The Early Innings, with Mark Boggett (CEO of Seraphim)

So we are in the early mid innings.

Yeah. Well, I guess I was using a cricket analogy to come back to you.

So look, what we are in is the first phase of the new space infrastructure. So, you know, I think that what we've seen, the infrastructure is largely built out in satcom, but it's still nascent in Earth observation. But crucially, the value creation of this infrastructure is still at the very beginning and it's only just beginning to compound.

So I've been focused on space for 12 years and investing for the last 10.

Well, you know, I know that's a very lot of ways you can go with that question. So I mean, well, the first thing is that I now have more confidence when I'm investing into an early stage company that the two, three, four, $500 million that that company needs to succeed is going to be available. 10 years ago when I was writing, you know, early checks into ICEYE and companies like AST SpaceMobile, I had no idea that the money was going to be there from the other sources that were, you know, essential for that company to succeed were actually going to be available. So that's the biggest thing. And now I think that pendulum has really swung so that we're now really confidently making investments into companies where you know that they can raise two or $300 million in the future to deliver against this, you know, that's much less of a consideration now.

Yeah. So, you know, I'd spent the previous 10 years as a deep tech investor, investing very broadly in frontier technologies, from life sciences right the way through to AI, 3D printing, new materials. So I've always been on that side of investment. And what was sort of increasingly apparent to me was that there's just a massive advantage with becoming a thematic specialist. And when the time came to set up my own firm, and the reason that happened was the firm that I was working for started transitioning more to private equity away from venture, and they really wanted to sort of move away from, you know, home run returns through a technology. They'd rather get, you know, a consistent 3x, and that sort of, you know, really wasn't my area of interest. So myself and two of the guys I was working with, Rob and James, so we've been working together since 2006, you know, decided to actually go and establish Seraphim and focus it. So because I had a 12-month period of transition, we actually had a lot of time to really think about this carefully. And actually we were actually starting off with an AI fund because AI was one of the areas that we'd had good success in the past and, you know, we were really, really comfortable with investing into. But we had the time to really go and look more broadly and really be thoughtful about how we were going to do this. And space kept on coming up as an area of interest. And we were watching what was happening with SpaceX at the time. You know, they weren't yet sort of, you know, returning rockets. The reusability element wasn't there. Skybox was bought by Google around that sort of time. That was really interesting to see how a business that was sort of, you know, working on shoebox-size satellites could quickly command, you know, $500 million enterprise value. And that was really, really attractive. So it was really a, you know, really thoughtful and analytical approach to the market that made us convinced that space was actually going to go through a multi-decade transition, a disruption effectively, embracing the technology solutions from other markets where space had fallen behind on really Moore's law of other markets. So we became convinced of that, and that's when I went then to speak to the leaders of other space companies to test my thesis. So I'm probably going into too much detail here, but actually there's an interesting story here, Mo. So if you indulge me a second. So what basically happened was I was introduced to the CEOs of 11 of the world's largest space companies to go and talk about this new fund for space that I was setting up, and I went and met...

This would have been in 2014.

And, you know, so I went to meet the CEO of Airbus and Inmarsat and SES and Telesat and Teledyne and a whole range of other companies. And I was introduced at the CEO level and went and sort of explained why I was setting up this fund and that it was effectively about identifying new innovation, new business models, and why they should be interested because their market was going to go through a period of disruption. And six of the 11 CEOs that I spoke to had agreed to invest into the fund. So it was actually the willingness of the industry to support my fund that really gave me the conviction to do the fund, because part of the issue was when we were looking to set up this fund, nobody else had set up a fund in this area, and that was actually a big problem because we were like, why are we doing this if nobody else is doing it? Why are we doing it? So the very fact that I was getting the support from all of those big space companies, and it sort of also addressed the sort of imposter syndrome of not coming from the space industry. Therefore, you know, how can we go and sell this fund and make those investments by being able to use the business units of those, you know, six major, you know, multinational, multi-billion dollar turnover space companies. That really gave us the confidence that we were going to really be able to, you know, make a great job of being the first space fund. So that's really where it all came about.

