Space is hot among investors again, so we’ve seen quite a few teaser pitches about various space launch and satellite tech companies over the past year or so… but this one is a little different, and seemed worth a fresh look.
Matt Milner at Crowdability is pitching an “Urgent Briefing” about something he calls “Space-Net”… here’s how he introduces it:
“One tiny company could help you turn every $100 you invest into as much as $48,750 — starting as soon as Jan 14, 2021!”
And apparently that’s some kind of hard deadline…
“… this opportunity will disappear, for good, on Jan 14, 2021.”
So what’s the deal? He’s selling subscriptions to his premium newsletter called Private Market Profits ($1,500/yr, they say they’ll offer a full refund for the first 30 days — so that’s good, and unusual for a high-priced newsletter recently)… and the bait he’s dangling is this private “kill your hated telecom provider from space” investment… here’s how he begins to describe it…
“As you’re about to learn, this is one of the first space-based internet technologies.
“And today, you have the chance to claim a ground floor stake in the company behind it! ….
“In other words, you’ll be getting into this company at its earliest stages…
“Well before its IPO.”
What on earth is a “space-based internet technology,” you ask? Here’s how Milner puts it…
“… this company is developing a technology I believe will transform the telecom and cable industry…
“Essentially, thanks to this company’s revolutionary new ‘Space-Net’ technology, you could be able to access high-speed internet from ANYWHERE in the world.
“Not only that, but you could get this global internet access:
“At 12x the speed of your current provider.
“For 90% less than what you’re currently paying.
“And because it could be beamed to you from space, it could give you perfect coverage no matter where you are!
“That could mean coverage in every nook and cranny of the entire world.”
Ah, so that’s very similar to the many past “you’re about to get cheap internet service from satellite” pitches we’ve seen, from Ray Blanco’s Halo-Fi and Apple-Fi to the other similar plays on high-profile low earth orbit satellite constellations from Spacex’s Starlink, Jeff Bezos’ Blue Origin, or OneWeb… most of the time those end up being pitches about companies that provide equipment for those satellite systems, or launch technology.
And, of course, that dream of 90% cheaper internet at 12X current speed seems to apply only to the folks tho are paying $1,000/month or more for low-quality satellite internet — Starlink and the other new satellite data services are likely to be priced similarly to cable broadband and offer a similar quality product, maybe a little faster, it’s just that they’ll reach lots of people who aren’t able to get cable broadband currently.
But, it turns out, this is something else, borrowing the big picture theme from those “Starlink” type pitches while focusing on a different kind of invstment… and yet, it also sounds familiar.
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Here’s the promise being made by Milner:
“Not only does it deliver a far superior product and service…
“But it also does it at a far better price.
“That’s why we predict this company could capture the lion’s share of the $2.7 trillion telecom and cable market…
“And when it does…
“It could help you turn every $100 you invest into $48,750.”
And then they start dropping some real clues… which means we start to get a clearer picture, and it’s one we’ve seen before.
Here are a couple of those clues:
“NASA invested $2 million in this company and confirms it’s ‘the first internet service provider in space.’
“Sir Richard Branson, the eccentric billionaire founder of Virgin Galactic, has already signed contracts to use this technology.
“Jeff Bezos, the billionaire founder of Amazon.com, loves this technology so much… he attached it to his rocket.”
And they show a photo of Bezos celebrating at a Blue Origin launch, with the founder of “today’s New Mexico company” as one more hint… so yes, we know what this is. And it’s been teased before.
Not ringing a bell yet? Here’s one more clue:
“In the very near future, demand for this tiny company’s technology could soar.
You see, Bezos, Branson and NASA are at the forefront of the new ‘space race’…
“All of them have billions invested in projects that are aiming to redefine space travel and industry…
“And they know that as we send more and more devices and people into space, we’ll need an easy and fast way for all of them to communicate…
“In other words, we’ll need internet access in space.
“Which is why I believe that the demand for “space-based” internet connectivity is about to increase exponentially.
“And this tiny company’s technology could be the backbone for ‘space-based’ internet.
“In fact, it’s already proven that its technology works by sending the first “tweet” on Twitter from outside the earth’s atmosphere.”
Just about a year ago, this same company was teased in a pitch, also from Crowdability, where they were advertising a special online course about how to invest in startups. This time, the ad is for a more traditional subscription newsletter product about startup investing, but it’s the same private stock that they’re pitching… and yes, it is a private company that is also soliciting small private investments.
So what is it that they’re pitching? This is the little space startup Solstar, which is indeed a private company that has done some public equity fundraising in the past — they raised a few hundred thousand dollars on WeFunder last year (a small portion of the million dollars they were looking for, it appears), and they seem to be back again for more cash now, again on the WeFunder platform.
