May 2021 update on space funding dynamics.
This article summarizes exits and investment rounds in the space industry, with a focus on 2021Q1 and extended coverage up to May.
“Isn’t it boring?”, a friend of mine asked, looking over my shoulder as I pored over articles on funding rounds, M&A, and strategic partnerships. As someone who gets very enthusiastic about anything space-related, I could hardly believe it — how could you not be hugely excited about this fast-growing sector?! For someone like myself, researching space industry investment goes beyond research — it is entertainment, and a great way to understand an emerging industry.
SPACs
As I’ve done in my previous articles, I will begin by discussing SPACs. In the last four months, a total of five companies have announced their public offering via a SPAC. These are rocket launchers Astra, Virgin Orbit and RocketLab and satellite operators Spire and BlackSky.
As a reminder, SPAC (special-purpose acquisition company) is a currently hyped way of entering public markets. The mechanism behind this is that a blank-check company enters the stock market and has to merge with some actual company (a space startup in our case). For startups, the benefits lie in lower barriers to enter to public and usually a significant financial injection. Unfortunately, this can also lead to listing unprepared and overvalued companies.
Astra is a rocket launcher company promising to offer small (12 meters) vehicles and frequent (daily) launches. After a merger with Holicity, Astra is valued at $2.1B and about to become the first space tourism company traded at Nasdaq. Although it can be a bit difficult to see the uniqueness of yet another launcher company, at least in the vision description company suggests some differentiation — by labelling 3D printing as expensive (unlucky, Relativity Space!) or generally arguing against big rideshare missions (SpaceX etc.). The company has a launchpad in Alaska and several signed deals (with organizations including NASA).
Virgin Orbit is the latest company from the Virgin family to go public via SPAC (Virgin Galactic went public in October 2019 as an SPCE). The main difference between the two is that while Virgin Galactic is preparing for a spike in space tourism, Virgin Orbit offers dedicated launches for small satellites. Recently, Virgin Orbit became a significant shareholder of Sky and Space Company (Sky and Space Global before rebranding) — previously listed at the Australian Stock Exchange. SAS’s original goal was to build a LEO constellation, which showed up as too ambitious a goal. After a certain form of bankruptcy, the company is now recapitalized and rebranded and Virgin Orbit now owns about 15% of their shares.
Announced on the 1st of March, RocketLab SPAC shows the highest valuation ($4.1B) of this batch of companies. Peter Beck, RocketLab’s CEO, clearly explained the deal as a way to raise enough money for the Neutron rocket development, with an emphasis on the speed of transaction offered with this mechanism.
Spire claims itself as the world’s largest multipurpose EO constellation operator and in recent months, they appear very busy. In December 2020, Spire received venture debt financing from the European Investment bank, the first-ever of this format. This year, Spire joined SPAC mania, but even before, the Francisco Partners investment firm provided a $70 million loan to repay the company’s existing obligations (possibly — just speculation — also the EIB loan). This loan is about to be later converted into stock shares.
BlackSky could be seen as a typical EO satellite constellation, but besides that, their data are combined with third-parties data layers using BlackSky’s own analytics. BlackSky serves mainly (surprisingly) to situational awareness and here, the shift from raw data to “actionable insights” can act as an additional value proposition. Even in investors’ presentations, the company rather compares itself to software (surveillance data processing) firms (Palantir as a benchmark) than to other constellation operators. With its current $22M revenue, the estimated market value is $1.5B — aggressive growth projections targets $550M in revenues by 2025.
Despite the clear success and investor interest, the popular trend of SPACs hasn’t managed to avoid comparison to the dot-com bubble. Critical voices raise an issue of valuation — using an example of Virgin Orbit selling $12M launches and being valued at $3B or questions around Astra’s 300 launches per year cadence.
EO downstream
The Earth observation sector has been together with the launch industry the most active one. Moving to Europe, the Berlin-based NewSpace startup LiveEO has in April raised $6.33M in series A. In Space Business Podcast episode #30, CEO Sven Przywarra talks about the company’s story and its focus on using EO data for utilities and infrastructure monitoring. Investment is claimed to be used for the growth of the team on both tech and sales fronts.
