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Space VC Launches $20M Fund II for Frontier Tech Entrepreneurs

Space VC's unique edge lies in its ultra-high conviction approach—dedicating $20 million to just 15-16 companies
May 23, 2024

In a striking shift from the traditional view that space and defense sectors were not ideal for venture investments, leading venture capital firms in the country are now increasingly supporting hard tech startups at their earliest stages. This transformative trend has raised concerns about the ability of smaller investing firms to keep pace with well-funded counterparts wielding substantial resources.

However, for Jonathan Lacoste, the solo General Partner of Space VC, a micro-fund based in Austin specializing in frontier tech investments, these challenges have not deterred his optimism. Recently closing a $20 million Fund II, Lacoste remains confident in the significant opportunities available for niche firms at the inception phases, notwithstanding the dominance of multi-stage funds venturing into industrial startups at pre-seed and seed funding rounds.

At Space VC, the strategy revolves around proactive investments from the very outset, a concept Lacoste refers to as ‘day zero’. The fund's approach underscores the importance of early-stage involvement rather than waiting to assess companies after formation. Maintaining an ultra-high conviction model, Space VC plans to allocate the $20 million fund to only 15-16 carefully selected companies, with individual check sizes ranging between $500,000 to $1 million.

Lacoste acknowledges occasional challenges when competing with larger multi-stage firms on pricing, emphasizing the pivotal role of entrepreneurs in determining the scale of their initial fundraising efforts. By prioritizing capital efficiency, resilience, and focused growth, Space VC aims to nurture promising startups towards sustainable success and significant milestones.

The contrasting viewpoints within the industry underscore the ongoing debate on the viability of different investment strategies. While some like Jai Malik have opted to step back due to perceived challenges for smaller funds, Lacoste remains steadfast in his belief that specialist firms like Space VC can add unique value beyond financial backing. Providing strategic guidance, industry connections, and a supportive ecosystem for entrepreneurs, Lacoste envisions a thriving landscape where pre-seed funds play a vital role in shaping innovative ventures and fostering long-term success.

Transitioning from a software entrepreneur to an impactful investor in space and defense technologies, Lacoste's journey exemplifies a commitment to pioneering in cutting-edge sectors. With Fund II attracting notable LPs and solidifying Space VC's presence in the hard tech ecosystem, Lacoste's dedication to early-stage investments underscores the potential for focused, specialized firms to drive innovation and create lasting impact in the dynamic startup landscape.

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