>> Maria Varmazis: White House cybersecurity officials are on a West Coast tour this week, and while they're there, some of the folks that the White House are meeting with are space companies, and the topic that top U.S. government cyber officials are meeting with space industry experts about, well, keeping satellites safe from cyberattacks, of course. Today is April 26, 2023. I'm Maria Varmazis and this is T-Minus. Space and cybersecurity, better together. The U.S. and South Korea strengthen ties. The Air Force PIPs 5 space programs. $60 mil for X-Bow, and $100 mil for Ursa Major. And my interview with Jonathan Lacoste, Founder and General Partner at Space.VC on space startups and venture capital in the space industry. Stay with us. Now here's your intel briefing for today. Kemba Walden, Acting National Cyber Director for the Biden administration, has been busy this week. It's RSA after all, and that's the huge industry cybersecurity conference happening in San Francisco right now. And while on the West Coast, Walden also says she's been busy down the coast at Long Beach, talking to California companies involved in aerospace. The topic of discussion is satellite cybersecurity, and specifically what kind of policies the White House might need to champion on behalf of the space industry to make sure that security concerns are top of mind during satellite design and when systems, specifically commercial systems, are used by civilian as well as military and government applications. Last year's attack on Viasat satellite networks by Russia is always one of the reasons space cyber is getting more attention. Also adding to the sense of urgency here are the recent disclosures about how adversaries might use physical or cybersecurity attacks to disable or destroy space systems. Building in security by design for new space systems is an ongoing priority, says Walden, as is making the most of new commercial capabilities to harden existing space systems.
Plans are also in the works at the National Institute of Standards and Technology, or NIST, about adapting the NIST Cybersecurity Framework, or CSF, which has been in use in the cybersecurity sector for quite some time now, and the goal is to also include best practices for space systems. Now, if you'd like to read more on this issue, I should note that our sister publication, you might have heard of it, the CyberWire, is covering more on satellite cybersecurity in their pro-policy briefing. You can head on over to the cyberwire.com to read more on that.
During an official state visit to the United States this week, President Yoon Suk-yeol of South Korea made an official visit to NASA Goddard with many representatives of the U.S. government, including Vice President Kamala Harris. They got a tour of the facilities and got to see the Nancy Grace Roman Telescope up close, which is still currently under construction.
This wasn't just a field trip, though, as during this visit, NASA Deputy Administrator Pam Melroy and Ministry of Science and ICT Minister Lee Jong Ho signed a joint statement of intent to, quote, advanced cooperation in exploration and science between NASA and the MSIT of the Republic of Korea. The two nations have been partnering on a number of recent Earth observation missions, including NASA's TEMPO and Korea's GEMS missions, both of which monitor air quality from space. In this joint statement, the UN administration noted that the upcoming agency KASA, the Korea Aerospace Administration, will be the point of contact going forward for joint space activities with the United States.
The Korean space private sector also used this state visit as an opportunity to strengthen ties with U.S. partners, with pharmaceutical firm Boryung Corporation and Axiom Space finalizing plans for a new joint venture for projects in Low Earth Orbit, LEO. Boryung invested $60 million in Axiom Space last year, and it will hold the majority share of the new joint venture, 51% specifically, with Axiom Space holding the other 49%. The goal of the new South Korea-based venture will be to help support Axiom's build-out of their commercial Axiom Space Station while also grabbing a spot for Boryung to connect its own microgravity-related research and development on LEO on the Axiom station.
Breaking Defense reports that Frank Calvelli, the official in charge of space acquisition for the Department of the Air Force, has issued his first scorecard on program performance. Five programs are allegedly struggling to stay abreast of their requirements. The scorecard will not be released to Congress or the public as a spokesman says it, quote, contains assessments of the classic cost, schedule, and technical performance of programs. Still, getting PIP-ed is no fun.
