This plan basically splits its funding into three buckets. Climatiq and Infinited see like quite safe investments, with very achievable goals and likely to at least find moderate niche serving other businesses/brands. Sylvera and Framework are monopoly seekers: they want to create and dominate marketplaces which may see a lot of growth. Both of their programs seem quite technically achievable, but the question is whether they happen to be slotted into whatever bigger greenwashing toolchains develop. Meanwhile, Sheru and HelioRec just seem like promising startups - Sheru more so but HelioRec seems like the kind of thing that has a chance of getting huge funding for some doomed megaproject.
I'm not a fan of Helion or SpaceForge because both seem like they're targeting immature fields, where it seems too early to expect small 'disruptors' to compete with existing Big Science industrial/government interests. We're still firmly in the "absurdly large capital costs" stage of development in both areas. This plan also only focuses on companies where our money will be big enough to make a significant difference.
Wouldn't call fusion a immature field. Is it one with zero prospects of commercial viability in our lifetime? Very likely, yes. But its not like that is a new thing. Neither is it a worthless investment imo, valuation will get a boost whenever some random popular science magazine markets a wet fart as an exciting and promising new breakthrough, or the company gets a grant or smtg. People are suckers for fusion.
Alexa looks around at the dimly lit barstool, where they can see recently wiped up mess and the cracking leather seat. It's a busy place – two thirds college party members, one other business partner group, and maybe a couple or two.
They sigh, set down their bag, and pull up to the empty barstool by Jack.
"This your idea of a good place, Jack?" Alexa opens.
"It's my idea of cheap food," Jack says, marking down $15 dollar sushi. Alexa eyes the messy sushi choice, and looks skeptically at Jack in his business suit.
"Damn, even McKinsey at least let you buy good food," Alexa grouses. "Why do we have to treat ourselves worse than our clients?"
"Because any money we spend on ourselves is money we can't spend on the business," Jack says. "Besides, I won't have you slander the good cook here."
Alexa raises an eyebrow. "How can you tell?"
"Acid control," Jack says, pointing. "Look, his nose can tell that sauce doesn't have enough acid."
"That sounds wrong but I don't know enough about food to disprove you," Alexa sniffs.
Jack rolls his eyes. "Did you seriously just bill McKinsey for the most expensive food on the menu?"
"And what's wrong with doing that? I can't be wasting my valuable time on pointless decisions."
Jack levels a disappointed gaze. "No wonder why you think your food isn't that good."
"Fortunately, being a food taster isn't my job, is it?"
"No, you're right. We're here to talk about our investments, right?"
"Yeah, and if I had my way we'd be doing a proper standup instead."
"I think this is better for my knees, thank you."
"You're twenty-eight."
"Practically a fossil."
"Only thing old about you is your shoes," Alexa scoffs.
"Yeah, I got them from the president of my frat."
Alexa narrows her eyes. Shoelaces from the president…
Space Forge
Roll: [N/A]
"Anyway, Space Forge seems to have gone surprisingly well. Don't know why so many other VCs passed up on them, I thought their pitch deck was pretty good."
"That was probably us grilling them on their climate advisor," Alexa shrugs. "Works out for us, but we need to find one, since we're the majority investor."
"But do they have a product worth selling?"
"I don't know – do I look like a material scientist to you?"
"We should probably fix that at some point. God knows I wouldn't invest in our own venture capital firm if I saw the board."
"Skill issue."
"What?"
"Don't worry about it."
Sheru
Roll: 119
Valuation: 3 Billion
"Mmh. Next line item, Sheru. Looks like we're making our money back on this one."
"Yeah?"
"Yeah, look at the sales numbers on it, both sides of buying battery space and selling spare capacity in India. They're doing a lot better than I thought they would – if they really can scale, we've got our unicorn, easy."
"Told you the India visit was worth it."
"Shouldn'ta doubted your intuition, I guess."
