Return of the Goodyear Blimp

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Happy Monday, folks.

We have a bunch of new readers today, in large part due to a truly appreciated plug from my friends at Level Up. The good people over in analytics (it’s me. i’m the person in analytics.) told me that many of you guys are Australian, so as we say in the US, welcome!

Or, as you say in your language, welcome!

Excited to have you aboard, and even better, if you know of an early stage startup building something cool in the Land Down Under, shoot me a reply and lemme know. Been meaning to have more Macca’s representation around here.

Plus, guess I’m obligated to join another site. So if you, too, are on Thr3ads, shoot me a follow or whatever.

Haven’t touched much on the OceanGate Titanic mission gone wrong, but first of all, anyone saying anything remotely to the effect of “they’re rich so who cares that they died” is weird. Those were 5 lives that were lost. Who cares that they happened to have a lot of money? Seriously, get help.

Now, the disaster actually reminded me of another transportation slip up. What similarly began as an exciting trip quickly turned to tragedy when The Hindenburg airship crashed in New Jersey in 1937, resulting in the deaths of 36 people.

Since, apart from the Goodyear blimp’s staying power in football broadcasts, airships haven’t been the “let’s just float to grandma’s” vehicle many had expected them to be.

However, the promise of these vehicles remains. Beyond just getting you from A to B, they actually have massive potential to reshape many of the same industries being targeted by satellites, like observation and internet service provision.

One of the companies still looking to tap into this floating egg market is Sceye. Rather than focusing on mobility, the company is utilizing airships to provide affordable, reliable internet access to hard-to-reach locales, greatly expanding upon the current reach of towers and satellites.

These puppies eat their Wheaties, making them capable of carrying more weight (and power) than traditional providers of internet service. Unlike satellites, they’re also able to anchor in the stratosphere for extended periods of time, another factor making them superior to the smaller, orbiting devices Elon keeps shooting into space. Will give the man creds, though, they look pretty dang cool while doing it.

The company’s airships have fixed wings, allowing them to remain geostationary to provide such impressive range and strength. Still think they should consider just strapping a bunch of balloons to a cell tower. It seems to work for some.

During the day, the ships are all jacked up on Sunny D, using their altitude to power via solar energy. The excess rays also fill their batteries, allowing them to stay up and running throughout the night, meaning internet users can doom cycle between watching Black Mirror, being too scared to sleep, watching Black Mirror, being too…

The ships leverage “state-of-the-art massive active MIMO array antennae and 3D beamforming technologies that deliver extended range, efficiency and a high quality of service.” In essence, the company is providing satellite towers on Bang, which is coincidentally being acquired by Monster, a move which feels far too natural.

The service can also complement existing internet infrastructure, filling gaps while avoiding interference with current providers. The end result? High-speed internet service for everyone, ensuring access to the countless educational, medical, financial, and other resources which come with it.

Not content with providing lag-free gaming experiences, the company also offers imaging services, including for fire protection, maritime monitoring, and arguably most lucrative of all, industrial emission monitoring. There are various promising and important revenue streams which allow the ships to wear more hats than a pre-seed founder.

Sceye last raised $50 million in its Series A in late 2021 in a round led by KittyHawk Ventures and immediately followed this with an investment of an undisclosed amount from Obsidian Investment Partners. Earlier backers include Boost VC and ClearSky.

Revenue is still pre-significance, but the team has made Dunkin-level progress as of late. The team’s prototype demonstrated broadband from the stratosphere and won the Green Good Design Award. Many are believing in the company’s ability to be a major force in the internet infrastructure of tomorrow, and customers like the state of New Mexico have signed on as partners to use the ships’ air quality monitoring capabilities.

The market for internet satellites is estimated to already be worth $28.7 billion and is expected to hit $44.9 billion by 2028. While Sceye could stand to eat a large share of this market, airships alone are worth an estimated $2.7 billion, and that’s expected to more than double in the next five years to $6.2 billion.

The company’s most immediate competitor is Altaeros, another company developing airships to provide internet accessibility. However, other startups are tackling alternatives to satellites with various other approaches, including Kespry which is exploring drones. Anyone catch a drone show last week btw?

The Sceye team’s superior product and team are its moats. In addition to having a more developed prototype than many competitors, the team offers expanded range and higher altitude, and it has a lower environmental impact and more reliable source of energy.

