New space holding company crafts acquisition, lobbying strategy
By bringing multiple capabilities under one company, Tayor says he believes he can allow innovation to flourish by by handling things like finance and accounting centrally, ultimately creating a formidable collection of individual companies that can take on the big prime competitors.
That competition extends to the national security arena, where there is a major push to speed up military space acquisition and establish the Space Force as a new branch of the military.
“We’re also very fascinated by this national security piece,” says Taylor. There’s huge tail winds at the Defense Department with the Space Force … not to mention the NASA Artemis program and commercial space. But I think the DOD piece … hypersonics and all the other things going on right now on a national security basis are big drivers.”
Taylor, who previously founded the nonprofit Space For Humanity, which focuses on bringing more people to space, sat down with POLITICO on the sidelines of the International Astronautical Conference in Washington. Wearing limited edition Vans sneakers the same color as NASA astronauts’ orange flight suits, he spoke about what’s next for Voyager and why the space industry won’t collapse if billionaires like Jeff Bezos and Elon Musk leave the scene.
This transcript has been edited for length and clarity.
How did you get interested in space?
It’s always been a passion of mine. I’m coming at space more from the social change [angle,] which is maybe a little unusual for an investor. I think space is the next big thing for humanity and is transformational for humanity as we go forward. I founded a nonprofit called Space for Humanity. It’s whole notion is the more people … who can experience space, the better we can make life here on Earth.
In that context, the way I think about it is: what does the industry need to help fulfill all these missions that people want to do? Whether it’s space tourism or really interesting missions to the moon or Mars, … you really need a healthy capital ecosystem to make that happen. Nation states and governments have the control, but unless the financing is sustainable, it’s hard to really keep them on that.
I started getting involved about 10 years ago. At that time, one of the blockages in the industry was early stage angel investor capital, so we spent a lot of time focused on building an angel capital community so that small companies can be formed. Some of those companies are going to fail, but some are going to be successful to the point where venture capitalists and other capital providers would be interested in funding those. … Now what I’m focused on … is we have a bunch of large companies … and we have quite a few entrepreneurial startups and things of that nature, but very few companies in between. What the industry is really lacking is scale.
The idea behind Voyager Space Holdings is to consolidate some of these smaller space companies and build a larger publicly traded space company that’s more entrepreneurial. … The CEO of [Altius Space Machines] will still be the CEO of that subsidiary. He will still very much be able to be an entrepreneur, but they’ll be within this larger holding company infrastructure and have access to all the other large companies shared services that we’ll have at the Voyager level.
So Voyager is not an investing firm.
It’s not a private equity fund or an investment fund. It’s an actual operating company. … We’ll ultimately take it public, that’s the intent.
We think having an operating company where all the companies are working together and sharing best practices and ultimately creating a capability where you have launch, you have spacecraft, you have on-orbit servicing, you have data and analytics, you have an entire soup to nuts capability is going to be really important. [Altius Space Machines] is in the on-orbit servicing vertical, which I’m a big advocate of. We’ve spent a lot of time as an industry focused on getting mass to orbit. I think the next thing for the industry is manipulating mass in orbit, whether it’s servicing satellites, cleaning up space debris, de-orbiting or space manufacturing. This matters because I think it’s something the industry needs to break through to that next level of development.
How big do you expect Voyager to be?
We have said that we’re going to be a multibillion dollar, multinational company within 10 years. There’s a very straightforward path to that. I think we’ll exceed that time. The idea would be to acquire somewhere between three and five companies a year. … We’ll hopefully grow those companies to anywhere between $10 million and $100 million in revenue. We might buy bigger companies as well, but that’s the strike zone.
We’ll have our European headquarters in Malta and our Asian headquarters is going to be in Singapore. The U.S. headquarters is Denver.
What are you looking for in companies to acquire?
The more entrepreneurial, the better. [We’re typically looking for] founder-led companies with good intellectual property and between $10 million to $100 million in revenue. That’s important because we want to help companies that have been successful that need this structure to scale to the next level. It isn’t angel investing where someone is starting a company.
I mentioned on-orbit servicing. The part that we’re really interested in there is the ability to manipulate things in space. Robotics is a key part of on-orbit servicing right now. There’s a big push on things like the ability to upgrade the satellite, refuel a satellite and de-orbit a satellite. … What I believe to be true is the large constellations will start selecting standard plugins for their spacecraft that will have these capabilities. So the ability to capture a satellite in space will be standard across many constellations. … If you look at the way industries typically evolve, people recognize the need and then there’s some level of standardization and the standardization comes from some of the large customers.
