India's space startups ignite investor interest

IDFC

24/06/2019 02:00

(Repeats story first published on Sunday; no change to text)
    * Rapid growth of low earth orbit satellites fuelling space
boom
    * Private companies now challenging India govt's
near-monopoly
    * Investors from VCs to Bollywood stars getting on board
    * Long gestation times, lack of policy clarity among the
risks

    By Sachin Ravikumar and Ismail Shakil
    MUMBAI, June 23 (Reuters) - From companies building
palm-sized satellites to those aiming to propel satellites into
space using cleaner fuels, a new wave of space technology
startups are mushrooming in India, catching the attention of
investors keen to join the space race.
    Bengaluru-based Bellatrix Aerospace, which wants to propel
satellites into orbit using electric and non-toxic chemical
thrusters, has raised $3 million from a group of investors,
co-founder Yashas Karanam told Reuters.
    Venture capital fund IDFC Parampara is leading Bellatrix's
pre-Series A round. The family office of Suman Kant Munjal, who
belongs to the billionaire family that controls Indian
motorcycle maker Hero MotoCorp  HROM.NS , and Deepika Padukone,
one of Bollywood's biggest stars, are two of the other seven
investors.
    Meanwhile, Mumbai-based Kawa Space, which designs and
operates earth observation satellites, has closed a seed round
of an undisclosed amount, one of its investors, Vishesh Rajaram,
managing partner at Speciale Invest, told Reuters.
    Bellatrix and Kawa are two of over a dozen Indian startups
developing satellites, rockets and related support systems which
can power space missions serving a range of industries.
    Their fundraising represents a big leap in private space
investments in India, a leading space power but where the
government has enjoyed a near-monopoly for decades.
    "No venture capital firm which does tech investments in
India has invested an amount of this size in space technology
before," said Narayan Prasad, co-founder of online space
products marketplace Satsearch, referring to Bellatrix's
funding.
    Besides Bellatrix and Kawa, seven space technology companies
in India are funded, according to startup data tracker Tracxn
and interviews with investors.
    Space technology is red hot thanks partly to activity
happening 2,000 km (1,200 miles) above the earth in the
low-earth orbit, much closer and easier to reach than the
geostationary orbit where many communications satellites
operate.
    Here, small and cheaper satellites are snapping images used
in everything from crop-monitoring and geology to defence and
urban planning, bringing down costs and increasing the frequency
of images.
    
    'EXCITING TIMES'
    In the past five years, some two dozen Indian startups have
grown into unicorns - companies with over $1 billion valuations
- most betting on India's growing middle-class and the consumer
boom at home.
    India's space technology firms are part of a new breed of
startups, and investors are paying attention, given the surging
global interest in everything from space exploration to space
vacations.
    Satellite launches planned in the coming years worldwide
give investors confidence in such companies, said Bellatrix
investor Jatin Desai, whose Parampara Capital collaborated with
lender IDFC  IDFC.NS  to form IDFC Parampara.
    "That gives us a large addressable potential market," Desai
said.
    Over 17,000 small satellites could be launched between 2018
and 2030, consulting firm Frost & Sullivan estimates.
    "There is money to be made ... These are exciting times for
lots of entrepreneurs," said Rajaram, whose Speciale Invest has
bet on three space startups in India.
    
    LONG GESTATION PERIOD
    To be sure, investors aren't opening the coffers for India's
space startups in large numbers just yet.
    Indian venture capital firms Maple Capital, Ideaspring
Capital, Bharat Innovation Fund and 3one4 Capital, say they have
held talks with space startups but are taking a wait-and-watch
approach.
    "The gestation period is long by the time you see returns,"
said Naganand Doraswamy, managing partner at Ideaspring,
referring to the multiple stages of development, testing and
government approvals involved in space missions.
    The state-run Indian Space Research Organization (ISRO),
currently preparing for its second lunar mission, has a monopoly
on launching rockets in India.
    Still, Indian firms are free to use ISRO's rockets or
overseas launch services such as Elon Musk's SpaceX or New
Zealand and Los Angeles-based Rocket Lab to send satellites to
space.
    Most Indian space startups are hopeful that parliament will
pass a long-pending space law, which will give clarity on how
private companies can operate in the sector.
    The administration of Prime Minister Narendra Modi has
sought suggestions from stakeholders for a draft Space
Activities Bill, which it has said could "possibly" be
introduced in parliament this year.
    Bellatrix Aerospace's first customer is ISRO, which is also
mentoring the company as it readies a water-based propellant to
help manoeuvre satellites in space.
    Bellatrix is not the only company racing to develop newer
satellite propulsion systems, with at least three others
overseas reportedly working on similar products.
    The company says its systems are affordable, less toxic and
much lighter, providing more room for payload on satellites.
"This will be the future," co-founder Karanam said.

 (Reporting by Sachin Ravikumar and Ismail Shakil in Mumbai
Editing by Euan Rocha and Lincoln Feast.)
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