And as we mentioned in yesterday's show, the GAO is reporting that the Space Force is behind in Space Situational Awareness, or SSA capabilities. The good news is that the National Reconnaissance Office and the Space Force are planning to launch the first satellites in their highly classified joint Silent Barker program later this year. The satellites are planned to be launched on ULA's Atlas V in September, with the mission to provide, quote, satellite threat intelligence and space situational awareness.
And also on yesterday's show, we commiserated with Japan's Ispace after the company lost contact with its Hakuto-R lunar lander during its attempted soft landing on the moon. Further investigation from the company suggests that the vehicle ran out of fuel in the final moments before landing. Ispace released a statement hours after the attempt stating that, "It has been determined that there is a high probability that the lander eventually made a hard landing on the moon surface, and establishing communications is no longer achievable."
NASA Administrator Bill Nelson says that despite rising tensions with Moscow, he expects Russians and Americans to continue to work together on the International Space Station until it's decommissioned. American-Russian space cooperation was placed in doubt after the invasion of Ukraine in February 2022, but Nelson told Reuters that the ISS partnership continues in a very professional manner between astronauts and cosmonauts.
Raytheon Technology says they are working to meet a backlog of supply issues worth $180 billion. In their first quarter earnings call, the company stated that supply chain issues that have slowed their production are finally showing signs of stabilization. Raytheon Chief Executive Officer Greg Hayes told investors this, "We are still constrained from a supply chain standpoint, although it's getting a hell of a lot better," as he warned that they continue to experience challenges in castings, forgings, raw materials, and machining.
On to some investment news now. And Hydrosat has announced that they have raised $20 million in funding which the company hopes will launch the first of their two thermal infrared satellites into orbit. The Earth observation company aims to provide customers from agribusiness to the government geospatial intelligence for food security, public safety, and the environment.
New Mexico startup X-Bow Systems announced a $60 million U.S. Air Force strategic funding increase, or STRATFI, agreement. The award extends X-Bow work with the Air Force Research Laboratory. AFWERX, the Air Force's innovation arm, established the STRATFI program in 2021 to provide small businesses with funding to help bridge the gap between technology development and commercial adoption.
Colorado-based startup Ursa Major closed $100 million in new funding last October, according to documents viewed by TechCrunch. The rocket engine company has reportedly raised $234 million and sought the funding at a $400 million pre-money evaluation. Ursa Major engines are being used by Astra, Phantom Space, and Stratolaunch, and they were recently awarded an engine delivery contract with the U.S. Air Force.
And now on to human spaceflight updates. And Virgin Galactic held a successful glide flight from Spaceport America this morning. Virgin Galactic's President of Spaceline Missions and Safety, Mike Moses, said the glide flight is, quote, one of the final steps towards commercial space line operations, which are expected to start later this year.
SpaceX continues to make waves in the aftermath of the Starship launch. The Federal Aviation Administration, which regulates launch site safety and oversees technical investigations into commercial rocket mishaps, is looking into possible damage from the rocket's explosion. Starship is expected to be grounded until the investigation concludes. And weather problems have caused SpaceX's 27th launch of 2023 to be scrubbed due to a high probability of landing failure. SpaceX is hoping to launch another 40-plus Starlink satellites into orbit later this week. There is always tomorrow. And that's our briefing for today. And hey, T-Minus crew, if you find this podcast useful, please do us a favor and share a five-star rating and a short review on your favorite podcast app. It'll help other space professionals like you find the show and join the T-Minus crew. Thank you so much. We really appreciate it. And next up is my interview with Jonathan Lacoste, Founder and General Partner at Space.V, on space startups and venture capital in the space industry. Stay tuned. Let's turn now to the space startup scene, and for that, I spoke with Jonathan Lacoste, the Founder and General Partner at Space.VC, which is an early stage venture capital firm investing in space and space-adjacent startups.