This investment can also show something about the innovation effort of Deutsche Bahn. DB is one of the world’s largest transportation companies, carrying both passengers and cargo. LiveEO came through their accelerator and on the same note, DB’s venture arm also has a stake in satellite IoT startup KeplerComms. If I make a comparison with Czech Railway corp., their biggest innovation is a regular increase of executive’s paychecks.
Also another EO startup, Israeli-based Utilis has secured a similar amount ($6M). LiveEO and Utilis have focus, business model and a number of employees in common, while they differ in a used band and a scale, as Utilis operates with SAR and opened US subsidiarity recently.
EO upstream
An interesting development was experienced by EO players owning hardware products, as at least seven of them added new funding.
Recently, Umbra has raised $32M, the biggest amount from this batch (and remained the most secretive at the same time). Out of the group of investors, you may be familiar with Hemisphere ventures or Starbridge Capital — I especially like how they have specified their investment thesis.
Reading about Umbra, the government focus is apparent. This direction is justified as a mid-horizon strategy in this masterpiece article. Other media outlets also mention their technical capabilities (resolution per unit of satellite mass), innovations such as umbrella-like antenna and several articles are adding upon the future possibility of in-orbit servicing.
Next, the Amsterdam-based Hiber announced at the end of march an investment worth of a similar amount (€26M, circa $31,63M), primarily from the European Innovation Council. Hiber focuses on multiple applications with 4 satellites currently launched. Support could be interpreted as yet another action aimed to support the European NewSpace sector, where EIC is a vehicle under Horizont2020 aimed to support high-risk, high-impact European startups.
Orbital Sidekick raised $16M from Singaporean Sovereign Wealth Fund Temasek and thus comply with the criteria to get financial support from AirForce’s venture arm. The San Francisco based startup claimed to use the fund for the development of six hyperspectral satellites.
Indian success story Pixxel announced a $2.3M extension to the seed investment from last year I mentioned in my last article. Interestingly enough, Crunchbase also tracked $28.1M in April 2021, but the company’s social media keeps quiet (so it might be possible just a whim).
One competitive clash comes in Europe. Both ConstellR and SatelliteVu aim to provide land surface temperature monitoring. Berlin-based ConstellR raised €1M in a pre-seed round by OHB ventures as a strategic investor and two VC partners, while being supported by Copernicus Accelerator. London-based SatelliteVu comes with $5M of seed investment through the UK infrastructure fund and also Seraphim VC.
Last in this category is YCommbinator alumni Albedo. Coming from Denver, Albedo enters the field intending to get the resolution of visual imagery to 10cm per pixel. If you are asking, “Haven’t I heard the same idea already before” — I’m a bit sceptical as well. The startup currently has a single-digit number of employees, with a fully operational constellation expected in 2027. As the field of satellite imagery is becoming crowded, I wonder what Albedo’s USP is. Part of the answer can be suggested in the proposed resolution. On the other hand, it’s likely that established EO companies will be able to match it quickly if they decide to do so. It is, however, worth mentioning, that the founder is a former space engineer from Boeing, with experience on classified projects — so I assume he holds some insight into demand specifics of DoD as a customer and connected engineering challenges.
I’m planning to summarize the competitive landscape of satellite constellations during Q3. One general point I noticed is that integrated manufacturing (case for all upstream players) can represent a unique value proposition. An example could be different approaches taken by ConstellR — which wants to launch 30 CubeSats and SatelliteVu — which, despite similar focus, works on 7 bigger satellites. Efficiency and innovations in production can then obviously lead to lower prices for final customers.
The majority of the invested startups acknowledged that current investments can possibly not be enough to launch even a demo satellite. This immediately reminds me of Astroscale, which recently launched its first satellites just a few months after Series E!
Launcher industry
For readers slightly overwhelmed by all the numbers and funding rounds, a short break for a fun fact — SpaceX acquired in January two former oil rigs platforms for probably Starship launches.
