Category: Launch Segment

Startup SigInt provider Kleos: 2-month Rocket Lab slip will delay early revenue, but liquidity is sufficient

The four-satellite Kleos Scouting Mission. Credit: Kleos Space
PARIS — The inaugural launch of commercial space-based signals intelligence provider Kleos Space has been delayed by launch-service provider Rocket Lab for at least two months, to no earlier than October, but Kleos said its liquidity remains sufficient to carry the company to first revenue.
Luxembourg-headquartered, Australian ASX-traded Kleos said in a statement that it had 2.69 million Australian dollars ($1.9 million) in hand as of June 30 and that it was “fully funded to revenue.”
Kleos had expected to generate revenue starting in August from early-adopter customers, which the company said had booked 3 million Australian dollars in services from the Kleos Scouting Mission of four satellites.
Kleos’s business model is similar to that of Hawkeye 360 of the United States, but without the large domestic market that is the U.S. government. The company’s constellation of low-orbiting satellites — in Kleos’s case, a 20-satellite constellation is planned — scan zones of interest to pick up radio signals.
Maritime domain awareness is a large prospective market, enabling coastal authorities to track vessels that have switched off their Automatic Identification System (AIS) transponders to avoid detection.
These ships will need to emit signals for navigation and other purposes, and these frequencies can be picked up by the Kleos satellites.
U.S.-headquartered, New Zealand-based Rocket Lab completed its seventh mission on Jun 29 and announced it had built its 100th Rutherford Engine and was expanding production in addition to preparing a second spaceport.
Built at Rocket Lab’s Huntington Beach, Calif., facility, seventy of these 3D-printed engines have been flown.  Each Rocket Lab Electron vehicle uses nine engines on its first stage and a modified Rutherford on its second stage.
It was not immediately clear whether Rocket Lab’s entire manifest would shift to the right, with a next launch no earlier than October, or whether the company would substitute the launch with Kleos and other passengers for another mission to occur earlier than that.
In response to inquiries, Rocket Lab said July 22:
“Rocket Lab will still launch a mission in August – details about this mission will be announced this week. The Kleos satellites launch window has been extended to no earlier than October due to production and manifest requirements.”
Kleos Chief Executive Andy Bowyer, referred questions about the reason for the delay to Rocket Lab. He confirmed that the early-adopter revenue will only be delayed. “No impact on early adopter contracts themselves,” he said, adding: “Our satellites are boxed and ready to go.”
Kleos, in its statement, said:
“Due to Rocket Lab’s manifest requirements and their evolving production schedule, Kleos’s next available launch opportunity has been extended beyond our contractual launch period ending August 2019, to October 2019. We have been advised that Rocket Lab is doing everything possible to minimize schedule movements and launch the Kleos satellites as quickly as possible.
“Launchers are exceptionally complex and often prone to delays.”
The Kleos statement included a brief comment by Rocket Lab Chief Executive Peter Beck: “We look forward to launching Kleos satellites in the coming months as we continue to increase our launch cadence.” 
It was also unclear whether the Rocket Lab contract with Kleos and other customers includes liquidated damages to be paid to customers for launches occurring beyond the contractually designated schedule.
Credit: Kleos Space
In a statement, Bowyer said the company will use the additional time to “expand the number of customer contracts secured, continue to develop our data products and rapidly progress  our 2nd-generation satellites, [to be] focused on delivering enhanced coverage of the Earth closer to the equator, increasing our revenues and our customer base.”
The first four 8-kilogram Kleos satellites are built by GomSpace A/S of Denmark and Sweden under a contract valued at 2.34 million euros ($2.63 million).
Kleos in June received a 1-million-euro grant from the Luxembourg Space Agency, bringing to 2.96 million euros the Luxembourg government’s total funding to date.
Kleos recently announced an agreement with L3 Harris Corp. to put Kleos data on the list of services available for contracts by the U.S. General Services Administration (GSA).

Momentus, a startup using water-vapor propellant to shuttle satellites from LEO to final destination, raises $25.5M

