What You Missed On The Vector Episode 1: “Investing in the Space Economy”

Written by: Morsiell Dormu

In this episode of The Vector, host Kelli Kedis Ogborn dives deep into the evolving landscape of space investment with two leading voices in the field: Jamie Lesser, CEO of NewSpace Finance, and Zaheer Ali, Managing Director of NewSpace Finance. Together, they unravel what it truly means to invest in the space economy, how to identify long-term value, and where the next generation of space entrepreneurs should focus their energy.

Key Highlights:

Understanding Space Investment:

The Space Economy Is More Than Launch: While headlines often spotlight launches and lunar colonies, the real ROI lies in the space-to-Earth market—which accounts for 95% of returns. The conversation emphasizes data, communications, infrastructure, and other less flashy yet vital areas.

ROI and Realism: Jamie Lesser breaks down the myths of trillion-dollar projections by banks and stresses the importance of realistic return timelines, especially for venture capital. Most VC investors are looking for returns in 5–10 years, not 20.

Lessons from Past Failures:

“Solve a Migraine, not a Headache”: Zaheer Ali urges entrepreneurs to solve real, critical problems—not just interesting ones. Using the example of Orbit Fab, he highlights the success of companies that solve pain points like on-orbit satellite refueling.

Hardware Is Hard: Unlike SaaS, space is capital- and hardware-intensive, making success more difficult but also more impactful. Investors and founders must understand that space requires longer timelines, deeper strategy, and more collaboration.

Picking Winners:

More Than Just Cool Tech: The panel discusses how to identify viable businesses—not just based on technology, but based on market need, team strength, and the ability to unlock multiple revenue streams.

Don’t Chase Headlines: They caution against investing in saturated areas like launch without genuine differentiation and new physics. With over 180 launch companies and room for maybe 10, consolidation is inevitable.

The Power of Adjacency:

Space as a Horizontal, Not Just a Vertical: Space technologies affect everything from agriculture to natural resources to internet access. Entrepreneurs should look at how space can enable other industries, much like the internet revolution.

Hot Sector – Space Data: Earth observation data will likely become one of the most valuable commodities, with applications in climate, agriculture, defense, and logistics. However, only ~10% of that data is used today—highlighting massive opportunity.

For Entrepreneurs:

Build the Right Team: Success in the space economy requires a team that balances technical brilliance with commercial savvy. Founders must understand what gaps they need to fill—and fill them early.

Tell a Story that Starts with the Problem: Most entrepreneurs lead with their solution. Investors want to know: What problem are you solving, who cares, and why now?

Know Your Investor Fit: Not all VCs are alike. Founders must understand who they’re pitching, the VC’s investment horizon, risk tolerance, and whether they fund hardware-heavy ventures.

Final Thoughts:

• Space is global, but founders must navigate geopolitical risks and regulatory frameworks.
• Europe and the UK offer strong talent and alternative investment pathways, especially in small satellites and quantum.
• The next 18–24 months could be a prime window for space investment, as the industry matures post-SPAC boom and early hype.

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Transcript:

Kelli Kedis Ogborn:

My name is Kelli Kedis Ogborn, and I am the Vice President of Space Commerce and Entrepreneurship here at Space Foundation. Today I am joined by Zaheer Ali and Jamie Lesser from New Space Finance. Zaheer is a respected expert on space technology policy and the new space sector, speaking often globally on artificial intelligence, the future of work, and how to help enterprises become agile. He wears many hats in our industry. He is a managing partner at New Space Finance, a venture partner at Mines Fund, a professor of practice at Thunderbird School of Global Management, the director of High-Performance Computation at Hewlett Packard Enterprise, and an advisor at Think Orbital, which is building the fourth-generation space station and a space railway. He is trained as a research physicist holding many patents, an r and d 100 award, and over 400 authored and co-authored publications. Also, joining me is Jamie Lester, who is an alumnus of the International Space University’s Commercial Space Enterprise Program at Florida Institute of Technology.

He previously spent 20 years in equity capital markets with 15 years in the global resources sector raising over 1 billion in equity. He spent six years as director of HSBC’s top 10 ranked teams advising institutional and private investors. He is founder and senior consultant of Tonno Resources, LTD, and a non-executive director of London Listed Investment Company Mineral and Finance Investments. He co-founded Chalk Stone Partners, LTDA Social and Political Risk Consultancy. He also has extensive experience in the analysis and appraisal of companies across the globe as both corporate broker and sell side resource specialized equity sales. Gentlemen, thank you so much for joining me today for this conversation.

Zaheer Ali:

Thank you very much, Kelli. We’re very glad to be here.

Kelli Kedis Ogborn:

Absolutely. So, what I want to dive into today is really focused on this concept of new space markets. So, getting at how to think about them, what’s really generating the buzz and how entrepreneurs can prepare for them. And I think that this is a really critical conversation to have because as an industry, we talk to ourselves, we talk in acronyms, we talk in statistics. Everyone throws around that the global space economy is going to be worth 1 trillion plus by 2040, but what does that actually mean? And I know that in your day to day, you do a lot of advising on markets and winners and how to prepare. And so, I’d really like to distill some of this practical advice for the folks listening. And so, to kick it off, I’m going to throw a question out and either of you can jump in, but I really want to get it to this concept of balancing altruism for where space is going and actually the pragmatism that’s going to build businesses. Because as you know, it’s a lot of those headlines like asteroid mining and lunar colonies and these things that capture headlines and investment. But the local space economy is fairly localized. 95% of the ROI is the space to earth market. And so, when you think about where this is growing, where is the real ROI, what are the investments and the industries that are really driving the market signalizing this optimism? I

Zaheer Ali:

Jamie, do you want to jump in first or should I?

