Profile: A Growing Small Company Searching for Big Partners

Profile: Mark Sirangelo

Chief Executive Officer, SpaceDev

Mark Sirangelo knows a little bit about mergers. As the head of PGI, an Arlington, Va.-based communications company, throughout the 1990s, he orchestrated a dozen acquisitions. So when SpaceDev founder Jim Benson was ready to acquire Starsys Research Co., he brought Sirangelo in as an adviser. As Benson began searching for someone to take over as chief executive officer of what was about to suddenly become a much larger company, his eyes came full circ le to rest on Sirangelo.

“To his credit, I think he realized the company had enormous potential, and having someone who had gone through some very large ramp-ups with a couple companies would be very useful,” said Sirangelo, who took over as chief executive officer in December.

Proud about some of the company’s recent accomplishments, such as becoming a finalist in NASA’s Commercial Orbital Transportation Services (COTS) competition , Sirangelo talks about focusing the company’s energies in specific areas, such as robotics, microsatellites and deployable systems. He spoke recently about his goals for the company, which finalized its merger in February, with Space News staff writer Missy Frederick.

In what new directions do you intend to take the company?

We’re trying to position the company to be a partner with the larger aerospace companies. What we do is very supplemental to what they do. We’re certainly not threatening most of their business — we’re a rounding error on most of their balance sheets. We’re consciously positioning ourselves to develop things in a more cost-effective, quick manner, and working with companies in partnerships.

We want to be one of the leading companies in microsatellites. I don’t see it as a replacement technology — we’re not going to have small satellites replace large satellites. It’s rather much like the computer industry, where you work with a mainframe but have distributed computers around to do work personally. That’s what’s going to happen in space. Many missions could be done more effectively using a small, distributed network tying into a large system. Sometimes big satellites can take six to seven years to develop; in our world we do that in months.

We’ve now more than doubled in size, and we’re beginning to focus on a few major disciplines.

Microsatellites are one. Another is component work. We’re going to organize ourselves around disciplines, like robotics, deployable systems and hybrid propulsion, and put R&D money into them. And focusing the energy of our company there, we also will bring existing contracts like our work with the U.S. Missile Defense Agency to fruition.

In terms of employees, we’re up 20 percent this year above the merger, just crossing 200 individuals in three locations. We hope to continue to grow, and there is the potential to get other companies to join us, either in a business relationship or a potential merger in the future.

Could this happen in 2006?

Potentially. We didn’t just happen across Starsys. It was part of an evaluation of what companies out there made sense to put together. So we have some ideas, and we’re out actively looking for them.

How is the merger working out?

Almost immediately, the business side has overtaken the organizational side. People had gotten together to work on projects almost before we closed. And we won a couple of them. We’ve had a series of pretty decent wins the last couple months, and we all believe one of the reasons is because of the merger of the two companies.

Does SpaceDev plan to move to a larger stock exchange such as the NASDAQ?

We are looking at doing that. It’s a question of meeting the right criteria for moving, such as sales and growth of the company. But we’d like to move to a national exchange such as the NASDAQ or the American Stock Exchange.

If you move, you get more visibility, and independent analysts will look at covering you. Also, by rule, some institutions cannot invest in companies unless they have that listing.

SpaceDev’s stock was trading around $1.45 at the time the Starsys deal closed. It is now down to about $1.25. What is the cause for the drop?

We don’t get information on who is buying or selling. I do know there were some investors in Starsys, which has been around for more than 20 years, who have since retired and are no longer in the industry. So we don’t know what happened, but there is some speculation. We expected a drop in price, and there was also a holding period before people could start selling, and that’s probably a part of it.

A lot of people don’t realize that we have almost 40 percent more shares sold than before the merger closed. So while the price has gone down, the market capitalization has gone up.

Have you won any contracts recently that you think you might not have received were it not for the merger?

Well, we’re a finalist in the COTS program. Starsys has a longstanding space history, which we believe was a big contributing factor, as they’ve been in space for more than 200 missions. They also have experience doing very large proposals.

We also recently announced two contracts totaling $2.45 million with the Air Force Research Lab to build deployable boom structures, and another for $1.25 million working on a next-generation nanosatellite. Several people at Starsys were very instrumental on that. We have an expanding presence in new areas of space, such as deployable structures. We’re working with the National Reconnaissance Office in this area.

And we have a bid in right now for a robotics program, where we combine with the University of Maryland to do an advanced robotic arm. Though it’s a classified program, the use of it in the future would not be.

What are you proposing for COTS?

SpaceDev is the lead integrator , and we are combined with Aerospace Corp. of El Segundo, Calif.; Oceaneering International Inc. of Houston; and Adam Aircraft Industries of Englewood, Colo.

We focused on two areas: bringing pressurized cargo to the space station and returning it, and moving people to and from the station. Our presentation space vehicle can take six passengers. It takes off vertically and lands horizontally, and is controlled, unlike a capsule. It’s an early version of our “Dreamchaser” vehicle.

We’re hoping regardless of whether we win to leverage the technology for other applications. Half of the 80-page submission was about the technical side, and half was a business plan on how we would go about marketing this to non-NASA people.

The steps necessary for developing a vehicle to go to the space station are the same as those necessary to develop a tourism vehicle. We’re using hybrid propulsion — the same we used for Spaceship 1, and the vehicle is derived from an old NASA vehicle, HL-20, that was never used because of budgetary reasons.

The vehicle could be used as a mini shuttle or carrying combo that could be deployed in orbit using the robotic arms we’ve been developing, perhaps in a more effective manner.

How are things progressing with your contract with the Missile Defense Agency? Are they still your biggest customer?

We’ve been working on it for three years. The last hurdle was the critical design review. That happened two months ago, and the next level is actually building microsatellites. We will be ready to fly within two years. The target date is late 2007 or early 2008.

It’s known as the distributing sensor experiment, and the purpose is to fly satellites in a constellation and have them communicate with each other. We’re using a variety of methods, laser and radio frequency. The satellites themselves are modular and can take different kinds of payloads, such as an infrared sensor, or an optical or communications device.

The Missile Defense Agency was our largest customer, but after the merger they no longer are. Starsys largely did industry business, so we now have a much more diverse portfolio. But it’s a significant part of the business.