Monday, January 26, 2015

Elon Musk as a Big Pimpin Playah; Raises $1Bln USD for SpaceX!

          by Brian Orlotti

On January 20th, Hawthorne,CA based Space Exploration Technologies (SpaceX) confirmed that it has raised approximately $1Bln USD ($1.24Bln CDN) from two new powerhouse investors, Mountain View, CA based Google Inc. and Boston, MA based Fidelity Investments.

It's been a busy week. SpaceX CEO Elon Musk, or at least a cartoon image backed up by his actual voice, guest starred in the January 25th, 2015 episode of The Simpsons as himself. Earlier in the week, as outlined in the  January 26th, 2015 Quartz article, "Elon Musk settles with the US Air Force, smoothing the way for competition in spy-satellite missions," Musk  announced a settlement with  the US Air Force, "ending a lawsuit that accused the military of unfairly awarding an $11 billion launch contract to United Launch Alliance, a Boeing-Lockheed Martin joint venture ." Graphic c/o Fox. 

The deal will not only provide SpaceX with the capital needed to achieve its goals, but also marks a watershed moment in the history of the NewSpace industry.

According to the January 20th, 2015 SpaceX statement, titled simply, "Financing Round," Google and Fidelity will own just under 10 percent of the company between them (the exact percentages have not been made public). The new investors join several others, including:
  • Capricorn Venture Partners (CVP) – A Belgium-based venture capital and equity fund manager whose portfolio includes a variety of European clean tech, medical, and IT firms. 
  • Founders Fund (FF) - A San Francisco, CA-based venture capital firm with $2Bln USD ($2.48Bln CDN) in assets under management. The firm's portfolio includes Airbnb, Knewton, Lyft, Spotify, Stripe and ZocDoc. FF was also one of the earliest investors in Facebook and the first institutional investor in SpaceX.
  • Valor Equity Partners (VEP) – A Chicago, IL-based venture capital firm with approx. $994Mln USD ($1.24Bln CDN ) in assets under management. VEP's portfolio includes Tesla Motors, Family Health Services (a provider of nursing and other home care services) and Sizzling Platter (a restaurant operating company).
How will SpaceX put this new funding to use? What do Google and Fidelity stand to gain?

The announcement comes on the heels of SpaceX founder Elon Musk's Jan 17th reveal of his plan to place a constellation of several hundred low-cost satellites 750 miles above Earth. Such a system has the potential to provide fiber-speed internet access to everyone on Earth.

Musk has stated that such a system would serve two  roles: tapping the potentially enormous market of low-cost high-speed internet access for the developing world and providing a telecommunications infrastructure for his planned human settlements on Mars.

Google, which is developing programs of its own for low-cost internet access via balloons, drones and satellites, as most recently described in the November 18th, 2014 post, "Google Takes Control of Hangar One," likely seeks to harness SpaceX's expertise in spacecraft and launch vehicles.

Fidelity Investments has not publicly offered any statement on its involvement, but with SpaceX on the verge of achieving low-cost space access and the subsequent opening of a huge new market to many players, the scent of profit must be strong indeed.

Google and Fidelity Investments' investment in SpaceX is a sign that more conventional investors are now willing to throw their hat into the space ring. As capital increasingly flows into NewSpace ventures, innovation will blossom. Over time, new infrastructure and revenue will enable even greater achievements.

Brian Orlotti.
Space will then not only be the realm of scientists, but also of workers, merchants, artists, entrepreneurs and settlers.

The true space age is about to begin.

Brian Orlotti is a Toronto-based IT professional and a regular contributor to the Commercial Space blog.

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