Jamie Lesser:

Well, I can kick off I suppose. I mean the R OI point is a good one. I think it was the European Space Agency who bravely put out a calculation that for every Euro invested, it returns six euros to the economy. I I’ve seen estimates of about eight to 12 times, but I think it’s probably lower than that. But governments around the world are in need of growth. And this is very much where to find it, to look at the forecasts that you mentioned. We get to those or justify those because they’re decades out, 20, 30, 20, 40. So you can have a variance of a trillion-dollar industry or a 3 trillion industry depending on which bank you pay attention to. And there was a lot of flag waving involved by the investment banks putting those forecasts out to say, we’re open for business in this industry. And that paid off because we saw quite a lot of activity in the SPACs over the last couple of years since those forecasts went out.

But the key thing I think is to keep a cool head, I suppose, because it is easy to get excited about the numbers. They’re very skewed towards one particular area, which is satellites, but the investors Calder analysis perhaps should help and focus on the market. And entrepreneurs should always be aware that that is where what investors are looking at most of all the market opportunities is really key. And how are they going to make money and what time period VCs are looking at a seven-to-10-year time period, not a 20 year time period. And so, we’ve got to bear that in mind. But at the same time, I think these forecasts, we can get over enthusiastic. We can get a little carried away possibly in part because we’ve had decades of sci-fi and we need to cut out the Disney effect a little bit. But one of the exciting things about this sector is we are working with people who are influenced and inspired by that. We Z and I are working with a doctor who’s building essentially what is a tractor beam for docking and slowing the tum of debris. There’s some very out of decades

Zaheer Ali:

Come reality. Jamie brought up some really key points. One thing that I think of a little differently I want to tell a little story is a few years ago, a friend made me aware this crazy concept of sticking a fuel can in orbit and then somehow docking a satellite to it. And I said, well, that sounds cool, but what’s the point, right? And just was it last month now, I guess since today’s November 1st, I believe it was last month, it might’ve been September. Dan Faber and Orbit Fab announced their contract with the Department of Defense for refueling satellites on orbit. And at the time when I researched it, a few friends of mine who have significant capital came to me and said, we’re thinking about investing in this. And I looked at it, I said, this makes sense. Why did I say this makes sense?

It’s because it addresses a fundamental problem that defense operators have in the space domain, which is that the satellites are fine, they’re engineered for 20 years, but they run out of propulsion, meaning the ability to move orbit up and down in orbit or even make small adjustments to avoid orbital debris and then become kind of 10% of their capability because they can no longer be tasked in the way that we might want them to. So as one Space Force, Colonel told me it’s a very gen comment, we want to maneuver without regret, and the requirement for that is the ability to put more fuel in the can. And so, the reason I tell that story about Orbit Fab is that they found a fundamental migraine. And then there’s a really good book called All in Startup by Deanna Canner that talks about how a business has to solve a migraine particularly to get started.

And really that is general business advice, but it applies super applicably in the space industry, perhaps more so than in other industries. And you could ask why, because this industry is hardware intensive for the last 25 years. The COVID stocks boom before that e-commerce and Web 2.0, all of this has been driven in the digital world. Software is cheap to make. It’s cheap to sell. Once you’ve built it, you can sell it an infinite number of times. It’s like a book except even cheaper because you don’t even have to print it. You send it or people download it. They’re using their own bandwidth to acquire the thing you’re selling, right? And so that has driven investment to think in these three-to-five-year cycles. As Jamie pointed out, the old appetite for seven to 10, 15, 20-year investment in venture capital and private equity has decreased a great deal because they’re all drunk on software as a service business models.

But the reality is that that’s not what space is. Space starts with hardware. I believe it was Andreessen that said, software is eating the world. Well, sir, hardware is the world. It sets the table; it is the food. There’s nothing in this world without hardware, but hardware is capital intensive. So, when you think about picking winners, picking losers, a lot of times you learn more from the dissection of the losers than the winners. As Tolstoy said at the beginning, I think it was Anna Carina, all happy families are alike in their happiness, but every unhappy family is unique in its own way. And the same thing goes for failed startups. All successful startups are basically the same because they did all those things. It’s the failures where you realize, oh, this was a critical error, and that critical error was different from this other critical error.

So, when we think about how you’re going to look at the space business, we know what everything right looks like. But as you navigate, as you are an entrepreneur, you have to actually do the postmortem, do the autopsy on the cadavers that lay around us. And there are a lot of ’em. We mentioned asteroid mining, I believe it was Deep Space industries, I always forget the name. Amazing company, visionary Leadership, literally 15 years before its time Psyche, the critical mission that NASA is launching. And it was almost canceled because of some nonsense software stuff and there was not an issue, in my opinion. If it was a commercial thing, it would’ve already launched. It’s fine. But the NASA is very, very careful that mission is critical because it’s going to show how you get a thing to a full metal asteroid that is worth more than all the minerals ever mind in the history of humanity, right? So, when you think about this, you really need to parse out the migraine problem and then what were the critical failures in your slice of space and how to avoid those critical failures? Those are the two things I think that the great companies are doing right now. And just because you raise money doesn’t mean you have a successful company. That’s the other thing. You have to sell something. It is a business.