Momentus Founder and Chief Executive Mikhail Kokorich. Credit: Momentus
PARIS — Momentus, a U.S.-based startup designing a service to take satellites from their rocket drop-off points to their final orbital destinations has raised $25.5 million in Series A financing led by Prime Movers Lab.
Other investors include Y Combinator, the Lerner Family, the University of Wyoming Foundation, Quiet Capital, Mountain Nazca, ACE & Co., Liquid 2 Ventures and Drake Management.
The new funding, announced July 17, brings total Momentus financing to $34 million and will be used for development of its Vigoride and larger Vigoride Extended shuttle vehicles. Vigoride standard has a payload capability of 250 kilograms, and provides a delta-V of 1 km per second. Vigoride Extended can carry up to 400 kilograms of payload and provide a 6 km/second delta-V.
Momentus launched a demonstration version of Vigoride on July 5 and plans to launch at least three times in 2020, with a combined demonstration/commercial mission to be the first of the three using water plasma propulsion with water vapor as the propellant. 
The new financing will also permit Momentus to move most of its development in-house, in line with its goal of vertical integration.
Momentus Founder and Chief Executive Mikhail Korovich, in an interview, described the company’s current backlog, near-term schedule and whether the arrival of small rockets designed to launch smaller satellites into precise orbits posed a threat to the Momentus business model.
Your backlog totals more than 50 satellites to be shuttled from LEO to other orbits over three years. What is the value of that?
The value of the backlog is more than $30 million. 
You launched a demonstration mission on July 5 aboard a Soyuz vehicle. What is that mission’s goal?
The goal of the first launch of the Vigoride prototype (mission El Camino Real) is to test water microwave electrothermal propulsion and spacecraft subsystems in space. There are no customer payloads in this mission.
You announced combined demonstration/commercial mission in 2020 that will also generate first revenue. Who is the customer and what is the intended orbit?
First missions in 2020 use Vigoride orbital shuttle and are intended to deliver payloads within LEO. We plan to announce the customer’ names before the launch.
Among your current customers, what is the rough breakdown between LEO, MEO and GEO orbits as the final intended destination for their satellites?
The overwhelming majority of the satellites are intended to fly within LEO. Only a few of the satellites we will be delivering to GEO or MEO. But because most of the LEO customers fly cubesats and missions to GEO and MEO are larger satellites, [the MEO-GEO business] accounts for a considerable part of dollar valued of our backlog — around 30%.
The Momentus Vigoride Extended in-space shuttle. Credit: Momentus
 What launchers will be used for your three planned missions in 2020? 
One mission will be using Soyuz-2 rocket as a first leg, the second will start from an ISS airlock and the third will use the US-based rocket, whose name we are not announcing yet. 
Will all the 2020 missions be using the Vigoride standard?
Yes, we will ride Vigoride orbital shuttles in all three missions.
What is the schedule for Vigoride Extended?
We plan to fly test ride of Vigoride Extended in 2021.
The company has talked about a mission price of around $1.2 million for Vigoride and $4.8 million for Vigoride Extended. So there is no scale economy from the basic to the extended vehicle.
Vigoride and Vigoride Extended are very different services. Vigoride customers could deliver satellites only within LEO, but Vigoride Extended can move move the payload to MEO, GEO, and even the lunar orbit. So the price to deliver satellites with Vigoride Extended will be several times higher than for Vigoride.
Will the arrival of many small launch vehicles pose a challenge to the Momentus business model insofar as it could take away some LEO business? These rockets are designed to solve part of the problem you solve with Vigoride.
Dedicated small rockets are still very expensive – $25,00 to 50,000 per kg to LEO. Large reusable rockets are cheaper – $2,000-$5,000 per kg — but rideshare options that are limited to just a very few common orbits like morning (9-11am) SSO polar orbit, or to the International Space Station orbit.
Deployment of satellites with Vigoride to specific orbits on LEO will be more than 2 times cheaper than with small dedicated launchers.
Momentus will work to provide a solution for both small rocket deployments or ride-sharing deployments on larger rockets, so the business model is sound.

U.S. space surveillance unit: Few issues with SpaceX Starlink; universities are toughest cubesat owners for us

