, um, Skybox, um, was, uh, was bought by Google around that sort of time. That was really interesting to see how a business that was sort of, uh, you know, working on shoebox-size satellites could quickly, uh, command, you know, $500 million enterprise value. Um, and that was really, really attractive. So, it, it was really a, you know, really thoughtful and an analytical approach to the market that that made us convinced that space was actually going to go through a multi-decade, um, transition, a disruption, effectively embracing the technology solutions from other markets where space had fallen behind on, um, on really Moore's Law of other, of other markets. So, we, we, we became convinced of that. And that's when I went then to, um, to, to, to speak to the leaders of other space companies to test my thesis. So, I'm probably going into too much detail here, but actually, there's an interesting story here, Mo. So, let me, uh, if you, let, if you indulge me a second. So, so what basically happened was I was introduced to the CEOs of 11 of the world's largest space companies, um, to go and talk about this new fund for space that I was setting up. And I went and met, >> And, and what, what year was this? >> This would have been in 2014. >> Okay. And, um, you know, so I went to meet the CEO of Airbus and Inmarat and SES and Telespazio and Thales Alenia and a whole range of, uh, of, of other, of other companies. And, and I was introduced at the CEO level and, uh, went and sort of explained why I was setting up this fund, and that it was effectively about identifying new innovation, new business models, and why, uh, they should be interested because their market was going to go through a period of disruption. And six of the, um, 11, um, CEOs that I spoke to agreed with me, had agreed to invest into the fund. So, it was actually the willingness of the industry to support my fund that really gave me the conviction to do the fund. Because part of the issue was when we were looking to set up this fund, nobody else had set up a fund in this area. And that was actually a big problem because we were like, why are we doing this if nobody else is doing it? Why, why are we doing it? So, the very fact that I was getting the support from all of those big space companies, um, and it sort of also addressed the sort of imposter syndrome of not coming from the space industry. Therefore, you know, how can we go and, and sell this fund and, and make those investments by being able to use the business units of those, you know, six major, you know, multinational, multi-billion dollar turnover space companies. That really gave us the confidence that we were going to really be able to, um, you know, make a great job of, um, of being the first space fund. So, that's really where it all came about.
No, that's a, that's a fascinating kind of origin story. What were some of the early pushback from your, from the L, from prospective LPs? Like, maybe LPs that eventually invested in your fund, or maybe they just passed on your fund at the time? Like, what was the, what were common items that you heard when you were raising?
Well, you know, "space is a black hole," really was the main sort of theme. You know, there had been many, uh, investors that we were speaking with that had, um, invested, um, you know, in the original sort of satcom businesses, the Iridiums and so on, that, you know, failed to deliver against the promise. So, um, really, you know, there was, there was little appreciation of why new space was different to old space, and why a new space approach was actually going to win out. Um, so that, that was really the biggest problem that folks, first of all, just didn't believe it was different this time round. You know, this is a capital-intensive, long-term industry, and we were trying to say, well, you know, it's still a long-term industry, but it's not so capital-intensive. You know, the numbers, the math works better now with the new space economics than it does with the old space economics. And that, that was a, you know, a real, a real, a real challenge. One of the, the biggest investors that we were able to convince on that was the British Business Bank, who were a major LP in our first fund. But they were more sort of relying on what I'd done in the past, um, rather than, um, you know, really, really buying into this. But they recognized, uh, because, you know, space has always been an important industry in the UK, and the amount of industry support that I'd managed to garner for this first fund was really convincing. And I think ultimately, that was the thing that, um, allowed the early investors to sort of take that leap of faith. Why are all of these leaders from the traditional space industry putting their money into this fund? You know, we're telling them that there's a disruption coming. They obviously believe that that to be true, and if that is true, there's, there's clearly some money to be made on it. So, one of the things that, um, that this really focused in our mind was that we had to take bets in the industry that were effectively going to allow us to be able to return money sooner rather than later. You know, we're investing 10-year money from LPs that are skeptical about, um, um, about, about how long it's going to take for them to receive that money back. So, from day one, we were like, right, let's focus our attention in investing into companies that can perhaps provide us with the return within, well within that five, within the 10-year period.
So, I'm curious how you did think about that, because, you know, if you're talking about 2014, 2015 time frame, right? At that point, SpaceX had been around for, I think 2002 was when they were, uh, when the company launched. So, like, call it 13, 13 years. I need to double-check that. But, but, but effectively, what I'm trying to say is, by then, the most, arguably the most innovative, um, and, and fastest-growing new space company at the time was SpaceX, and it still wasn't public. And, and I don't think it looked like it was anywhere near going public, obviously, at that time, or that wasn't even even a discussion point. So, I'm curious, like, you know, like, if I'm an LP, just to, just to play devil's advocate, if I'm an LP in 2014, you're pitching me liquidity effectively in under 10 years. How do you, how do you tell that story when, like, the best company in the space was still not public, even after a decade?
