Ctrl I - Investors Insights - Assessing SpaceTech with Sam Martin

​Sam Martin is a partner, board member of a family office, and proven investor within the Space Tech industry. We spoke with Sam recently to understand some of the key insights across Space Tech including key metrics, drivers and how the future of space tech is shaping up.

Sam’s Journey into Space Tech:

I had my business background and I studied philosophy at university. I started out working at a tech start up that was in AI. I was considering starting a business but wasn’t sure what specific technology I would pursue. I then used the intersection of my studies, my family background, and my experience working in tech to start a venture capital firm in mid-21, where I made my first two investments. I focused on companies that built data assets and applied machine learning to fields that the entrepreneurs were experts in. In the middle of all this I found a space venture firm that was crowdfunding for early-stage space companies.

I decided to invest in 2022 and then joined the team in January this year, Gravity Management, to run the asset management side (VC side). We’re looking to be THE financial institution for space, all inclusive at every stage.

We now feel like we’re at the point where we have an advantage as we have our team of space enthusiasts, I guess would be the casual way to put it. Everyone involved, LOVES space. We live and breath our work. We feel like we can offer a unique service in an unsaturated area of the market. There aren’t enough experts investing in space. There are a lot of VC’s that would invest in space companies, but who aren’t space-focused. Some VCs consider space as just an interesting area to expand their portfolio. If a VC is not space-focused, there is so much happening in the industry that investors can be easily blindsided. We are working on building our relationships so that as VCs enter the industry they can count on our guidance on which investments are qualified and which are not. You need a certain level of expertise within space to be able to take into account all things that need to happen for it to go well.

Balancing Short-Term Wins for Long-Term Success:

Our primary focus is on infrastructure. Infrastructure is where we see the foundation for long-term goals like going to Mars, mining, travelling to the Moon etc. These things are all long term and can produce massive markets.

We like to draw on the analogy of the Morgan Family and what they did with railroads. They focused on investing in infrastructure so that railroads could be built across America. They were able to consolidate certain technologies that really enabled the entire industry to survive and do well over time. That’s where we feel like we’re at with Space at the moment, infrastructure is where we will see things come together and improve, which has been the case for launchpads and satellite communications moving to laser instead of just radar now.

In comparison, OceanGate for example recently pledged to have 1,000 people living on Venus within 50 years. Awesome vision, but so much has to be built for this happen. One group or company alone isn’t going to be able to build all of the steps required. In order for something like Venus to happen, you have to fund things in the market that are going to make that possible. That’s where we want to fill that gap. We want to be space-focused and invest very purposefully.

Separately, right now is a difficult time to raise capital. I’m seeing two things – reluctance to allocate capital and lots of liquidity. It’s a strange balance. If you have the right idea, there’s money out there to be allocated. But if you are not there yet, especially in early-stage ventures, it’s on you to figure out how you are going to bootstrap your business until you are ready to convince investors. It’s a difficult trade off, but I do think if you are an entrepreneur and you choose to bootstrap at this time to get your company off the ground, the value of that experience will be unparalleled. Figure out how to run lean and survive in this extremely highly volatile time.

Assessing Regulation and Challenges for SpaceTech:

There’s, shockingly, very little precedent right now. I like to compare it to Maritime Law. It’s not the Wild West, but it’s not far off. There are around 5 treaties regulate space. But otherwise there’s so little international space law, I wouldn’t be surprised if we see a new set of treaties emerge quite soon. There’s nothing that I see on the investment side that I feel could be high risk with any regulation coming into play, but we have to judge investment by investment. There are practices that are actively prohibited, such as monitoring military bases. Aside from that, it’s essentially a totally free market.

In terms of barriers, failures cause fear. Anytime there’s an explosion for instance, or death, that will always and understandably set the industry back, as it should. We need to be able to prevent these. There’s so many protocols in place to ensure stuff like this does not happen, but there’s always a risk.

The other barrier is marrying up the talent with the investment. Rocket Engineers are not easy to come by necessarily. Not only do you need those, you need the access to capital and investors who can take risks. If you want to get to prototype stage (obviously depending on the product), many potentially scalable business require anywhere from $500,000 to $5 million. From prototype to market, often requires $50 – 100 million. The risk increases when there are still unknowns in the manufacturing or scaling processes. Minimizing unknowns by collecting as much data as possible per iteration is a key to success in such a difficult industry.So getting a prototype to be a viable business model is probably the biggest challenge. The best way for us to succeed is making sure we have a diverse group of thinkers.

What you’re most excited about in SpaceTech:

Starship. When Starship succeeds, the cost of a launch will drop by almost 20 times. What people are paying at the moment ($2,000 - $5,000) per kilogram right now, it’ll drop to close to $100 per kilogram. This is going to explode at some point.

I’m also really excited about Earth Observation. There are so many ways that we can use data through Earth Observation. You could use it for the Department of Transportation, hedge funds could use it to understand how markets or supply chains are performing based on the craziest things, for example, the number of cars in a parking lot. There are so many different cases this could make an impact for.

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If you'd like to get involved or discuss investment and finance trends, contact Oscar ([email protected])