Diana McKissock, SSA sharing and spaceflight safety lead, 18th Space Control Squadron. Credit: Seradata
LONDON — U.S. Strategic Command’s 18th Space Control Squadron (18 SPCS), which tracks and catalogues space objects and makes data available worldwide, is stepping up efforts to integrate data from commercial space-surveillance companies despite a slow evaluation process, the squadron’s spaceflight safety lead said.
She also said that while it has taken time for 18 SPCS to identify all 60 SpaceX Starlink satellites launched together on May 24, the satellites were quickly catalogued.
“We have a lot of data on that” launch, said Diana McKissock, space situational awareness sharing and spaceflight safety lead at 18 SPCS. “They [the Starlink satellites] have been catalogued since a day or two after launch. We are working very closely with SpaceX” on naming each of the 60 to permit better tracking.
Credit: 18 SCPS
McKissock spoke here June 25 at the Seradata Space Conference as part of 18 SPCS’s campaign to encourage launch providers, satellite operators and launch-service integrators to provide the squadron with data.
A particular challenge for 18 SCPS is the growth in the number of cubesat launches, most on board rockets carrying dozens or more of these small satellites and releasing them in rapid succession.
Because not all launch providers are at ease with submitting data to the U.S. military, 18 SPCS often relies on the launch integrators — those who secure launches on behalf of groups of small satellites — to provide the needed information.
“When they are dealing with a non-cooperative [launch] provider, they can very often get us the launch plans and the information we need to track effectively,” McKissock said.
Perhaps surprisingly, she said the most difficult organizations for 18 SCPS to secure data from are universities, which are ever-more active in launching their own spacecraft.
“Most satellite operators are very forthcoming with information because we are doing much more for early engagement,” McKissock said. “The hardest entities to get in contact with our universities — without a doubt. If any of you know Indian or Japanese universities, please send them my contact information.”
Credit: 18 SPCS
How the growing number of commercial space situational awareness companies will integrate their data into the U.S. Air Force’s Space Surveillance Network and improve 18 SCPS’s tracking ability remains to be seen.
McKissock said it remains a work in progress, in part because of the criteria 18 SPCS uses to clear data.
“We are working on this,” she said. “The challenge is that we have a very onerous numerical evaluation process that right now does not lend itself to rapidly integrating new data sources. But Air Force Space Command, which equips our site, has programs working to do that better.”
The Space Surveillance Network of ground- and space-based radar and optical sensors this summer is expected to receive test data this summer from the new Space Fence system, which will enable to track objects the size of a marble. The Space Fence is scheduled to begin full operations next year.
New telescopes in Australia, managed by the Australian military, will add long-needed surveillance from the Southern Hemisphere.
The collision-avoidance maneuvers reported here are probably conservative. Not all operators disclose that they have performed them. Credit: 18 SCPS
18 SPCS issued 9 million Conjunction Data Messages to satellite operators worldwide in 2018. Less than 1% of these were judged serious enough to require an emergency report to the operators. Most of the activity, unsurprisingly, concerns satellites at between 500 and 750 kilometers in altitude.
On average, only two alerts — meaning a probability of collision of greater than 1% — are issued per day, and even this figure is inflated because it includes the same alert issued over several days.
Confirmed collision-avoidance maneuvers numbered 107 in 2018, including six in deep space, according to 18 SPCS, but McKissock cautioned that operators are not required to report their maneuvers and the statistics may undercount what’s actually happening.
In any event, 18 SCPS does not make recommendations for a particular course of action.
“What we can do [for satellite operators] is provide high-accuracy data at no cost,” McKissock said, noting that 32% of the 2,200 satellites that 18 SPCS supports with tracking are commercially owned. “What we can’t do is recommend courses of action or tell an operator what to do, or do advanced risk analysis.”

Maxar starts work on Ovzon-3, a novel, 500-kg GEO design for a new satellite operator

Ovzon has ordered an SSL-500 satellite platform, designed to carry up to 250 kilograms of payload for communications missions for a 500-kilogram launch mass.
PARIS — Commercial geostationary-orbit satellite orders are rare enough these days, and startup Swedish satellite operator Ovzon AB’s order with Maxar Technologies is even rarer — a 500-kilogram spacecraft for mobile, mainly government, communications to mobile terminals.
Maxar is using its Legion satellite frame, designed for Maxar’s next-generation optical imaging satellites in low Earth orbit, and borrowing elements from its venerable 1300 geostationary satellite design for the Ovzon-3 satellite.
Maxar announced July 12 that work on the satellite had begun following the latest financial raise by Ovzon. The satellite is scheduled for launch in 2021 aboard a SpaceX Falcon Heavy rocket. It will include an Ovzon-designed digital signal processor.
The use of a Falcon Heavy to launch a single 500-kilogram satellite sounds like overkill. But Ovzon has said the choice made to assure direct injection into the geostationary arc rather than at a more-common drop-off point in geostationary-transfer orbit.
Ovzon has said it has already had bookings totaling $65 million for Ovzon-3, including a three-year contract with Intelsat valued at $56 million. Ovzon is leasing capacity Intelsat’s IS-39 satellite, scheduled for launch this summer aboard a European Ariane 5 rocket.
The Ovzon financing that set in motion the Maxar contract — which was signed in December 2018 — includes a loan from Proventus Capital Partners. Ovzon completed a rights offering in January for 750 million Swedish krona ($79 million)  and a senior secured six-year loan for $60 million and a subordinated loan of 200 million krona.
The Ovzon order was a vote of confidence in Maxar, which had openly speculated whether to close or sell its telecommunications satellite business given the decline in that market. Maxar has since decided to reorganize the business.
How much of a market there is for small geostationary satellites is unclear. Several companies have expressed interest in building or buying such spacecraft to fill in capacity at a given orbital slot without having to commit $200 million or more for a standard-size geostationary satellite.
“We chose Maxar to build Ovzon 3 because they have a strong reputation of delivering world-class, reliable products backed by industry leading customer service and manufacturing agility,” Ovzon Chief Executive Magnus Rene said in a July 12 statement. “Ovzon 3 is an important first step towards fulfilling our strategy to further revolutionize mobile broadband by satellite, offering the highest bandwidth with the smallest terminals.”