Kelli Kedis Ogborn:

Yeah, no, those are phenomenal points and I’m really glad you brought up that dichotomy between hardware and software because as you so aptly put, hardware is capital intensive, but it’s also very risky. And so a lot of the iteration that you see a lot in Silicon Valley and others, that’s more on the software as a service side. You can put out something that is good enough and then iterate upon it or give an update. And that’s not true in space because you are dealing with high stake systems, very expensive, but also lives at stake, which is not for the fainted heart, but it also draws a lot of interesting people or interested people rather to the industry because they’re building something really hard. There’s a lot to unpack in what both of you said. So I want to pull on a couple of threads. One of ’em, as you were talking about companies being 15 years ahead of their time or you hearing pitches back in the day and saying, why is that something investible?

There is this balance between doing science for science sake and progressing research and then knowing that that’s going to lead somewhere. So looking at the evolving market, because the three of us live and breathe this every day, that tech maturation is really tied to market opportunities. Once there’s some fundamental technical things like launch and reentry and powering things in space, it’s going to enable other technologies. But there are all of these other capabilities sort of waiting in the wings that have done the basic research. They’re ready to jump, but how do they know where their insertion point is and if it’s going to be viable?

Zaheer Ali:

So there are a lot of amazing ideas that nobody cares about right now, and that’s a fundamental reality of research. I spent the first decade of my career as basically a fundamental researcher whose work was then applied by other people. I worked in the backend of nuclear weapons, payload side, not delivery. And then I also got sucked down the rabbit hole of counter-terrorism and nuclear down proliferation, which was where I worked on more with far more space assets in terms of tracking, monitoring, issr, et cetera, in intelligence surveillance and reconnaissance, sorry, we’re avoiding acronyms. Thinking about how to take a technology and commercialize it. You got to talk to people like Janaya Griffin whose moniker is the Commercializer. She worked at NASA in the commercialization office for many years and has gone to a private consultancy, or Craig Pritz who built a consultancy in career over 20 years commercializing med tech and is now going into space.

That’s a skillset. So one thing I would advise entrepreneurs is there is this myth of the great man or great woman that drive that takes a company somewhere, but that doesn’t exist anymore. As one of my professors said to me, Z, all the easy problems have been solved. Nobody’s discovering electromagnetism in their basement anymore. Like Amp here with a copper rod and a voltage meter, or rather a volt source on one side and a bunch of compasses. And that’s how we found the field line. It’s a crazy simple experiment. It was him in his basement. Apparently that doesn’t happen anymore. All these companies, if they’re really successful, whether it’s led by people like Bezos or Elon or somebody like Dan Faber or Sarah Spano or Swarm, they have put together the right team. And that’s super critical. And as a leader in this industry, you have to love the team.

This is big science, this is big research. This is big industry, and if you don’t have the right team, then you have a challenge. So figuring out that insertion point again, you circle back to is this solving a fundamental thing that somebody is willing to pay for and not willing to pay a few bucks for, but willing to pay big bucks for? Again, when you have a migraine, you’re going to breathe into a bag, you’re going to stick your head in a bowl of steam, you are going to go run five laps. Anything, you have a migraine, you want to get rid of it. So you’ll pay, you’ll do whatever it takes. If you have a slight headache, you might just go lie down. You might not take a pill, you might not pay anybody. So focusing on what problem in the world that technology can move the needle on is really going to tell them that, Hey, this is something commercializable. And then you want to go find the right people to help you build that. Because one of the things as a technology person, I have to literally go get a degree certificates and educate myself on how to be a business person. If you don’t have time and interest in doing that, you got to go get the right team member.

Kelli Kedis Ogborn:

And Jamie, I’d love to hear your thoughts on this, but really quick to hear one follow up to that. So are there any indications that they are on the right path? So you mentioned getting people excited, but if we’re looking at forecasts that might be relevant 10 to 15 years that are going to be extremely critical to where space is going, what are those indicators that will let these researchers or basic scientists know that they’re on the right?

Zaheer Ali:

Yeah, fair enough. So one of the things, for example, why was reusability of focus in rock, right? Fundamentally because you could do the map and tie it to a business value chain that said, if we can reuse this portion of the rocket, then the overall cost over a campaign of a hundred launches comes down to this price. Boom, you can do the math. So one of the things you look for, and it’s not just building a platform, people always want to focus on platforms, investors love platforms, but it’s kind of overdone. If your technology enables a bunch of business opportunities, then your technology is highly commercialized. If it only enables one business opportunity, it’s far less. And that may be something where you want to just go far enough to go have somebody acquire it, integrate it into a larger system. But if what you’re doing unlocks multiple business models and enables other people to build business models on top of what you’ve unlocked, then that is a highly, highly commercializable piece of technology

Kelli Kedis Ogborn:

Technology. That’s a great point. Jamie, anything to add?

Jamie Lesser:

Sure. I think just on the insertion question, it’s important to think with a structured framework of how the market is going to evolve. And there are relatively few investors I think, who are really doing this properly. Starbridge Ventures has a full blown plan of how each technology development is going to unlock new markets that I think looks forward about a hundred years. There are thematic investors. Clearly there’s still quite a lot of opportunism, I think amongst the institutional investment community for entrepreneurs thinking about where they step in, I think they need to demonstrate thinking because I think that’s one of the key elements as Z was talking about the team. You invest in a team, that team has to show they’ve thought through the entire process, they understand their own relevance, they understand their own importance, and what might be missing in that team. That’s the first thing you look at.