Yeah. Well, with, with great difficulty. This is the reason why it took us just shy of two years to raise the initial $90 million, um, for our first fund. So, you know, it's a leap of faith, um, by the LPs that, um, that backed us there. You know, the, for those who are prepared to listen to the story several times over, um, and, and buy, buy into this, because this was all about the promise of what a SpaceX could deliver in terms of lower costs, because, you know, they weren't being realized at that time. It was a direction of travel rather than, um, you know, they weren't, they weren't commercially operational. Um, they weren't successfully, you know, landing the reusable elements of the rockets. Um, so all of that was sort of still, still taken on faith. So, yeah, you know, investors who are investing in LP seed and a series C funds, you know, go in recognizing that 10 years is, is always going to be 12, perhaps 15. Many of the investors that invested into, um, that first fund had invested into my previous funds. So, they were investing into the manager. They're they're backing the jockey rather than the horse. Um, and, um, whilst I think people would have just called us crazy if it wasn't for the massive amount of backing that we had from the industry that were, um, that were, that were, that were really, you know, underlining, um, you know, the, the truth of, um, the potential of, um, of this disruption.
So, on that first, on that very first fund, um, have you started returning capital on that first fund? H, how are, how are the, uh, how are the investors and LPs feeling about that one, since that was?
Yeah, they're, they are very happy. Um, we, uh, returned, we've, we've returned all of the, the fund closed down. We've returned all of the capital, um, and investors made a 3x return net.
Great. Congratulations on that. So, um, so, so talk to me about your strategy then, like, so on that first fund versus what you're doing today. Maybe give me a little scope of, like, how Saraphim, and I know, by the way, I know, I know, um, you've, uh, recently gone through a rebrand and, and, uh, you know, you're, >> I'm sorry, >> we haven't, >> generation space. What is so, >> maybe tell me, yeah, tell me a little bit about sort of the architecture of the entire firm, because I know you have a number of different things going on, the accelerator program, >> the private funds, the public fund. Give me, give me, give me a kind of overview of all that.
Sure. Yeah. So, uh, there's three elements to, um, the overall Saraphim business. We have an accelerator program. We have venture funds. We have growth funds. All of them invested into space. All of them globally focused. Managed out of our UK team, but with satellite offices in San Francisco and Berlin. About 20 people full-time in the organization. We've got sort of a lot more sort of part-time, um, uh, uh, that that are involved as well. So, uh, we, we receive a giant global deal flow. We triage that between the three different parts of the business. So, the stuff that's going into the accelerator program is typically coming out of university spinouts, teams out of different large companies like SpaceX or like some of the primes. Um, so this is sort of pre-seed, um, in fact, pre-establishment in many cases. The folks who are coming on to the program haven't yet set up the company, and, um, you know, many, many, many companies, um, actually set themselves up and spend the first few months of existence in one of our meeting rooms, um, after they've completed the program. So, it's a three-month program. We take 10 companies on to each of those, um, cohorts, and they're very global. We've had, um, 36 different countries represented, um, and, um, we help them with various facets of how they get themselves ready for the fundraise activity, and, um, think about establishing a board, and, um, think about accessing advisors, and, uh, and all of this. And we also introduce them to our corporate partners who are very interested in their, their new innovation, new business models, new technology, new ideas. Um, and then we sort of release those companies, you know, into the market. We introduce them to our VC friends around the world who syndicate and invest. So, the companies that have gone through the 15 cohorts we've done of that today have raised $1.1 billion, um, post going through that program.
And then, just to be clear, is the, is, so, is Generation the accelerator program?
Yes. So, Generation Space is our, is what is, is effectively what we called the accelerator program, um, and what we call our podcast, um, that, that we do as well. Um, we've then got our, um, venture funds, um, and, they will, um, invest into the companies that are coming through the accelerator program, and they will invest, um, out, outside, um, of that. We've recently closed our most recent fund where we've, in fact, we've not done the final announcement yet, but we're over our hundred million dollar target, and we've been, um, investing into that fund. We've already invested into 17 companies in that portfolio. And then we've got our, um, so that, that's a UK fund that invests globally. Um, right now, more than half are US, it's more like sort of 60, 60% US, the rest Europe. Then we've got our public listed fund, which is listed on the London Stock Market. Um, and that is another global fund that invests, um, um, in VC and PE. Um, we've got 26 companies in that portfolio. Last year, they raised $2 billion in equity funding. Um, the top 10 companies out of those 26, um, have, um, uh, last year their revenues grew at just, just below 80% on average. Um, and 86% by value, will be profitable in 2026. So, we've got two that are profitable already, and, um, uh, 86% by value will be, um, profitable this year. So, there, there's been a massive growth spurt throughout that portfolio. That, that fund is the, um, number one, um, uh, performing fund on the London Stock Market this year. Um, and, um, you know, is really, um, is really sort of firing up on all cylinders. So, taking a step back, we've invested into 46 companies since we established Saraphim. Over the last 10 years, we've had nine unicorns. We've had five IPOs. We've had just four failures. So, less than 10% failure, um, and more than 20% unicorn success.
Well, uh, first and foremost, congratulations. That's, those are impressive numbers. Um, I do, I do, um, have to ask, like, what is the strategy of the firm? If you had to take a step back and describe it in, like, two sentences, like, how do you think about the industry, and what type of founders are you backing?
