The Allplane Podcast #38 - investing in aerospace startups, with François Chopard
François Chopard is the founder of Starburst, a firm that acts as a vector to accelerate innovation in the aerospace industry.
Through its eight offices distributed all over the world, Starburst acts as a startup accelerator, holding regular and frequent open pitching sessions, a consulting firm and a venture capital fund. Its scope is also quite broad within this industry, since it ranges from sustainable aviation and software for commercial aviation all the way to space technologies, satellites and defence. Starburst is also an investor in two green aviation startups that have been featured on this site: Ampaire and ZeroAvia.
On today’s episode François shares his entrepreneurial journey as a Frenchman in the US, how he got into the field of aviation technology and how he led Starburst to become an international reference in aerospace entrepreneurship.
Tune in for this fascinating story and some insights about what comes next in aviation and aerospace!
Download this episode from:
Apple Podcasts / iTunes, Spotify, Google Podcasts or Stitcher
Things we talk about in this episode:
François professional and entrepreneurial background
What is Starburst and how it was created
How and where does Starburst’s Accelerator operate?
How aerospace entrepreneurs can apply to Starburst
Which areas of the aerospace industry is Starburst most active in
Which areas of space tech are most promising
Views on sustainable aviation
Views on the evolution of the aviation industry
Resources:
Podcast with ZeroAvia, an hydrogen-powered flight startup that Starburst has invested in
Ampaire, another interesting green aviation startup in Starburst portfolio
The Archer $3.8B SPAC deal that we mention
A note about the Virgin Galactic SPAC
My CNN article about “flying cars”, which I mention in the chat
Podcast Music: Five Armies by Kevin MacLeod
Link: https://incompetech.filmmusic.io/song/3762-five-armies
License: http://creativecommons.org/licenses/by/4.0/
Interview Transcript
(please note that, although we strive to make it as close as possible to the original recording, the transcript may not be 100% accurate)
Hi everyone and welcome to the Allplane podcast! With innovators and entrepreneurs that are transforming the aviation industry
Remember...You can find all the previous episodes of the podcast as well as many other aviation stories on our website: allplane.tv - allplane.tv
In this episode, like in the previous one, we continue our exploration of the aerospace startup acceleration and investment ecosystem
François Chopard is the founder of Starburst, which is today perhaps the most active specialized player in the field of early stage finance and acceleration in the aerospace space.
Starburst has offices in multiple countries around the world, from where it scouts the tech ecosystem of each world region and it also holds regular and frequent pitching events - which I have had the chance to attend, on occasion - in order to identify the most promising startups in the field of aerospace, broadly defined, it can range from software for the air travel industry to super niche satellite and defence technologies.
We have chatted with François about the work they do at Starburst and also about the aerospace innovation landscape and the most promising technologies appearing over the horizon, from sustainable aviation to space tech.
Tune in for a conversation at the edge of the technology frontier in aerospace!
Hello, François, how are you?
Hi, Miquel, how are you?
Very well, thank you. Thank you for joining us this morning...your morning, because you are in California. So it's a nine hour time difference! But I was really looking forward to having this conversation because you are the founder and CEO of Starburst, which I think it's one of the most fascinating projects that there are right now in the field of aerospace, technology and investment. Can you tell us for a start a little bit about yourself, then we can move on to talk about Starburst and the sort of projects and initiatives that you guys are backing?
Of course. So I'm an engineer by background by training. I started my career at Airbus for a couple of years, I had also the opportunity to cross the Atlantic and work for the US Air Force in one of their research labs, in upstate New York, for two years, and it was also a great experience. It was already for me a way to either compare, to work, on both sides of Europe and in the US, and see how things were different in the aerospace industry. I was very curious. I love innovation, but I didn't want to be an engineer.
So I came back to France and worked as a consultant in the industry, in a strategy consulting firm, during the internet bubble in ‘99, to join a startup that raised 8 million euro quite successfully doing b2b. At that point I was already scouting and working...didn't work there very long because of the crisis. And so I came back to consulting. I started another company four years later. And it was almost like the precursor of Starburst.