Back to business. Rocket manufacturer ABL announced a $170M investment round and consequently also bid for 56 launches from Lockheed Martin. As a SpaceNews article commented, “ABL is one of many companies actively developing or operating small launch vehicles, a supply that seems far in excess of even optimistic demand forecasts.”
OHB spin-off RFA (Rocket Factory Augsburg) is actively seeking €25M to later compete with yet another Germany-based ISAR which raised €75M at the end of the last year.
Apart from mainly US companies, South Korean Innospace got $7.3M in series A, reflecting a rapid development of rocket thrusters delivering a small mass of payload to LEO.
About 60% of global venture funding into space happens in the US — regardless of that, I always try to have my articles at least a bit geographically diverse.
A connection could be found, since Innospace’s founder and CEO, Kim Soojong was previously working on guided missiles at Hanwha Aerospace. An aerospace focused conglomerate, raking #8 on the list of biggest South Korean companies, has recently started to concentrate on the space business. Harvard graduate Kim Dong-Kwan, son of the group’s chairman, is a force behind this shift, which has been so far executed by the acquisition of antenna manufacturer Phasor Solutions in June 2020, investment in Kymeta, and purchase of a minor stake in local satellite maker, Satrec Initiative earlier this year. Those initiatives might come together as Hanwha announced its satellite constellations at the end of March.
Another defence-aerospace conglomerate is Indian Paras Defense and Space Technologies (yes, self-explaining name), which is currently going through an IPO preparation process.
Developments in the Chinese launcher industry has been a topic of DongFang Hour Ep-32, so I will leave this to the experts.
Manufacturing
The future of the space industry lies in software (because it’s cheaper to work with photons than with electrons), but this report is surprisingly quite sticking with hardware sectors.
Defence and energy sector giant General Atomics acquired Tiger Innovations, a space firm with a wide product portfolio around small satellites. This transaction succeeds several previous acquisitions, while Tiger company will be integrated into one of the GA’s divisions. Tiger Innovation is a holder of SBIR grant from DARPA, while GA also generally supplies to the US government.
Satlantis is an optical payload manufacturer from Spain/USA and raised €14M from Gas Transporter Enagás and one investment firm. Miniaturization appears to be the key offer of the company. There could be an interesting business potential to provide optical systems on the (big or at least crowded) market of EO smallsats. The logic behind this is that increased willingness to invest in satellite constellations projects will lead to propagation through a network of subsystems manufacturers and other partners.
Last year I wrote about the Mitsui conglomerate establishing space as a new strategic field through a buyout of Spaceflight. Camera manufacturer Canon has recently acquired Morf3D. According to some observers, this is a result of an initiative within a company to open new strategic fields. Morf3D works in the additive manufacturing field. Funded by Boeing’s venture arms in two rounds, it has customers including Honeywell, Northop Grumman or Raytheon. Linked to the previous company, this could be the first step in the company’s effort to utilize its optoelectronics experience in space.
I think that there are three basic ways to keep an overview of the industry. Funding dynamics (M&As, investments, IPOs) is what this article is about. Besides this method, you can simply look at which satellites are being launched (which companies are happy) or track personnel movements. In the 2020 article, I mentioned Spaceflight’s VP moving to Stoke Technologies. Based in Seattle, their goal is a fully reusable, daily operating rocket, for which they raised $9.1M and additional grants like one from National Science Foundation.
After a complicated stakeholders history, including a period under Maxar, Canadian space tech firm MDA made it through IPO at Toronto Stock Exchange.
Data economy
I believe that now, is a time to take look at data-driven space startups. This category could be very well involved in EO; I decided to make a separate group for companies that work with more data layers.
ClimaCell has rebranded as Tommorow.io and raised $77M in Series D and intends to launch a radar small satellite constellation to improve the current technology of weather forecast.
Unseen.labs serve to global maritime market by tracking ships through RF using their unique electromagnetic signal identification. The second funding round of €25M from investors such as Definvest (gov. funded defence tech fund) or Blue Ocean Partners (support scalable ventures related to world’s oceans and SDGs).
