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Investing in Space: The latecomer

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Texas-based investor Matthew Brown speaks to “Worldwide Exchange” on Mar. 23, 2023.
CNBC

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Overview: The latecomer

A small group of Virgin Orbit employees are rolling back into the company’s Long Beach, California, headquarters today. The work they’ll resume carries the hopes of the rest of their colleagues, who wait unpaid in the wings. 

Virgin Orbit this week announced a partial resumption of operations, potentially bolstered by a surprising new backer: private investor Matthew Brown. 

In the 24 hours or so since news broke of Brown’s possible $200 million injection into Virgin Orbit, I have yet to find a space financier outside of the deal who was previously familiar with Brown, let alone his previous investments in the sector. A person close to the Virgin Orbit deal described Brown as a “latecomer” and said company leadership initially considered his bid “super fringe.” While it’s common to see a family office go about its investments quietly, Brown’s name is now front-and-center thanks to his belief that Virgin Orbit “has something special.” 

He told CNBC on Thursday morning the 11th-hour deal would make him the effective owner of the teetering rocket builder. 

According to people I’ve spoken to over the last week, Virgin Orbit’s founder Sir Richard Branson doesn’t want to own the business any longer – not even through a bankruptcy process. My CNBC colleague Lillian Rizzo asked around the bankruptcy market and found that Branson’s Virgin Group shopped around for a DIP (debtor-in-possession) loan over the past few weeks. 

After a number of false starts, discussions with bankruptcy firms broke down and focus returned to finding an investor or buyer for Virgin Orbit. But, as talks dragged on, the imminent probability of a bankruptcy filing remained. Virgin Orbit has been working with Latham & Watkins, Alvare & Marsal and Ducera Partners in the event they would need to prepare a filing, CNBC’s Rizzo confirmed, according to a person familiar with the matter.

Even if a deal gets done, with Brown and/or someone else, one investor I spoke to emphasized that “it’s a long road ahead” for Virgin Orbit. A fresh $200 million buys the company “a year max” of runway at its current burn rate. That means any new owner will almost certainly need to consider downsizing the workforce and making the business more lean.

Virgin Orbit’s prevailing strength lies in the company’s demonstrated capability. While two failures in six launches is not an ideal track record, a private venture’s rocket successfully deploying satellites in orbit puts the company in rarefied air in the U.S. launch market. From another investor’s perspective, Virgin Orbit was “the most likely to succeed after Rocket Lab” in the small satellite launch market. That could still be true, but the company will need Brown’s $200 million — and maybe more — if it’s going to get back in the game.

What’s up

  • Relativity launches debut Terran 1 rocket, which flew successfully for about three minutes before an anomaly with the second stage caused its engine to shut down. Despite not reaching orbit, the mission represents a significant step forward for Relativity, helping demonstrate the viability of its ambitious 3D-printing manufacturing approach. – CNBC
  • First batch of Starlink Gen2 satellites suffer “some issues:” In a tweet, SpaceX CEO Elon Musk confirmed the initial V2 Mini satellites launched in late February are still undergoing testing, with some of the satellites to be deorbited. – Musk
  • Astra outlines plan to avoid Nasdaq delisting: The company is seeking a 180-day extension from the stock exchange, which would give the company until Oct. 1 to get shares back above $1. The company’s plan includes the possibility of a reverse stock split. – CNBC
  • Firefly pivots next launch to support Space Force mission: The company was planning to fly a mission for NASA on the third launch of its Alpha rocket, but changed plans after winning a contract under the “Tactically Responsive Space” contract, for a mission dubbed “VICTUS NOX.” – Firefly
  • Japanese ispace’s first mission enters orbit around the moon, as the company prepares to attempt a landing in late April. So far, ispace’s Mission 1 has completed seven of the 10 milestones the company outlined before launch. – ispace
  • Andreessen Horowitz releases space market map, as the venture capital firm increasingly looks at the sector for investment opportunities. – Read more
  • Deloitte takes a look at the global space industry, as the consulting and accounting giant analyzes growth opportunities in the sector. Deloitte surveyed 60 senior U.S. space executives for the report, with analysis focused on the next three to five years of the industry’s development. – Deloitte
  • SpaceX launches 18th and 19th missions of the year, with a pair of Falcon 9 rockets flying Starlink and then SES satellites. Watch more / Steve Collar
  • Rocket Lab launches second Electron mission from the U.S., carrying a pair of Capella SAR imagery satellites into orbit. – Watch more
  • SpaceX will be ready to launch Starship “in a few weeks,” Elon Musk says. He noted that the launch timing also depends on the FAA approving its launch license. – Read more
  • Kazakhstan reportedly seizes control of Russian-leased Baikonur Cosmodrome, with the country specifically barring Russia from removing and operating the assets of Roscosmos-subsidiary TsENKI. – Ars Technica
  • Advisory group calls for Europe to develop and build its own human spaceflight capabilities, including fly an independent crewed mission to the moon: In a briefing to the European Space Agency, the “High-Level Advisory Group” outlined a case for Europe to have its own space station in low Earth orbit, as well as cargo and crew transportation capabilities and a “sustained presence” on the moon. – ESA