Yes, there’s a huge interest in the software side and platform technologies and enabling, but I just wanted to touch on the hardware question. My background is in natural resources where we raised money for companies that quite honestly, there were individuals saying, we think there’s gold in them, our fields, and we want to spend millions of dollars finding out that means it’s eight to 10 years before you get any revenue. It’s huge CapEx upfront and a long wait time. And for hardware, it is not impossible. The city of London, Canada, Australia has been financing these sorts of companies for decades. There are thousands of mineral exploration companies offering those sorts of long dated returns. So we have the capacity and the wherewithal to fund hardware, and as he says, it is the table on which the food is served. So yes, I think the timing is essential for entrepreneurs to understand where they fit into the broader market, but also understand the investors that they’re talking to. Know your market, know your audience and the problem that you’re solving and whether or not that’s a problem for the investor that you’re speaking to.

Kelli Kedis Ogborn:

And on this theme of advice to investors or how investors look at the market, if you were to give some critical road mapping to them, how would you say that you should go about picking winners in this ever evolving market? So Hir, I liked how you mentioned a technology unlocking multiple aspects, right? Not just one. Are there any other things that you would give as advice about what’s worth investing in?

Zaheer Ali:

Sure.

Kelli Kedis Ogborn:

Maybe there’s two ways to answer this, sorry. So partially there’s going to be the ROI play, which investors are obviously very, very attuned to, but then there’s also the side of unlocking what space potential is. And so investors diverge on both of those. And so you could take this question anyway,

Zaheer Ali:

So that that’s a continuous spectrum.

And oftentimes you have the same investor at one point investing in the prestige or the legacy project. And then at one point, and then the other side, investing in a pure ROI. One of the things that I talk about a lot in my classes at Thunderbird School of Global Finance Global Management, where we have the degree in space business leadership and policy is that space is not just a vertical, it’s a horizontal. So when you’re looking at investing, it’s really critical to think about not only what is going to support the space industry and further exploration, exploitation of space and its resources, but also what aspects of space are going to disrupt existing industries. And there’s a tremendous amount of opportunity to invest there. For example, the satellite internet and communications infrastructure in orbit is going to reach fruition at the end of this decade when we have kuper, OneWeb link and starlink, all of them up full fledge final form constellations doing what they’re supposed to do, but they need ground stations.

Not everybody has an iPhone 14. Not everybody can afford an iPhone 14 that directly interfaces with that, right? And when you think about connecting the unconnected, you need a ground station. So there’s a huge play in the ground support for satellite based communications. The same thing goes for, it was a quiet acquisition relative to the rest of all the splash this in space. But when SpaceX bought Swarm Ban’s company, that was massive. They’ve cornered the market. They are the best system for iot connectivity in the world right now. Genius play, but that’s a very deep, it’s not sexy. Nobody’s about it. They’re not supporting freedom fighters in Ukraine, right? It’s just a very simple B2B play that’s going to connect all infrastructure in the world unless competitors come and try to attack that market. So I always talk to investors and students about not just thinking about space as how do I invest in the next thing that’s going to advance space, but how do I invest in and how do I build, how do I think about being an entrepreneur in using space to affect other industries? The same way that some of the geniuses in the last 20 years have figured out how to disrupt everybody else by using the internet to disrupt existing industries. We’d still have blockbuster if somebody at Netflix hadn’t had this great idea of saying, let’s stream this stuff. We have the bandwidth now.

Kelli Kedis Ogborn:

Yeah. Well, and it’s a great point about really thinking about the enabling technologies and then the enablers because there are these two buckets that people fall into. And you remember Netflix actually was taking a spin on the Blockbuster model and they initially would mail you the cd,

Zaheer Ali:

Right? The DVDs. I was going to release DVDs and the CDs and then realized that nobody wants to deal with the mail service anymore. We might as well just be able to tap into streaming. And now that’s ubiquitous with everything we do.

 

Kelli Kedis Ogborn:

Exactly.

Jamie Lesser:

And again, this is where the investors fit in with the enabling and the enablers in identifying the right investor. They are. You asked about picking winners. You pick winners in capital markets on the stock exchange, and you do that by following things like the world buffeted, durable competitive advantage. That’s relevant here too. But in VC, it’s often less about picking winners and more about creating them. And these funds are designed to offer you a whole suite of services and networks and expertise and experience that will help your particular company. So whilst you may have plenty of institutions that will follow into a funding round, for example, key is to find the right strategic investor who’s actually going to build your business with you, who gets your mission or your technology or your team or something about your industry or subsegment and are going to help you grow as fast as you can as well. Speed is of the essence too with this.

Zaheer Ali:

Yeah. If I can just follow on to one thing Jamie said, right? Is that the last few years of space have been kind of the, sorry, late nineties, early two thousand, when I was a student at Cal then. And sometimes I wonder if I should have dropped out and taken one of the many roles offered to me at a startup because you had VCs and people flying out from East coast, it felt like they were on the corner throwing checks at people. It was nuts.