We were a team of 15 people in Paris, and we were already scouting for innovation for large corporations. So we got contracts from Airbus and others who say, “Okay, what can you say about the future of batteries, the future of more electric aircraft? And what are the patterns? What are the top universities, professors working on this subject and what can be the future?”, and that was in 2005.
So it was already interesting, very similar to what we are doing now. And for some reason, after four years, it was working very well. But it was not my company completely. So I stopped reading some strategy consulting, and then really started Starburst about eight years ago now. I mean, I left my previous company, 10 years, it's gonna be 10 years..by the time I started a new business, found the new business model, adjusted it to what is Starburst, it was about eight years ago.
Because Starburst, and then we move of course to the project that you are leading, it's a very interesting beast, because you do different things at the same time, but they are all connected to the, let's say, the cutting edge of innovation in aerospace. So just to summarize, how would you describe it in a two line sentence? because you are an accelerator, you also do some consulting and you are also an investment fund, right? Like a VC.
Yeah. And so what do we do now? Okay, I will do it in two lines, we do two things. We work with startups to get traction, and get the next round of financing, which is usually a series A, and we help corporates understand better, what's the landscape? What's happening? What are the trends, what's emerging, and what should you be careful about or, you know, take care of...that's really the two things we are doing, and then everything is related. But we ended up doing so many things, because when I started eight years ago, I was not an investor, I didn’t have a fund, I, basically, started with 10,000 euro.
So, I needed to be creative in order to start the business. And the only way I could do that was by selling services. So I knew what to do. I was using my brain to support corporates, understanding what's going on and suppose startups to work with the corporates. And that's really how it started. And that's why even today, we are still doing strategy consulting, because the startups and the corporates, they still need to understand on a real time basis, what's going on, and how they can be better. So that's why we're doing that service.
And then we realized that suggesting that service in Paris was not enough. And what's going on around the globe and starting the, you know, if we're just focusing on France or Europe, there will be not enough, because aerospace is a global market and even the startups very quickly, they need to be global. So that's the reason why we expanded our service. T
hat's why, six years ago, we moved to LA, I found partners and, and we developed our business in the US. And then we have an office in Paris in LA, I found that we need something in Asia. So I moved to Singapore for a couple of years. Developed our presence in Singapore, it was long and painful, but that was necessary to be global. And then came back to France, opened an office in Munich, and then moved back to to San Francisco finally. So, yeah…
You're a global firm. Now, I think you have how many offices...eight?
So, now we have eight different offices. And each office is a subsidiary, which is, you know, an entire company, not just a representation, it's a full company. So there we have a managing director, we have a couple of people who are able to support local startups, either to invest in them or take equity, and provide local services. And so we're working in environments, aerospace and defence, where you need to be local to work with the local government.
So, you are a global company, and I read you started, you started, as you mentioned, a consulting operation, and you've been increasing more and more the investment side of your activity.
Yeah, because if you want to have more weight with the startups, if you want to have more impact, you need to be more invested than just, you know, doing services. And so either we take sweat equity, so which means that they don't pay for our service. And for us, it's already a big investment, and we get equity, or we invest directly. And we've already a couple of investments.
But right now, we want to do much more. So we're going to talk about this...But, yeah, at the beginning, we are not taking equity, we are trying to as we are helping them on the business development, we are taking some success fees on the contract, we are going to sign but we realized that it was not enough. If you really wanted to make a difference, we need to be more committed and invested, we needed to take equity. And so that's the shift we did about four years ago now. And that's how we became investors...in the beginning, we took 12 startups and then 15,18.... And now we're taking on average 20 startups in our late stage access accelerator model, every year.
And you run, throughout the year, a number of events, like presentations, I remember I attended one of them in London. So basically companies, startups, come to you, they pitch, then you have a selection committee, and you select a number of startups. So that's, that's a model that's been practiced by accelerators, incubators, the world over, particularly in recent years. What can you tell us about the characteristics that these startups must have? Are you investing at any stage of development? Are you focused on a specific stage and size?
So, it's interesting, it's a model that we developed in 2013. So already at the beginning, we were scouting startups. And we were inviting them to pitch in front of all our corporate partners and our corporate partners, the ones, you know, paying the retainers would help us to pick the best ideas, they would tell us, we like this one, we like this one, we would do our mix, our a recipe and out of the 10 that we pitch would take two or three that would take into our accelerator. So that's a model that we developed a long time ago, we are industry specific.