The exec and advisor teams are highly accomplished:

• Founder and CEO Mikkel Frandsen is globally known for his contributions in the worlds of humanitarianism and business, founding multiple public companies such as LifeStraw and winning various awards for his work in serving others

• David Kim, CTO, worked with Mikkel, leading engineering efforts at the Founder’s previous company

• Chair of the Board of Directors, Astronaut, and former telecom founder Anousheh Ansari. Talk about a resume

• Stephanie Luongo, Chief of Missions Operations, has more than a decade of aerospace mission control experience

• CFO Julia Halin is an experienced finance exec who can help keep the dollars flowing where they need to go.

Frankly, I feel like the last couple of generations missed out on the blimp craze. I want to be able to look out the window and see a massive orb-shaped bubble, floating majestically through the air while helping some kid in rural Alaska to play Roblox.

As long as they can stream the Zuck and Elon fight in 4K.

Sceye is building airships to provide internet access to hard-to-reach locations. This mission is made possible with a superior product which is more cost-effective, reliable, and stronger than existing solutions like satellites. Led by an experienced team and with a more developed prototype than competitors, the company might be a massive player in the future of internet infrastructure, and it will look darn cool while doing so.

It wouldn’t be an edition of The Startup Breakdown without another mention that markets = bad. Unfortunately, our founder friends in South Asia are feeling the heat, and it’s not just the summer monsoons or “Indian spicy” curry.

Fundraising in India was down 68% for H1, only hitting $5.46 billion versus the $17.1 billion seen in the same period in 2022 and $13.4 billion the year before that.

The drop was seen across industries and across stages. There were only 325 seed stage deals versus 936 and 921, 108 A and B deals versus 296 and 211, and 36 later stage deals versus 137 and 114, all for 2022 and 2021 respectively.

Much of the slowdown was driven by big money getting a little travel shy, with major investors like Tiger Global, SoftBank, and Insight all doing the Bart Simpson disappearing act. While some of the gap was filled by sovereign wealth funds, the Saudis couldn’t save the egos of darling startups like Byju’s, Swiggy, or PharmEasy, all of which saw valuations drop by 50%.

In case the buzzcuts weren’t crime enough, the market took victims in fantasy lovers everywhere. No new unicorns were born versus 18 for the period last year and 16 in the year before. Yikes.

Here’s to hoping some noble being rises and slays a couple dragons or whatever it takes to create these mythical creatures. Maybe a PVC pipe, some duct tape, and a goat?

While not quite as bad, the US VC scene was ugly, too. However, there might be the tiniest, faintest ray of sunshine shining through those big bad clouds?

Companies in the US raised just $39.8 billion last quarter, a 48% decline YoY. To be honest with you, that’s not great, Nate. However, this total is in line with what was seen in 2020, further drilling down that this downturn is more of a curse of our own raised expectations.

Plus, while valuations are coming down as well, they’re actually still above pre-2021 levels in most sectors.

Seed stage valuations are elevated across the board with some YoY declines seen across the later stages. Median early stage valuations declined 20% to $39.8 million, and growth stage companies saw their valuations fall 62% YoY to $126 million.

If it’s tough out here for anyone, it’s VCs themselves. Funds only managed to raise $33.3 billion from LPs, in large part because of the lack of liquidity caused by the bad IPO scene stunting exit ops. At this rate, the market is poised for the worst year of VC fundraising since 2017.

However, I hinted that things might be kinda sorta looking up, and one only needs to look at the public markets to see why. The IPO ice appears to be thawing given the Nasdaq’s best performance for H1 of any year ever, meaning more companies might be looking to take the plunge.

Plus, there has been a recent frenzy in the M&A scene. Perhaps seeing big tech coming and scooping up startups with big checks with lots of zeroes on them is going to encourage more firms and LPs alike to open up the pocketbooks?

Idk, I’m taking it as a positive. Maybe it’s just BFS. Battered Founder Syndrome.

Finally, gonna go ahead and make this the tweet of the week:

Good on you digital health. But until the broader startup ecosystem catches up, I feel a responsibility to continue to highlight the disparities seen in funding and starting companies. Nobody likes a sausage fest, Brad.

Did you know that the market price for Triceratops skulls is only $270K? Feels a little low to me (you guys wanna pitch in?), but regardless, it’s the kind of detail you’d never know if not for sites like Rally which lets you bid on alternative assets like watches, cars, and yes, fossils.

Get to hear the stories that accompany these… unique investments and subscribe to Unwinding the Thread, the newsletter brought to you by Rally’s very own Will Stern.

Cheers to another day,

Trey