Launch is really interesting. From my vantage point, there’s gonna be a little bit of a shake up. There’s a lot of launch providers now and I think in 2020 there’s likely to be some winners and losers. It’s likely Voyager will wait until that sort of shakes out before we make our launch investment. It’s a capability we know we need to have in house, but I’m not in a huge hurry to build that.
Do you expect Voyager’s business model to be the wave of the future?
I expect there will be other holding company structures. I’ve been told there are a couple others forming, which tells me we have a good idea. I don’t think it’s the only solution for this scale problem, but I think it’s an important solution. In a lot of industries it would typically be a private equity firm that would do the roll up, but space is difficult because private equity firms are very [internal rate of return] driven. … Basically, you invest capital and you get a return, but it’s very much sensitive to how quickly the capital comes back. It’s very sensitive to time. Whereas most other ways to think about investment is you invest a dollar, you get $3 back in 10 years. It doesn’t matter if you don’t get money in years five, six, seven. … The point being, typically in private equity, the time frames are a little shorter. Under this model we can be a bit more patient. I think it’s a better model for space.
This is an operating company. We’re having these companies working together. We’re bidding on programs together. … That doesn’t happen with private equity. They’re not operators, they’re investors really. They buy a company, try to improve it a little bit, then sell it. We’re buying it, trying to improve it so that it can be better in the future and we’re going to own it for 10, 20, 30 years. That’s the difference.
You want all these capabilities under one roof, when other companies are teaming up.
I think so too. You’re picking up on a really important point, which is that the large primes dictate the supply chain and there’s a lot of shotgun marriages between different companies. They might not know each other or they might not respect each other, or they might not trust each other, but they’ve been told, “Look, you’re going to work with this company.”
Whereas if you had a larger operating company that had all these capabilities that was not bureaucratic and actually had the entrepreneurial of vibe going, I really think that’s going to be a great competitor for those larger firms. I really believe that it’s a better version of these larger firms now. It takes time to build that capability.
The entrepreneurs who have launched these companies, … they like being able to innovate, create and be entrepreneurs. … We want to enable that. We can consolidate some of these shared services that they don’t have scale on, like finance, administration. … Even things like public policy. These small companies might have three hours a month from an outsourced public policy person in D.C. That’s not going to move the needle. Whereas within Voyager, we can have an entire D.C. team.
Will you have a lobbying arm in D.C. that represents all Voyager’s companies?
Hopefully I won’t regret pinning myself down on this, but January 1, we’ll be on the ground or in D.C. Maybe sooner.
We’re also very fascinated by this national security piece. There’s huge tail winds at the Defense Department with the Space Force … not to mention the NASA Artemis program and commercial space. But I think the DOD piece … hypersonics and all the other things going on right now on a national security basis are big drivers.
What happens if there’s a new administration?
It depends on who it is. There is risk for sure that the priorities change. … It’s a significant risk. … With all that being said, I think for Voyager, it’s a little bit of a double edged sword because yes, the tailwind might be less strong, but … I think it creates more opportunities at the holding company level for us to grow quickly and acquire other companies. I’m not too concerned about our model. I think our model thrives in an up market or down market just in different ways.
I think for the whole ecosystem, politics matter. … I was at a Commerce Department meeting the other day and [Secretary Wilbur] Ross was there. He said all the right things in terms of space as a priority. … That sort of thing I think might endure [under former Vice President Joe] Biden or others. [Sen. Elizabeth] Warren probably would be the biggest risk.
What impact would her wealth tax have on space economy given the role of billionaires?
I think of that category of space as more benefactor capital. I just mean capital that’s being deployed to space for passion reasons that doesn’t necessarily mandate or require return on investment. It’s an important part of the ecosystem, but I don’t think long-term it’s the driver of the ecosystem. I really don’t. I really admire what they’re doing. I’m glad they’re doing it. But if they were to vanish tomorrow, I don’t think the ecosystem would be dramatically impaired. It would be a blow. [Jeff] Bezos I think is still the richest person in the world, so even if he’s taxed at 4 percent a year, I don’t think it’s going to effect his spending.
Originally published at https://www.politico.com on October 25, 2019.