And so we use our corporate partners to help us, you know, sort out the stellar ones that they like the most and show the more chances to be successful. And so, yes, now that we are global, we have a team of at least 10 people scouting startups on a regular basis, I mean, on a daily basis, which means that on average, we identify 2000 to 3000 new startups every year, which is a huge number. And so we came up with a mechanism where we sought them, we pre-select them, and we learned the ones that are around their seed stage.
At seed stage, you know, they come up with already a lot of them have failed already with us trying to have something that they can show up and demonstrate and that's when the corporate start to be interested until seed stage is the right time where we can do some, you know, more efficient, much more. It’s in between selection and cooperation, that's why we picked it.
Because you also have a quite an impressive roster of partners, industrial partners, companies like Boeing, for example, a whole range of companies that are in the industry, which I guess it adds value to the proposition as well, because many of the startups that you are selecting, are in some degree dependent on on these large corporates adopting this technology that they are developing, right?
Yeah, of course. And that's also the value. We know the industry, we have connected to all the major corporates and the different governments in the US...we work a lot with NASA and the Air Force. And we are starting to engage with the Army and the Navy, which in particular in the US, they have a check book and so the military are able to, you know, give contracts very easily to early stage startups. And that's what we're looking for too. So it's corporates and government entities that the startups are looking for.
Do you focus on specific market niches? because you have invested in some 200 startups so far, or you have accelerated 200 startups, possibly, with this to the scheme, but it's quite diverse. So you have things like from satellites to very, very specialized technologies that go into a specific function of, let's say, a satellite, all the way to startups developing, for example, new propulsion technologies for commercial aviation...I had here on the podcast, for example, ZeroAvia, which is one of the of the companies that I think you you've been involved with. There are others that have been in the headlines recently, like Ampaire, for example, and some others. So, how do you categorize these startups? Are there specific market niches that you are focusing your attention on at the moment? Or is aerospace very broadly defined?
Yeah, so we took aerospace...we call that aviation space and defence, because it was my area of expertise. And that's how I picked it and then inside aviation space and defense, you're right, it's the same industry, which means that it's the same players. If you look at Airbus, they are entering in all these different categories Boeing's the same, so all large corporations, some are more defence or more aviation, but overall, it's the same industry.
But then when you look at the product, and they are very different: aviation, it's more on the aircraft, the helicopters and here we have the Evtol category, the cargo drones, you have the electric aircraft, hydrogen aircraft, now the supersonic, we are also tackling with the new way of addressing mobility, so the emergence of the small regional airport that are being used for smaller airlines.
So, we also looked at a certain number of new airline business models. And so that's an entire category. And then, of course, you can look at batteries, you can look at fuel cells, new types of sensors for sense and avoid or LIDAR, also 3d cameras. And then you need to look at, you know, Ai, because it's key, and some degrees of machine learning and others, cyber security, because you don't want this product to be out. And so that that's an entire ecosystem. The other one that is booming right now is space, from launchers to a new type of constellations, we're talking more and more about having multiple space stations. And so people working in space manufacturing in space, refueling...that category, and also all this is because the cost of sending stuff to space is becoming much cheaper, it's much more flexible.
Now, you can either use SpaceX for 1/10th of the price or rocket lab and have your, you know, perfect flight right for you, just putting your things in the exact orbit. So we've been, you know, addressing these two categories, and how out of the 200 startups that we have accelerated, we have equity into 60 of them, including ZeroAvia, Ampaire and more and here, our portfolio companies are starting to do pretty well. And so, we are starting to be recognized now as a good investor, a good partner for our accelerator program and the way we teach startups and we support them.