Indonesia, unable to find gapfiller Ku-band HTS satellite, seeks extension of regulatory deadline

Indonesia’s PT Palapa Satelit Nusa Sejahtara and China Great Wall Industry Corp. signed the $220-million Palapan-N1 in-orbit delivery contract in May 2017, but it did not enter into force until October of that year. Credit: CCTV
PARIS — Indonesia’s May 2017 contract signing ceremony with China Great Wall Industry Corp. (CGWIC) for the Palapa-N1 Ku-band high-throughput satellite was always going to be a close call with respect to the satellite’s regulatory in-service deadline of August 2019.
Given the five-month delay between the ceremony and the $220-million contract’s effective start date on Oct. 20, 2017, that became mission impossible.  The contract calls for CGWIC to deliver Palapa-N1 into orbit by early June 2020.
Indonesia’s PT Palapa Satelit Nusa Sejahtera, the company signing the contract, knew it needed to find an in-orbit satellite using the same Ku-band HTS frequencies as those reserved for the Palapa-N1 to keep the reservation with the International Telecommunication Union (ITU).
A gapfiller satellite was necessary because even though Indonesia’s Palapa D now occupies the 113 degrees east orbital location planned for Palapa N1, it does not cover all the Ku-band capacity reserved for the new satellite and its HTS capacity.
Indonesia estimated that there are the equivalent of seven transponders of capacity that would be abandoned if it could not find a temporary replacement to add to Palapa D at the 113-degree slot.
Indonesia’s Ministry of Communication and Informatics had reserved the Palapa-N1 slot with the ITU in August 2012 under the name Palapa-C1-B. Under the standard ITU rules, that meant the frequencies reserved had to be put into use within seven years, or August 2019.
The remaining frequencies in the reservation would be secured by Palapa-D, whose anticipated retirement date is July 2020.
Indonesia in recent years has become one of the world’s most active nations in terms of satellite use and the dynamism of its domestic satellite market. With a population of 250 million spread over 17,500 islands, it is a satellite service provider’s dream come true. Multiple fleet operators are active in the country.
But finding a suitable in-orbit satellite proved difficult. “Given that only a few satellites are equipped with the frequency band of interest, it has not been possible to identify a suitable satellite,” the Indonesian ministry said in a statement to the ITU.
With the deadline fast approaching, the ministry is now asking the ITU for a deadline extension, to July 2020.
Indonesian authorities have not sought to hide behind smokescreens such as “force majeure” or alleging military use for Palapa-N1 to explain why the country will miss its deadline by nearly a year. The reason was simply “the difficulty [in finding] financing,” the ministry said.
The CGWIC contract includes an offer of financing in addition to the satellite’s construction and launch and a portion of the ground segment.
In defense of its request, the ministry is asking the ITU to take account of Indonesia’s status as a developing country.
This stands every chance of obtaining the extension. The ITU’s Resolution 80, which is now being reviewed for possible modification, deals with applying due diligence to the ITU’s Convention and says:
“[C]onditions could be specified under which extensions might be granted on an exceptional basis to developing countries when they are not able to complete the regulatory date requirements, so that sufficient time for design, construction and launch of satellite systems is made available….
“[The conditions created under the previous paragraph should be included in the Radio Regulations as provisions that would allow the Radiocommunication Bureau to grant the extension.”

FCC proposes order to streamline, cut cost of smallsat licenses; requires propulsion above 600 km