Sure. So, this is one for the LPs, which we normally start off by saying what we're not. So, um, you know, LPs conjure up an idea of what a space fund is, and we kind of don't do any of the things that they expect us to do. So, we don't invest in launch. We don't invest in space travel. We don't invest in anything to do with the moon, or anything to do with Mars. So, those, those are the four areas that we don't invest into. Okay.
So, you've never invested in a company that had that as a core strategy: launch, um, space travel, the moon, or Mars?
Correct. Yes.
Interesting. Okay. We, we'll touch on that later, but, >> so, uh, so then what, so then what do we invest into? So, uh, so again, go, this is the sort of LP answer, and then, um, which is that we're trying to invest into companies that can provide a return within the 10-year window of the money that we've taken. So, what that leads us to doing is investing into companies that are specifically focused on Earth, providing service, space providing services back to Earth, where there is a genuine market, where there is a, um, budget, there is a requirement by a customer to buy that product, and that already exists. So, so that really lends it to, um, investing in sort of digital infrastructure and everything that that sort of provides back to Earth. That's where we've, um, done most of our investment, and we're now just starting to invest into infrastructure-based plays over the last handful of years, effectively that are building infrastructure for Earth, cell towers in space. You know, I've alluded to the fact that we invested in an early, um, um, but things like, um, um, manufacturing capabilities for the space environment. You know, we're investor in Voyager, um, and, um, and then it goes through to, um, anything that's sort of infrastructure providing, but effectively where the customer is an Earth-based traditional market that, that has a budget today. So, that, that's really how we sort of, um, uh, where, where, where, where we're focused. And then to answer your question, how would I say in a few words, really, what we're really looking to invest into, what the sweet spot is, is a vertically integrated satellite constellation. That's what we want to invest into every day of the week.
And how has that strategy changed over the last 10 years?
Amazingly, it hasn't changed at all. So, um, so when you think about the last 10 years and the evolution of of the investment, uh, sort of community around the space industry, clearly it's become much more in vogue. Right, space is like now, space defense, like these are areas that a lot of funds, quite frankly, are completely pivoting to. So, now you have, um, large, very large, um, well-resourced funds in these arenas. How do you think about how your, your, um, sort of competitive moat, or like, how do you think about, like, you know, when you're in a, when you find a company that you really like, that meets your criteria, but you're sitting across the table, theoretically, against a large fund, well-resourced, um, and, you know, has is maybe cost-agnostic and wants to get a deal done with a with a fancy term sheet, like, how do you think about that, like, dynamic? How do you win that deal? Um, and maybe, yeah, tell me a little bit about how the evolution of the competition, like, over the last, you know, 10 years.
So, so, so, there's quite a lot to unpack there. So, you know, we, we are more, um, um, price, um, sensitive than a, a much larger, um, uh, fund might be. So, there are scenarios where we just can't make the numbers work on the valuation, and we have to just walk away. You know, we are a financial-first investor. We're not doing this because we love the space industry. We're doing it to make money. So, if we, if it just, just as an organization, there's just a sort of choking point when, when we get to a certain valuation that we just can't deal with. So, we're, we're, we're just sort of walking away from deals where that, that, that is the challenge. Um, there is only one example of a situation where we've competitively not been able to get into a round. I mean, space is a team sport. Yeah. Um, even the biggest funds are not writing, you know, 100% of the round for whichever company it is, in whichever round. Uh, all of these, um, players want to invest alongside other investors, provided that they can bring something to the table. And, um, you know, I think that we've built a reputation over time to, uh, to demonstrate that we bring something to the table. Um, you know, we join the boards of most of the companies that we invest into, and we are a very hands-on investor. So, um, you know, one of the realities of the world of investing into early-stage businesses is that the founders that you back on day one aren't necessarily the right parties to take that business right the way through to, you know, later-stage growth. And, um, some investors don't have the stomach to, to, to get involved with the transitions. And, and we are more than happy to do that. Um, so, um, that we can point at, and, you know, that's just part of our reputation in the market as being sort of, you know, if we're in the room, um, we are actively engaged. We are, we are not a passive investor. So, uh, so that has really opened up the doors to be, um, you know, to, to, to have the opportunity to invest into most companies that we've wanted to invest into.
Yeah. Well, talk to me about this piece on the founder. Because, you know, most investors want to, you know, position themselves as, you know, founder-friendly. We let the founder do their thing. You know, where do you think that, uh, you know, and we don't have to talk about specific situations, but what, what are elements that you've identified where, you know, you have a founder in the early stages, it makes a ton of sense, and then at some point, it's like cracks appear in the business or the leadership style where you start to say to yourself, okay, like, this is really the the profile that we need at this point of the company's, like, life cycle.
