Esther Dyson’s Flight School

 Here’s another in our series of interviews with speakers at the upcoming Flight School.  

Investor John B. Higginbotham, now with SpaceVest,  grew up primarily in West Virginia during the Homer Hickam era, but with a little more parental approval than the famed “rocket boys”: His father was a ballistic missile engineer with the government during the Cold War build-up of the 50’s and early 60’s.  “But,” says Higginbotham now, “I had to slow down my rocket experiments after almost burning the house down.”  After getting his BS in civil engineering from Virginia Tech, he went to Harvard Business School where he participated in a NASA-sponsored case study on materials processing in space. 

Space jobs were scarce in 1979, so he joined Hewlett-Packard Company in the so-called “toy factory” division in Oregon to help bring HP’s new-fangled personal computer to market.  The business grew rapidly to more than $100 million in revenues in two years but, says Higginbotham, “I was still being called to the space business.”    

At that time the market for communications satellites was just opening up, following the US regulatory and privatization decisions that ended ComSat’s monopoly.  But the capital markets were reluctant to invest in businesses reliant on launch risks without insurance.  So he left HP to co-found a space insurance business in late 1981. 

So Higginbotham and co-founder Jim Barrett set to work building a capital base in their start-up insurance company Intec (International Technology Underwriters).  Since there was little experience from which to predict the results for launches and satellite operations, they had to build a company that was expert in communications satellites, launch vehicles  and aerospace practices rather than actuarial tables.  Soon they were recognized as leading experts in the field, turned to by  insurers, lenders and investors alike, as they  managed the dominant global insurance facility and covered billions of dollars of launch and satellites risks annually.  “We essentially underwrote the expansion of commercial satellite communications during the ‘80’s by financing the risks of doing business in space.  We even got Congress to pass legislation establishing liability conventions for all space operations in the United States,” says Higginbotham.  

In 1991, Higginbotham sold his interest in Intec (later sold to AXA and renamed AXASpace) and started SpaceVest to invest in space businesses privately.  In 1995, he expanded the firm’s investment operations by adding the first of what ended up as three institutional venture capital funds.  By 2005, when Higginbotham retired from active management of venture capital operations, the firm had more than $270 million under management with investments in over 50 companies.  The venture operation has since changed its name to RedShift Ventures, while Higginbotham continues to focus SpaceVest activities on strategic space-industry initiatives.  

“Businesses based on space operations continue to be challenging,” Higginbotham says, “because the market has to be there.  You can’t build a business without customers.  We made sure to invest in companies that had a clear market available for them.  Many of the emerging businesses today need to keep this focus.”

SpaceVest is today involved with various industrial partners and clients in a number of initiatives designed to bring new business models and market efficiencies to the industry.  One of them, Higginbotham says, may be ultimately make a material contribution by providing another solid customer base for today’s launch companies – or at least those that can actually offer reliable and  cost-effective spacecraft and launch services.