And yes, NASA and Bezos are at least somewhat connected to Solstar — they got a ride on one of Bezos’ Blue Origin rockets for their initial test, and NASA subsidized that trip. They’re not aiming to provide “$7 Internet” for terrestrial consumers, however, they’re trying to build a WiFi network for people and equipment IN space based on their Schmitt Space Communicator — basically, a hotspot for astronauts and space tourists.
The Crowdability folks think they’ll go far beyond that, but keep in mind that this is really a dream on top of a dream at this point — here’s how they put it in the ad:
“My gut tells me this company is onto something far bigger than sending tweets from space
“I believe that once this company perfects its technology…
“Once its routers are on every satellite in orbit…
“Then there’s nothing holding it back from providing ‘Space-Net’ internet to everyone in space… and everyone here on earth too!”
“And that’s where the real money will be made.
“Because that’s when the ‘Space-Net’ could start offering blazing speeds and total worldwide coverage for just a small fraction of the price you’re paying now.”
I think that’s wildly optimistic. They are not ramping up the capacity to serve millions of people, and they’re really just in the early stages of proving up their “hotspot internet connections for astronauts and space tourists” technology. But, of course, we don’t know what the future will bring.
So yeah, perhaps Solstar is interesting, and you can see how they could develop this equipment with a relatively small amount of funding (as opposed to the billions of dollars OneWeb and SpaceX and others are spending to build and launch giant networks of microsatellites with that goal of providing terrestrial internet access), but it doesn’t sound like it’s going to change the world or make a dramatic splash anytime soon. “Internet service from space” is a way bigger potential business, at least for the foreseeable future, than “internet service for people and objects who are in space.”
Which isn’t to say it can’t turn into something bigger someday, I wish them the best. There’s a good article here about efforts to update and privatize the existing communications networks that are used to connect to people and objects in space, and while most of that focus is on the big space contractors there was an interesting quote from Solstar’s founder… here’s a little excerpt of that article:
“‘With the sharp increase in spacecraft on the horizon, now more than ever we need to shift towards an always-connected, internet-of-things mindset in space,” said Brian Barnett, CEO of Solstar Space, a New Mexico startup seeking to create a ‘Space Wide Web.’
“Solstar’s Schmitt Space Communicator, a transceiver, relays messages between spacecraft and the ground through commercial communications satellites in geostationary orbit. Solstar tested the device in April and July 2018 on board Blue Origin’s New Shepard, sending the first tweets from space.
“‘We’re leveraging space infrastructure in new ways and embracing new technologies to craft innovative telecom solutions that open up new operations strategies for spacecraft and payloads,’ Barnett said.”
If you want to see some other coverage of the story, the local New Mexico media certainly covered it well last year, probably the best story is from the Santa Fe New Mexican here and includes that photo of Bezos and Solstar’s M. Brian Barnett which Crowdability also used in its ad. They’ve apparently raised $535,000 through Wefunder crowdfunding so far, and another $50,000+ through Reg. D… which is probably good news for them, because as of last year it looks like they were pretty much out of money. It’s not a big company or project, at least so far, and nothing related to space is cheap.
Which is pretty much all I can tell you — I have no idea what their financial status is beyond what’s on their WeFunder page or on their entry in Crowdability’s own deal directory, or how long it will take them, if they ever break through, to really become a commercial company instead of a crowdfunded R&D project… I don’t even know if they have any scary skeletons in their closets. Crowdfunding projects are generally a leap of faith, you do get a legal agreement but you get a lot less information about the company than you’d be accustomed to for a public investment. Or even for a partnership to help a friend open a restaurant in your town, for example.
But if you love the idea of becoming a telecom pioneer in space and maybe becoming some future generation’s Ma Bell, well, you can research it up and see if you want to invest. The fundraising they’re doing is via what WeFunder calls a “Future Equity Agreement” at a maximum equity value of $8 million, meaning that you’ll see good returns on your investment if it gets a “real” venture funding bolus from somebody at a market capitalization above $8 million (but if they get future funding at a lower valuation, your shares will reset to that lower valuation too).
Like other crowdfunding projects they offer some “perks” for investors (like a T-shirt if you agree to invest $2,500, for example), which serves as a good reminder that this is a “for fun” investment that makes sense mostly if you love the idea of backing a “space” project. These early-stage venture agreements are very different from investing in common stock, and there is no guarantee that there will ever be an exit from this investment, or that it will ever turn into equity. I expect that most of the folks who are investing are doing so for the cool factor, with a side helping of “maybe it’ll be a lottery ticket in ten years, too,” and if that’s your kind of thing then I won’t stop you — I’d just go into it with a clear understanding that you won’t get the cash back even if you really need it, and that the most likely outcome is a 100% loss of whatever you invest.
And no, you’re not getting $7 internet, either from Solstar or from Starlink or anyone else, not anytime soon.
Any thoughts on this one, or on angel investing in general? Feel free to shout ’em out with a comment below. Thanks for reading!
Disclosure: Of the companies mentioned above, I own shares of Amazon. I will not trade in any covered stock for at least three days, per Stock Gumshoe’s trading rules.