I never really realized the importance of the shipping industry. Then I moved to Norway, for which maritime transportation has historical importance. What a coincidence that all NorSat-1, 2 and guess what, also 3 provides ship tracking services. Later I came across the book the Box, about how shipping containers changed global trade, so I was prepared when the M/S EverGiven affair came. Many satellite imagery companies showed their capabilities. Maritime surveillance is also a case for Spire or HE360 etc.
HawkEye360 works with RF spectrum — the company provides global radio emissions frequency monitoring. In series C, HE360 secures $55M from again a consortium of investors, where NightDragon is a strategic partner and noticeable is also Esri international. Night Dragon is a security-focused VC fund, with experience from Oracle, McAfee, but also Czech antivirus Avast. There is a bit of a contradiction where the company invests in startups protecting individual privacy decides to invest into EO company, which is essentially a surveillance tool, but that is another story for another day.
Space economy
As rocket launchers and satellites are becoming more ubiquitous, three companies I noticed are working with an assumption of much more common extraterrestrial operations.
Japanese based space robotic startup Gitai raised around $17M in series B. The company’s product portfolio currently includes two types of robots and a human manipulation system. Amongst investors, there are EPSON’s investment arm or The Space Frontier Fund (whose record contains also investment in Astroscale and other space firms). The investment is supposed to cover personnel, development and US expansion costs.
Always once in a while, there is some effort to build private space stations. Current market and technology readiness is trusted by C5 Capital, which is leading the Series B of Axiom Space company, with other allies, including Starbridge and Hemisphere (who appear in the exact duo as in Umbra). C5’s partner is a former executive at Blue Origin and marked Axiom as a core of their future portfolio. Michael Suffredini, CEO of Axiom has experience as a technical manager for ISS at NASA, which also approved a manned mission scheduled for 2022. Building private space stations requires a huge amount of financial resources, which should be obtained in H2 2021 (really fast considering a typical period of 18 months between series) and later possibly through the SPAC merger.
If you combine Space and Data, Lyteloop will be the result. Attracting $40M from unnamed (!) investors, the company is proposing datacenters in space. Pushing the projects on engineering and physical limit, the result should be storing data in motion (reflecting photons between satellite network). Lyteloop’s founder describes desired outcome as a cheap, secure and efficient data centre. Having an option, I would ask two questions — how they plan to protect sensitive electronics from cosmic radiation and secondly — how did a group of military scientist, university professor, RRsat’s former president and tech consultant end up together.
Communications
Bulgarian based smallsat service provider Endurosat got an undisclosed amount from NeoVentures to further scale shared satellite service. Last year, this fund invested into quite a similar (more administrative and configuration based, less technical) startup Precious Payload.
Canadian based Kepler Communications builds an IoT satellite network. Recently, the company was funded with $3.14M from Ontario’s province development funds (actual name is Federal Economic Development Agency for Southern Ontario, to be correct) to support the mass production of satellites. As I mentioned above, the DB VC arm has a stake here.
An IPO in the United States was announced by German Mynaric. The company focuses on laser-communication terminals, with an indicated strategy to serve the growing optical space communications market. Mynaric is currently listed at Frankfurt Stock Exchange and although the location for the offering wasn’t indicated yet, Nasdaq already works with the MYOFF ticker. The intention to enter US public markets is explained by more available capital and arguably also message to the US government, which is a significant buyer of laser comm equipment. Mynaric’s CEO, Bulent Altan works also as an advisor at already mentioned ISAR Aerospace. This operation is particularly significant for me as a first occasion where I used my German in a space-related context (or actually any context at all).
A case of PE in SatCom field
Compelling development happens at the intersection of satellite communications and private equity — it’s beyond a scope of this article, but I want to write in the future about Speedcast’s bankruptcy, Global Eagle’s restructuring or Eutelsat’s investment in OneWeb. There will be a lot to discuss.