Kelli Kedis Ogborn:

They were in some ways, yeah,

Zaheer Ali:

They were. Yeah, right. And a lot of dumb ideas got funded. The same thing has happened in the space. Let’s be really sharp about this. Let’s be really honest. Don’t invest in launch. Don’t start another launch company unless you figured out new physics. Literally you have to figure out new physics at this point or new chemistry to get us off the existing system of fuels, et cetera. It’s not worthwhile. Now the propulsion in space, propulsion companies have figured out how to apply new physics. That’s different. I’m talking about launch, getting to orbit, right? It’s pointless. You’re going to see massive consolidation. There’s going to be a launch market, a launch company crash. It’s not going to be the whole space industry. It’s going to crash, but you’re going to see a bubble burst in launch, but it’s going to be good. It’s like a fever.

It’s healthy sometimes because it’s going to cure the disease that is this unthinking rush of gluttonous investment where certain other projects are starved because they aren’t sexy enough and they’re not in the news constantly. So that’s one of the things that we talk a lot to investors at New Space Finance is that part of the reason you talk to us is because we have the ability, because we’re constantly, our head’s always in this, to really parse out where these opportunities are. Whereas if you invest purely on the headlines, right? For example, I told a lot of my friends, look, as soon as other SPACs come online, you’re going to see spice. It’s going to go to 10% or 10 or 20%. And I shorted the hell out of it. And I did pretty well because as soon as the other companies started IPOing, the spac, et cetera, SPAC Spice at that time was trading as a surrogate for the entire space economy because there was nothing else to invest in. And you see a lot of things like that happening. So you can’t invest in headlines, and as an entrepreneur, you can’t chase headlines with your business idea. You have to focus on what’s real, what’s tangible, and where that migraine and ROI are going to come from.

Kelli Kedis Ogborn:

You’re hitting on a really critical aspect. Well, Jamie, did you want to mention something quickly?

Jamie Lesser:

Yeah, I was just going to say, in capital markets, every time you get to a peak, people start to raise war chests, cash shells or SPACs, whatever they’re called. Each time it might be slightly different and excessive enthusiasm can be damaging, and it does tend to blow up fairly spectacularly in the case of technology. And investors do make that mistake not just in space. And Z’s touched on a couple of examples from SPACs to launch, but it always follows the similar trajectory, whether it’s excitement around graphene or 3D printing or the internet or space. You have the exuberance, you have the bubble burst, and then the dust settles and the industry matures. And I would say that we are in a situation now and over the next 18 months, which will probably be the best time to be deploying capital into the industry and making the right decisions. It’s going to be tricky. As you say, if there are an excess of 180 launch companies and there’s a market that can probably stand 10 or less, it’ll be tricky to pick the right one. So stay away from launch, do something which you do understand. But I do believe that the next 18 to 24 months is going to be a very interesting time if you’re investing on a five year horizon, even it doesn’t have to be seven to 10. I think there are some excellent returns to be had.

Kelli Kedis Ogborn:

Yeah, the headliner topic hits at a fundamental problem that persists across the space industry. And part of it is is that because it’s so often discussed in silos, you talk about launch, you talk about satellites, you talk about now commercial space stations for folks that aren’t already in it. They think that’s all there is in a lot of ways. So going back to this concept of enabling technologies and the enablers, and people think that, oh, I want to be an entrepreneur. That’s how I get involved in it. But they don’t see the second and tertiary effects that these technologies ripple throughout markets. And so pulling on this concept, which is a very, very favorite concept of mine, of space adjacency. So what are the capabilities, background skill sets, industries that are those enabling technologies that are going to be relevant to not just grow, but also sustain commerce and low earth orbit and lunar outpost and Mars Outpost and everything else, else. What gets you excited about the future of space? So what are those areas that are budding that if there was an entrepreneur saying, I really want to get involved, but I don’t want to create a launch company, you would tell them not to. Where would you tell them to go and look at?

Jamie Lesser:

Well, I’d kick off with the point of adjacency. We nearly didn’t call ourselves new space finance because if you say space to an investor, they used to just run away. It’s too hard. They didn’t have the in-house expertise. There hadn’t been enough exits. But as he was talking about earlier, you identify a problem that is shared beyond the space industry or the space domain, which touches on other sectors and other industries. And that’s the critical point about space. Not only is it the confluence of almost every buzzword from additive manufacturing and quantum computing and miniaturization and renewable energy and all of that, and refining those technologies. Robotics is another one, but also they impact every economic industry in one way or another. And oftentimes those industries aren’t perhaps at the forefront of the space industry. Mining again, is a good example where the folks who are really at the forefront of robotics may not necessarily know a great deal about the mining industry.

Mining’s been working on automation for decades. Absolutely. And they’re pretty good at it. But do they really understand what NASA can do? I shouldn’t think so. And it is going to affect the industry and the companies that grasp that early will do very well or at least protect themselves. And I think portfolio managers need to be aware of that. And I think the entrepreneurs need to be very conscious of that too. What excites me about the industry beyond that, its overarching effect, is also you are working with people whose legacy is intended to last centuries and not just a few years. And I think it’s not just the investor mindset, which is quite short term, it’s relative to what people are working on here. But you also mentioned silos. Space has to get out of itself and look at the real world around it. Again, we’re back to adjacency, but there’s an awareness of this. It’s exciting to be around, and eventually the presence of space in our daily lives will be more fully felt by the individuals, and that’s when things really take off.

Zaheer Ali:

I shouldn’t say one thing. I sound pretty negative on launch, but I’m not. Jared Friedman, for example, of Orbital Bridge has a fundamentally game changing concept for how to do frequent launch. Ken Douglas of Space Railway has a fundamentally game changing concept on how to move mass around. There’s also sling or slingshot, which is doing things differently. So thinking different is always going to be investible at some level. But when you think about adjacency, there are key problems. We know, for example, the Malaysian Airlines flight that years ago went down in the Pacific and we never found it. Debris washed up here, washed up that we don’t know what happened to it. We actually did know what happened to it, but we deleted all the data because there are satellites that covered that part of the Pacific, but they’re programmed to delete all pictures of open water because there’s no value being derived there for their purpose.