>> Jonathan Lacoste: It's actually a really incredible time to be in the space startup ecosystem. I think where we focus at the earliest stages from ideation and company formation all the way through Series A, there are a tremendous number of really talented entrepreneurs leaving and choosing to start their entrepreneurial journey right now, which is really exciting. We also see a lot of robust investment activity at that stage. So while later stages, maybe Series B, Series C, is a little bit more difficult to raise those rounds, we're seeing a lot of space startups and, from the venture side, a really active robust amount of deals being done in the early stage. So it's a pretty good time to be in early stage space.
>> Maria Varmazis: Yeah, that's great to hear, and you have a very impressive portfolio. So I I'd love to ask you, what are you looking for specifically, and what excites you in different companies?
>> Jonathan Lacoste: A lot of this actually falls back on my own personal experience. So before I launched a venture capital firm, I was a founder and CEO for 10 years of an enterprise software company, and because of that, you know, I raised five or six rounds of venture capital, almost $100 million, and so I had 10 years of experience from the other side of the table, understanding the challenges and what a founder would go through and how difficult it was to build companies, and so because of that, I bring that perspective to when I meet with founders and what I'm looking for.
So first and foremost, it starts with the team, especially early on when we're investing as venture capitalists. We're investing pre-product and pre-revenue. A lot of the times it's just an idea or a plan on paper or in a slide deck, and so we really need to be able to have conviction around the experience that the team has had, and it can be brief experience, too. We've invested in 22-year-olds, right? So it's really more about what you've done with your time rather than the longevity of time.
We need to have conviction around the feasibility of the product roadmap. About half of our portfolio is complex hardware systems and half is software oriented. So depending on what you're building, you need a very different product roadmap, obviously, instead of experiences, but it's really important that you have a strong and very feasible product roadmap.
And then the last component is the TAM, the Total Addressable Market. For us, when we invest, we're looking to invest primarily in space startups that are selling to enterprise markets that have large commercial opportunities here on Earth. So what I mean by that is selling into the insurance market, the financial services, agriculture, mining, oil and gas where the size of those markets is much, much larger than maybe being constrained to just selling to other space startups.
So those are three things that we look for when we evaluate early stage startups, is team, the product feasibility, and the TAM.
>> Maria Varmazis: Oh, that makes a lot of sense to me. So you've been doing this for some time on both sides of the -- of the table, so to speak. What are some key lessons that you've learned?
>> Jonathan Lacoste: I would say, from the founder side, I would sometimes be frustrated at why a VC didn't understand the vision or didn't get it, or it didn't seem to be that they were that interested. What I realized from the VC side now is that very rarely, if ever at all, will a VC have their perspective be changed by more follow-ups from a founder, if that makes sense. Like, it's more about matchmaking and finding somebody who genuinely believes in the market or the problem set you are building versus trying to convince everyone you speak to about your solution. The reality is you're looking for the best fit partner, not to convince everyone that you're speaking to. So I think that's one major takeaway.
The other takeaway is that now being on the venture side of the table, I appreciate and understand how much investors want to invest in lines and not in dots, and what I mean by that is, if you're thinking about starting a company, the best thing to do even before you've started is early and often communication with investors, with potential investors, right? What do you think about building? Can I get some feedback on the product roadmap? Do you have anyone in your network that might be interesting? As investors, we want to see you be thoughtful and ask questions. We want to see you say what you're going to do and then go and achieve those things. It gives us more conviction and allows us to move more quickly when you're finally opening a round of capital. If we only hear or interact with you when you're looking to fundraise, we have to make decisions in a very tight and narrow view. We don't have the benefit of building a relationship with you for 6, 9, 12 months, and I've noticed a lot of times that founders will be frustrated if they don't do the pre-relationship building or, you know, the quarterly email newsletter updates to investors because they're trying to squeeze it all in a short process. So especially in this market, I would encourage folks to think long term and build long-term relationships with VC funds.
>> Maria Varmazis: So you mentioned there are certain questions that you like to hear a startup sort of ask the VC, so could you get into some detail? What builds confidence on your side when you hear a space startup ask these questions of you?
>> Jonathan Lacoste: Truthfully, I think it shows tremendous confidence to be vulnerable about your own startup, and so the most thoughtful CEOs I know do not pretend that everything is up and to the right with their company. They don't pretend that everything is up and to the right and rosy in their market.
