SpaceX ups fund-raising effort from one to two billion
Capitalism in space: SpaceX has apparently raised $2 billion during an on-going investment capital round, double what the company had initially expected.
This means that SpaceX has now raised $4 billion in private investment in the last year, the bulk of which the company says it is devoting to Starship. However, they have also said that for this most recent round some of the monies will go to making their Starlink satellite internet constellation operational. With 595 satellites already in orbit, and good testing ongoing, it appears a lot of investors want to get in on the game.
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Capitalism in space: SpaceX has apparently raised $2 billion during an on-going investment capital round, double what the company had initially expected.
This means that SpaceX has now raised $4 billion in private investment in the last year, the bulk of which the company says it is devoting to Starship. However, they have also said that for this most recent round some of the monies will go to making their Starlink satellite internet constellation operational. With 595 satellites already in orbit, and good testing ongoing, it appears a lot of investors want to get in on the game.
Readers!
Please consider supporting my work here at Behind the Black. Your support allows me the freedom and ability to analyze objectively the ongoing renaissance in space, as well as the cultural changes -- for good or ill -- that are happening across America. Fourteen years ago I wrote that SLS and Orion were a bad ideas, a waste of money, would be years behind schedule, and better replaced by commercial private enterprise. Only now does it appear that Washington might finally recognize this reality.
In 2020 when the world panicked over COVID I wrote that the panic was unnecessary, that the virus was apparently simply a variation of the flu, that masks were not simply pointless but if worn incorrectly were a health threat, that the lockdowns were a disaster and did nothing to stop the spread of COVID. Only in the past year have some of our so-called experts in the health field have begun to recognize these facts.
Your help allows me to do this kind of intelligent analysis. I take no advertising or sponsors, so my reporting isn't influenced by donations by established space or drug companies. Instead, I rely entirely on donations and subscriptions from my readers, which gives me the freedom to write what I think, unencumbered by outside influences.
You can support me either by giving a one-time contribution or a regular subscription. There are four ways of doing so:
1. Zelle: This is the only internet method that charges no fees. All you have to do is use the Zelle link at your internet bank and give my name and email address (zimmerman at nasw dot org). What you donate is what I get.
2. Patreon: Go to my website there and pick one of five monthly subscription amounts, or by making a one-time donation.
3. A Paypal Donation or subscription:
4. Donate by check, payable to Robert Zimmerman and mailed to
Behind The Black
c/o Robert Zimmerman
P.O.Box 1262
Cortaro, AZ 85652
You can also support me by buying one of my books, as noted in the boxes interspersed throughout the webpage or shown in the menu above.
And it seems it is one of the few space companies investors will put money in to. I am glad SpaceX is getting the funding it needs. Unfortunately, it crowds out a lot of investment in other space opportunities.
“Unfortunately, it crowds out a lot of investment in other space opportunities.”
The true competitors to SpaceX may have to evolve once the cost to orbit drops enough for small shipyards to move to orbit. Even then, the profitable start will be in ships that leave orbit, from LEO to EML-1 for places outside the Earth/Moon system. But eventually, they will build Earth/Space launchers that are steeply competitive with what can be built on Earth, using their advantages of vacuum and free fall.
Among other things, they will build them, even if still chemically powered, instead of their power being beamed from orbit, in much more intricate designs that have far fewer parts. Reliability can go up, and mass and costs go down, as launcher structures, with the intricacy in each CC of structure of a current GPU computer chip, can get printed in orbit . When we start seeing structures whose individual truss components are smaller than the minimum size for flaws that are microcracks in the given material, then we will see the full theoretical strength of these materials available, in trusses that are incredibly lightweight.
https://jrgreer.caltech.edu/
At that point, SpaceX will be competing with their own self-created Space Aliens.
Isn’t it wonderful????
Mr. Z.,–
Related–August 14th, 2020 WSJ article:
(Section B Midwest print edition)
“Amazon Preps for Internet Satellites”
Amazon plans to spend $10 billion on an internet satellite constellation. They won FCC approval in July to launch 3,200 low earth orbit satellites over the next 9 years. (Project “Kuiper.”)
“The announcement has left industry insiders guessing about which customers the company plans to serve.”
Ref: OneWeb– “Months before its bankruptcy, OneWeb jettisoned its initial concept of pursuing consumers and small-business in developing regions, in favor of serving cruise-line, aviation, and other established markets able to pay higher service fees.”
Joe wrote: “Unfortunately, it crowds out a lot of investment in other space opportunities.”
I’m not so sure about this. I have been reading that right now, investors are cautious about investing in risky space ventures, as there have been quite a few disappointing failures, recently. Added to this is the Wuhan flu fiasco, which is causing even more problems for commercial space ventures. Investors, this past year or so and especially the past few months, are looking for successes, and SpaceX’s current two major ventures look like they are going to be very successful. Many venture capitalists who had been investing in space are not doing so, right now.
investors, a quarter century ago, were not investing in space endeavors, as Alan Binder discovered with his attempt at a commercial lunar satellite, Lunar Prospector. This began to change with the success of Ikonos, the invention of the inexpensive cubesat, and especially with the success of Falcon 9. There has not been enough success, recently, for the now overabundance of investors to be as confident with the risky new entrepreneurs as they were just a few years ago. For instance, there are now too many smallsat launchers for the foreseeable smallsat market and that is scaring investors. What we really need is fewer failures and more successes, and this is the Cath-22. Investors will not back the attempts at success, and without backing, it is difficult to have attempts in order to have successes to give confidence to the investors to encourage them to back other attempts.
