Seraphim wins £30m from government bank to build on Britain’s satellite lead

The first venture capital fund dedicated to commercialising space has won the backing of the UK government with a £50m investment pledge from the British Business Bank.

The launch of the £80m Seraphim Space Fund comes as the government prepares to publish figures that will show that growth in the UK space sector is outpacing the wider economy.

The government has set a tough target to win 10 per cent of the world’s estimated £400bn space market by 2030. The last figures compiled in 2014 showed the UK space sector generated revenues of close to £12bn a year.

Greg Clark, business and industry secretary, said the industrial strategy that the government was preparing would recognise the importance of building on the UK’s strength in the sector, in particular its leading position in satellite manufacture and applications.

“The launch of the Seraphim Space Fund … will cement our place at the heart of the space and satellite technology and start-up revolution,” he said.

Interest in the commercialisation of space is booming as satellite and launch costs tumble.

More venture capital was invested in the sector around the world in 2015 than in the previous 15 years, according to the Tauri group, a California-based space industry consultancy.

However, the UK and Europe have struggled to provide the volume of funding available in the US, where investors are more accustomed to risk, according to companies who have tried to secure early stage funding.

The Seraphim fund is an attempt to tackle that funding gap.

It has attracted investment from wealthy individuals and some of Europe’s biggest space companies, including Airbus. The fund is launching a year later than planned amid uncertainty over the UK’s decision to quit the EU, but about £50m has now been committed in the first round of funding of which £30m is from the BBB.

A further £30m is being promised by the BBB and industry for the second round, due to close in April, and the first investments of £2m-£3m will be made in the new year.

Representatives from the corporate investors will sit on the fund’s investment advisory board and the European Space Agency will also have a seat.

Keith Morgan, chief executive of the BBB, said the UK would struggle to meet its targets without funds such as Seraphim.

“Providing the best space-related start-ups with the funding they need to grow into global players will be a vital component if these targets are to be met,” he said.

“Through its combination of industry heavy-hitters, leading space-tech entrepreneurs and partnerships with the likes of the European Space Agency, we believe that the Seraphim Space Fund will be ideally placed to help make this vision a reality.”

Mark Boggett, chief executive of Seraphim, said his fund would work with another initiative that aims to expand the financing options for start-ups in the sector. A new group of space-focused “business angels” will be launched next month to focus on very early stage start-ups that need funding of up to £1m.

Seraphim said it was already receiving at least 50 applications for funding a month and those that were promising but too early-stage for the fund would be passed to the UK Space Tech angels, being launched next month by the London Business Angel network.

These investors would have the comfort of knowing they were backing a business that had already attracted venture capital interest, he said. “We have created a financial ecosystem that doesn’t exist anywhere in the world.”