Yeah. You know, it's different in every case, and we are, we are founder-friendly. You know, we do want to back people who scale all the way through to success, and we've got, you know, loads of examples, um, to, to, to demonstrate that. You know, if, if it, if it's, um, if it's not broken, don't try and fix it. What, what, um, what, what is normally required, um, for, uh, for us where, um, it becomes through necessity, you know, it's typically a company that, um, hasn't achieved the things that it set out to do over the time frame that it set out, that match against the money that it's raised. So, um, you know, so they're then back to their existing shareholders to raise more money because things haven't worked out. And look, you know, I spent my career investing in early stage. You know, it rarely works out. But the way that the management team and founders behave in that period will sort of demonstrate to you, you know, what, what, what they're likely to be next. This is one of the great advantages of, um, of building conviction over time in the capabilities of the management team and how they respond to, um, you know, the, the ups and downs of running their business, is really, um, you know, insightful. So, we've got sort of all the history of, uh, you know, all of the, all of the teams that we've backed and how they behave, behave in, in, sort of adverse situations and how they, how they go about doing that. And really, the sort of key thing that really sort of indicates whether these guys are going to be successful or not is whether they're prepared to listen to anybody. Um, and that is one of the things that we're really sort of, um, you know, really sort of really testing for when we're investing into companies. You know, are these individuals that are prepared to sort of listen to members of their board, listen to investors, listen to the advice of non-execs, listen to the advice of their own senior management team or not? And, uh, this, this ability to not be told what to do, but to take on board advice and respond to it is, is a critical success factor. So, what, what we will often find as we are, you know, learning through the process of, um, being invested into a company is, um, you know, teams and founders that just refuse to listen. Um, so that, that will either sort of lead to us not wanting to participate in, in subsequent rounds where things have gone wrong, or us wanting to first of all, sort of supplement the management team. You know, what, what we really require here is, um, you know, a new COO, or, you know, just some more experience being brought into the team. That's phase one of whatever we would try and do. And then if that, if that doesn't work, then it's a sort of a, a grown-up conversation, which normally sort of aligns with the next funding round in circumstances where companies haven't quite hit, um, or nowhere near hit what they were expecting to do, where we're like, right, okay, well, you know, is, is this company better served with, at this point, with a change of, um, leadership, you know, and what is the appropriate thing to do? Um, and it's different in every case. Um, but the thing is, is that, um, you know, we, I've spent so long investing in early stage that, um, you're either an investor that's prepared to deal with that, or one that's not. So, we, we are prepared to deal with it, which means that, um, we will, we will invest into companies, you know, with, uh, with, with potentially some concerns about, um, the team and about how we need to sort of help them, uh, transition over time. So, you know, nine times out of 10, you know, that, that all works out. Um, and, you know, what, one in 10, it doesn't. Um, and, um, you know, we're, we're prepared to do what's necessary, working with other shareholders, working with the, with the company itself. You can't force this on any company. So, it has to be done, um, you know, in a collaborative way. And, um, you know, that, we, we're, we're investing other people's money. We basically, you know, do everything that's necessary to give these companies at least a couple of, um, shots at getting it right. You know, we, we don't really give a sort of third shot.
Is, is there a company that you passed on that you wish you hadn't?
Give me an example. I'm sure. >> Of course, there's plenty out there. Astranis is probably one that, um, you know, we regret, um, and, and we were, we were in process on their A-series, and we timed out. They, I think, I can't quite remember, but I think they brought it forward by a week or two. We just couldn't hit it, and, and off, off they've gone. And, you know, you know, I love the fact that they're just disruptors in the GEO market, um, because, um, you know, they are the disruptors in the GEO market, um, in my, in my view, um, and, um, yeah, sad that we, uh, that we didn't get, um, exposed to that one.
So, uh, I want to talk about a company in your portfolio, um, ISAI, and it's a big position for you. Um, I also understand that it's part, it's a large part of your, um, listed fund's NAV, or NAV. Um, and I also want to be mindful that it is a public, uh, position. So, I, or, you know, obviously, it's, it's part of the public fund, I should say. So, um, tell me if I'm asking any questions that are, uh, that are, that, that you can't answer, but, um, but, uh, re, most recently, what I'll say is the company did in a press release publicly say that they would be effectively doubling their revenue this year from 250 million euros to 500 million euros, and then a billion euros next year. What is going on with that business? I'm very curious because you look at Planet Labs, which is another publicly traded company. They did about, I think their trailing 12-month revenue was like, I looked it up right before this call, like around 280 million, and I think their fiscal year '25 was around 250 million. You know, growing at a very nice clip, and that growth has been accelerating over the last few years, but like, you know, that ISAI growth is something that is really, that kind of really sticks out to to me, and I'm curious, like, how much visibility you have into what the company's doing right now and the strategy.