Yeah, actually, I couldn't avoid thinking about a statement you have on your site that says “the next billion startup will be in aerospace” today. Because just like two, three hours ago, we learned the news about a massive deal, through a SPAC Archer, an air mobility startup that got valued, not at 1 but at $3.8 billion in a really eye-catching deal with United Airlines and some other large investors! So, yeah, I guess that's a sign of how dynamic things are getting…
In one year...so I think, Virgin Galactic was the first one to do an IPO through a SPAC and it was just 12 months ago. Since then we've got a zipline for cargo drones, which got valued above 1 billion, Boom is around 1 billion, Rocket lab is around 1 billion...yeah, there's a couple of SPACS that have been announced, startups that are going to be valued in the aerospace industry above 1B, one is for constellations, another one is momentous, which we are are part of of, and it is doing first stage rockets...So yeah, in one year, we went from zero, or maybe just SpaceX to at least 10 or 15. And that's crazy! But again, I think it's just the beginning, aerospace is not a bubble. We are in for at least 10 years of you know, revolutionising the way we move we fly, the way we go to space, it's gonna be a great 10 years to come for sure.
Yeah, I wanted to ask you about this, because we are at a point where there's certainly a lot of activity on the, let's say, the technical side. But it seems that the business models are not yet that well defined. Where do you see things going? I know, that's a very vague question. But, for example, in Air Mobility, you, guys, have a vision or have identified some potential winners? And when it comes to trends: where are things going and what are the drivers of this industry going forward?
So what's exciting is that there's already product flying, if you look at Joby, even though they're not talking much, but they're already flying, doing a lot of experimenting and being close to being certified. So that's the first point. They're going to be certified in a couple of years and they will be able to operate. Now the first commercial flights, of course, there's going to be a pilot, the batteries are going to be heavy. And so it's going to be limited, it's going to be for high net worth individuals. And it's all at the beginning, it's going to be the same way the automotive industry was...
Yeah, so it's not surprising, but then, you know, we might move away from battery and replace that by hydrogen, and then it's going to be cheaper, it's going to go further, we are not going to need to refuel all the time, so the downtime will be less and then autonomy and automation will be better until there’s not going to be a need for pilot. And so you can sense that, each step will take a couple of years.
And so the first flight, if you look at the first flight, maybe next year or the year after, along with certification, so that's in ‘23...and then you want to have a better propulsion system. So maybe hydrogen would be viable through ZeroAvia working in 2025, and then fully achieved through startups like x-wing or others, and maybe that's going to be 2027. But one thing is sure, in 10 years from now, we're going to be fully using these types of products efficiently, autonomously. And at the same time, the infrastructure, the airports, or the heliports or the elevators or who knows how we're going to call them...across the city, and we'll have a better understanding.
So, yes, it's gonna take time, but we're gonna see it evolving with us. And in 10 years, for sure, it's going to be a nice product and mass market. And that's why our line is massively investing in this because that could be the future of cars and mobility.
Yes, actually, I had a chance to write an article for CNN about a year ago focused on this fact that many car companies are actually investing in Air Mobility so you have Toyota, FIAT and…
Hyundai…!
Yeah, yeah, there are quite a few! and the luxury ones...Porsche... quite interesting how they are moving this in this direction. But are we going to have so many things flying overhead that at some point we will need to start looking up just to see if there's something...if there's a chance of things falling from overhead?
So, it's a good point. But then at some point, it's gonna be a choice. So do you want traffic jams and a massive line of cars on highways and be stuck in traffic, like you are in LA every day? Or do you accept to have more things above your head and in less traffic and something much smoother and less cars on the streets more street for them for the pedestrians and bicycles at the end? It's going to be a choice and some cities will be more advanced. So we'll see how it goes, if it's better or not...what are going to trade off, but yes, you're going to have more stuff above your head...right now you have nothing, so the sky is not going to become dark because of these vehicles, but for sure you're gonna have more...
Yeah. And when it comes to space, where do you see the opportunities? Because that, I must confess, it's an area I don't know that much about, but it's obvious there are many things happening as well. There are nano satellites and space travel...but for me, it's difficult to measure what are the main drivers? What are the most promising areas? What's your vision for the coming years in this space?
So, it's interesting, because space it's one thing, but at the end, there are so many different markets that are being pursued right now...At the beginning of 2010, we're all talking about asteroid mining. And then technology was not fully ready, it was always too expensive...so it faded, but I'm sure asteroid mining will go back again, because we're going to be able to have access to these minerals not that far away, for a very cheap price.
