Investors look for disruption factor before investing

Silicon Valley Venture Capitalist Looks For ‘Disruption’ Before Investing

_Frank Morring Jr | AWIN First

LOGAN, Utah – Steve Jurvetson, one of the most successful venture capitalists on Sand Hill Road – the Wall Street of Silicon Valley – says he spent 10 years looking for a suitable space startup to back before he found Elon Musk.

Musk was an attractive bet, Jurvetson told the Satellite 2014 conference at Utah State University here Aug. 4, because he’d already invested $100 million of his own dot-com money in the Falcon 1 space launch vehicle. But what closed the deal was Musk’s idea of colonizing Mars.

“A new entrant who has a goal so far beyond industry incumbents will think of solutions others might not think to take,” Jurvetson said of Musk’s “breathtaking” Mars ambition. “Whether it’s a propulsive landing for the Dragon capsule, whether it’s a reusable booster, whether it’s using methane as a fuel because when you’re on Mars that’s what you want to process into a fuel to get back, those steps might make sense, maybe, maybe not, as a return on investment if your entire scope is low Earth and geosynchronous launch … If no one else is doing anything bold, why would you? Why would you invest billions to shake up a business you’re riding high?”

By contrast, the “disruptive” startups he has convinced his partners at Draper Fisher Jurvetson to back are ready to tackle “the things they think of that are unique, are so big, so audacious, that it’s almost crazy to the average person.” That approach gives a startup an “unfair advantage” that it can take to the bank – or at least to his office.

Musk’s push toward reusable flight hardware in the space launch industry is disruptive enough for Jurvetson’s taste, given the competitive advantage that would come from the resulting launch-cost savings. “Seeing is believing,” he said, displaying aerial footage of the latest Falcon 9 main stage descending on its Merlin engines to a soft touchdown in the Atlantic Ocean in the most recent test of the SpaceX vertical landing concept.

Also winning his support has been Planet Labs, the garage startup founded by a group of youthful Ames Research Center employees who have raised a reported $65 million. They have used the funds to launch 71 test-flight articles as they work toward a cubesat constellation of more than 100 of the tiny spacecraft that would be able to image every spot on Earth every day. The up-front investment was sweat equity and experience on NASA’s PhoneSat project, and it played into a market that entrepreneurs here generally consider hot for small satellites – Earth observation.

Jurvetson has checked his remote sensing box by backing Planet Labs. Other space business areas he considers promising are “novel” launch vehicles for small satellites and space tourists; broadband from satellites; energy “harvesting, transmission and storage;” mining celestial bodies; and recycling organic waste and purifying water as part of what he calls the “ultimate recycling and sustainability challenge.”

But low-cost access to space remains an underlying disruption that will enable a host of new applications, he said, just as building out the fiber-optic network took the Internet to another level of commerce.

“Access to space is not free, but when it comes down to the cost of an airplane flight there are all kinds of things people could imagine doing differently,” Jurvetson said.

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