Well, you know, we sit on the board and have done since 2018. So, >> there we go. >> You know, we've got a reasonable view. One, one of the, um, other stats that, um, is, is in the public domain. So, I can say this that's pertinent to your question is also the fact that last year, on 250 million of revenue, they did a 100 million of EBITDA. So, that is like, wow. 100 million of EBITDA on 250 million, um, of of revenue. So, um, just before I go into, sort of, to talk about that, let me just take a, sort of, step back. You talked about this being, you know, one of our larger holdings. What, one of our, uh, strategies at Saraphim is that when we have built conviction in a management team, we will take the opportunity to double down. So, this is one of our double-down companies. So, we consciously take two units of investment into companies that we believe are going to be able to provide us with a, you know, an exceptional return, where we've built conviction because the management have demonstrated them to be a particular type of management team. So, there are several across our portfolio, is one of them. This is the reason why we've got such a big stake, um, in, in the company itself, but also why it's, um, now, because it's grown so much, why it's such a big stake, um, of our, of our fund. So, uh, so, so to go back to the point that I was first of all saying about the sort of profitability. So, this is really one of the first examples of where we can say to the LPs, um, and those interested in the market, this is new in new space working. You know, new space is about ultra-low-cost infrastructure that creates a unique data set, that is the value of that business going forwards, and, and what this company's being able to demonstrate by that sort of massive level of profitability is that this is a great example of what new space is all about, which is just fantastic. So, that's, that's point number one. Point number two about ISAI, um, which is really, sort of, a European poster child of, um, of what's going on, but it's also a really interesting reflection of what's happening around defense, um, in Europe. So, uh, during the course of 2025, from sort of April onwards, um, ISAI have, um, are very open about the contracts that they win and really publicize them. We have other portfolio companies that keep these contract wins very close to the chest, but, um, ISAI put them out there with, with plenty of information each time they do that. So, what's happened every month since about April of 2025 is that they have announced a, um, a new customer that is effectively a European, um, defense organization, you know, a, so, like, um, uh, let me think of the list. You've got some, I probably get this wrong, but it's Poland and Denmark, um, um, Greece, um, um, Netherlands, Portugal, Finland, and Germany. So, uh, once each month, those announcements have been coming through that they've been winning sizable contracts with each of these, um, government defense organizations. And the one that was announced in December with the, the German, um, uh, uh, defense, government defense organization was a 1.7 billion euro contract. Um, so, um, and, and some of those other contracts have also been identified as contracts valued in hundreds of millions of dollars. Um, so, um, what that really sort of demonstrates is what's going on in Europe, um, at, at the sovereign, um, uh, government level, which is that traditional procurement processes have been completely swept away, and that these governments are willing to, um, identify a technology leader and quickly align themselves with it, um, um, um, and, uh, and make considerable, um, uh, budget available to that company, and they're buying a sovereign capability that they are then effectively going to operate and rely on themselves. So, that's putting a lot of, um, faith in a, um, startup, unprofitable startup, um, that, um, is very different to the way that they traditionally engaged with the, um, with the prime community. So, I'll just pause there. I can see you're desperate to say something there.
Yeah. No, I, I want to, um, there's a lot of ways to go through this, but I, I do want to ask the, sort of, seemingly obvious question, which is like, so you have a company that you like, you've mentioned is now getting a lot of attention from all the European governments and in almost a coordinated fashion getting in these contracts on a, on a, on a very regular basis. Is this an exception, or is it a new way of doing business with the government in Europe? Because Europe, obviously, historically has been a place where the investment community, especially on the American, like, American investment community, has largely ignored, um, and European companies have had, have struggled to raise capital within Europe. Um, at least the large amounts of capital we're seeing in the US. Correct.
So, maybe let's take a moment. I'd love to get your thoughts on, like, what do you see happening in Europe, and is ISAI a reflection of a kind of a trend, or is it just as specific to that company?
No, I don't believe it's specific to the company. I believe it is a trend. Um, and, and what, and what you're, what this is a nice window into is the sort of changing mindset of governments and their procurement. Um, and, and what is really evident is that they want to operate quickly. Speed is of essence. And really to understand the sort of driver behind that, you really have to take a step back and try and understand why this is happening and, and what, what the drivers are. So, um, and I'm sure all your listeners are aware of this, but, you know, really, ultimately, Europe has relied on the US to finance, you know, two-thirds of NATO's budget for the last 60 years. And, um, the space element of that, uh, Europe has really largely just completely relied on the US. So, um, in, um, in March and April last year, when it became, you know, obvious, when it was made clear, particularly by the US switching off, um, support for the Ukraine, was that Europe had to stand on its own two feet. The reality was, and, um, and, and, and what folks didn't really recognize was that they, they just didn't have any of this capability at all. You know, what launch exists, what ISR existed, uh, what satcoms, um, existed. You know, these are really important elements that these nations need to be able to protect themselves and protect each other, and they simply just don't exist. So, uh, they have needed to go from sort of zero to, sort of, to some adequate level of capability as quickly as they possibly can do. So, what, what we're seeing with ISAI is a, is the first of a series of, um, of, of the use of budget in order to access capability that they perceive that they need urgently. So, um, so in doing this, every, every country has done it. This is, this is one of the challenges with operating in Europe. You've got 27 countries that, whilst they're bound together under the EU, each of them from a sovereign capability, how they run their own. There isn't a, um, single, um, uh, defense unit across Europe. You know, it's individual countries that contribute to NATO, but they do that in a sovereign way. So, everything is different in every country. All of their processes, all of their procedures, um, everything is different. So, what we're seeing happening at speed is the, the complete change, um, in, in, in that, um, and, um, there are test cases that, sort of, are proving this, and ISAI is one of those test cases. I've got another, um, sort of, interesting, um, sort of, uh, data point that I think, sort of, also sums this up quite well, which relates here to the UK. So, um, what the UK have done is that they've rapidly appointed a, uh, an individual that is responsible for all of procurement across army, navy, air force, spaceports, into a, into a new role, called the National Armaments Director. And they've, uh, they've, they've rapidly gone out to identify someone to do this role. And the person that they've chosen to do this is a guy called Robert Pierce, who's the ex-CEO of Inmarsat, UK's largest, um, um, space company, which he left about three or four years ago. And then he joined, um, the venture industry and became an investor in technology businesses, which he's, which he's done for the last, um, you know, x number of years. So, uh, what the UK have selected for this most important person to change procurement is one, a space guy, and two, a guy that is really comfortable around emerging technologies. And I think that that really paints the picture for the mindset for change that's required in Europe. And I think that, um, ISAI is the great example of this working in practice.
