One of Silicon Valley’s best-known venture capital companies is making a big bet on outer space. Bessemer Venture Partners (BVP), which manages more than $4 billion in capital and primarily invests in cybersecurity and enterprise technology firms, announced a new aerospace investment practice this week. The launch coincides with the appointment of satellite industry veteran Scott Smith as a part-time partner and an undisclosed Series B funding round in New Zealand firm Rocket Lab, which produces low-cost rockets designed to send miniature satellites into space.
Bessemer previously invested large sums of money in Skybox, a satellite firm which was acquired by Google for $500 million in 2014. Both Skybox and Rocket Lab built their business models around drastically reducing the financial and research and development costs of launching satellites. Smith, who was unavailable for comment, is best known as COO of communications satellite company Iridium and as a former member of Skybox’s board.
David Cowan of BVP told Fast Company that Rocket Lab’s founder, Peter Beck, is a "modern-day Henry Ford" who will eventually create a weekly launch schedule for satellites. "We are going to offer a weekly launch capability that's going to change everything. The United States, the largest colonizer of space, launched 19 rockets last year. That's it. Small satellites represent the future of space, and the launch capabilities we have for them are completely misplaced. At Rocket Lab, we want to create a reliable program to deliver satellites to space when and where people need it."
Rocket Lab also received undisclosed amounts of funding from aerospace giant Lockheed Martin, Khosla Ventures, and K1W1 as part of their round. The company is currently working on a launch system called Electron which will reportedly cost only $5 million per launch—less than 1/40 the current price of a typical rocket launch. If the company is successful, they could sharply reduce the price of satellite technology globally.
BVP is expected to announce more aerospace investment rounds in the coming year. Cowan added that the recent global financial crisis forced NASA to transition into using the private sector for product development, which has spurred a cottage industry of aerospace startups. In addition, the success of private space travel companies such as SpaceX (not withstanding recent hiccups from both them and Virgin Galactic) have attracted more companies to the field.
"Entrepreneurs have told me about the excitement about the projects they're working on and there is a level of interest that isn’t very visible," Cowan claimed. "Broadly, here in the venture community and media we don’t read or see it so it’s considered a bit of a fringe activity. I think that there's a sense or a fear that these ideas are so difficult and capital-intensive that they don't make for good venture investments. We're seeing an enormous eruption of activity among entrepreneurs that the venture community hasn’t yet responded to."