Credit: AGI
PARIS — The U.S. Federal Communications Commission (FCC) relaxed its proposed rules relating to on-board propulsion for small satellites and the minimum satellite size eligible for a lower-cost regulatory procedure in response to industry requests.
The agency has also extended, to six years, the license duration for the streamlined procedure.
The FCC expects to vote on its new regulation, “Streamlining Licensing Procedures for Small Satellites,” on Aug. 1.
A proposed order on the new regulations, more than a year in the making, was published July 11:
In most respects, it confirms the FCC’s earlier definition of what satellites will be eligible for the streamlined procedures, where the license fee for a constellation of a maximum of 10 satellites will be $30,000 instead of $471,575 now, plus annual regulatory fees of $122,775 for fiscal-year 2018:
Eligible applications for the streamlined regime:
— Constellations of 10 satellites or fewer.
— Satellites with a launch mass of 180 kilograms or less.
— Satellite systems that have provided certified orbital debris risk mitigation procedures.
— Operators must agree to operate on a non-interference basis with satellites already in service, and to accommodate future users in their spectrum.
But there are three major changes in the proposed order compared to the original notice issued in April 2018.
The six-year license
The first modification will extend the license duration from five years to six years, including the mandatory deorbit phase, to give smallsat operators more time. In another concession to the smallsat sector, the FCC said the six-year time clock starts only when the satellites are in their intended orbit and have begun functioning.
The agency said operators had been concerned that the FCC’s earlier proposal would mean a satellite dropped into its operational orbit but unable to function would seem the six-year countdown.
For streamlined licensing, only not-too-smallsats
The second modification relates to the size of the satellites eligible for the streamlined licensing process. The FCC had earlier wanted to set a limit at a 1U cubesat — 10cm x 10cm x 10cm.
The proposed order modifies that, so that only spacecraft measuring more than at least 10cm at their smallest dimension will be eligible for the expedited licensing regime.
Satellites would also be required to carry a telemetry marker so that ground teams are able to distinguish it from other satellites.
The FCC says the U.S. Air Force’s 18th Space Control Squadron (18 SPCS), which handles satellite tracking, can track 1U cubesats and that this is the reference the agency used to set a limit on minimum satellite size.
Some smallsat operator groups had argued that the agency would set rules on traceability without specifying a given satellite size.
The agency responded that very small satellites and spacecraft that in other ways do not qualify for the streamlined licensing procedure can always use the standard Part 25 licensing regime.
Allowing PocketQubes and other very small satellite designs would require more FCC review, which would defeat the point of the streamlined procedure, the FCC said.
The agency said it will deal with the question of whether all satellites should carry markers to enable them to be identified as part of the agency’s ongoing orbital debris regulatory update.
Credit: ESA
A propulsion requirement above 600 km, not the 400-km ISS orbit
The third modification to its earlier proposal has to do with which satellites should be forced to carry on-board propulsion to avoid collisions with other satellites or with debris, and to assure non-interference with astronaut-carrying vessels including the International Space Station and the vehicles serving it.
The ISS operates at 400 kilometers, which is where the FCC set its earlier propulsion requirement.
The proposed order raises that ceiling to 600 km to provide flexibility for operators. The FCC said a satellite can be expected to re-enter the atmosphere passively, by the force of atmospheric drag, within six years.
Some companies had argued that the advance of non-propulsive technologies enables satellites to be deorbited just as reliably without propulsion. Here too, the FCC acknowledged the point but said those technologies would be subject to the usual Part 25 regulations to enable the agency to study them in detail.
Applicants in any event must describe, in detail, their collision-avoidance strategy as a condition of getting a license.
Satellite operators SpaceX, Iridium and SES/O3b voiced concerns that too many small satellites would be transiting through the 400-kilometer orbit, on the way up and down, and that the orbital-debris risk would be high.
The agency did not disagree, but said that this is another concern that is best addressed by the orbital debris regulation it is preparing.

At ~$400 million, Vega launch failure with UAE’s FalconEye 1 may be biggest-ever space insurance loss

Mission Director Fleur Lefevre of CNES announced successful first-stage separation and second-stage ignition two minutes and 16 seconds after liftoff. At 3:05, she gave first word of a problem: The trajectory is not normal.” Credit: Arianespace video
PARIS — The July 10 failure of Europe’s Vega light-lift rocket carrying the United Arab Emirates Armed Forces FalconEye 1 optical reconnaissance satellite will cost insurance underwriters more than $400 million in what may be the largest insured satellite failure ever.
An insurance claim for that amount of money — one insurer said the total package was around $420 million — will also consume most of the space insurance premium volume expected this year.
Combined with other, less-costly claims, it will almost certainly make 2019 a loss year for underwriters:
For the UAE, the loss means a planned two-satellite intelligence, surveillance and reconnaissance system will be reduced, at least for awhile. The identical FalconEye 2 satellite was scheduled for launch later this year, also aboard a Vega rocket. Both satellites are built by Airbus Defence and Space and Thales Alenia Space. The full FalconEye contract was valued at about 800 million euros when it was definitely signed in 2014, or about $900 million.
The Vega rocket lifts of July 10. Credit: Arianespace
Built by prime contractor Avio SpA of Italy, the Vega rocket was on its 15th mission with FalconEye 1. The vehicle had a perfect record until now.
In a July 11 statement, Avio said:
“Approximately two minutes after the Vega launcher’s liftoff, shortly after ignition of the second stage (Zefiro 23), a launcher anomaly occurred – leading to the premature end of the mission.
“Data analyses are in progress to clarify the reasons for this failure.  An independent inquiry commission will be set up in the coming hours.”
Avio is the world’s only rocket builder with publicly traded stock. Its shares were down nearly 10% in the first minutes of trading on the Italian Stock Exchange.
The webcast of the launch took on a surreal quality at T plus 2 minutes as the launch broadcaster continued on the usual all-OK topics while CNES Launcher Director Fleur Lefevre was delivering news in the background that launch experts would recognize as a failure.
At 2:02 into the flight, Lefevre reported that ignition of the second stage Zefiro-23 was nominal after an apparently successful separation of the P-80 first stage.
At 2:16, Lefevre said propulsion of the Zefiro-23 was nominal, although the launch video, still tracking the rocket, showed no motor illumination after 2:02. The video shows what appears to be the burnout of the Zefiro-23 stage, and then nothing.
At 3:05: “The trajectory is not normal.”
This is what it looks like when launch teams know a mission is lost but are still assimilating the information and awaiting a formal announcement. Credit: Arianespace
3:18: “Zefiro-23 trajectory is degraded.”
3:38: “Separation of the Zefiro-23.”
3:51: Ignition of the Zefiro-9 [third stage]. Trajectory still degraded.”
4:01: “Loss of acceleration.”
4:08: “Separation of the fairing.”
4:26: “Trajectory is very degraded.”
5:44: “Loss of telemetry.”
Luce Fabreguettes, Arianespace Executive Vice President for Missions and Operations, delivers the news of the failure 9 minutes after liftoff, and seven minutes after the apparent second-stage anomaly. Credit: Arianespace video
Less than four minutes later, Arianespace Missions and Operations Executive Vice President Luce Fabreguettes stepped to the podium to confirm the news.
“About two minutes after liftoff, around the Z-23 ignition, a major anomaly occurred, resulting in the loss of the mission,” Fabreguettes said.
“On behalf of Arianespace, I wish to express my deepest apologies to our customers for the loss of their payload, and to tell them how sorry I am. From the first flight data analyses, we will get, in the coming hours, more precise information.”
CNES President Jean-Yves Le Gall, a former Arianespace president who has been through more than one of these events, said in a July 11 statement:
“This failure reminds us once more that we are in a tough business and that the line between success and failure is a very fine one indeed. The failure is all the more unexpected, coming as it does after a run of 14 straight success that had proved the maturity of the Vega launch system.
“Our teams shall now be getting straight down to work to analyze, understand and fix the causes of the failure so that Europe can return to flight with Vega as quickly as possible.”