So, if you're looking out your sub, your next run, your subsequent dollar, like, how would you, let's just say your, your $100 to invest, what percentage is going into the US and what percentage is going into Europe over the next five years?
Well, that's a, that's a, that's a really good question. And this is the reason why we have always been a global, um, fund, and, that has been a great challenge, um, to, to, to us, because investors don't think globally, they think regionally. So, American investors want to invest in America. European investors want to invest in Europe. And we've had to turn down a huge amount of capital over the last decade because it came with strings that would force us into being only an investor in Europe or only an investor in America. We've wanted to keep our options open, and we remain in that exact same position right now. So, all of our funds are global. So, we will continue investing globally. So, uh, the, the, the, the macroeconomic effects are changing on a monthly basis, as we're all aware. But what, what is clear is that, um, the US is going to continue to be a powerhouse, um, in, in this market, and that, um, uh, in areas like defense, there is significantly less friction to invest into a company that sort of wins that contract with the DOD than there is in Europe that wins that contract with 17 of the 27 EU, um, uh, uh, uh, players, um, out there. It's just harder to do that. So, where, where's that dollar going to go? Um, or where's that $100 going to go over the next, um, year? So, I'm sitting on the fence here, but I actually believe that this is true. I think it's, um, I think it's 50/50. Um, I think the, um, I think that the opportunity in the US is really, um, you know, exceptional and, and remains. Though, I think that US companies are still going to be successful internationally, and there is a significant period of time where, frankly, there still isn't the European companies to provide the necessary services that Europe requires, and there were, there's still significant opportunity for for US firms to fill that gap for five to 10 years. So, um, uh, but there is a, um, and I think ISAI really portrays this, a massive and immediate, um, demand in Europe. And what, what I see, um, as the sort of outcome here is the creation of neoprimes. And I would argue that ISAI is now a neoprime. And, and what, what I mean by a neoprime is a, a company that's really been anointed by governments that, whilst this is a startup, they've proven that they can deliver on time, can deliver, you know, technically competently, they can deliver against the sort of low-cost promise that's, um, that they've done. We've seen that operating, and we're now going to put our faith in them being able to replicate that at a larger scale. Um, so, um, our focus is in trying to, um, identify and invest into those neoprimes, because I think they've, they get that confidence in these government customers, and they'll win contracts that really they shouldn't perhaps win, um, but the government has got confidence in, in them as an organization. So, um, I'm expecting there to be a decent number of European neoprimes that are created, um, during the course of, um, the next, um, five years. So, I want to make sure I'm invested in all of them.
So, let me, um, let me ask a slightly different question then. So, like, I think it's, I, I don't think you would disagree with this, but tell me if you do. Um, which is that valuations in Europe in general are just more reasonable and, and more fundamentally aligned. How much more fundamentally aligned are they? Like, if you were to say, if you, when you look at a, when you look at your average American space company today versus your average European space company, how much tougher is it to wrap your head around the American valuation versus, like, the European valuation? Like, what is that? I mean, and feel free to use numbers, but I'm really, I'm really asking more of a, almost like a qualitative than a quantitative question.
Yeah. So, I can, I can give a, you know, a really clear answer to that. Challenging question that valuation is, um, is determined by the size of the round. And, um, typically, take an A-series, typically the, the round would be taking about 25% of the round of this, of the ownership of the company at that stage. And typically in the US, um, the round sizes are materially larger than they are in Europe. And that, that is that.
is becoming more even, um, at sort of seed and Series A. But, um, but still very much is a big difference when you get to B, C, D, E, and so on. Um, but, but, but really the sort of typical scenario is that the American companies are raising a large round and are therefore, by necessity, doing that at a larger valuation. So that's one of the things that we sort of look at, um, when we're sort of comparing, and we are regularly looking at two companies. Here's the European, and here's the American play. And historically, we would have said, which one of those are we going to back? And now we live in a world where we are quite happy to back both.
So when you, um, when you look across all the different segments of the market right now within space, where are we overbuilt? Like, where are we, where are we, you know, when you see a comp, when you see a company hit your, you know, t, you know, come across your desk, you're like, ah, not another one of these. What are some areas where you feel like we are overbuilt and we just don't need another company?