So we have the data, we deleted it, and therefore we are blind. So why is the satellite program to do that? It has extremely limited onboard processing, extremely limited onboard storage, and satellite communications are literally the same as they were in 1960 or 1965. It’s a problem. It’s old RF systems, so people working on satellite communications. You’ve got Rick Ward of Orbital Edge who’s working on computation and data storage in space so that we don’t beam down data. We de beam down information and conclusions. It’s a fundamentally different concept. I talk about that a lot. People don’t understand the stack of what data means. Data is equivalent to rocks out of the ground. You do stuff to it, you get some level of information, you do stuff with information, you build a model, and then you build a prediction. And so really where people are paying, where the value is derived is at that top right now.

You have a lot of people filling that stack. So when I think about adjacency, I think about things like that’s in the space, vertical unlock communications, processing, storage, those will unlock our ability to use so much more data. I believe that Megan Crawford of Space Fund said the other day that she had the number, I think it was like 10% of all data gathered is actually used. That’s crazy. That means we’re throwing away 90% of stuff. That’s interesting. That’s insane. So there’s a tremendous, tremendous amount of opportunity in turning, sorry, enabling the better usage of earth observation data. And the second part of that is this is now into the horizontal, right? We’re starting to see applications of earth observation data in a huge variety of things. Everything from crop optimization to understanding water levels in Africa. I was talking to some folks from Kenya and they’re like, look, we don’t know why in the same yur that we had a drought, our water table rose.

We don’t understand what’s going on. We know this can be solved by earth observation data because of what the planetary scientists tell us, but we either don’t have good enough data, and I’m going to tick off a lot of the EO companies here, but just when I was building a pipeline for monitoring oil pipelines, we acquired data from one of the major EO companies and they did not deliver what was promised. So they have some tech problems, they’re getting there, it’s going to come. It’s just the typical tech ladder startups over promise, under deliver at times. But the fundamental thing is people need to figure out what to do with that data and apply. You’ve got companies like SA, which are basically predicting or giving indicators on the price of oil based off of things like tanker movement and other logistics movements of oil. That’s a really great pointy application that can sell it.

So when I talk to people who are like, oh, I’m thinking about this, I’m thinking about that. I say, can you do anything in terms of using earth observation data? Do you have an understanding of a different domain where this can be applied in an intelligent and monetizable way? The other area is where are the gaps? That vertical satellite communication is something that’s going to be a five-year return for investors and a five-year exit likely, and it’s likely to be exited, not necessarily to the market, but to be acquired by one of the major players.

So you have things there. Then the other side of it is hardware as a service is going to continue to grow. We’re seeing commoditization of a lot of systems within the vertical and also the offering of those systems as a service. So you don’t just buy the thing off the shelf, almost like a Cox part, but even the integration and everything is managed and you get continuous software updates, optimizations, you might get changes to even parts of your hardware that you purchase it through a service agreement over time. So those are a few things that are very interesting in the shorter term play and where there aren’t enough people working on it right now.

Kelli Kedis Ogborn:

And a pervasive theme that really plays throughout that as a strategy is really not really necessarily inventing the wheel, but finding an insertion point into the supply chain. And I think that’s an overlooked strategy because innovation isn’t necessarily doing something new, it’s just doing something better or more efficient. And with space data in particular, what’s interesting is that has been probably the number one answer when I asked that question to folks is where are the opportunities? And I read somewhere that they were saying that space data is probably going to be the most hotly traded commodity that’s going to surpass oil and gas in the next 10 to 15 years. Because to your point, there are so many satellites collecting so many things, processing a very small aspect. And so when you think of that entrepreneurial chain, it’s being able to not only store but qualify and quantify and then utilize down on earth. So there’s tremendous opportunity there, and I think it’ll only grow, especially as we start to see a lot more of these satellite constellations going in low earth orbit that are going to be just more agile in that way.

Zaheer Ali:

And one point on that, I’m sorry interrupt, but I forgot it, is that we are now entering a time where you have time domain earth observation data. That is a big deal. Some of these constellations are promising that I can get the same. I can image the same spot every hour that changes the game. That’s huge difference than what we were even five years ago where it was once a week, once a month. When you can do true time domain analysis, that changes everything. So what’s going to be interesting actually is how people build the stack between all the way from earth observation data from space to drones, to haps high altitude platforms, to lesser range drones to people. So thinking about this as an integrated stack of capabilities that can be used in different ways. For example, one stack that I helped field was satellites to drones to people for oil pipeline surveillance and repair. And it sounds obvious once you say it, but because we had somebody with domain expertise in the oil industry and we were experts on the technology side, we were able to come together. So there’s going to be a lot of amazing creativity through that Medici effect where you bring somebody in agriculture and sit them next to an EO data expert and suddenly amazing sparks will fly.

Kelli Kedis Ogborn:

Yeah, it’s that whole adage of what was impossible all of a sudden become inevitable.

Zaheer Ali:

Yeah, I love that one.

