US space startups' latest struggles marked by layoffs, shake-ups
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[August 16, 2023]
By Joey Roulette
WASHINGTON (Reuters) - U.S. space startups have slashed workforces and
restructured operations to survive amid an investment drought that has
grounded once-lofty aspirations.
While more established players like Elon Musk's SpaceX and Jeff Bezos'
Blue Origin spend billions on new, bigger rockets, rocket startup Astra
Space, satellite imagery firm Planet Labs and privately held engine
maker Ursa Major recently laid off workers to cut costs.
Those struggles follow the April bankruptcy filing by satellite launch
firm Virgin Orbit, which was owned by billionaire Richard Branson. Among
the factors cited by the company were volatile capital markets and
Branson's reluctance to invest further.
"The focus for investors in this space is very different than what it
was a couple years ago. It's less about your potential," Ursa Major CEO
Joe Laurienti told Reuters. "It's more about how can you build a healthy
pipeline ... and execute and deliver upon the efforts that you
promised."
While a steep drop in space investments spurred by a grim economic
outlook in the past year appeared to stabilize in the most recent
quarter, startups, many of which went public through blank-check
companies to raise cash, are reeling from the downturn's impact.
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Quilty Analytics analyst Caleb Henry called it a tough capital market
and said startups are working with what they have rather than banking on
an influx of new funds.
"We're seeing a bit of a decrease in investor risk appetite, and that is
made worse in some cases by poor company performance, and then more
broadly, things like high interest rates and general market
uncertainty," he added.
Astra disclosed last week it laid off a quarter of its workforce and
diverted focus from its rocket launch program, once the core of its
business. It is now focusing on its satellite propulsion unit, a more
immediate source of revenue that it split off as a separate entity
earlier this year.
"The spacecraft engine business is a much different business than
launch," Astra CEO Chris Kemp told Reuters. "Having it all mixed up with
launch was making it harder for us to raise capital"
The company, which is delaying tests of its rocket to 2024 to focus on
the satellite engine unit, reported on Monday it had $26 million in cash
and securities on hand. That was down from $201 million the prior year.
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The Virgin Orbit building is seen after
the company paused operations last week, in Long Beach, California,
U.S., March 22, 2023. REUTERS/Mike Blake/File Photo
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STEEP CHALLENGES
With complex technologies and explosion-riddled tests that often
spook investors, venture-backed and publicly traded rocket
businesses have faced some of the steepest financial challenges. The
industry also includes satellite imagery and analytics firms, seen
as safer bets by investors due to more predictable demand.
But even those satellite firms have struggled.
Planet Labs, which went public in 2021, shed 10% of its roughly
1,000 employees earlier this month, citing the tough economy and the
company's overly fast expansion.
"Our business has scaled rapidly and continues to grow apace, but
the expansion of projects has also increased cost and complexity,
which slowed us down in some regards," CEO Will Marshall told
employees in an Aug. 1 note posted on the company's website.
Quilty's Henry said Planet Labs hired too aggressively. "That's not
an uncommon mistake for startups to make, especially once they
become flush with cash."
The financial headwinds faced by rocket startups have triggered pain
elsewhere as well.
Denver-based Ursa Major, whose engines are designed for rockets and
hypersonic crafts, laid off 27% of its workforce this summer. It
shifted much of its focus to government defense programs as its
commercial customers face tight capital markets, CEO Laurienti said.
"The hope is that shift really generated some confidence," he added,
"and started to show that we're acknowledging this isn't times of
zero percent interest rates and venture capital flowing like crazy."
(Reporting by Joey Roulette in Washington; Editing by Ben Klayman
and Matthew Lewis)
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