>> Well, you know, I've, I've already explained that we don't invest in launch. So, um, you know, we see a lot of launch companies. >> But that being said, you know, I would argue launch, you know, is, is it overbuilt or is it not? I don't know. I think that's a question to ask. Like, when you have SpaceX wanting to put up a million satellites or, you know, according to their filing with the FCC, and that's like maybe Starship capacity for the next however many years, and you don't have, you know, then you have, you know, Neutron, Electron, which is a very small rocket compared to what the market needs, and all these other rockets that are not still little really operational. But we can, that's a whole different conversation. So we can set that aside. Um, so, so that's what I mean, overbuilt in, in, in capability and capacity. Not so much like how many companies you see in a segment. It's just more like the actual infrastructure side of it.
>> Yeah. No, you know, I think we're still, you know, your first question was, you know, where are we on, on the growth curve? My answer was that, you know, we're still right at the beginning. So, um, you know, the, there, there are areas where, well, you know, just to, to finish off my sort of comment on, on launches that I've sort of stopped counting. Um, I think I stopped counting at 200. You, you'll probably know better than me, Mo, how many launch companies are out there. Is it, is it 400?
>> Um, well, launch companies that were once out there versus how many are still operational and alive. I mean, it's a fraction. I mean, that, I, I, I don't know the exact number, but I do remember we used to quote something like a 200 number like a few years ago, and then that was what, that was sort of at the, at the, at the peak of the, of the capital craze, um, coming out of sort of the low liquidity, or sorry, low interest rate environment, which obviously all kind of came, came, um, you know, reversing over the last like, you know, five, six years. But like, uh, yeah, I mean, at one point it was something like that, like a couple hundred, you know, startups, and now it's far, far, far less. And I don't think anyone with their in their right is deciding to start a launch company right now.
>> We still see an awful lot of them.
>> Um, so we still, we still see an awful lot of them. You might be surprised. So yeah, so that, that would be the first area. But, you know, is there anywhere that is really, you know, really, um, you know, o, overdone? Well, you know, do, do we, do we need another optical, um, um, constellation to take more pictures from space? I would argue that we don't. Do, do we, do we need any more, um, uh, traditional GEO players with their traditional GEO satellite? Probably not. Um, but I think most of the other areas, I think that there are still, you know, significant growth. You know, if you look at the sort of supply chain, the component element of that, there's still loads of components that, you know, have got a year, um, uh, uh, lead time. So there's lots of opportunities remaining to sort of invest in, make that more efficient. Um, you know, I think that the supply chain, sort of regionalization is still a massive play. So I don't think that, you know, within the sort of component elements that, um, that we've, uh, that we've seen, sort of, you know, overinvestment.
Um, the constellations, um, is, is the area that we consider to be our, um, bread and butter. A lot of newer investors that come to the market, particularly space funds that are coming to the market, I kind of overlook all of the constellations. We, uh, we love a good constellation, and, um, you know, uh, we, we continue to believe that we can invest in tens and tens and tens more of them. Um, so please keep those coming. But, um, you know, that, that's an area where I think that, um, certain players in the market would say, you know, how, how many of these sort of constellation plays do we need? You know, how, how many, um, SAR companies do we really need? Um, I think that we've still, you know, plenty of scope for, for growth on, on, on all of those.
Um, and then I think as we, as we sort of get more into then the sort of downlink, this is, uh, which is what we sort of the, the term that we refer for sort of moving data from space back down to ground, all of the sort of ground, um, station equipment and everything that goes with that. That's an area that I think has been massively underinvested, um, in, uh, across the course of the last decade. It's growing in focus and is one of the, um, you know, as, as a category, faster growing categories, but it's coming from a very low base. So that's the sort of inverse of, of your question. I think that's one that, um, where, where more focus is needed.
And then you've really got the sort of then the sort of data analytics companies that, um, where, you know, the, there, there are not many good examples of great successful space analytic companies. So these are companies that effectively using space data as the predominant, um, um, elements of their data sets that they're then selling to customers. Um, there are, there are sort of limited examples of breakaway successes of companies that, um, that are effectively not owning satellites, but using space data to provide an analytics-based service. That's the area where I think that, um, money continues to pour into, but there's, there's, um, little evidence of that, um, um, going well. I think that, um, access to AI and, uh, you know, just AI companies, you know, being able to rapidly, um, compete, um, um, around data analytics, I think is part of the challenge there.
In fact, one of the things when we originally set up Saraphim, and if you were to sort of be interviewing me, um, 11 years ago or 10 years ago, and say, you know, what proportion of the, of the portfolio will be in sort of software-centric data analytic companies versus hardware companies? I probably would have said 80/20 in favor of the data analytics, and the reality is the reverse. Um, and, um, and, um, so, so yeah, I think working through category by category, I think it's the sort of data analytics element where, um, yeah, there's, there's probably too many me-too companies, um, that have got, you know, a challenged long-term business model, given everything that's going on, threats from other forms of, uh, analytical businesses.
So, um, I want to spend these last few minutes here talking, um, a bit about sort of what's, what's, what's coming next. And I know we've alluded to a few of these things, but I want to go back to something you mentioned early in the conversation, which is we don't like to invest in the moon and the and Mars. You know, next month hopefully, um, we will see. I mean, we're, we're, we're kind of knocking on the moon's doorstep now, the art with the Artemis, um, mission and program, and you have two of the largest space companies, SpaceX and Blue Origin, who are, uh, very much interested in building the infrastructure for the moon, um, and one day Mars. So I am kind of curious, like, how is your, I know you mentioned that we don't right now. Do you see that evolving, and, and, and is it because you don't see a viable economy, um, in, on, on moon and Mars, or not an investable business model? Like, tell me about what you think today versus, you know, how the, how your firm will look at this over the next, you know, decade.