Framework
Roll: 33
Valuation: 100K
"Framework doesn't seem to really be panning out, unfortunately. I thought they were a solid hardware company, and I liked their pitch deck – but… well."
"They are, but we should have learned from the previous modular phone attempts. They probably could make it as a company, but investor interest was rock bottom, and without the money to scale they'll stay a small-scale boutique laptop manufacturer. Probably doesn't help that we questioned in that investor meeting about how they were going to get revenue from their secondary market."
"They should have prepared better for that question – it's how they're making most of their secondary sales," Jack says between bites.
"Oi. Are you really going to talk and eat?"
"Aren't you?
Ubiquitous Energy
Roll: 119
Valuation: 4B
"Excuse you, I have table manners. Speaking of which, why did we rate Ubiquitous Energy so low?"
"I wasn't confident in the executive board," Jack shrugs. "Guess I got unlucky this time."
"That's pretty ironic, isn't it, Mr. Jack Pott?"
"Look, I said in my report that they had a strong business idea with big potential if they didn't self-implode from their exec board. I just wasn't confident in their exec board executing."
"Well, 5 mil is 5 mil. Still glad we got on that early with a small bet, even if we could've made more. Still think that means my judgement gets the win, though."
"Hey. This is venture capital. Seeing through the losers is at least half as important as picking winners."
"It's venture capital, Jack. Half's overselling it, especially at SoftBank – it's pretty obvious that's why you got reassigned to crypto, you know?"
"…"
Climatiq
Roll: 53
Valuation: 1M
"So let's talk about something more up your alley – Climatiq. 500K, you said?"
"Yeah, I didn't buy their business model in the long run. If it's so short and quick to implement, it's unlikely that anyone would want to buy licenses to maintain that stuff year over year when it can eventually be in housed, and if it can't be in housed firms can use that threat to cut the margins to the bone."
"You think coding is about a number of lines, Jack?"
"Maybe it is, maybe it isn't. But as you say, I know how the corporate types think, Alexa."
"You're saying this to the McKinsey vet?"
"Yeah, that's why I think you agree with me."
"…point."
Helion
Roll: N/A
"I do get credit for Helion, though."
"I still think fusion is too much of a gamble."
"Eh. I think Sam Altman was pretty convincing, and everyone else is investing billions into Helion already. Might as well take a cheap gamble on it. Besides, if Helion succeeds, we'll make 10x, easy – maybe 100x. They might even make the third trillion dollar company, in the outside case."
"If."
Infinited Fiber
Roll: 62
Valuation: 5M
"So what's the story with the guy investing in the fabric company?"
"I like the recycling story, and I thought they had a good opportunity," Jack shrugs. "Besides, that early deal from Lululemon was a good sign for their growth prospects!"
"And then they didn't get any other major contracts."
"And then they didn't get any other major contracts."
"Unlucky again."
"Unlucky again."
Sylvera [NOT TAKEN]
Roll: 58
Valuation: 1M
"Looks like it was pretty good we dodged Sylvera, though."
"Give them time, carbon credits will be important – plus, they have some major companies behind them."
"There's not really a later for us now, you know."
"Oh well."
Greenwash
"So do you have any intuition on anybody we should do closer reading on?"
"Mmm…"
Pick one company to investigate in deeper depth. Doing this might reveal more market structure details, and might allow you to invest a little bit more – or prepare you to zero out your investment.
The extra conditions that the winning plan has for Space Forge stipulates that we name a climate advisor – because technically speaking, SF isn't a climate-tech company. Between trying to find one and figuring out what, exactly, SF has to offer in that field more concretely, it's arguably an instant-lock for the vote, were it not for the stellar rolls on Sheru and UE. Speaking of:
The extra conditions that the winning plan has for Space Forge stipulates that we name a climate advisor – because technically speaking, SF isn't a climate-tech company. Between trying to find one and figuring out what, exactly, SF has to offer in that field more concretely, it's arguably an instant-lock for the vote, were it not for the stellar rolls on Sheru and UE. Speaking of:
Sorry for being late. A lot of the research in this chapter was conducted a few weeks ago, but, well, with apologies to Space Forge, they didn't answer my email, and neither did my professors – I was just asking some questions about spaceborne materials! I gave them a reasonable amount of time to answer my emails, but since I haven't had any response, I'm just gonna go by what I can publicly read, and what I asked Blackstar to help me figure out.
