Spotlight: Raffaele Mauro – GP @ Primo Space

Insights from a VC partner on space tech investments, Italy's role in the ecosystem, and what entrepreneurs should consider in an environment where frivolity isn't rewarded anymore.

Issue No 29. Subscribers 5253.

This week we spoke with Raffaele Mauro, General Partner at Primo Space, an Italian deep tech venture capital firm, focused on the space economy. He is a seasoned investor and entrepreneur, who agreed to offer a few insights into the current market dynamics and share his experience with us. Primo Space is one of the first European venture funds and has roughly $90M dedicated to downstream and upstream space tech companies. His team has backed D-Orbit, Astrocast, and Pangea Aerospace. 

Raffaele Mauro, General Partner at Primo Space

You have a background in political science and economics. What drew you to space and what inspired you to start investing in the industry?

The reason why the space industry has captured my attention is threefold. First, it intersects with my passions for finance and innovation policy. It is imperative to closely follow policy developments and geopolitical shifts. Second, the space industry is inherently interdisciplinary and involves a variety of industries, such as hardware, software, life sciences, manufacturing, cybersecurity, and many others. The industry is incredibly diverse and potential applications range from agriculture to defense, logistics, and telecommunications, which adds a layer of complexity to this already intricate ecosystem. Finally, the long-term potential is inspiring, and I am excited to support innovative projects that can shape our world for the better. 

What is Primo’s investment thesis? What factors do you consider when evaluating an early-stage company in an environment where frivolity isn’t be rewarded anymore, and money is tight?

We take a 360-degree approach to investing in the space economy, backing companies that are building systems for electronics, materials, launch systems, and satellite technologies, as well as those working on applications for data analytics, earth observation, etc. The fund is focused on seed and early-stage venture capital deals, investing up to 5M Euro per transaction. The evaluation process is holistic and places great emphasis on every aspect such as technology, traction, and financials, but the team’s quality is incredibly important in the current macro environment: the ability to create something from nothing, a deep understanding of the industry, and adaptability.

Another important consideration for us is the market dynamics within each segment. We look for startups that operate in high-growth markets because companies within the high-growth markets have more room for error, allowing them to adjust as needed, while companies operating in static markets have fewer opportunities to do so.

Astrocast satellite network. Photo: Astrocast, Primo Space portfolio company

What makes Italy a great place for space tech startups? 

One of the most compelling factors is the country’s strong economic history and availability of talented engineers, many of whom were trained in mechanical and electrical engineering, and their skills are easily transferrable. Italy has also been one of the largest contributors to the European Space Agency. The government has announced that Turin will soon host an aerospace tech hub with R&D facilities, and university campuses, among others.

The country hosts a diverse range of investors: family offices, sovereign funds, banks, private equity firms, etc. It’s an exciting opportunity for them to invest in frontier tech and help grow the local ecosystem, creating opportunities for startups, SMBs, and larger companies. 

The local space industry has evolved significantly over the years, with larger companies driving growth and innovation for SMEs. Companies like Argotec, Planetek, and D-Orbit started as small startups and have grown into major players with hundreds of employees. 

Last but not least, the food is absolutely terrific!

What recent developments in the industry have surprised you and what are the biggest opportunities for growth? 

Over the last 10-15 years, we have witnessed a dramatic reduction in the cost of sending payloads to space and can now achieve things that were unthinkable just a few years ago. However, we must be cautious not to overemphasize the short-term hype and instead focus on the long-term. 

I’m very optimistic about cybersecurity solutions for space-based assets. It is incredibly relevant today because space assets must be protected from hacking and data extraction attempts. In general, software plays an important role in terms of capabilities and vulnerabilities. Another interesting line of work is the “retro-innovation” of traditional industries, such as agriculture, that today are significantly empowered by earth observation data, machine learning, and IoT.

D-Orbit offers in-space transportation services with its ION satellite carrier. Credit: D-Orbit, Italian Space Tech Company

What are some of the biggest challenges that space tech startups are facing today and do you have any advice for entrepreneurs? 

As we look to the future, we must acknowledge the increasing likelihood of unforeseeable, “black swan” events. The current economic climate will require teams and investors to be more cautious about cash flow management and burn rate. As a result, founders must show resourcefulness and adaptability. I place a lot of emphasis on adaptability because many entrepreneurs in space tech come from academic backgrounds, which can be very static. Intellectual capability is a necessary condition but must be coupled with flexibility and a bias to action.  

Each business model has its own set of risks. For example, most downstream applications are B2B software companies, with a similar dynamic to software companies in other industries. However, the teams that are developing hardware systems must plan for the long term and work with investors who are willing to take the extra risk. In a tough funding environment, having the right people by your side can make all the difference. I have no doubt that talented and dedicated teams will be able to navigate these challenges.

Thank you Raffaele for taking the time and sharing your journey with our readers!

At Space Ambition, we frequently meet investors who would like to start investing in space tech but either do not have the expertise or do not know how to get started. If you are looking to pivot into the space industry and facing difficulties, please reach out to alexandra@spaceambition.org. We believe that increasing investment in the space sector is critical to reducing reliance on government grants and creating a more self-sustaining ecosystem.

We are also convinced that it is the bold and visionary entrepreneurs who are willing to take risks and swim against the current that will drive this industry forward. Do not hesitate to reach out if you are working on a space tech venture or simply want to brainstorm ideas with us.