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At the UK Innovation and Science Seed Fund (UKI2S), we recognise the importance of supporting UK science across all sectors, including space technology.
The UK has a thriving space sector which generates an income of £14.8 billion each year, with the help of the National Space Technology Programme (NSTP), which has supported 272 projects since it launched in 2011. The disruptive technology and innovation delivered by this sector is an important contributor to keeping the UK at the cutting edge of R&D and has wide reaching applications far-removed from satellites and space shuttles.
In this blog we look at UKI2S portfolio company, Oxford Space Systems, and hear from its CEO, Sean Sutcliffe. Visit our website to find out more about our work and the investment opportunities we are seeking.
OSS develops deployable space structures which are incorporated into satellites and expand into position when the satellite is in place. OSS uses composites and metal mesh which offer substantial benefits in weight, cost and performance over traditional space materials. The company is one of a small number of new satellite hardware manufacturers and leverages innovations from beyond the space sector, bringing together knowledge of materials science, radio-frequency (RF) engineering, mechanisms and thermal engineering.
UKI2S first invested in the Company in 2015 and has held a board observer position ever since. We have gone on to directly invest in several more recent funding rounds and have also invested through the Stephenson Fund, an additional fund under our management. Sean Sutcliffe, a member of our fund’s advisory committee, became CEO of Oxford Space Systems in 2019 to accelerate the company’s growth.
In 2017 and 2018, the company set two records, raising a significant round of fundingand securing a number of blue chip customers. It has leveraged significant funding from the European Space Agency and now with significant customer revenues the company is continuing to develop ground-breaking products.
Other than providing funding, how has UKI2S supported Oxford Space Systems?
As a company looking to carve out a leading position in the deployable space technology sector, we face many challenges. Throughout our journey, UKI2S has supported the company by offering advice on strategy and commercial plans. Our Board Adviser, Andy Muir has nurtured a huge variety of companies through growing pains and invariably has relevant experience to bring to bear on issues being considered by the management team. UKI2S has also offered practical support, introducing us to helpful consultants/advisers/suppliers, recommending us to potential employees and making us aware of potential funding and development programmes.
Is Space different from other sectors?
In some ways it’s just another business sector and some standard rules apply; make a good product at a fair price and lower cost, listen to and nurture your customer base, deliver your plans, and build a strong team and employee culture.
In other ways it’s rather different. There is the glamour – it is in truth very exciting to watch a rocket lift off with your equipment on board. It is also a challenging mix between commercial and governmental customers, who have very different approaches in terms of risk, processes and timescales, so you need a flexible business approach. Finally, the product has to be right first time – you can’t go up to adjust it after launch – so there is a strong emphasis on design integrity and testing. This includes detailed computational analysis covering thermal resilience (there is quite a swing of temperature out there), vibration testing (a launch isn’t the smoothest ride) and performance characteristics (in our case the radio frequency gain and bandwidth achieved, with high performance invariably demanded). We then go on to build subsystems of the product, so called ‘breadboards’ to test the design concept. After that we build the final product which itself goes through a battery of tests to check that it will indeed perform as expected.
Why is public funding so important for deep tech companies with long lead times?
It is about the length of time needed to establish a sustainable business, both in building capabilities and the lead time of the programmes themselves. For example, OSS was started in 2013 and while we have made great progress, we still need a few more years to reach major milestones and profitability.
The patient capital that comes with publicly funded investors such as UKI2S, along with Enterprise Capital Fund investors such as IQ Capital and Longwall Ventures, and EIS enabled capital such as Foresight Group and individual investors, are able to work with those timescales. The strategic support for the space sector from UK Space and the MoD via Dstl is also critical to building industry-leading companies such as OSS.
What milestones has the company recently reached and are there any key milestones coming up?
Mainly our key milestones are about building ‘space heritage’, i.e. elements on space missions. This year we had components on a mission tracking shipping movement and have just delivered two satellites for launch by commercial customers. We hope to hear news of successful launches shortly. Behind the scenes we are working with major sovereign customers on programmes for future earth observation missions, which are key programmes for us despite being less in the public eye.
What advice would you give to a company starting out in the space tech sector?
Less advice, more lots of questions. There are a lot of good companies in the sector already, so how are you going to stand out? Do you have a unique product and what unique capability can you point to (behind the slick presentation) that gives me confidence in the company? What about the market and customers; are your products going with the grain of market development, focussing more on low earth orbit constellations and less on large geostationary satellites, and do you have any strong customer relationships? How are you balancing the long-term support from state programmes with the speed to market from commercial customers? And will your product work? Before entering into this sector, make sure you have good, evidence-backed answers to all these questions and more.