Industry maneuvers

  • SpaceX reportedly in talks with Saudi and Emirati investors for new funding: The round would represent a “multi-billion dollar” raise from Saudi Arabia’s Water and Electricity Holding Company and the United Arab Emirates’ Alpha Dhabi. It is expected to value the company at about $140 billion. – The Information
  • Satellogic offers to sell imagery satellites for under $10 million each, expanding its product lineup by aiming to tap customers who want to own and operate, instead of just buy imagery from the company. – SpaceNews
  • Thai-based mu Space signs partner deal with OneWeb: The company said the agreement represents a “multi-million, multi-year deal” to distribute OneWeb satellite broadband services in Southeast Asia. – OneWeb
  • NRO awards study contracts to six companies for hyperspectral imagery: The spy satellite agency announced awards to BlackSky, HyperSat, Orbital Sidekick, Pixxel, Planet, and Xplore. The value of the contracts was not disclosed. – National Reconnaissance Office
  • Startup Arkisys wins $1.6 million Space Force contract, to demonstrate robotic satellite assembly. – SpaceNews
  • Impulse Space moves headquarters to Redondo Beach, relocating from its spot in El Segundo, California, as the company aims to increase manufacturing and office space with a new 60,000 square foot facility. – Impulse
  • Sierra Space establishes operations at NASA’s Marshall center in Alabama, for further development of its LIFE space habitat. In its fourth test of a one-third scale inflatable LIFE prototype, the company says the habitat demonstrated a predicted design life of 60 years during pressure test. – Sierra Space
  • Frontier Aerospace raises $10 million from AEI HorizonX: The private equity firm, which was formed by Boeing in 2017 but is now managed by AE Industrial Partners, invested in Frontier, which builds liquid rocket engines for in-space propulsion, such as for lunar spacecraft. – Frontier
  • Private equity firm ATL Partners forms LightRidge Solutions, to develop and produce “small, affordable, high-performance space and airborne sensors and payloads” for national security purposes. LightRidge is made up of by a combination of GEOST, which TL acquired in 2021, and Ophir Corporation. – ATL Partners
  • Nonprofit Space For Humanity to receive revenue from William Shatner documentary: The organization announce it would receive 25% of the gross revenue earned by producer CCG Guardian from the documentary “You Can Call Me Bill,” which features Shatner’s spaceflight on Blue Origin’s New Shepard rocket in October 2021. – Space for Humanity

Market movers

  • Terran Orbital reached near $100 million in revenue last year: The small satellite manufacturing specialist reported Q4 results, in which it brought in $31.9 million, up 15% from the prior quarter. Its adjusted EBITDA loss doubled, however, both on a quarter-over-quarter and year-over-year basis, to $26.1 million. While its backlog slipped at year-end, the 60 some satellites it had booked does not include the company’s mammoth deal with Rivada, which adds 300 satellites to that total. – CNBC

On the horizon

  • March 24: SpaceX’s Falcon 9 launching Starlink mission from Florida.
  • March 24: Rocket Lab’s Electron launching BlackSky satellites from New Zealand.
  • March 25: ISRO’s GSLV Mk.3 launching OneWeb satellites from India.

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