Note: despite the fact that the person Andrew Bacon is real, I have imagined a personality for him. Please understand, Space Forge did not respond to an emailed request so I definitely don't think I could've gotten an informal/formal interview with him
"So. A closer look at Space Forge[1] is what the doctor ordered, huh?"
"Exactly right, Mr. Pott. While I'm off looking for 2022 prospects, how about you go find the pot of gold at the end of the rainbow for me, eh?"
"Alexa, you're telling me a joke about leprechauns to an Englishman heading to Wales. Surely your brilliant McKinsey brain can come up with something slightly more culturally appropriate?"
"We can't all pull rabbits out of our hat on a moment's notice, Mr. Fifth Generation American. I mean, what is there in Wales anyhow?"
"Ten seconds of Googling pulled up King Arthur."
"Tch."
"Hm?"
"Touche. This is why I'm having you doing the on-the-ground research."
JACK POTT
You're in Cornwall, staring up at a dark grey sky, and somehow Great Britain has gotten even more depressing since the last time you stepped foot on the island.
Some are good reasons, you think, securing your mask on tighter. Staring Boris Johnson's mugshot on another article about Partygate, you think some reasons are quite bad indeed.[2]
Part of the reason you're crabby is probably because it's been pretty hard to find anywhere to sleep properly – but that's because of "somewhat responsible COVID-19 restrictions". Eh. Honestly, you probably could and should have done this virtually, but, well, your limited partner client demanded the best, so that's why you're here in person.
Ah. Footsteps on concrete, and your counterpart was here.
Chief Technological Officer and cofounder, Andrew Bacon.[3] A blue suit and white shirt hung on him albeit tightly – and on top of it sat a man with unruly dirty blond hair and beard. Square glasses seemed to somehow complete the look.
"Hello, Mr. Potts, it's a pleasure to meet you! How are you enjoying Wales?" he says jovially, offering his hand.
You think about it for about half a second. Then you rustle the rag calling itself a newspaper in your hands as you deliver your response.
"Better than England, certainly, Mr. Bacon." you quip, and he has a half chuckle at your cheap shot. "It's a pleasure to meet you," you say, taking his hand. He gives you a firm and equal handshake, and you think you're starting to like him more already. "Shall we discuss pleasantries like the state of Welsh fishing, or shall we get to the main topic?"
"I think that's up to you, Mr. Potts – especially after you're dangling the option to fund half our Series A, so long as we meet one of your conditions."
You take a sip of your coffee, eyes closed.
"I came here with questions about your company, and I'd like to have them answered. Let's start with what you think your business model is."
Andrew Bacon suppresses a sigh. He's given this sort of spiel before and imagines that you're asking him because you think he hasn't done the thinking and he thinks you haven't done the prep work. True, but also false.
You like it when people are wrong about you.
"Space Forge is an innovative startup in space. We focus on the problem that manufacturing is terrible on Earth – there's too much contamination from the atmosphere, too much unwanted mixing from gravity, and too little temperature variation to truly be efficient at producing high quality alloys, crystals, and semiconductors. While it's possible to doggedly overcome each of these problems one at a time with dogged effort, they all cost huge sums to solve only one problem. To build something in zero-G on Earth, you need to rent time on a free-falling flight; to build something without atmosphere you need incredibly expensive clean rooms; to build something with high or low temperatures you need ruinously expensive heating and cooling methods. Worse, the cost rises exponentially when a product requires two out of the three conditions I've listed, let alone all three.[4]
If you have a product that requires isolation, low-gravity, or high temperature variation, you'll find that space is a much better environment for manufacturing. To achieve isolation, expose the site to hard vacuum. Zero gravity is achieved practically by default. Variation in temperature of up to 300K is possible simply by arranging where in the spacecraft manufacturing occurs.
