It’s Time to Build: Expansion

Earlier this summer, I shared the exciting news of Space VC’s Fund II.

Despite the challenges in the broader capital markets, we found LPs to be enthusiastic about our vision, track record and commitment to partnering with world class founders.

Today, I’m excited to reveal some of the bigger updates and details about our Fund II:

💰 Closed additional capital and increased the size of Fund II

🏭 Expanding beyond Space & Defense

💵 Investing significantly more capital per startup

🗒 More concrete details about our strategy moving forward

Closing Additional Capital for Fund II

Amongst venture capitalists, there is a common proverb that “your fund size is your strategy.”

Simply put, the more capital a VC firm raises, they must either (1) invest in more startups, (2) increase their initial investment size or (3) increase the size & frequency of their follow-on investments.

When I started out on the Fund II fundraising journey, I began by sketching out what I felt was a winning strategy in today’s venture landscape. I then backed into the ideal fund size to deploy that strategy. Therefore, it would not automatically make sense to increase your fund size (i.e. from $20M to $50M, as an example) even if capital interest was available. That calls for a completely different strategy, and one in which you may or may not be better suited to follow.

Towards the end of our fundraising journey, we experienced significant inbound interest from top LPs that we wanted to partner with. Unfortunately, we did not have capacity for all of them at their ideal investment size. I worked with our team to model out the most capital we could take with our existing strategy without deviating too far away from it.

Thanks to considerable LP interest, we ended up increasing Fund II to our cap of $22,500,000. Even though we had more capital around the table interested in investing, this was the right level to bring our fund size too. Tactically, this will enable us to support 1 or 2 additional founders and upsize one-follow on investment, without fundamentally changing the core strategy we’re pursuing.

Strategically, our new LPs also bring larger pools of capital for follow-on investing into exceptional founders that begin to “break out” in the early days. We aim to partner with those founders at Seed and Series A. Therefore, we will be pursuing much larger direct, follow-on investments into our existing portfolio than we previously have entertained before.

Expanding Beyond Space & Defense

Since our founding in 2021, Space VC has become known as one of the premier VC firms in Space & Defense Tech investing. We have been fortunate to support many elite startups being built in the category, including True Anomaly, Loft Orbital & Castelion.

We have built an incredible network of entrepreneurs & engineers that are passionate about the opportunities the Space & Defense industries provide.

However, many of the talented entrepreneurs we meet from SpaceX, Anduril and other industry circles have their eyes in adjacent opportunities beyond space & defense tech. Ultimately if you abstract away the specific products being built in space and defense, often times these frontier tech startups have a similar rhythm to them:

🎯 Building & designing initial hardware prototypes

🎯 Transitioning to scaled manufacturing processes & facilities

🎯 Building internal software platforms to provide more holistic value to their customers

🎯 Selling to government or enterprise customers

🎯 Lobbying federal & state governments for additional support

🎯 Recruiting hardware, mechanical, manufacturing, aerospace engineers

🎯 Raising venture capital from a similar pool of VC firms & partners

Over the past 4 years, the more time I have spent with Space & Defense founders in our portfolio, the broader my collective network & knowledge base has also become in these highly adjacent areas. I have learned an incredible amount that we are now leaning into more directly — and truthfully, that’s a core element of what I believe top VCs should always aspire to have; intense levels of intellectual curiosity.

I’m thrilled that our Fund II will be able to support founders across a broader variety of Frontier Tech sectors:

☑ Semiconductor Manufacturing

☑ Industrial Automation & Energy

☑ Cybersecurity

☑ Autonomous Platforms & Systems

☑ Robotics, both hardware platforms & their underlying software systems

☑ Supply Chain, Critical Materials & Domestic Manufacturing

☑ Vertical specific Artificial Intelligence applications

I strongly believe in focus. Therefore, Space VC will still primarily aim to support the best emerging founders in Space & Defense Tech. In fact, nearly 2/3rds of our capital deployed will target these sectors. However, we will also continue to leverage our network of founders who are aiming to solve critical problems in similar industries.

Investing More Capital Per Startup

In Fund II, we’re writing even larger investments, aiming to invest $750k — $1M per startup initially.

Our hope is that these more meaningful investments allow Day Zero founders who are at the very beginning of their journey, to leave their jobs and pursue their entrepreneurial ambitions with more runway and confidence.

We will continue to partner with incredible Tier 1 VC firms, as we have throughout most of Fund I, including but not limited to Sequoia, Andreessen Horowitz, Eclipse Ventures, Lightspeed, and many more.

Beliefs that Drive Our Strategy

🥇 We aim to partner with Founders on Day Zero. If you are thinking about starting a company or raising a Pre-Seed round, please reach out!

👥 Our philosophy remains one of Concentration and Conviction. We will only invest in 15–16 founders over the next 3–4 years. This enables us to maintain an incredibly high bar for who we partner with.

🤝 As a former Founder, I deeply understand the journey our CEOs are on. As a firm, we strive to support, provide guidance, be a strategic sounding board and open useful doors (capital, customers, government) to our portfolio companies to help accelerate.

👨‍💻Solo-GP enables speed — I am the only member of the investing team at Space VC. Therefore, I encourage all founders to reach out and engage with me as early in your company building process as possible. The benefit of being a solo-GP is we can move with incredible speed once we get conviction on a founder and the problem set they are pursuing.

Thank you to everyone for your warm and generous support to date.

Onwards and upwards,

Jonathan Lacoste