Kelli Kedis Ogborn:

Yeah, because it’s true. It’s just a matter of finding when it’s going to be relevant and having the perseverance to actually make it possible. So my final question before I want to open it up to last thoughts, but if you were going to give advice to entrepreneurs now, so we talked a lot about the investment side, but thinking about the entrepreneurial side, what is an often overlooked aspect when they are pitching to investors? So you talked about the power of teams and we know that teams are critical in order to scale and also being able to know whether your technology or proposed solution unlocks multiple markets. But is there something that you see a lot that is critical for them to getting investment but is just an afterthought?

Zaheer Ali:

Jamie, you want to jump in?

Jamie Lesser:

I think the two things which always come straight to mind with this is sort of question is one we’ve already touched on before. It’s not about the technology, it’s about the market. And try and get your mind into the investor’s head and think about what is important to them rather than what is important to your audience. That’s the first point. But the second which we see often is to understand whether a VC is even right for you. Do they have the right time of horizon? Do you have venture scale? Do you tick the boxes that they can’t bend around the mandate that they’ve been given by their own investors? So you have to really consider not only whether or not the VC is right, but which particular VC is going to be right. And I suppose in doing ourselves out of a service, the best advice is always the best way to raise money is by selling something and not your equity, but it’s never usually an option at the earlier stage. But to think commercially, think like an investor would the conversation. That’s a great point.

Zaheer Ali:

Yeah. One of the things I’ll double down on product market fit, as Jamie said, and also making sure that you’re going to the right investors for my materials company material mind. A good friend of mine, he spent 20 years in Hong Kong bringing Asian startups to American capital, and I asked him to help me figure out who to pitch to. And we sliced and diced it. And out of the couple hundred good series semi deep tech VCs in Silicon Valley, we parsed it down to a list of five total that we might be a fit for right now. That sounds brutal because as a startup you’re like, well, I shouldn’t go pitch to the other 195. It’s like you can, but at some level you’re wasting your time and theirs. So you really want to be focused on the right type of investor. And one of the things to again, keep in mind that the exit horizons and the type of stuff they invest in, and I don’t just mean like is it biotech or is it space, but is it platforms?

Is it hardware, is it software, et cetera? It’s really key to understand because VCs work on VCs are Mark McGuire, right? He batted 2 45 or something for his career, not a very good batting average, but he was one of the most sought after hitters in all of baseball because at any given day, he could hit a ball 450 feet. And so he hit a lot of home runs. That’s most VCs right now. There are a few that are more like Intel, right? They’re Ted Williams, they’re out there trying to bat for average and for basis, and they bat much, much higher exit level. But intel companies often exited to acquisition as opposed to IPO and unicorn. So you want to think about is your technology, as Jamie said, scalable to that level? A lot of technologies are not. So you need to build your company to be acquired by the right company that will then integrate it into whatever system.

That’s still a huge amount of value. A lot of amazing serial entrepreneurs do that. Folks who made that massive exit war chest, but they’ve done it over four companies where they build the right thing with a super tight product market fit, build themselves to be acquired by one of four companies in that sector, and then that happens in four years and everybody’s super happy. So you have to think about how you’re building a company and make sure your pitch is right for that. Make sure your audience is right for that. The other thing though that I want just say that people often forget is when you have to tell a story and the story has to start just like Vonnegut would say with a problem. It doesn’t matter what the problem is. Somebody wants a glass of water to use Vonnegut’s famous lecture analogy, and it can have all the ups and downs, but he has to have a problem. You could call it market need, but as this is probably a propal, but as Henry Ford supposedly said, if I’d asked people what they wanted, they would’ve set a faster horse. So sometimes you will end up creating a market that is true, but there was still a problem,

There was still a problem goods and people didn’t move fast enough. It was hard to move a lot of them, and you had a lot of problems along the way because that’s why they had horses staged, right? The phrase stage coach comes from the fact that you’d go from one stage to another where you change the team of horses and the driver and then the coach would continue, right? People have forgotten a lot these things. The old post system worked that way. The postman would stay the same, but they would change horses, right? Cars completely change that. You refuel in 10 minutes and you got right, it’s hyper reliable, blah, blah, blah, right? So when you think about how you give your pitch, you have to start with that problem. And most pitches I see start with the solution, and then they’re burying the lead halfway through at the end. Somehow this is the problem and they finally present the market. It’s like, no, no. Start with that on the top because now I’m interested.

Kelli Kedis Ogborn:

It’s that classic, and Jamie, you mentioned this about knowing your audience, but impact to them because oftentimes you have to show someone that it’s an issue, then get the solution, remind them again why it’s an issue and how it’s going to impact them and bring them along through that narrative journey as opposed to just jumping straight to something like you said, here’s a car. And they’re like, well, I just need X. Because a lot of times when you’re pushing the boundaries of innovation, sometimes your competition is the status quo. It’s just how things have been done and why do we need to do it better? And so bringing people along that progression is important. I

Jamie Lesser:

Would add as well, sorry, if I may, I’d add the importance of the story is also you have to build momentum when you are raising capital. And sometimes these processes just drag on and on and on, and people can take it or leave it, but a well thought through approach will have hopefully a deadline, momentum building towards that. And I think the most effective way of raising capital is to do it before you need it. You speak to the investors you want to be speaking to build a relationship with them before you are trying to raise money, and you have them monitoring your progress. You’ve built that relationship of trust. They know that you are delivering so that when it comes to raising money, you just pick up the phone and say, now’s your chance. Rather than picking up the phone and say, hi, you’ve never heard of me before.

