DFJ, Jurvetson propel SpaceX funding

Rocket aficionado Steve Jurvetson is leading an investment round in space transportation provider SpaceX that includes the Founders Fund and Draper Fisher Jurvetson and which may reach $60 million, PE Week has learned.

Jurvetson declined to discuss the specifics of SpaceX’s financing. Regulatory filings show the company had raised $15 million toward a proposed $60 million round as recently as March. Jurvetson says that the round has either closed already or will close within the next 14 days.

Executives at SpaceX were not immediately available for comment.

The Hawthorne, Calif.-based company has raised $112 million in funding since 2002, according to regulatory filings. Most of that financing has come directly from SpaceX CEO Elon Musk, who holds the title of CEO, CTO and founder of the company. Musk was an early investor in Tesla Motors, where he currently serves as CEO, and he was an early investor in PayPal, whose co-founders launched the Founders Fund.

SpaceX is profitable, despite having only successfully launched one rocket into orbit, says Jurvetson. Customers pay the company for rocket missions 24 months before liftoff. The prices of the operations are based on the weight of the shipments sent into orbit. The company has four flights scheduled for 2009, including launches for Malaysian satellite maker ATSB and U.K.-based satellite broadband provider Avanti Communications. SpaceX has seven launches planned for 2010.

The company is able to attract customers by offering more affordable launches than the competition, says Jurvetson, who adds that SpaceX manufactures most of its own parts rather than relying on third-party suppliers, which helps to reduce costs. He also says that the company uses electronics and materials advances that government-sponsored spaceships have yet to fully incorporate.

Though Jurvetson has a penchant for model rockets, the investment is a bit of a departure for DFJ, which focuses on early stage companies.

“SpaceX is a lower-risk business than our usual investments,” says Jurvetson. “And, yes, it is a later stage company, but it still had that unique, change-the-world idea, and the potential is huge.”

One potentially large customer is NASA, for which SpaceX is currently demonstrating that it can help provide crew and cargo supply missions to the International Space Station. SpaceX may receive up to $278 million if it meets NASA milestones.

Jurvetson is known for building 15-foot-tall rockets and launching them in Nevada’s Black Rock Desert during the weekends. He says he initially avoided pursuing SpaceX, since he views rocketry as more of a personal passion. “I’ve been holding back when it comes to anything too close to my interest,” he says.

DFJ Associate Joshua Raffaelli recently floated the idea for an investment by the Founders Fund and Musk, who were both receptive, says Jurvetson. “There were three [DFJ] partners who were eager to do the deal and take the board seat, but the confluence of interest and knowledge was all too great to ignore the obvious choice,” says Jurvetson, who has joined the board.

Although Jurvetson believes SpaceX is poised to take off, thanks in part to its NASA connections, its CEO is finding himself busy with his duties at Tesla. When Musk took over as CEO of Tesla in 2008, he became the latest in a string of four CEOs. Tesla has been busy trying to ramp up production and gain a toehold in the electric car manufacturing business. The company received a $50 million investment from Daimler in May that valued the company at $550 million, according to reports. DFJ is also an investor in Tesla.

Jurvetson and SpaceX’s other investors are not concerned that Musk is running two companies at the same time.

“Steve Jobs has blazed a role model trail in how to do that [operate two companies at once] when you have good teams in place,” Jurvetson says. “My suspicion is that over time, Musk will tend to focus on one [company] over the other.”

As a financier of Tesla Motors, Jurvetson was one of the first people to line up for an electric sports car. He owns the 12th Tesla Roadster that came off of the production line. Jurvetson has not, however, secured a spot on any upcoming spaceflight.

“We thought about inserting a special clause in the [SpaceX funding deal] when we put the term sheet together,” Jurvetson says.

Also, space tourism may still be too risky for adventures, Jurvetson says. SpaceX is eventually planning to help send people to space, but they will likely be professional astronauts, he says.