The space race is still alive and well—at least when it comes to VC funding and global satellite internet.
SpaceX, the rocket company founded by celebrity billionaire entrepreneur Elon Musk, has raised an additional $704.74 million across two previously declared rounds, according to filings reviewed by PitchBook on Friday. Both rounds have now raised a combined total of $1.02 billion since January. With the new funding, SpaceX now holds an estimated $31.5 billion valuation, with previous investors such as Sherpa Capital, Alphabet and Founders Fund adding to their stakes in the company. SpaceX did not immediately respond to requests for comment.
The funding announcement comes a day after the Los Angeles-area company launched 60 Starlink satellites into low Earth orbit, en route to an eventual goal of the 800 satellites needed to reliably provide significant high-speed internet coverage worldwide. The Starlink project, initiated in 2015, is expected to be fully operational in 2020, with the possibility for up to 12,000 satellites entering orbit, per regulatory filings SpaceX submitted to the Federal Communications Commission. Its competitors include global satellite internet aspirations from OneWeb, which is backed by Virgin Group and Qualcomm Ventures, and from Samsung, among others.
Elon Musk has previously declared his goal is to use revenue from Starlink’s projected operations to fund Starship, an initiative to build advanced rockets and spaceships to bring human civilization to Mars. Currently, Starship’s vehicles are being constructed in Boca Chica, Texas, and Cape Canaveral, Florida, with Musk regarding the locations as “competing” to see which site is more efficient.
Legal challenges abound
While the promise of exploring space and colonizing Mars someday may sound dreamy, the journey isn’t always glamorous, and SpaceX has had its share of difficulties.
The new funding also comes on the heels of the company’s lawsuit against the US Air Force’s Space and Missile Systems Center, filed in mid-May and unveiled on Wednesday by CNBC. In the lawsuit, SpaceX claims the center “wrongly awarded” $2.26 billion last fall in development contracts “to a portfolio of three unproven rockets” built by its competitors, while rejecting SpaceX’s bid.
Namely, Blue Origin received $500 million, United Launch Alliance scored $967 million, and Northrop Grumman banked $792 million. Meanwhile, SpaceX’s Falcon 9 and Falcon Heavy rockets were kicked to the curb, with the Air Force concluding that certain elements of the company’s Starship vehicle broadly labels its entire fleet as “high risk.”
Since the filing was largely redacted to protect proprietary and competitively advantageous information, it is not clear what the specific factors that were deemed “high risk.” Without greater details, it is difficult to speculate regarding the merit of the complaint.
However, the lawsuit may simply be an indication of the unwillingness of SpaceX and Elon Musk to concede defeat. As part of a broader ethics investigation into Acting US Secretary of Defense Patrick Shanahan, an April 25 report revealed that Shanahan and Musk met privately on December 6 to discuss SpaceX’s failure. During the meeting, Musk expressed his opinion that SpaceX had submitted a lousy contract proposal that “missed the mark.”
In addition to Musk’s stated opinion on the proposal quality, Bloomberg reports SpaceX has won nine federal contracts since 2015, including a recent $297 million launch contract from February. All such contracts were in direct competition with ULA, among others, arguably contradicting perceptions of institutional favoritism working against SpaceX.
While the $1.02 billion in funding SpaceX has garnered this year may be coincidental, it could reasonably be an unenthusiastic replacement for what would have been a grant from the Air Force, considering the timing and a similar amount to what the Air Force was dishing out.
Regardless, such a refusal to concede defeat is far from unusual in the world of Elon Musk, where themes of stubbornness and denial abound. There was his infamous “funding secured” tweet and subsequent unwillingness to adhere to SEC monitoring, as well as his long-standing but never-fulfilled repetition of Tesla’s ever-imminent resolution of cashflow and production issues.
In perhaps the most dramatic example, Musk has steadfastly refused to settle the defamation lawsuit filed against him after he called Vernon Unsworth, one of the divers who helped rescue a Thai soccer team from a cave in 2018, a “pedo guy” on Twitter after Unsworth disparaged Musk’s offer of a submarine to aid in the rescue as a PR stunt. The suit reportedly seeks damages for some $75,000, equivalent to less than 0.00005% of Musk’s net worth, but in a familiar denial, Musk maintains his innocence and regards his comments as an “imaginative insult” protected by the First Amendment.
As SpaceX’s lawsuit seeks to recover its missed Air Force grant by challenging the reasons the company’s bid was not chosen, it remains debatable whether the Air Force truly did cheat SpaceX—or Musk & Co. are simply unhappy to admit that they lost.