"Space Forge's ForgeStar satellites is meant to help firms realize the potential of space manufacture. We produce a scalable series of returnable satellites that can carry manufacturing equipment and raw materials up, manufacture in space, and then bring the payload down anywhere in the world with a minimum of damage to the finished product. After a quality assurance check, we can then reuse the ForgeStar satellites in future launches."
You take a sip of coffee. "So long as you can overcome the cost of launching the satellites and the cost of retrieval. I don't follow news in the extraterrestrial sector closely, Mr. Bacon, but space launch doesn't strike me as cheap, let alone retrieval."
"You're not surprised by the possibility of retrieval?" Mr. Bacon asks. The confusion is currently in effect.
"Well, if you fail to retrieve in several launches I'll zero out the investment, so we're both going to look the other way and pretend you have it under control. Besides, I've seen your interviews. You have good focus on that issue.[5]"
Andrew Bacon raises an eyebrow. Tch. Played your cards too early with that.
"Well, when we started this company, we sat down and asked ourselves what applications there were that the purity of vacuum and the precision of microgravity and the variation in heat that space offers us, and we found a list of fourteen. Next year we bumped that list up to thirty, and now today we have something closer to a hundred items where it makes sense. You know, the favorite example we like to bring up is jet turbine blades, where the cost of those items are like $100,000 per kilogram of titanium nickel alloy – if you can make those blades in space with a much higher purity and durability, there'd be interest in producing those kinds of things in space as well as potential carbon savings from not building more of those materials. When we did the basic look into how much demand into these sorts of materials there might be, we found that there might be a market of half a billion or more a year for this 'microgravity as a service'[6]."
Your eyebrow raises. "And that's current expectations, let alone if you succeed, or if space launch prices come down."
"And that's current expectations, let alone if we succeed," Andrew Bacon nods, a fever pitch building in his voice. You can feel your head nodding slightly. "But there's something important about the cost structure of satellites that you should know – the vast majority of the cost isn't in the launch itself, its in the testing of the satellite. The cheapest I've ever seen a satellite get designed, built, and tested was $50,000 per satellite. And that was for like a 1U educational CubeSat. If you're looking at something like an operational mission like the Sentinel, that's $300,000 per kilogram. If you want to land on Mars? $2,000,000 per kilogram. Suddenly, that makes launch provider and costs seem fairly small by comparison.[7]"
"Fascinating," you start. "But I still have one major question remaining," you say, raising one finger.
"So how are you going to be carbon negative? Let alone to the tune of multiple tons of CO2 reduction achieved per kilogram of CO2 emitted in launch."
Andrew Bacon can't help but break out into a smile.
"Right, let me explain. Our products are going to be much more efficient, much more long-lasting, and much better for the environment – we're thinking about applications in jet engines, super strong bolts, and long-lasting semiconductors, as just a few examples of places where we can make a difference in our carbon emissions. This is where we can achieve outsize carbon emission reductions, from our preliminary calculations."
"That will overcome the pollution incurred by rocket launches and retrievals?"
"That's actually the most interesting part, Mr. Potts," Mr. Bacon says, eyes gleaming. "We did an internal audit of our carbon emissions, and we found that as a company where our emissions come from, the number one is emissions from cloud computing, the number two is eating, the number three is cloud computing. If we look ahead to a point five years from now when we're doing 10-12 launches per year, we'd find that our number one source would be commuting, second, heating the office, third, cloud computing, and fourth, launches. However, if we travel abroad with a small team down to America or Australia for a launch, we'll rapidly see the emissions cost doubling, so we'd like to launch and land in the UK if at all possible."
"Space launch is that carbon efficient?" you ask, raising your eyebrow.
"Oh yes, especially at our payload size. Since we're aiming to keep our payload in our satellites in the sweet spot of 10-20 kilos, our launches aren't actually very carbon intensive at all. If you'd like, I can demonstrate it to you on…this sheet of paper?"
