Start-up Goals Beyond Earth

When Lisa Rich called with investors in March to raise money for Aurvandil Acquisitions, a company that buys start-ups focused on space technology, she aimed to bring in several million dollars.

Ms. Rich, a member of Aurvandil’s board, reached her goal within about an hour.

“It doesn’t happen,” she said with a laugh.

Richard Branson is about to fly to space on a ship built by his company Virgin Galactic on Sunday. Jeff Bezos, Joe stepped down as chief executive of amazon is on monday Ready to fly in space after about a week, in a spacecraft built by his company Blue Origin. and Elon Musk’s SpaceX company has entered into an agreement with the National Aeronautics and Space Administration To land the Americans on the Moon. But moguls are far from the only people whose eyes are up to the sky.

Investors are investing more money in space technology than ever before. Space start-ups raised more than $7 billion in 2020, double the amount just two years ago, According to space analytics firm BryceTech. BryceTech Chief Executive Carissa Christensen said that trend continues this year.

The biggest deals are going to companies launching rockets into space such as SpaceX and Relativity Space, which last month announced $650 million in new money, a day after Mr Bezos announced he would fly to space.

But start-ups in every area of ​​the space industry — including launch and satellite communications, human life support, supply chain and energy — have investors’ attention. Satellite Internet company Astranis signed a $280 million deal in April. Axiom Space, which aims to build the first commercial space station, raised $130 million in February.

“I have never seen a market like this,” said Gabe Dominociello, co-founder of Umbra, a start-up that develops satellites designed to take pictures regardless of weather or lighting conditions. Over the years, the number of phone calls I have received – As a start-up, usually, the start-up usually calls an investor. Now it’s just the opposite.”

Many executives, analysts and investors say the boom is partly driven by advances that have made it affordable for private companies to develop space technology and launch products into space – not just nations. for.

Thanks to technology developed for mobile phones, for example, start-ups such as Planets Can build and deploy satellites that image the entire Earth every day. And the analytical capabilities enabled by machine learning, artificial intelligence and cloud computing have increased the demand for the data produced by those satellites.

“You can do a lot with a small satellite and launch several of them,” said Planet Vice President Mike Safyan, “which enables new kinds of missions that you can’t do if you just build There are a satellite the size of a school bus in which space-specific technology is very expensive.

In addition, satellite companies can now pay for their technology to ride on rockets, greatly reducing their economic constraints. For example, if one rocket has a capacity of 500 kg and the primary payload is 300 kg, another company may use 200 kg.

Astra, a start-up founded in 2016, wants to make getting into space even easier by offering smaller, more frequent launches – similar to the role of cloud computing in enabling web start-ups as the building blocks of the space industry establish oneself. The company is competing with other more established start-ups in the small launch market like Rocket Lab, but hopes to stand out with the aim of launching smaller and cheaper. Astra has its first launch with a payload scheduled for this summer and has 50 launches under contract, involving Planet and NASA.

“Astra is filling this gap in the market where you have hundreds of these companies, they have all the new technologies they’re developing, and you don’t want to wait until next year when SpaceX can get you there, said Chris Kemp, Astra’s chief executive officer. “Even if it’s free, even if SpaceX paid me money to wait a year, the value of being able to get to space next month is incredibly valuable to a start-up. Which is burning millions of dollars a month.”

“The ability to reuse something and make it consistent and reliable is transformative in the space industry,” said Ms. Rich, who is also the founder of Hemisphere Ventures, which has invested in space companies since 2014, and is a founder and Chief Operating Officer of Explore, the company that designed the orbital mission.

The latest wave of deals has also been driven, in part, by special purpose acquisition companies such as Ms. Rich’s and Vandil. The sole purpose of these publicly traded shell companies, known as SPACS, is to buy out one or more private companies. they have been One of the hottest trends in the financial world throughout the last year.

From a start-up point of view, the merger with SPAC is an effective way to raise large sums of money in the first phase. It also replaces calculus for investors.

Some investors shy away from space start-ups in the past because technology often takes longer to develop and generate revenue than software such as a social media service or app.

“If you’re at a software company and you deploy an app and it doesn’t work, you just build a new app. That failure could probably take a month or two,” Umbra’s Mr. Dominosiello said. “If you have a satellite, you’re only spending millions of dollars, and if that satellite fails, you’ve lost years.”

But SPACs allow companies to go public before a traditional initial public offering, giving investors the opportunity to cash out much earlier. The value of a public company is often based on growth projections rather than actual revenue.

Nine companies in the space industry have announced plans for a SPAC merger, including six in 2021. Astra is one of six. The merger with Holicity would give Astra about $489 million in cash, allowing it to expand fast enough to meet “absolutely insatiable” demand.

“When you get to the point where you need half a billion dollars of capital to build a rocket factory, you have to go public because you’re beyond the venture stage of financing,” he said. “That’s where SPAC play really well.”

Astra began the merger process in December and went public on Nasdaq last week.

In total, $3.9 billion has been raised through nine SPAC deals, and the companies have a joint venture value of $20 billion, according to Ms. Christensen of Brystech.

Investors, founders and analysts expect the space industry to continue to expand rapidly. Morgan Stanley an estimate That space will be a $1 trillion industry by 2040, up from $350 billion in 2020.

Ms Christensen said government contracts for research missions such as NASA have increased Artemis Moon Program and for military and national defense purposes such as space force, is expected to continue to pursue the development of the industry. Others see commercial space travel as a “railway” that will catalyze mass access to the ultimate frontier.

“Everyone is waiting to see if Elon can pull off Starship,” said Rick Tumlinson, a founding partner at SpaceFund, a venture firm. “And then there will be a lag time when that really starts flying, when people get the business and stuff they want to fly together and there will be funding, then this bump will be, I would say, three years.”

“It’s like the week before the internet for us,” he said.

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