Investing in Space: How corporate VC is a double-edged sword

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Airbus Ventures is one of the most prolific investors in the space sector. And, at first glance, it sounds like any other corporate venture capital firm, nestled under Airbus, acting on behalf of the larger entity – and potentially unfriendly to disruptive startups. But it's not.

Airbus Ventures maintains an "air gap" between itself and its eponymous corporation, according to Lewis Pinault, space-focused partner at the firm. The VC operates as a self-standing fund: Airbus is a limited partner but AV has other external LPs as well, with an independent investment committee.

"This was very much by design," Pinault told me.

"We knew that for us to be able to work on a trusted basis with top tier VCs in Silicon Valley … and to have insight to their startup companies, often typically still in stealth mode when they're the most interesting .. that we would need to be co-investors on the same sort of trusted basis within the startup company," Pinault said.

It's a telling dynamic — attempting to straddle the line between scale and agility, reputation and newness — and is important context amid a deal-making shift in the space sector.

A few weeks ago I polled folks on the state of M&A in the space industry, and the consensus was unanimous that deal activity is heating up. While the latest data indicates the sector is stabilizing in terms of investment, Pinault noted that there is still "pressure on valuations." That can be a risk to startups that took money from corporate venture capital firms, where a lack of options can quickly corner a company into an exit.

"It can really narrow down the options. Maybe that's part of the risk, but maybe for some it might be part of a fallback-opportunity thinking," Pinault said.

According to PitchBook, as many as 100 space companies have taken investment from CVCs, including from the venture arms of Lockheed Martin, Toyota, Raytheon, Honeywell and Boeing.

The risk and distrust of CVCs is not a new topic. There's fear that a corporation would use its venture arm to gain competitive intelligence, take a look under the hood, stifle young disruptors, or simply hunt to acquire speculative tech. That's a perception Pinault fights.

"Many portfolio companies sometimes in the beginning are asking the same kind of questions: 'Oh, aren't you a CVC? You're not a department of Airbus, and you're not after acquisition?'" Pinault says. "But there are no conditions [with AV]. There's no hooks, there's no promises about future M&A, there's no first right of notification or right of refusal."

"We might make decisions that [Airbus] finds occasionally disruptive," Pinault said, adding: "In truth, this has happened – we've shaken the trees a few times."

• SpaceX's valuation nears $150 billion after the company completed a share sale by insiders in a secondary round. Additionally, the company reportedly told some investors that it expects to bring in about $8 billion in revenue in 2023, which would be about double its prior annual revenue. – CNBC / The Information
• Senate threatens to cancel NASA's Mars Sample Return program, with growing costs for the effort triggering an independent review of its feasibility. – The Planetary Society
• Venezuela joins China's moon base project: The South American country became the latest to join the Chinese International Lunar Research Station (ILRS), which aims to establish a base next decade and is seen as a competitive project to NASA's Artemis program. – SpaceNews
• SpaceX flies 48th and 49th launches of the year, a pair of Falcon 9 missions. The company pushed a second Falcon 9 booster to the 16 launch mark, and deployed another set of second generation Starlink satellites. – Space.com
• Rocket Lab launches seventh Electron mission this year, recovering the booster after splashing it down in the Pacific Ocean, as the company further advances its plan to reuse its small rockets. The mission delivered seven satellites to orbit: Four cubesats for NASA's Starling mission, a demonstration satellite for Telesat, and two satellites for Spire. – Rocket Lab
• India launches Chandrayaan-3 moon mission, as the country aims to follow-up on an effort that failed to land on the lunar surface four years ago. If successful, the mission would make India the fourth country to land a spacecraft on the moon. – AP
• Virgin Galactic announces second commercial flight crew, with a British Olympian and two Caribbeans to fly on the Galactic 02 mission, set for August 10. – Virgin Galactic
• Japanese rocket engine explodes during testing: JAXA was test firing a second stage engine for its Epsilon S rocket, which was scheduled to launch next year, but about halfway through the engine failed. – Read more
• NASA begins assembling lunar ice-hunting rover: The agency has begun building the Volatiles Investigating Polar Exploration Rover (VIPER), which it plans to use to hunt for ice deposits on the moon, with launch scheduled for November 2024. – ArsTechnica
• Above: Orbital conducts test of tech for artificial gravity space station, with the company announcing that the milestone validated "our partial gravity control systems" during work at NASA's Marshall center. – Above: Orbital

• Rocket Lab adds two-launch deal from Synspective, to fly more of the Japanese company's synthetic aperture radar (SAR) satellites on Electron. – Rocket Lab
• Satellite weather data startup PlanetiQ wins $60 million NOAA contract: The company has two satellites in orbit, and plans to grow its constellation to 20 satellites. – SpaceNews

• Lockheed Martin reports Q2 results, with its space unit generating $3.2 billion in revenue during the quarter, up about 12% from a year ago. Much of that increase came from its missile defense program, but about $120 million was from national security space programs, and another $65 million from building the Orion capsule for NASA. The division has a $30 billion order backlog. – Lockheed Martin
• Deutsche sees Rocket Lab's stock climbing higher, even after the company's shares have more than doubled since the start of the year. The firm has a buy rating and $10 price target on the company's stock. – CNBC

• Jody Singer, director of NASA's Marshall center, to retire: Singer will leave the agency after a 38-year career. She became the Alabama center's first female director in 2018. – NASA

• July 22: SpaceX's Falcon 9 launching Starlink satellites from Florida.
• July 26: Boeing reports Q2 results before the bell. 
• July 26: SpaceX's Falcon Heavy launching EchoStar's Jupiter 3 satellite from Florida.
• July 27: Northrop Grumman reports Q2 results before the bell.