SpaceX raises $850 million in latest round
WASHINGTON — SpaceX confirmed Feb. 23 it has raised $850 million in a new funding round as the company continues work on two capital-intensive but potentially lucrative projects.
In a filing with the Securities and Exchange Commission, SpaceX stated it had raised $850 million from 69 investors in its latest round. The filing offered no details on those investors or the valuation of the company, although recent reports, such as one by CNBC, stated the new round valued the company at $74 billion, a significant increase.
The round comes six months after SpaceX raised $1.9 billion. The company has raised more than $6 billion in equity to date, most of it since early 2015, when it raised $1 billion in a round led by Google and Fidelity.
That demand for capital is currently driven by two major projects. One is Starlink, its broadband internet constellation, for which the company has launched more than 1,000 satellites but has plans to ultimately deploy tens of thousands more. The other is Starship, the next-generation reusable launch vehicle that the company is developing in South Texas that promises to launch much larger payloads at much lower per-kilogram costs.
Investors are particularly interested in Starlink, with its potential to generate billions in revenue from millions of customers worldwide seeking broadband access. SpaceX has seen strong interest in beta tests of the Starlink service in the United States, Canada and the United Kingdom, and is in the process of expanding service in those countries and others.
Starlink “is sending shock waves throughout the satellite industry as a whole,” said James Murray of PJT Partners, an investment banking company, during a Feb. 9 session of the 2021 SmallSat Symposium. The fast pace of its rollout, he argued, is disrupting the businesses of more traditional satellite operators.
“This is going to be a big year with the public getting to know they can get high-speed internet at least in some locations” with Starlink, said Ward Hanson, a lecturer in economics at Stanford University, during another panel at the conference Feb. 8. “You’re going to see space touching people’s lives like it did in the 1990s with satellite TV.”
SpaceX has also been able to ride a surge of investment into the space industry overall. Its funding rounds have paced the industry, but many other companies have raised significant funding through venture capital and, more recently, by merging with special-purpose acquisition companies, which allow privately-held companies to raise money and go public outside of the traditional initial public offering (IPO) process.
“It has never been a better time to raise money for ventures in and around space,” Murray said.
SpaceX has long said it has no interest in going public, either for the company itself or by spinning off Starlink. SpaceX Chief Executive Elon Musk, asked about reports a year ago SpaceX was considering spinning out Starlink, said he is “thinking about that zero” and is instead focused on avoiding the bankruptcies other satellite constellation companies have suffered.
Musk, though, may be reconsidering that. “Once we can predict cash flow reasonably well, Starlink will IPO,” he tweeted Feb. 9. He didn’t forecast when that it would happen, but said in the near term the company would be spending heavily on the deployment of the system, which he called a “staggeringly difficult technical & economic endeavor.”
“SpaceX needs to pass through a deep chasm of negative cash flow over the next year or so to make Starlink financially viable,” he wrote in another tweet. “Every new satellite constellation in history has gone bankrupt. We hope to be the first that does not.”