Today we talk to Tim Muehlenbach, CFO of Zero 2 Infinity (Z2I). Tim worked for a long time at Goldman Sachs and in 2017 he landed at Z2I, where he is in charge of, among others, investment. Astropreneurs talked to him and asked him for his vision about financing companies.
If you want to know more about Zero 2 Infinity, check our interview to the Founder and CEO, Jose Mariano López Urdiales.
Astropreneurs: Equity capital is the prime choice for financing new business ventures, but does equity capital come in different guises?
Tim Muehlenbach: It does! Venture Capital Funds (VCs) are often cited as being the primary source of equity capital, especially for early stage businesses. Beyond that, we see Family Offices, High Net Worth Individuals, Super Angels, and Business Angels providing pools of equity capital for startups. These categories of investors have distinct objectives as previous contributors to Astropreneurs have rightfully pointed out. Though finding a good fit is often akin to looking for the “needle in the haystack”. Above all, the investment must fit its investor. The founding management team needs to be credible and investible, the chemistry has to be there and so on. Ideally, of course, there is some form of synergy with other investments in the investor’s portfolio as well. And surely enough, there needs to be conviction around the ability for an investment to generate a “juicy” return. Oftentimes, however, the fact that a competing VC firm is looking to invest, will be sufficient to secure interest.
But there is a “new kid on the block”! I believe there are two important trends currently gathering pace: crowdfunding solutions via established crowdfunding platforms (like Seedrs, Seed Invest, or Crowdcube to name a few) and Initial Coin Offerings (ICOs) enabled by blockchain technology. Although ICOs have provided firms with non-dilutive capital, the more likely format to succeed in the long run is one that is more equity-like. Some may say that neither is sufficiently developed to be relied on and that it’s not really an instrument for Astropreneurs to take seriously. I think differently, and my team at Z2I does, too. Naturally, the risk inherent in space ventures is compounded by the market risk that the investment community still (and probably for some time) attribute to volatile crypto-currencies. Though it should be noted that ICO fundraising surpassed traditional early stage VC fundraising last year. At the same time, there are a growing number of space ventures successfully securing equity finance by way of crowdfunding, with two similar projects in the light payload launcher segment live today: LEO Aerospace, raising an early seed round in the US via Netcapital and Zero 2 Infinity, raising growth capital for Bloostar via Crowdcube (UK).
Astropreneurs: Can you describe your specific experience with raising equity capital at Zero 2 Infinity?
Tim Muehlenbach: We are a European Space transportation company and we have just opened a new investment round of c. £1 million through Crowdcube (UK) to fund our growth plan and our vision to make Space more accessible for all. The Crowdcube campaign is open to everyone who signs up to the platform, with the minimum investment set at £25. Since inception, Z2I has received over €5 million across a number of investment rounds. The current investment campaign is set to fund the next technical milestone in the development of Bloostar. Bloostar is the name of our dedicated satellite launcher, which was shortlisted by the European Space Agency (ESA) in its recent micro-launcher study, the Launchers Preparatory Programme (LPP).
Astropreneurs: Should every startup in the space sector consider accessing equity capital by way of new and innovative solutions? And does the future bode well for aspiring Astropreneurs?
Tim Muehlenbach: Consider it and be prepared, yes! But pause to reflect first. Private space is breaking new ground daily. Though the only successful venture that has truly grabbed everyone’s imagination (and attention) is SpaceX. And there just hasn’t been broad-based investor participation in that success story. SpaceX has an implied market valuation of c. $27.5 billion driven by the VC community in the US. At Z2I, we concur that there is increasing investment activity globally in space ventures, and we subscribe to the optimistic projections that are recently being published. Bank of America Merrill Lynch (BAML) recently stated that it believes the Space industry to reach $2.7 trillion in three decades, up from c. $350 billion today. We think the launch segment will be a major contributor. For now, there is no dedicated ride to space for small satellites, and Z2I aims to fill the gap. There’s more to come here as we all build the future, one that seeks to unlock the huge potential of an entirely new economic realm!
Astropreneurs: Thank you, Tim, for spending some time with us and talking about your vision of the space economy. To our readers, if you want to follow Z2I Crowdcube campaign, you can do so here.
Posted by Marta Lebron Gaset