Chamath Palihapitiya-led fund invests $1.3 billion for 49% of Virgin Galactic, assumes 45% EBITDA margin in 2023

Credit: Virgin Galactic
PARIS — Social Capital Hedosophia (SCH), the investment vehicle established by former Facebook executive Chamath Palihapitiya, is purchasing up to 49% of Richard Branson’s Virgin Galactic space tourism company on the assumption that Virgin Galactic will generate $600 million in annual revenue and $272.7 million in EBITDA by 2023.
The transaction, announced July 9, gives Virgin Galactic (VG), which has struggled transform is early promise into regular commercial flights with people on board, an enterprise value of $1.5 billion.
Branson and the other VG investors have put in $1 billion since the company’s inception in 2004. Under the transaction, which will see Virgin Galactic become a publicly traded company, current Virgin Galactic investors will receive $300 million in cash from SCH, plus the equivalent of $1 billion in the form of the VG common stock priced at $10 per share.
Palihapitiya will invest $100 million separately into VG and will become the company’s chairman.
“It is a privilege to partner with Sir Richard Branson, a once-in-a-generation visionary, to bring the reality of commercial spaceflight to the world,” Palihapitiya said in a July 9 statement. “We are confident that VG is light years ahead of the competition. It is backed by an exciting business model and an uncompromising commitment to safety and customer satisfaction. I cannot wait to take my first trip to space and become an astronaut.”
So far, $80 million in deposits from 600+ VG customers and $120 million in potential revenue
VG said it has booked pre-commercial orders from more than 600 customers that have made more than $80 million in deposits and $120 million in potential revenue.
“The Board of VG believes that the additional capital provided by the merger with SCH will provide the company with the support needed to reach commercialization” of its service, the company said in a July 9 statement.
Richard Branson said: “We are on track for our beautiful spaceship to begin commercial service. By embarking on this new chapter, at this advanced point in Virgin Galactic’s development, we can open space to more investors and in doing so, open space to thousands of new astronauts…. I am delighted that SCH has decided to become such an important part of our amazing journey.”
SCH and VG said they expected the transaction to close before the end of this year. SCH is currently trading on the New York Stock Exchange with a market capitalization of $899 million.

Noosphere Ventures: Firefly’s launch vehicle, then data analytics, then satellite production, then …

