INSUBCONTINENT EXCLUSIVE:
The aerospace market is evolving quickly and merging with other segments of tech, making it an exciting space for both startups and
investors — but the complications of the global pandemic are being felt by both.
Bessemer Venture Partners investor Tess Hatch has been
helping guide companies in their portfolio through these strange times, and has been rolling with the punches herself.
Hatch recently spoke
to us about the advice she been offering startups, which companies are being hit hardest and where opportunity still lies in the frontier
(This interview has been edited for length and clarity.)
Austerity measures and hard-hit hardware
TechCrunch: I&m interested in how the
virus is affecting things in the investment world
Have you made any official accommodations, like a change of strategy, or putting off key investments, things like that?
Tess Hatch: Of
course, we&re advising startups on things to do, like their employee safety, and implementing working from home, and tools and tips and
tricks that can help that
Especially when it comes to hardware companies — it kind of hard to work from home when you&re manufacturing.
We&re advising them to
really watch their burn, because their top line is not going to hit where they expected it to hit, like a double or triple revenue, it&ll
If it increases even a little bit, they&re winning
We&re having these individual company-to-company conversations, just advising them on getting through, hopefully just these next couple of
quarters, but it could be next year plus.
&We&re advising them to really watch their burn, because their top line is not going to hit
where they expected it to
If it increases even a little bit, they&re winning.&
There is the question of new deals that we were looking at and this is a time
where entrepreneurs will find amazing opportunities to solve the most pressing/immediate societal challenges and we are here to invest in
We&re still taking new pitch meetings, new deals, we&re still busy, just doing it in the comfort of our pajamas rather than at the
office.
So would you say that it has affected the frequency or the cadence of your investments, on a larger scale?
There really been like
three partnership meetings since craziness happened
And the number of deals that we&ve talked about in the presentations we&ve had, those have remained the same, but ask that question in three
more weeks, and I&m sure it I&ll have a better answer.
One of the funny things we&re talking about is that investors, one of their favorite
things is to be able to predict how the future, at least the next year or two, is going to go
But this is one of the greatest times of uncertainty we&ve all lived through
So how are you approaching that when there so much that uncertain, but there so much that you need to know in order to effectively manage
your portfolio, give advice and make sound investments?
Right now, it is shaking everything that we&ve believed in so strongly
However, we still are looking out, let say two to five-plus years
The real question is if this is going to be, with quarantining and lowering the curve, a little bit more under control by let say the
summertime, or if this is going to be more than a couple of quarters, say a couple of years.
&It like you said, the uncertainty of
just not knowing how long or how drastically this is affecting everything.&
One of the many things we are advising is for our
companies that are able, raise a bit of extra capital now while the water is shut off, but there still a little bit trickling from the
showerhead… I have not seen anything like this in my short career, but there are partners at the firm who have been here 20-plus years and
while they have never seen this particular situation, I&ve been amazed by their ability to deal with these unique challenges and advise our
companies on how to get through this
It like you said, the uncertainty of just not knowing how long or how drastically this is affecting everything.
I think that the hardware
companies that you mentioned, those may have it the hardest because they involve so much travel, so much mailing back and forth of
Is there any specific advice that you have for hardware companies that are trying to build a product right now?
Unfortunately, most of them
We&re trying to do as much as we can virtually
The majority of them are smaller teams that are actually making, let say, a drone, or an autonomous robot, and they&re just staying six feet
apart and taking all of the necessary precautions, doing every-other shifts
So if, say it a six-person team, three of them are working in the morning and three of them are working in the afternoon to increase the
distance between all of them
The offices — especially where we&re building drones — are huge, so there tons of space for everyone.
The real issue though, is our
customers aren&t showing up to work, you know? One of our companies, Impossible Aerospace, sells drones to police and fire departments
This is one of the best times to use drones to deliver emergency medical supplies, or even toilet paper and hand sanitizer to people in need
The ones that do have the drones are happy and they&re using them, but the ones that don&t, they&re so overwhelmed with everything else that
going on.
There are always leads to follow up on, contracts to hammer out and negotiate, improvements you can make to your sales process
Is this something that there actually is a lot of, that even hardware companies can focus on in these downtimes?
At a high level, I&m sure
there are people in the organization that can turn and do that
But think about a sales person or business development, there are certain ones that, their entire job is shaking hands or going to these
I mean, think of marketing spend with no conferences this year, and all that upsets.
Aerospace between air and space
The space in between:
The stratosphere
You wrote an article last week for us about a sort of neglected area of the new space industry, the stratosphere
I feel like people have been chasing this for a long time, but that the drawbacks of being in atmosphere are too much, especially when LEO
[low Earth orbit] is getting so cheap
Do you really think that things like balloons and blimps are in the cards?
I agree with you that LEO is definitely becoming more accessible
and cheaper and this market is shifting from price per kilogram to time to orbit, with launch vehicles like Rocket Lab coming to
fruition.
However, there are still so many things one needs to do to modify their sensor for LEO
And with LEO, you&re only over the same area of interest for let say 15 minutes of a 90-minute orbit
And even then, the revisit rate over the same spot of Earth, it depends on the orbit, but it daily, weekly, sometimes more than weekly
The only way to stay over a single point in space is GEO [geosynchronous orbit], and that 36,000 kilometers versus 500 to 1,200 [for LEO].