So, bringing back, these minerals is going to be already a business and then manufacturing in space, we know that already, there's a couple of products that would make sense to be manufactured in orbit like fibre optics, we made a lot of progress on that..
Is it because of vacuum conditions or…?
Yeah, it's not vacuum, it’s zero gravity. And so the fact that you don't have gravity in the way the fibre crystallizes...it's much more pure. And so the bandwidth of this fibre optic is 1000 times better.
That's one example. Another example, scientists have realized that when you grow skin in a zero gravity environment, it grows in many different directions. And so I'm not a biologist expert, but they say that there are some properties that they would like to explore more. And then semiconductors, I'm sure manufacturing semiconductors in space, with no gravity and hopefully no perturbation, would be great.
We are also talking about putting a lot of supercomputers in space, because you don't need to cool them. And on earth, the curve of the energy required to cool all the computer farms is growing in an exponential way, if you put all these computers in space, as long as you have a good downlink connection, which is being worked on, you can save a lot of energy on Earth. We're talking about space tourism and hotels in space.
So, we don't fully understand and realize what's gonna happen in space. But for sure, a lot of things and with the new SpaceX rockets, the one that Elon is trying and crashing on a regular basis, but at some point, it's not going to crash like the others. And then it's going to reduce the cost of putting stuff into space, even by a factor of 10. And so, in the past it would cost billions and now will cost a couple of dozen millions and a lot of things are going to be accessible, that were not only five years ago.
It's expected to be a monopoly of sorts, though, because all of this is going to rely on a gatekeeper, the people that are able to, to send those cargoes to the space.
And so what we are asking ourselves right now is you know, on the internet side, Google became a monopoly, Facebook became a monopoly, snapchat, WhatsApp, there's been a couple of monopolies And we are at the point where we don't know if SpaceX will become a monopoly in that sense…
A platform...can we call it a platform...?
Yeah, but at the end it’s still a monopoly...maybe the Chinese will develop their own monopoly, the Indians, the Europeans...But for sure, they have specific as done, you know, things on the cost of operation that nobody has succeeded in doing so. And even now, nobody has a clue on what they're doing today, so they're gonna have a monopoly for a while, and then see what's gonna happen…
You mentioned space tourism...Do you see this becoming more of a mainstream thing in the coming years? Maybe not a massive thing, but something that few 1000 people can experience
For sure, it's going to be a business. It's going to be a couple of billion dollar business, but it's still going to be a niche for the next five to 10 years. But it's some of these businesses that are pushing forwards and are making space more accessible. So it's a necessary business for sure. And then when you look at Virgin Galactic, what they are doing...there's a much bigger business and transportation. And so using their vehicle to do Paris to New York or London to Tokyo in just a couple of hours makes more sense if they succeed in achieving these cost saving to make it more affordable.
So that would be a hypersonic suborbital flight…?
Yes you almost go 200 kilometres high and then you wait for the earth to turn beneath you. And then you go back…
Then, in parallel, we have also strong pressure for technologies not only to fly faster, but also to fly greener, what's your view here? you're invested in companies that are attempting different approaches. As you mentioned earlier, you have mentioned ZeroAvia that is investing in hydrogen, we have Ampaire, that has a hybrid electric power plant...Do you have a view here about what is the most promising path for decarbonisation of the aviation industry?
The key, whether it's Ampaire or Zero Avia, is how you manufacture, how you produce electricity...Even if you switch everything to electricity, and you still make your electricity with coal or fuel or carbon products, then it's not going to work. So if we want to move away, we don't have that many solutions. Interesting about hydrogen is that we were going to be able to store energy and electricity in a more efficient way and reuse that electricity when we need it. So then solar will be more effective if we combine solar with hydrogen manufacturing, or even wind turbines with a place to store electricity that would not be expensive. The other way we need to think about is nuclear, everybody is worried because of Fukushima and a couple other catastrophic events, but nuclear, if you manage the waste...and maybe the waste could be sent into space in one way or another...nuclear is really the way to get out of co2, methane and all the fossil fuels...
What about biofuels and synthetic fuels? Is this an area you are also active in?