So what looks like the cause of a lack of investment in other space opportunities may actually be the effect of recent failed ventures combined with a fear of more to come.
I must add that Joe’s statement contains a premise that is false. It assumes there is a fixed number of investors that can only provide money to so many companies.
The reality is that such things grow and shrink, depending on the success and failure of any industry. The more success we see in space, the more money will be available, for both the big and the small.
Edward outlines the real problem now. While SpaceX has had some spectacular success, it is just one company. Other than Rocket Lab, we haven’t seen much other success in this new private market. It is this lack more than anything that will put restraints on any new investment.
“Other than Rocket Lab, we haven’t seen much other success in this new private market. It is this lack more than anything that will put restraints on any new investment.”
Or if an space based concept is too far advanced or too different from what we see now. If SpaceX had not started with a sizeable sum (Elon Musk was very close to bankruptcy when NASA called) they would not have even started as a company. For those who have ideas and are building the next generation of tech for space applications, the money is not there. It goes to the more established players or those who look very much like the established players. Failures don’t help that equation at all (Vector, Stratolaunch, etc). The market for space activities has to be looked at as a semi-finite market because even though it ebbs and flows, there are other competing concepts for that money (phone app software, video games, phone accessory tech, and so forth). Despite venture capital’s reputation as risk takers, they really aren’t. They stick with what they know or what is known to work. Hence the infamous, “It’s like Uber but for X” or “It’s like AirBnB but for Y”.
I quipped once that it would be easier to fund a TV show about building a rocket company than it would be to actually get funding to build a rocket company (I was running a rocket company at the time). Astonishingly, I was proved correct. We landed funding, finalized concepts, and were waiting on a green light from the studio to go film when the whole reality TV concept shifted and the market disappeared. We were one yes away from having a TV show about building rockets. That was an eye opener.
The dollar amounts do go up but the bulk is absorbed by the existing (and dare I say newly entrenched) companies. Case in point: https://www.forbes.com/sites/alexknapp/2020/01/16/space-industry-investments-hit-record-high-as-venture-capital-seeks-the-next-spacex/#c80ea8d7f9f9. SpaceX and Blue Origin slurped down 41% of all dollars invested in space companies. This year it will be worse. It is crowding out the investment dollars.
Joe wrote: “Despite venture capital’s reputation as risk takers, they really aren’t.”
This has much truth to it. The risks that they take are investments in new companies, which have a tendency to not survive. Vector is a good example. However, venture capitalists reduce their risks by being picky about which companies that they invest in, and they tend to take great control over these companies in order to make sure that they are well run. This leaves them largely with the risks involved with the new technology or new advantage that the new company has over the competition.
If the advantage turns out not to be what everyone thought, or if someone else is coming out with a better mousetrap, then the investment goes south. With SpaceX and Blue Origin, investors feel comfortable that the reusable technology will work and that there is no serious competition coming out any time soon.
At the moment, there is great uncertainty in many industries, and uncertainty frightens investors away from investing. This is the major problem that commercial space is facing, right now. Venture capitalists like to make their invested businesses successful in only a few years then get out, often by having their businesses listed on the stock exchange. Right now, they are not seeing such short-term successes in the space industry. Other investors take even fewer risks, because they are not in a position to tell the company how to operate. They are dependent upon strangers to make money for them.
“If SpaceX had not started with a sizeable sum (Elon Musk was very close to bankruptcy when NASA called) they would not have even started as a company.”
Musk, Bezos, and Bigelow had to use their own money to start their companies, because investors were not willing to take the risks. At that time, success was not in the cards. Joe pointed out that SpaceX did not have enough customers to last very long and is seen as having been rescued by NASA’s commercial transportation project. This may be true (it is possible but unlikely that SpaceX could have received enough commercial payloads to stay in business), but it was not a guarantee of survival. Kistler received the other contract but went tango uniform anyway, resulting in Orbital Sciences replacing them.
“Failures don’t help that equation at all (Vector, Stratolaunch, etc).”
I see this as one of the problems with Blue Origin and Virgin Galactic taking so long to start their suborbital tourist businesses. Robert has expressed disappointment in them, and he isn’t an investor. What must these projects look like to today’s investors?
It could be well worth a discussion or a research project to explore what failures do to the space industry, how many failures relative to successes does it take to frighten away investors, how many companies other than SpaceX are needed to succeed to reassure investors, and how many smaller companies (e.g. making components or satellites) are succeeding and how many are failing. Now that Virgin Galactic has taken four times longer than it originally projected to start operations, do we consider it a failure until (unless?) it finally does start operations? Etc.
There are plenty of successful smaller space companies that started over the past decade. They are not well celebrated, but many offer products that are useful, often to small satellite manufacturers. Small satellites are one of the success stories of the past decade or so. However, I see this as a difficult time in the space industry. Some good companies that could be very important to future space development may not survive the current economic crisis, adding to the fears that are keeping investors away.
When can we get the Botony Bay built so we can send all those Antifa and BLM into space?