InvestmentSpace 2019 Hits Enough Right Notes to be a Success

InvestmentSpace 2019 Angel and VC Investors panel. Credit: SpaceQ.

If the goals of the first InvestmentSpace was to attract investors, startups and to start a dialogue, then the event was a success.

The one day event wasn’t without issues, but these can fixed should the Canadian Space Agency (CSA) and its co-organizers the Business Development Bank of Canada, the Ontario Centres of Excellence and the Creative Destruction Lab decide to make this a recurring event, and make it a recurrent event they should.

A lot of interest

It would seem the organizers underestimated the interest the event would have, a good problem to have.

In her opening remarks, Mary Preville, Director General, Policy, at the CSA said they had hoped to get upwards of 80 people at the event. In the end, they had to cap registrations at 150 as that was the capacity of space they had. Of those, 92 people were from space companies, 38 were investors, and 18 from universities or other organizations.

Critical to the success of the event was getting investors to show up, which is the primary reason the event was held in the heart of Canada’s investment community. Without the investors, the event would have failed.

It’s also important to understand that the investment community is still learning about the space sector and the possibilities it holds. This can’t be underestimated. It was clear from what was said at InvestmentSpace 2019 that investors still don’t fully grasp the opportunities, or even understand the market segments some of the startups are in.

That may sound strange in era where the global space economy was estimated to be over US$384B in 2017 by the Space Foundation. But outside the US, investments by venture capitalists (VC) in other markets, including Canada, is still in its infancy.

Much of the investments in the space sector to date have been government driven but that’s changing. In Canada, finding the balance between government investment and the investment community is a dynamic that everyone is still trying to grasp. This event is a good starting place and is of value to all, though perhaps in five years it may not be needed in its current introductory format.

Morning panels

The morning session was divided into four panels:

  1. The changing Economics of Space: Do primes and space startups views align?
  2. Commercialization, Revenues and ROI: Insights from Angel and VC Investors on what drives investment.
  3. Growing talent in Canada and globally: Views from space incubators and accelerators.
  4. Success South of the Border: Key ingredients for investment success stories.

Some of what was said in these panels wasn’t new. One of the messages, which was reiterated during the lunch talk by CSA president Sylvain Laporte, was the changing dynamic of what industry provides to government as a product. In the past, government would procure the whole system. Today, companies are selling the data but own and manage the hardware.

However, government as a data customer only isn’t working for everyone. Stephane Germain of GHGSat pointed out that 100% of their revenue from the last two years came from outside Canada. His company provides satellite monitoring of greenhouse gas emissions from industrial sites and has received some investment from government and VC’s. Ironically, Canada’s not buying his data, but the US government is.

It was also noted that the Creative Destruction Lab which is currently hosting its first space stream accelerator, had 120 applicants of which 27 where selected. Of the 27, 1/4 were Canadian.

Mike Greenley of MDA spoke of their LaunchPad initiative which is designed to allow smaller companies, including startups, an avenue to partner with MDA. MDA doesn’t pre-judge them and provides them an easy online portal to get them in the door according to the company. SpaceQ spoke with a couple of companies which have used the LaunchPad portal and are pleased with the resulting relationship.

Mike Pley, a consultant now and member of the Space Advisory Board, was the former CEO of COM DEV when exactEarth was started and then spun-out. He said during the early stages of exactEarth the company pivoted “20 odd times.” Pivoting isn’t something unusual for a startup. By his definition, we’re in the 3rd iteration of “New Space.” The first was the failed attempt to build satellite constellations in the 90’s, followed by a failed attempt to build a microsatellite market around 2001, and now we’re seeing the 3rd iteration.

During the Commercialization, Revenues and ROI panel which was the most interesting, Sergio  Escobar of Montreal based BCF Ventures said any startup has to have a global mindset otherwise they really aren’t interested in them. Their product must have a market beyond Canada’s borders. As well, he said startups should focus on five things, “team, team, team, product and opportunity.”

It was good to see OMERS Ventures participate in the event. OMERS Ventures is the venture capital arm of the pension plan for Ontario’s Municipal Employees (OMERS). Representing them was Michelle Killoran. OMERS notable investment have included Canadian technology companies such as Shopify, Wattpad and Hootsuite among others. Perhaps the introduction Michelle had to the startup space sector in Canada at this event may eventually lead OMERS into making their first space investment.  It was disappointing though that Michelle didn’t participate in the afternoons Startup Pitch Panel. Based on what I heard OMERS could be interested in data driven startups. According to the OMERS Venture website “over the last five years, OMERS Ventures has invested more than $340 million of capital in over 35 disruptive technology companies across North America, creating over 5,000 jobs, and attracting an additional $1.2 billion for our portfolio companies.”