Max Polyakov. Credit: Noosphere Ventures
PARIS — Noosphere Ventures has invested more than $100 million in startup small-satellite launch vehicle Firefly Aerospace and lesser amounts in Earth observation data analytics platform EOS DA and Space Electric Thruster Systems (SETS).
Based in Silicon Valley with roots in Ukraine, Noosphere also has a satellite production company and, in Dnipro, Ukraine, an R&D facility equipped with 3D printers to test satellite components. But the company has been reluctant to say what satellites the facility is designing.
Where is all this going? Noosphere Managing Partner Max Polyakov says he has an integrated vision for a space company that builds satellites, launches them and provides downstream services. Noosphere is now looking at a half-dozen distressed assets for possible investment.
What is happening at your R&D center in Dnipro? What missions will use the satellite and rocket hardware being made there?
For our rockets, flight components are produced in the US.  Almost 100% of the rocket is built in the U.S.
The Ukrainian activity is mainly R&D. The facility designs turbo pumps and valves and so on to make use of some of the experience from the Soviet Union, but with new materials and new technologies. None of them are Russian now, they are European and American design techniques for 3D printing.
Then they stress test the components and the designs are moved to the U.S. and the U.S. team does the full production, either in house or outsourcing to other companies. Then it all comes together in Texas. So there is no production at the R&D center.
What we are trying is a third way of acting between the U.S. and the former Soviet Union. U.S. dollars paid for a lot of work being done in Russia since the Soviet Union collapsed in 1991. Whatever we produce in Ukraine becomes American IP.
Who’s IP is behind Firefly — it is Firefly’s?
Yes. I run an American corporate venture fund, which invested into Firefly, and then Firefly U.S. has a subsidiary, called Firefly Ukraine, 100% US owned. It is registered in the Ukraine but there is a security perimeter around the two.
What is the R&D center doing with satellite components?
Noosphere, the name of the venture fund, invests in around 10 companies. I have a kind of integrated vision with launchers, spaceports and satellites in addition to our data-analytics company.
But we also want to provide imagery in addition to our own analytics on top of that.
So we’ll have two classes of satellites, optical and radar, and a third will be high resolution. Some components for these designs are built by Firefly’s sister company to produce stuff for our satellite company, which is fully owned by Noosphere.
What satellite company is this? What’s its name?
We’re not talking much about it as this company is still in stealth mode. But we are at an advanced stage.
Ukraine has a new president. Do you see any changes in how you do business?
As a U.S. company we will be fine, we see no issues. Our revenue from Ukraine is very small. We are a valuable asset for the Ukrainian government, and cooperation with the U.S. is good for Ukraine — I feel very strongly about that. I am hopeful the new government will want to start more international projects.
Back to Firefly. It’s behind its announced schedule, as startup launch providers usually are. Are you happy with your investment, two years after you made it?
First of all, we are pushing hard to launch in December this year. Our fund put in a bit more than $100 million into the company. It’s our largest investment so far.
In my career I have done public placements, exits to Oracle, to Blackstone and private equity. I think I know how to invest. Yes, I am definitely happy. We already have a couple of strategic partners. We have sold launch services. Firefly is becoming a real player. And I have a personal interest to the extent that my father was in rocket avionics at [Russian space hardware contractor] Energia.
Also, for the U.S. government, our rocket is ideal. The first Firefly is light class, the second is medium class.
When we bought Firefly we undertook a series of design changes to the vehicle and now we have Firefly Alpha, 1,000 kilograms to LEO. It’s a simple design, low-cost and easy to mass produce.
We cannot get government customers lined up yet but I believe the government will get more interested in LEO. A vehicle that can deliver our class of launches will be a good choice.
So the fact that launch vehicles aren’t known for making money is not a worry for you?
We don’t look at it like that. Firefly is part of an integrated vision we have. Launch vehicles are critical to the growth of the global space industry. We have seen how Elon Musk and his development of SpaceX has occurred, and then his more recent communications constellation.
Credit: Noosphere Ventures
Some companies have horizontal integration as their vision. My vision is vertical integration. If I am correct, 30% of Firefly sales ultimately will be internal, to sister companies. Another 30-40% will be government and the rest will be commercial because we are inexpensive. So we’ll have three legs.
How is your data analytics company, EOS DA, doing?
It is doing well. Our model is not to become experts in oil and gas, transportation and other verticals. We sell data to the experts in these fields — insurance companies, hedge funds, chemical companies. We give them access to our platform and then they use it as part of their existing product line.
What is your relationship with Skyrora, the UK-based launch startup?
I know them well. Scotland is a good point to launch and British space is going in interesting directions.
Did you go through a CFIUS [the interagency Committee on Foreign Investment in the United States] review to purchase Firefly?
We bought it out of bankruptcy, so technically we did not go through CFIUS. But we did going through a regulatory review.
You mean like a Blue Lantern review at the U.S. State Department?
Yes, and we became U.S. export controls compliant through this procedure and the receipt of a U.S. State Department authorization.
In a year or two, the half-dozen or so US launch startups will be battling for US government business and one of your competitors is going to paint Firefly as Ukrainian. How do you defend against that?
Well, Elon Musk is from South Africa, OK? Second, I have lived for years in the U.S. and I have a green card and will get a passport. Find other people willing to invest $100 million in a US launch startup. Over the past 18 years, with some multi-hundred-million-dollar exits we have done, you do get people who will dislike you. So we are ready for this.
What are you looking at in future space investments? There are companies in the US, Canada and Europe that might have interesting products, but are likely not going to survive. Do any of them interest you?
There is a consolidation coming. It is similar to early internet companies. In the space industry, we have already checked about 20 companies that are in stressed positions, and we are speaking with five or so.
But we don’t want to do small transactions. There are two classes of distressed companies. One is a class of companies that have been around for years in satellites, in data analytics. They may be the most interesting to us because they have good customer relations.
Then there is the new wave companies, which have been created in the last five years with the space bubble. They are less interesting because I don’t see much there.
Are there any sectors of particular interest to you?
We are not in human space flight. But communications, observation, AIS, there are multiple possibilities. Space companies take time and we are ready to be patient with our investment.
So you don’t have the usual five- to seven-year exit horizon in our fund?
Absolutely not.