You’ve got three months going to your due diligence. It’s much easier if you’ve got all of that in place beforehand. You’ve built momentum around the story. And even better, and I have to take my hat off to the folks at Serafin Capital who listed their VC fund in London July last year, and they did it exactly the time where all of the so-called billionaires were setting themselves up into space. They had every single news headline in their favor at a time when they were raising money from the stock exchange. It was brilliant timing to try to engage PR as well as investor relations.

Kelli Kedis Ogborn:

Yeah. This has been a fascinating conversation and I want to throw it out for final thoughts. Anything that we didn’t touch upon that is just burning in your mind that you want to impart for our audience?

Zaheer Ali:

Well, I’ll go, Kelli. We were at IC together just a couple months ago. It’s amazing that it’s already a couple months, I feel like it was last week, but time temp Fuji and all that. One of the themes of that show was of course, post-launch space economy, but also was really the moon is gathering momentum and specifically because it’s a near target for resource capture and it’s also going to be geopolitically critical. But within that, on that geopolitical point, what was very interesting was the discussion of sovereignty and capabilities countries would have. So when you think about space, space is born

The supply chain’s global, the value chain is global, certainly the value delivery location is every human on earth at some level is capable of taking advantage of it, right? We’re using space assets right now. Before I had my first cup of coffee, I checked my email, blah, blah, blah, 10 space assets were engaged. But ITAR is a thing. Trade regulation is a thing. So I would advise folks to be very, very sharp about understanding their geolocation in terms of market and where they’re building, where they’re setting up their company, who they’re selling to, and where the capital is coming from. I’m going to be really sharp, Don, don’t take Chinese capital, don’t do it. It’s going to end badly, right? If your capital is coming from Eastern Europe, you need to engage somebody who’s going to investigate the true origin of capital. I engaged some former associates of mine who used to work in committees where they can find things out about people.

For a friend of mine who runs a fund and he had to turn down a $10 million check because it was coming from the wrong person in the Middle East that happened. So as a company, you have to be really, really sharp on this, right? If you need help, if you’re stuck with some bad cap table issues, you need to contact Heather, Joe Rickman at the Defense Innovation Unit. She’s amazing, and she will help you get that stuff sorted. So I just want to touch on those things. And finally, you can sell a capability to the EU that is wholly redundant, possibly with a capability being sold in the US if your company’s based in the eu, because they need that capability within their sphere of global influence. And you may not be able to sell it sitting in the US to that and vice versa.

So there’s a lot of these things there that, and this is why you need the right team. Frankly, this is a lot of the advice we offer at New Space Finance. There’s also ages, trade law, Bailey Reihart and Jack Shelton who did an amazing job keep us companies out of trouble, frankly, or help them get out of trouble once they’re in it. So as a founder and an entrepreneur, you have to be doing what in business school, the very old pesto analysis. You have to do it. It has to be part of how you think about what your business is doing, what your roadmap is, because there is a bit of a minefield because these technologies have for so long being integrated with defense. And so as we’re extricating them from that, we’re going full commercial, I want to play quidditch in space at some point. That’s not defense at all, but you are right. A lot of these technologies are wrapped up in that. So we have to, as a founder, as founders, investors, entrepreneurs, keep that in mind, understand that political, that geopolitical risk, geotechnical risk, et cetera, and just account for it. And what’s fun is that it actually creates opportunities if you know how to parse it out and look for

Jamie Lesser:

It. I’m going to pick up on the geographical point exactly. The talent in the UK and in Europe is quite considerable. And the global nature of space means we really should take advantage of that. The UK leads in small SATs, Europe leads in quantum, perhaps on the PPP, certainly, and the uk again in small satellites. But again, as you mentioned, not every dollar is the same. And the nature of European capital investment has a low risk appetite that is changing fast. We have different valuations to in the us, and this is one of the reasons new finance has a bridge between Europe and the us, not only for the flow of capital, but also the flow of ideas and to reach for the people that you need to build the dream, I suppose, to build the company that you’re trying to build. So take advantage of the global nature of it where you can. It is complex, and he’s just given some pointers about how to navigate it or who to talk to.

Kelli Kedis Ogborn:

It is the power of partnerships are extremely critical for building our collective wish for the future. But Zaheer, to your point, it is an interesting shift because space during the Apollo era was one of competition. Now it’s one of competition and collaboration. No one owns space, no one owns the moon. So now when we’re going to have these commercial and government activities operating simultaneously and symbiotically, it’s like the wild, wild west we’re about to enter into. And that’s a whole other conversation that we could have and actually should have because when people are always asking me what areas of academic research or majors they should go into, and I’m like, go get into space law because it’s going to be really relevant and very necessary in 3, 5, 10 years. Well, Zaheer, Jamie, I want to really thank you for this conversation. This hour just blew by. We could probably go on much, much longer, but that’s why I think we need to schedule a part two and dive into some more of these topics. But thank you for sharing your time and expertise with us this morning.

Jamie Lesser:

It’s been a pleasure. Thank you very much.

Zaheer Ali:

Likewise. Thank you so much, Kelli. And thanks to the Space Foundation for all the work they do. You guys are amazing and we’re very happy to participate and support.

Kelli Kedis Ogborn:

Thank you. Well much more to come. And to our audience, thank you for tuning in. Please stay tuned for more conversations from the Vector where we will discuss topic and trends driving the global space ecosystem. I’m Kelli Ogborn, and we’ll see you next time.

Zaheer Ali:

Cheer.

 

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