Integrated holdings
Together with SPACs, integrated holdings are probably the biggest change that emerged in the space industry last year. And while Voyager holding looks stagnating (even though the announcement of Jim Bridenstine to chair their board), RedWire space is continuing in their crazy ride by acquiring Oakman Aerospace and Deployable Space Systems. The goal here is to continue building vertically integrated holding with an announced intention to go public through SPAC.
Meanwhile, Noosphere started more as a VC fund, but the strategy is currently similar. As they are taking it seriously, CEO Max Polyakov overtook South African satellite manufacturer Dragonfly. Those can be launched with Firefly yet another mid-sized rocket launcher, which recently became another space unicorn after raising $75M from a group of firms and one crypto billionaire, owned as well by Max Polyakov through Noosphere Ventures. Sounds like fun.
Also worth mentioning
For at least two companies, the connection to the space industry remains unclear. Lilium, an urban air mobility company and ESA BIC Bavaria alumni announced going public intention through SPAC.
Edgybees, a video augmentation service company, raised $9.5M from investors including space-focused Seraphim. Service started on cars and drones, although future employment on satellite imagery is possible. Edgybees are also yet another example of a tech startup with Israelian roots.
There are also two companies I’m hearing a lot about recently. My observation is that space companies use to hire first communications people around series A, so this is possibly coming. French Antenna manufacturer AnyWaves even mentioned investment during one presentation, as one of my friends noticed, but the internet still keeps quiet about that.
Anywaves was established as a CNES’s spin-off. Thus I notice that CNES has a stronger record of emerging space startups, including Kineis.
Also about HydroSat, I hear more and more often — last time as former Capella’s VP became their CTO, apart from equity round, this can be also explained as HydroSat received quite a big grant last year.
Conclusion
This article is an upgraded follow-up on my article tracking space investments in 2020. The most noticeable difference is in the amount of investments. From the amount in this article, it is possible to draw a statistical conclusion of comparison investment rounds by series, geography, upstream/downstream. For me personally, it means, that I’m getting close to numbers recorded by established industry tracking sources.
Business/Economics textbook (and our culture) is obsessed with the idea of competition. Cases of satellite constellations (EO, IoT, SatCom) and rocket launchers are providing a real-life experiment with variables of market shares, value propositions and investors money. I’m curious to observe the competitive landscape and one day I might write my MBA thesis on that.
With an increasing number of IPOs (and yes, SPACs, even they’re declining), investing in the space economy is evolving far beyond small startups and seed funding rounds. Not everything is gold what shines — Virgin Galactic has currently quite a difficult time at NYSE, MDA shares were sold about 20% under its initial price, but the trend is clear: space is growing, and investor appetite for space likewise.
As for the startup ecosystem, it’s good not to forget other players beyond just VC funds. Through its Small Business Innovation Research programme, 365 companies got $45M for business proposals as a way of support during a pandemic. From the perspective of incubators and accelerators, Y Combinator made a contribution to the industry with notable alumni including Alba Orbital, Momentus, Relativity and Astranis.
Funny point to the end. My Extended Essay, a research essay I’m writing in school is supposed to be 4000 words. This article is about 3500 — if I would write the thing I’m supposed to, I have been close to done already. Anyway, I’m writing about the thermal management of LEO satellites, so wish me good luck and ask me about it in July.
Questions, suggestions and thoughts are much appreciated at me@filipkocian.com
Remarks
I’d like to give a shoutout to my friends Raj and Jacob for “making this article worth reading” and Blaine Curcio suggestions on the content side.
Also, a nice way how to say happy birthday to space engineer, my friend and former colleague Tomas Ridosko. Vsechno nejlepsi Tome!
Notes:
I noticed several other companies which also secured funding, but they are exceeding the limits of this article (and my calendar). Cosmic Shielding Corp.; Ale.co; SpaceShift; TrustComm, Sierra Nevada Corporation’s restructuring, Viasat’s acquisitions, Axelspace’s series C
Resources:
I used mainly SpaceNews and Techcrunch for tracking, Crunchbase to verify and countless other websites to find out small details.
I made use of my two previous articles:
Better together. Mergers, Acquisitions and Investments in the space industry of 2020.
A random overview of middle-sized small satellite constellations.
