I woke up this morning to the very exciting news that both Rocket Lab and Spire have just announced that they will become public companies via a SPAC process (Rocket Lab news, Spire news). This brings back many memories from my 6 years at Bessemer Venture Partners where I co-led these investments (Rocket Lab in 2014, Spire in 2015). Here I’d like to reflect on what drove these early investments, what I learned from these great entrepreneurs, and how this inspired me to eventually launch Ubiquity Ventures 3 years later.

One item to note upfront: Rocket Lab and Spire are not investments of Ubiquity Ventures. I left Bessemer in mid-2017 to launch Ubiquity Ventures, so it was at this time that I stepped off the boards of Rocket Lab and Spire. I haven’t spoken with either company about this blog post or about today’s SPAC news. I have no information about either company’s operations from the last 2-3 years beyond what is public in the news. Ubiquity Ventures is not an investor in either of these companies. 

Now back to your regularly scheduled programming: 

Rocket Lab and Spire are “software beyond the screen” companies

In my view, Rocket Lab and Spire are part of the next wave of great technology companies. Rather than hoping to be a consumer breakout success (Instagram, Tik Tok) or a traditional SaaS company (Salesforce.com, Snowflake), Rocket Lab and Spire are “software beyond the screen” companies. Both are led by visionary entrepreneurs who are pushing software beyond the screen of computers and smartphones so it can run in the real physical world.

Rocket Lab, led by CEO Peter Beck, builds and launches rockets that launches small satellites to orbit around Earth. Spire, led by CEO Peter Platzer, has a constellation of small satellites that gathers data about Earth.

“Software beyond the screen” companies are typically B2B technology startups that utilize smart hardware or machine learning to solve business problems outside the reach of computers and smartphones, tapping into large greenfield markets. Here I’ll explore the theses behind these investments in Rocket Lab and Spire (during my time at Bessemer) and how they eventually crystallized Ubiquity’s focus on “software beyond the screen”.

2014: The decision to invest in Rocket Lab

Bessemer’s initial investment in Rocket Lab in 2014 was actually catalyzed by a prior Bessemer investment 4 years earlier. In 2010, Bessemer invested in Skybox, later called Terra Bella, that built a constellation of small imaging satellites (100kg, the size of a mini-fridge) to collect high-resolution photos of Earth from space. In mid-2014, Google purchased Skybox for $500 million in a shot heard around the space world. Major credit goes to Bessemer’s David Cowan and James Cham (formerly Bessemer, now at Bloomberg Beta) for being some of the first investors in the world to see that commercial space had an offshoot called “newspace” that might have venture return potential.

While the traditional space industry is built on the idea that “failure is not an option”, newspace opens up vast swaths of new business opportunity with the mantra of “faster, better, cheaper”.

Newspace leverages several trends: (1) the declining cost of electronics, (2) magnifying that cost advantage further by combining lower-reliability hardware with larger constellations with no single point of failure to create overall resilience, and (3) the heavy use of 2021-style agile software development.

Below is a recording of the 2015 talk that former Skybox CEO Tom Ingersoll and I gave on why newspace is becoming more interesting to VCs — from the 2015 ISPCS conference (10 minutes from Tom followed by 10 minutes from me):

About 6 months after Skybox’s 2014 acquisition, David Cowan and I were sitting in Bessemer’s office listening to Rocket Lab founder/CEO Peter Beck pitching his idea to create a 150kg payload orbital-class rocket dubbed “Electron”.

To me, his very big idea was tied to something very small: 2 little electric motors deep inside the engines of this new rocket. Most rocket engineers agree that the hardest part of building a new rocket is pumping the fuel fast enough into the combustion chamber. While every other orbital rocket on Earth uses a complex mechanical “turbopump”, Rocket Lab’s Electron would be the world’s first rocket powered by a software-driven electric turbopump.

Mechanical turbopump-driven companies (including ULA, SpaceX and others) must move at the glacial pace of hardware, with each design iteration involving the manufacture, assembly and disassembly of hardware.  In stark contrast, Rocket Lab would move at the pace of software: they would push code, test, and iterate their software-powered rocket and electric turbopump to build and refine their product at the pace of software companies like Google and Facebook. 

This has worked: Rocket Lab has completed almost 20 successful launches, taking almost 100 satellites to Earth orbit, and is reportedly on track to cross $1 billion in revenue by 2027 (according to CNBC).

They are the only private company besides SpaceX currently launching satellites to orbit and the only one using electric turbopumps -- “software beyond the screen”.

During the summer of 2015, Rocket Lab won their first orbital launch contract via the NASA Venture Class Launch Services Demonstration program, so I joined the team at Cape Kennedy in Florida to cheer them on. Obviously, Peter and I took every opportunity to nerd out at the real desk of the Space Shuttle Launch Director.

2015: The decision to invest in Spire (Small software-powered satellites)

Just 6 months later, in the summer of 2015, the Bessemer space team of David Cowan, Josh Benamram and I invested in Spire, alongside Mike Collett of Promus Ventures and others. Spire listens to the sounds of Earth. More specifically, Spire has developed a constellation of small satellites, each the size of a shoebox or “3U” in space jargon, to gather intelligence about Earth by using radio frequency (RF) signals.

Spire CEO Peter Platzer and his co-founders Joel Spark and Jeroen Cappaert had a vision for a satellite constellation that could use software to address both an initial set of use cases as well as future applications via software updates.

Spire gathers data about (1) marine traffic (every boat on the water has a VHF transmitter for boat-to-boat visibility that can also be “heard” from low Earth orbit), (2) airplanes (every plane flying in the US today has an ADS-B transponder), and (3) weather (using a mind-blowing technique called GPS-Radio Occultation where satellites in orbit “listen” to the scattering of the signal from GPS satellites also in orbit). They named their satellites LEMURs which is short for Low-Earth Multi-Use Receiver which reiterates their founding vision of having flexible, software-defined satellites.  The company continues to iterate at the pace of software, designing and deploying new applications of their constellation via ongoing software updates -- “software beyond the screen”.

What lies ahead

Today’s news provides major validation that newspace is here and full of real business opportunity. More importantly, today is an even bigger validation of the the years of hard work from founders Peter Beck of Rocket Lab, Peter Platzer of Spire, and their incredibly sharp teams.

Many of these smart folks continue to play a role in the Ubiquity family. Peter Beck is a member of the Ubiquity Extended Team and spoke at our last annual Ubiquity Summit (pictured below).  Peter and I also serve on the board of Halter together (which takes a “software beyond the screen” approach to managing dairy cows on a farm - “cowgorithms”). Josh Benamram was on the Bessemer space investment team but is now a Ubiquity Ventures portfolio founder/CEO with his company Databand.  And Bessemer’s David Cowan continues to lead the space investing practice at Bessemer and serves as an informal advisor to and investor in Ubiquity Ventures.

Today is deep validation that “software beyond the screen” is the next phase of technology development. Let’s hope software continues to grow more ubiquitous in the real world!

Are you a founder in the smart hardware or machine learning sector? Let’s talk! Leave a comment or get in touch with Ubiquity Ventures.

Ubiquity Ventures — led by Sunil Nagaraj — is a seed-stage venture capital firm focusing on early-stage investments in software beyond the screen, primarily smart hardware and machine intelligence applications.