Space insurers: The current market is unsustainable unless some of us throw in the towel

Jan Schmidt of SwissRe Corporate Solutions. Credit: Seradata
LONDON — Space insurance underwriters agreed that their market has grown worse in the past couple of years and will improve only when some of them quit the business.
That, they said, is probably inevitable as total annual space insurance premium income continues to fall with the collapse of the market for large geostationary-orbit telecommunications satellites. Average launch premiums have fallen, too, as the glut of insurance underwriters has resulted in a buyer’s market for launch insurance.
The availability of space insurance has increased with the entry into the market of new underwriters. That has pushed rates down to historic lows. Credit: SCOR
Even as per-launch premiums and aggregate premium volume have declined, insurers’ aggregate exposure to insured in-orbit satellite risks has continued to grow  — from nearly $20 billion in 2011 to $31 billion now.
In addition to the possible departure of insurers who no longer think space is sufficiently profitable, the arrival of multiple small satellites, including commercial constellations, could also help rationalize the industry.
“Hundreds of cubesats have been launched but they are not really part of our statistics,” said Jan Schmidt, head of the space department at Swiss Re Corporate Solutions. “Underwriters are interested in reliability measures and figures from The Aerospace Corp. reveals a terrible record — only 53% full mission achievement.
Credit: Swiss Re IUAI/Axa XL/Aerospace Corp.
“So what do I want to charge [cubesat operators] as an underwriter? Only once these satellites improve to an acceptable level will they become insurable post-launch,” Schmidt said here June 25 at the Seradata Space Conference.
Cubesats and their insurability was a recurring topic at the conference. Axa XL is the biggest insurer, so far, of cubesat missions, which remain a small business for the underwriters.
Christopher T.W. Kunstadter, Axa XL. Credit: Seradata
Christopher T.W. Kunstadter, senior vice president and head of Axa XL’s space department, said that in the past 3.5 years, 343 cubesats were insured for launch. But only 12 of them carried post-launch insurance.
The reasons, he said, are that many cubesats are technology demonstrators, and some of the commercial satellites are part of a constellation that can afford to lose spacecraft in orbit without service interruption, reducing the need for in-orbit insurance.
One metric insurers use to assess the industry’s health is the relationship between annual premiums and the largest single insured risk. The largest risk each year is usually a European Ariane 5 rocket carrying two large telecommunications satellites.
Premiums in 2018 totaled less than $500 million, which is not enough to insure such a launch.
Stephane Rives, SCOR Global. Credit: Seradata
Stephane Rives, head of space at SCOR Global, said nearly half of all annual launches are insured, but the proportion of heavy launchers is declining relative to lighter vehicles.
“Satellites related to these launchers have smaller sums insured than in the past,” Rives said. He agreed that “We have far too much capacity today in the insurance market.”
Pascal Lecointe, Hiscox. Credit: Seradata
Insurers said space insurance requires more technical knowledge than other markets, such as aviation. Maintaining technical teams is costly. As the market continues to sag, some underwriters will be tempted to reduce their technical staffs.
It’s already true that not all underwriters have their own in-house engineering capacity. These insurers depend on the expertise of larger underwriters when pricing risk. But they don’t pay for that expertise.
Pascal Lecointe, space underwriter at Hiscox, said there will be a natural attrition among underwriters given the market trend.
“Time will play a factor,” Lecointe said. “Premium volume has dropped significantly and expenses are going to be at a higher level.”
Attendees here said the growth in the number of space underwriters includes some who are counting on little technical assessment to determine which risks to cover, and how to price them.
“Part of it is just luck,” Schmidt said. “It makes it possible to stay in the market, even though it’s not sustainable at the moment. It’s a kind of legalized gambling.”
Should the most technically proficient, larger underwriters be better rewarded by the market by some sort of fee paid by the smaller insurers? None of those in attendance thought that was a good idea — at least not yet.
Peter Elson, Gallagher Aerospace Credit: Seradata
“The market actually works in a pretty efficient way,” said Peter Elson, chief executive of Gallagher Aerospace. “The marketplace dynamics are such that most insurers are capable of assessing and pricing risk and following their own fortunes. That’s why we see that different insurers have different results. That’s a healthy situation.”
Elson agreed that the growing smallsat/cubesat market may argue in favor of a lead-follow model where a handful of insurers decide on rates that are then accepted by others.
With smallsats, Elson said, “it maybe more difficult for all of the insurers in the market to carry all of the cost of being able to assess and rate and adjust risks and claims successfully…. In other markets there is something called a leaders’ fee, intended to compensate for leaders. It is paid by the following markets for the expertise the leader is providing. That would be a logical proposition if the market evolved” into one dominated by cubesats.

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