SpaceX to acquire Swarm Technologies
WASHINGTON — SpaceX has quietly agreed to acquire Swarm Technologies, a company that operates a smallsat constellation providing internet-of-things services.
Swarm revealed the acquisition in a series of filings with the Federal Communications Commission Aug. 6 where the company sought approval to transfer its existing satellite and ground station licenses to SpaceX. The companies signed the merger deal July 16, according to the filings, under which Swarm would continue to operate as a wholly owned subsidiary of SpaceX.
The companies had not publicly disclosed the acquisition before the FCC filing. Neither SpaceX nor Swarm responded to emails with questions about the deal. The SpaceX subsidiary that is merging with Swarm, called Swarm Holdco, was incorporated in Delaware May 5, according to state records, suggesting discussions between the two companies had been ongoing for months.
Swarm operates a constellation of 120 smallsats, each smaller than a single-unit cubesat, to provide two-way communications at low data rates for markets such as agriculture, energy and transportation. The company argues it can provide services at a fraction of the cost of legacy satellite services.
In the FCC filing, the companies say that the acquisition will give Swarm resources to compete against several other companies that operate similar satellite systems. “Swarm’s services will benefit from the better capitalization and access to resources available to SpaceX, as well as the synergies associated with acquisition by a provider of satellite design, manufacture, and launch services,” it states.
A footnote references recent events to support that argument, such as Orbcomm’s pending acquisition by private equity firm GI Partners, Spire’s plans to go public through a merger with a special-purpose acquisition company, Kepler’s $60 million Series B funding round and Astrocast’s statement that it is considering going public.
Swarm’s last announced funding round was in early 2019, when it raised $25 million in a Series A round. The company, though, has said that funding was more than sufficient to deploy its constellation and begin services.
“We’re at a point now where we’re able to put up our entire network of 150 satellites for far less than our Series A,” Sara Spangelo, co-founder and chief executive of Swarm, said in a webinar hosted by Caltech’s Keck Institute for Space Studies in March. She added the company had, at the time, about 30 employees and raised a total of $35 million.
The benefits to SpaceX of acquiring Swarm are less clear. Swarm’s satellites operate in a different frequency band, VHF, than SpaceX’s Starlink broadband satellites. The incremental revenue that Swarm will provide SpaceX is likely to be minuscule compared to the fees the company gets from Starlink beta testers, let alone its space transportation services.
The filing suggests SpaceX is primarily interested in Swarm’s technology and staff. “SpaceX will similarly benefit from access to the intellectual property and expertise developed by the Swarm team, as well as from adding this resourceful and effective team to SpaceX,” the document states.
It’s unclear what the acquisition will mean for Swarm’s long-term plans. At the March webinar, Spangelo was asked where she saw the company in 10 years. “I think we will have launched at least one, if not two, different constellations,” she responded. “A natural progression would be bigger satellites — or maybe smaller — that can do way more data and connect more types of devices.”
“We definitely have aspirations of additional kinds of demand curves of things that we can do in the future,” she added. “You’ll have to stay tuned.”