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.
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?