Well, you know, space is a black hole really was the main sort of theme. You know, there had been many investors that we were speaking with that had invested, you know, in the original sort of satcom businesses, the Iridiums and so on, that, you know, failed to deliver against the promise. So really, you know, there was a little appreciation of why new space was different to old space and why a new space approach was actually going to win out. So that was really the biggest problem, that folks first of all just didn't believe it was different this time round. You know, this is a capital-intensive long-term industry, and we were trying to say, well, you know, it's still a long-term industry, but it's not so capital-intensive. You know, the math works better now with the new space economics than it does with the old space economics. And that was a real challenge. One of the biggest investors that we were able to convince on that was the British Business Bank, who were a major LP in our first fund, but they were more sort of relying on what I'd done in the past rather than really buying into this. But they recognized, because space has always been an important industry in the UK, and the amount of industry support that I'd managed to garner for this first fund was really convincing. And I think ultimately that was the thing that allowed the early investors to sort of take that leap of faith. Why are all of these leaders from the traditional space industry putting their money into this fund? You know, we're telling them that there's a disruption coming. They obviously believe that to be true, and if that is true, there's clearly some money to be made on it. So one of the things that this really focused in our mind was that we had to take bets in the industry that were effectively going to allow us to be able to return money sooner rather than later. You know, we're investing 10-year money from LPs that are skeptical about how long it's going to take for them to receive that money back. So from day one, we were like, right, let's focus our attention in investing into companies that can perhaps provide us with the return well within that five, within the 10-year period.

Yeah. Well, with great difficulty. This is the reason why it took us just shy of two years to raise the initial $90 million for our first fund. So, you know, it's a leap of faith by the LPs that backed us there. You know, for those who are prepared to listen to the story several times over and buy into this, because this was all about the promise of what a SpaceX could deliver in terms of lower costs, because, you know, they weren't being realized at that time. It was a direction of travel rather than, you know, they weren't commercially operational. They weren't successfully, you know, landing the reusable elements of the rockets. So all of that was sort of still taken on faith. So yeah, you know, investors who are investing in LP, seed and Series A funds, you know, go in recognizing that 10 years is always going to be 12, perhaps 15. Many of the investors that invested into that first fund had invested into my previous funds. So they were investing into the manager. They're backing the jockey rather than the horse. And whilst I think people would have just called us crazy if it wasn't for the massive amount of backing that we had from the industry that were really underlining the truth of the potential of this disruption.

Yeah, they are very happy. We've returned all of the, the fund's closed down. We've returned all of the capital and investors made a 3x return net.

I'm sorry, we haven't... Generation Space, what is so...

Sure, yeah. So there's three elements to the overall Seraphim business. We have an accelerator program. We have venture funds. We have growth funds. All of them invested into space. All of them globally focused. Managed out of our UK team but with satellite offices in San Francisco and Berlin. About 20 people full-time in the organization. We've got sort of a lot more sort of part-time that are involved as well. So we receive a giant global deal flow. We triage that between the three different parts of the business. So the stuff that's going into the accelerator program is typically coming out of university spinouts, teams out of different large companies like SpaceX or like some of the primes. So this is sort of pre-, in fact, pre-establishment in many cases. The folks who are coming onto the program haven't yet set up the company, and, you know, many companies actually set themselves up and spend the first few months of existence in one of our meeting rooms after they've completed the program. So it's a three-month program. We take 10 companies onto each of those cohorts, and they're very global. We've had 36 different countries represented, and we help them with various facets of how they get themselves ready for the fundraise activity and think about establishing a board and think about accessing advisors and all of this. And we also introduce them to our corporate partners who are very interested in their new innovation, new business models, new technology, new ideas. And then we sort of release those companies, you know, into the market. We introduce them to our VC friends around the world who syndicate and invest. So the companies that have gone through the 15 cohorts we've done of that today have raised $1.1 billion post going through that program.

Yes. So Generation Space is effectively what we called the accelerator program and what we call our podcast that we do as well. We've then got our venture funds, and they will invest into the companies that are coming through the accelerator program, and they will invest outside of that. We've recently closed our most recent fund where we've, in fact, we've not done the final announcement yet, but we're over our $100 million target, and we've been investing into that fund. We've already invested into 17 companies in that portfolio. And then we've got our, so that's a UK fund that invests globally. Right now more than half are US, it's more like sort of 60% US, the rest Europe. Then we've got our public listed fund which is listed on the London Stock Market, and that is another global fund that invests in B, C, and E. We've got 26 companies in that portfolio. Last year they raised $2 billion in equity funding. The top 10 companies out of those 26, last year their revenues grew at just below 80% on average. And 86% by value will be profitable in 2026. So we've got two that are profitable already, and 86% by value will be profitable this year. So there's been a massive growth spurt throughout that portfolio. That fund is the number one performing fund on the London Stock Market this year, and is really sort of firing up on all cylinders. So taking a step back, we've invested into 46 companies since we established Seraphim. Over the last 10 years we've had nine unicorns. We've had five IPOs. We've had just four failures. So less than 10% failure and more than 20% unicorn success.

Sure. So this is one for the LPs, which we normally start off by saying what we're not. So, you know, LPs conjure up an idea of what a space fund is, and we kind of don't do any of the things that they expect us to do. So we don't invest in launch. We don't invest in space travel. We don't invest in anything to do with the moon or anything to do with Mars. So those are the four areas that we don't invest into.

Correct. Yes.