Less, because...biofuel...Again, how do you make these fuels? If you need to plant trees, or different kinds of vegetables to manufacture them, we know that it's not efficient. And so it's going to be even worse than just digging into the ground and getting natural gas or regular fuel. So all these biofuels, if they are waste of a current process, yes. But if you're trying to redevelop an entire industry, if you need to remove some forest in Amazonia to manufacture this biofuel, then it's not viable anymore. So I'm more skeptical about this and more positive about the renaissance of nuclear energy.
What about infrastructure, I mean, if all these projects, go ahead, that's completely gonna change the way that we move around, not just from point A to point B, but also how you move to, let's say, to an airport, from the airport from door to door...I guess that's going to require massive investment as well. It is an area where you guys are also looking into and what sort of infrastructure changes are we expected to see in the coming couple of decades if that panorama materializes?
For sure there's going to be a real estate impact. And, but here, it's less about disruptions, okay. Yes, there's gonna be changes, but it's not based on technology. So investing, as a VC will not make us this huge...it's more traditional real estate investments. Of course, we would like to do so. In the 18th century, when Napoleon redesigned entirely Paris, the one with the map of the place and the one who knew where all the big boulevards were located, you know, made a lot of money on the real estate because they were able to buy all the places before...buying the right real estate, you know, ahead of the others because of these new spaceports or airports, yeah, there's gonna be a lot of money to be made. But right now, we are not real estate investors. We're not rich enough. We see something in the top of our mind, but we have not been able to execute that so far.
Yeah, I was listening to a business podcast the other day, I don't remember which one, I will have to look, we'll have to search it. But someone said that the car revolution in the 20th century made a lot more money not just to the people actually doing the cars, but all the all the whole ecosystem: the changes generated in real estate, all the new commercial centers, hotels, restaurants, facilities that were created, the petrol stations, all the other investments that came around this technology change that was produced by the car...Obviously, the car itself also, it's going to be a factor, I guess, with all the improvements we are seeing now in electric car, self driving cars, that's going to have an impact as well. And it will be linked to all this revolution we are going to see also in the air.
Yeah, that's for sure. And that's why we need to make a lot of money investing in startups, so we have, you know, more capital to deploy in real estate! haha!
Yes, haha! That sounds like a great plan! Yeah, well, there might be many entrepreneurs now that might be wondering how to apply to Starburst. So, where should they go? And when are the next rounds? What would you recommend?
So we have selection rounds every month, or at least once a month. So they can apply on the website, you know, push their company, send a presentation, that's pretty easy...what we are launching right now is where we are launching an early stage program. We realized that there was also a need for pre-seed startups. And so we are launching a program in LA called Scale, we are launching a program in Paris called Blast. We have one in Israel, it's from our Tel Aviv office, we launched one in Singapore, called the Aviation Accelerator, and we are looking at leveraging this local ecosystem and launching aviation space and defense accelerators in local cities. So LA is more about space, Paris is more global...
So, would you recommend that companies apply based on the geographical region they are based on or based on the type of service or product that they are developing?
So first, they need to apply based on their maturity and then, yeah, if one of our four early stage programs fits into their category, they should apply to that and if not, they should apply to the closest one.
Let's remind people that the website is Starburst.aero and I don't know if there is anything else you would like to say before we wrap up this conversation?
Yeah, we need more entrepreneurs, we need more people that wants to make a difference in the aviation and then space industry. So I hope that this discussion will motivate and convince more people more successful entrepreneur in other industries to come and join us in our major revolution, there's not that many industries that are going through such a huge transformation and aerospace is now.
Yeah, I was thinking that if things move along this curve, I think we can expect aerospace investment to go from a niche to more of a mainstream thing like telecoms and, and other industries.
The other sector that I'm really passionate about is food. There's so much things that need to be done in the food industry. So we can, you know, eat better and live better.
Very good. Actually, I must say I was once a digital food entrepreneur. That's my previous career a few years ago. Yeah, that's also a sector that I hold very dear. And it's very interesting many things going on there…! Well, thank you so much, François!
Thank you. Yeah!
And let's see what happens with all these very promising technologies that you are backing,
I'm sure...There's going to be some failures, but I'm hoping there's going to be many more wins...
For sure...Thank you very much!
Thank you, Miquel!