Pitching to investors

The afternoon portion of the event was divided into two areas, a public Startup Pitch Panel and Business-to-Business meetings.

According to the CSA, 43 startups asked to make a pitch to the investment panel. Of those, 9 were selected to pitch. The CSA outsourced the selection of the pitches to Keiretsu Forum Canada. Keiretsu is part of global investment community made up of accredited private equity angel investors, venture capitalists, corporate and institutional investors.

SpaceQ was not privy to the list of 43 startups, but it’s clear by some of the selections made by Keiretsu Forum Canada that the space sector is not something they are all that familiar with. Instead of having a single organization make the selections, the CSA would have been better off creating a small knowledgeable advisory committee to make the selections.

The startups selected were Nano-Lit Technologies, C6 Launch Systems Corporation, Mission Control Space Services Inc., SpaceHorizon, Nüvü Cameras, QEYnet, Reaction Dynamics Lab Inc., CB2.0 Communications Inc., and Rocketplane Global.

What strikes me in looking at this list is that its heavy on launch service providers, includes a company that isn’t a space company, two that aren’t startups, and didn’t include a single Earth Observation company.

I find it hard to believe that of the 43 startups who wanted to pitch, that not a single one was related to Earth Observation and that could be selected.

Nano-Lit Technologies is a company that is developing lighting fixtures which includes technology designed to provide healthier light. A demonstration of the product, and the information provided certainly seem to indicate they are on to something. And while it could someday be useful for space explorers, this company is firmly rooted in developing products for a variety of sectors here on Earth. They should not have been selected.

How Rocketplane Global was selected is a mystery to me. To start, this event is focused on Canadian companies. Rocketplane Global is US company which was registered in Delaware in 2017.  What’s more, it has been around in various forms since 2001 and has never been able to produce its primary product, a launch vehicle. John Burgener, who made the pitch, is Canadian, and by all reports a successful businessman, but they had no place pitching at this event.

Nüvü Cameras which produces excellent imaging products is not a startup. They’ve been around for 9 years and have had some commercial success. If the goal of the event was to have true startups pitch, they should not have been selected.

Another odd thing about the Startup Pitch Panel is that it was done in public. The audience was told not to Tweet, no pictures, and no communication about the pitches should be made public. The results of the format was that companies were talking about their business plans with potential competitors sitting in the audience. Some of the companies removed slides from their presentations or omitted key parts of their plans. If the goal was to pitch to raise real money, the format wasn’t right.

For the public, especially the young entrepreneurs in the audience, the opportunity to sit in on such an event was valuable. It was a window into what happens when you pitch a VC.

As for the startup pitch panel itself, while it did include some investors, it seemed odd that that there was no representation by investors who had actually invested in any Canadian space startups.

One of the co-organizers of the event was the Creative Destruction Lab. This event was purposefully held the day after the third session of their space stream accelerator so that companies from the space stream could participate along with mentors and investors. How come only two of the six Canadian companies in the CDL space stream was selected to pitch? BTW, they were QEYnet and Reaction Dynamics. Of course, it is possible some of them might not have wanted to pitch at this event. Also, how come a group like Space Angels wasn’t represented on the panel?

One last question that came to my mind from this session was, will any of the companies that pitched, or participated in the event get any funding? That’s an important question to consider in the evaluation of the event, the current state of the investor community in Canada with respect to space startups, and the quality of space startups in Canada.

The participants reaction

I spent a lot of time talking to people attending the events. This included startups, investors, members of the Space Advisory Board, and seasoned company representatives. It wasn’t quite a unanimous endorsement, but the reaction was overwhelmingly positive. All agreed the event should happen again next year. Many suggested some changes to the format.

The positive reaction by the participants will be welcome news to the organizers as they evaluate what to do next.

About Marc Boucher

Boucher is an entrepreneur, writer, editor & publisher. He is the founder of SpaceQ Media Inc. and CEO and co-founder of SpaceRef Interactive LLC. Boucher has 20+ years working in various roles in the space industry and a total of 30 years as a technology entrepreneur including creating Maple Square, Canada's first internet directory and search engine.

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