The reality is anyone who has built a business or has been at the founding level knows how much controlled chaos goes into it, and so I think it shows confidence to ask questions sometimes about, what should we change with our product approach, or how do you think about our go-to-market? Would you do anything differently? We're debating between hiring one of these two roles for -- here are the pros and cons. What would you do? I think those are really thoughtful questions that show that you're being introspective of your business. I also think it's a good way for founders to vet their venture capital partners.
At the end of the day, venture capital, the actual capital is a commodity. There's lots of ways to raise financing. The question is, it's like a marriage, who do you want to partner with for the next 10 years on this individual business to help you build and be successful? And so that's why it's really helpful sometimes to pose those questions to the VCs as well because it'll get them to think about your business and you can evaluate to see if they are a good fit to be a long-term valuable partner to you.
>> Maria Varmazis: Excellent. That's a great point. And just finally, I like to just get a sense of what developments or technologies are interesting to you right now? Maybe not even as a VC, but just as a person in this space. Like, what do you think is really interesting that's coming over the horizon?
>> Jonathan Lacoste: The thing that I am most excited about in space that maybe folks not inside the industry don't realize is how much -- I call it a "tsunami of Earth observation data," how much data is potentially being collected, actively being collected, and is going to be used to help improve and optimize and potentially disrupt how we monitor and measure and better understand the world around us, and the reason I'm excited is because of the long tail of use cases and how applicable it is.
If you are a climate activist, if you are a Fortune 500 company wanting to measure your methane or your carbon output and the impact you have on the environment, space-based Earth observation data is one of the best ways to do that. If you are a financial trader and you're looking to better understand the inflows and the demand of certain commodities, space-based data is an incredible way to use that and to get an alpha edge on your trading plan. If you're a real estate or an insurance person and you want to understand how real estate structures have changed over time or the risk of something from a wildfire in real-time, space-based data is one of the best ways to do that. And if you just happen to be a sports fan, I'm a big Formula One fan, F1 teams leverage space-based data to get a leg up on their competition in terms of understanding very, very local weather and rain patterns, because you have to change the tires for the race depending on that.
So all of those use cases rely on satellite applications and Earth-based data, and I think we are just in the first few innings of people realizing the impact that that type of data can have.
>> Maria Varmazis: That's fascinating, and that use case with Formula One's really cool. I didn't know about that. So thank you so much for sharing your insights with us, and I really appreciate you spending the time with me today.
>> Jonathan Lacoste: Thanks for having me on.
>> Maria Varmazis: We'll be right back. And welcome back. You know, as the saying goes, "Love thy neighbor," but does that still apply after they shoot a rocket over your border? The Norwegian Foreign Ministry seems to be testing that philosophy and is launching a very serious investigation into unauthorized activity on its side of the border. That's because a research rocket fired from Sweden ended up landing nine miles inside of Norway this week. The projectile, launched from Sweden's Esrange, had reached an apogee of 155 miles when it went slightly off course and landed in a mountainous area about 30 miles from the planned landing site. Oops. The Sweden Space Corporation who was behind the launch says the rocket took a slightly longer and more westerly trajectory than calculated. Esrange maintains that it had notified Norwegian Armed Forces ahead of the launch and after the anomaly occurred. Let's hope the happiest region in the world is able to quickly restore order civility. And that's it for T-Minus for April 26, 2023. For additional resources from today's report, check out our Show Notes at space.n2k.com. And we'd love to know what you think of our podcast. You can always email us at space@n2k.com, or submit the survey in our Show Notes, and you know your feedback ensures that we deliver the information that keeps you a step ahead in the rapidly changing space industry.
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This episode was produced by Alice Carruth, mixing by Elliott Peltzman and Tre Hester, with original music and sound design by Elliott Peltzman. Our executive producer is Brandon Karpf, and I'm Maria Varmazis. Thanks for listening.