>> Yeah. So look, so look, it's, it's evolving as space is evolving. So, you know, as I mentioned, our sort of previous focus was, was really around, uh, the digital infrastructure that's being built around constellations, uh, and we've evolved that into now also doing infrastructure, and it's all about sort of, um, serving Earth. So the, the first answer to that really is that, um, you know, I truly believe that there's a multi-trillion dollar market opportunity just in the data and the constellation businesses that we're investing into. So, and that, that is near-term, real customers, real demand, and that, that is sort of upon us right now. So that just aligns with my sort of ethos as an investor, investing other people's money, wanting to return it within a reasonable time period, a great track record that I want to build upon, of delivering against that promise.
Um, and, uh, uh, so we are not short of investment opportunities in lower-risk environments that are directly aligned with everything that we've done in the past, where we've got lots to add and value add and relationships that we can bring. So it's a sort of risk-reward element right now as to this is a giant opportunity that we're still at the very beginning of. Why do we need to go to the extreme of investing into newer markets right now? This is one of the benefits of the three parts to our business. So if you actually look at many of the businesses that are going through our accelerator, we don't distinguish between the different stages of growth of, uh, of, of companies that go through our accelerator. So, um, you know, for example, we've got companies like, um, Vertus Solus, that, um, you know, are doing solar farms in space, that, um, you know, went through that program, you know, four or five years ago.
Um, we really like to identify great businesses, great founders with, you know, brilliant ideas, and we put them into our accelerator program, and that's a platform for other people to invest into them that have got a different approach to market. And what we've seen through that accelerator, and it really, it really gives me great pleasure when I see this and pride, that we see three or four, um, uh, space-focused funds clubbing together to invest into those companies that have come through our accelerator program. That's fantastic because they've just taken a different thesis on the market, and that's great.
So, this is the reason why we've got a, a growth fund. So when I'm speaking about this to, uh, to, to the, the LPs and investors that are coming into our growth funds, I can say, look, we're not investing into the moon or Mars or space travel right now, but we're building up a whole range of companies through our accelerator program where we're building knowledge and relationships with the teams where we can revisit them every quarter as to when is the right time to invest into some of these. And my belief right now as to where we're sort of standing right now is, I'm, I'm, I'm happier to do that in the C series than I am in the seed and Series A and Series B today, as to where we stand today. Show me a, you know, fantastic, um, uh, uh, uh, moon company in Ceries, um, and, you know, I'm, I'm, I'm super interested. So that, that's really how it sort of works for us right now. But that evolves over time and with the market, but everything comes back to, um, you know, wanting to make a return over a time frame that, um, that matters to our investors, and that really defines what we're investing into.
>> When do you think we'll see the first British astronaut on the moon?
>> On the moon? I, you know. Wow. Wow. I, uh, well, you know, I, I was disappointed to see that, um, out of all of the various European nations contributing to the European Space Agency's, you know, recent round of funding, the UK was one of the few countries that, you know, that took a step backwards rather than a step forward. So, you know, I think that we're, I think we're in the wrong. Do you know what? I just don't know. I don't have an answer to that question. I don't, I, uh, I would love to see Tim Peake flying the flag there sooner rather than later, but I just don't, I don't know the answer to that. I couldn't even guess.
>> No, I, I, that was, I, I trapped you with that question. So I, uh, I, I feel for you. Um, uh, Mark, what do you do for fun?
>> What do I do for fun? Uh, so, well, I find, I find my day job fun. So that's the first point.
>> That question, that answer doesn't count. Every time I ask that question, 90% of people just.
>> So, look, so, so I love anything that revolves around the sea and, um, being on water. Um, so, you know, I, I love everything to do from, um, scuba diving, uh, right the way through to wakeboarding and, um, and, and everything in between. So, anything to do with boats is my thing. So that's the thing that I, uh, sort of work hard for so that I can take a sort of European length holiday, um, and enjoy, um, you know, the water sports. So that, that's my thing. But, you know, but being with my family, you know, I've got two kids that are, uh, just starting university and at that sort of age. So they're now at sort of an age where I can do a lot of fun things with them as well.
>> Yeah, that's amazing. Well, Mark, thanks so much for being with us. This is a great conversation. I feel like we could have easily talked for hours longer. So, thanks so much for, uh, for all your, for all your, uh, context and, uh, congrats on all the success so far.
>> Thank you. And, uh, you know, I think that we're only scratching the surface. I genuinely do. We're right to go back to where we started. We are really at the beginning of the growth inflection point for this market. You know, space tech has become a permanent institutional allocation, as far as I'm concerned, which really then creates a capital flow for the sector that's never existed before. So, this is the reason why I think we're on the first rung of the ladder. So, thank you for having me on the show, Mo. I'd love to come back in the future and share some more thoughts.
>> Absolutely. Until next time, Mark.