GENES PreparesPioneering Space Fund

GENES Venture Services, Germany’s longest-established venture management group, in 1999 plans to launch Europe’s first dedicated fund for the space technology sector.

The fund, Ignition SpaceVentures, will aim to become the world leader in the commercial space start-ups field.

Telecommunications aside, the commercial potential of space technologies to date has been largely unexploited. According to GENES partner Jrg Kreisel, this is partly because the international space community historically has been largely government-funded and therefore has developed a budget-driven, rather than a commercial, mentality. In addition, there are relatively few channels of communication between space scientists and the financial world. However, following the global downsizing of space programmes that took place in the early 1990s, the space community will be compelled to take a more commercial approach.

Jrg Kreisel explained that Ignition SpaceVentures will target three principal investment areas: space-related services, infrastructure manufacturing (normally at the subsystem and component level) and spin-offs and technology transfer.

GENES aims to raise ecu 100 million for the fund. Jrg Kreisel said that, when plans for Ignition SpaceVentures were at a very early stage, GENES intended to attract its initial capital from space agencies, governments and astronautical industries before approaching the mainstream financial sector.

GENES has revised its strategy and instead will primarily target mainstream institutional investors, particularly banks and insurers that have already been involved in funding or underwriting space projects. By raising capital from such “neutral” sources, rather than from aeronautical manufacturers, GENES believes that Ignition SpaceVentures’ investees will be better positioned to cooperate with a broad range of firms in the space sector.

While Ignition SpaceVentures is undoubtedly a pioneering vehicle, a precedent does exist for venture investment in the space sector. US-based SpaceVest raised a $50 million (ecu 42 million) dedicated vehicle three years ago to invest in pure early-stage space technologies. The fund made 12 investments, all of which are currently doing well, and SpaceVest is preparing to launch a $250 million successor fund.

The GENES fund will invest internationally, with a primary focus on Europe. The group plans to generate deal flow through its own network, cooperative agreements with relevant players such as SpaceVest, space agencies and the space industry, and a vigorous proactive marketing programme.

Jrg Kreisel, who heads the Ignition SpaceVentures project, could scarcely have a more appropriate background for the task in hand. A former managing director of the Space Research Forum in Aachen, he served as a United Nations delegate for the conversion of the aerospace complex in the former Soviet Union and was involved in the scientific management of the German Spacelab Mission D32 and the German hypersonic technology programme. Previously, during the 1980s, he was a member of the Franco-German space working group Coherence, which masterminded the Hermes, ArianeV and Columbus projects. Before moving into the venture capital sector in 1994, Jrg Kreisel also gained experience as a consultant in international technology management and commercialisation.

GENES hopes to bring a number of core investors on board Ignition SpaceVentures before marketing the fund more widely during the second half of 1999.