"Please."
Different rockets will have different characteristics – we're optimistic about some of our local UK space-based firms for adopting a more environmentally friendly fuel, for example. However, let us assume that we are launching using Falcon 9B rockets or equivalent. Those rockets generate 27 tons of CO2 per 1ton of payload – or in more useful terms for us, 27kg of CO2 per kg we put into orbit.[8]
Let us consider the case where we are launching 12 times per year, with an average payload size of 20kg just to be on the more conservative side. We will have launched 12 x 20 = 240 kg into space that year. With 27 kg CO2 generated for each kg launched into space, 240*27 = 6480kg will be our emissions, solely considering from the launch platform to space.
An average oil-fed car will emit 4600kg of CO2 from annual operation. We have over 50 employees on payroll.[9] Even if our estimates of carbon emissions from launches is off by a factor of 10, we still would not come close to exceeding the emissions from commuting.
"So if your emissions from commuting dropped, your environmental targets would become much easier to hit, is that what you're suggesting?" you casually ask.
Andrew Bacon raises his finger, lowers it, stops, and scritches his head.
"I think you have a point, but I haven't properly sat down and considered it."
You shrug. "Just something to consider. And while we're on the subject of considering things, can you tell me what would happen if one of your products truly does break it into the mainstream, and the cost declines you project take place do take place in the space industry?"
"Well," Mr. Bacon pauses, "if they really do have a breakthrough I think we might need to be concerned about spacelift capacity – it's not implausible for me to imagine demand for a thousand satellites a year, if one of our products really does break through."
"Hm. I see. You've given me a lot to think about, Mr. Bacon. I appreciate the time you've taken out of your day to meet with me," you say, offering a hand.
"Oh! No, the pleasure was all mine, Mr. Potts," he says.
"So, your impressions?" Alexa Godlewski asks between munches.
"I think I had a very interesting call with Mr. Bacon. He was sizzling the whole interview."
"Oi. You're not cultured enough to pull off a British accent yet. Let it ferment a little longer."
"Pish posh. I buy the fundamental numbers, but I'm concerned about double-counting."
"Double-counting?"
"Yeah. Space Forge is counting it as mitigated emissions if their product replaces another part which would've required more emissions to produce but doesn't answer the question of induced demand. I'm worried about carbon neutrality, let alone carbon negativity, just from that perspective."
"On the other hand, it really does seem like it'd be pretty easy to lower emissions on their end, if the commute emissions come down. Launches probably can't be optimized, but a dedicated climate tactician who could help reduce emissions might get them closer to that goal very quickly."
"Hm. Jack Pott, what's the goal of Brown River Capital again?"
"What, 'we make the paddle' or something?"
"Yeah, that. Are we obligated to demand Space Forge hire a climate advisor to strictly go carbon negative, or is it good enough that we're invested in them?"
"..."
What do partners Jack Pott and Alexa Godlewski decide, after a long night hashing it out in Cornwall, and Alexa is eating a 5 Michelin star lunch from Subway?
[] Require Space Forge take a climate advisor for their clients – and accurately calculate how to maximize carbon reductions globally and for the climate.
[] Require Space Forge take a climate advisor for themselves – and find any place possible where they can cut carbon emissions.
[] Require Space Forge take a climate advisor in general, and generate climate progress reporting.
[] Do not require Space Forge take a climate advisor, but keep reporting climate footprint data.
[X] Require Space Forge take a climate advisor for their clients – and accurately calculate how to maximize carbon reductions globally and for the climate.
Yeah, not sure if I really buy this explanation for carbon reductions. Would be great to have someone really focus on this.
[X] Require Space Forge take a climate advisor for their clients – and accurately calculate how to maximize carbon reductions globally and for the climate.
[X] Require Space Forge take a climate advisor for their clients – and accurately calculate how to maximize carbon reductions globally and for the climate.
