Space Business: Legendary Pictures

Capella Space raised $60 million from a former movie-making billionaire

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Dear readers,

Welcome to Quartz’s newsletter on the economic possibilities of the extraterrestrial sphere. Please forward widely, and let me know what you think. This week: Capella’s big capital raise, Virgin Orbit’s failed launch, and a Soyuz swap.

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Weak fundraising environment, you say?

Capella Space, a company that uses seven satellites to collect radar imagery of the Earth below, kicked off the year with a big capital raise despite a tough finish to 2022 for capital-intensive private space start-ups.

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Capella took in $60 million from the US Innovative Technology fund, or USIT, operated by billionaire Thomas Tull. An entrepreneur and investor, Tull is best known for starting the Hollywood studio Legendary Entertainment in 2005, which financed hit films like Dune and The Dark Knight, before selling his majority stake in 2016.

Raising that much capital at a time when many other venture-backed firms are battening down the hatches for economic slowdown isn’t easy. Capella CEO Payam Banazadeh tells Quartz that his firm has more demand for its imagery than its current satellite constellation can provide.

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The reason, in a word, is Ukraine. Russia’s invasion of its neighbor vaulted a variety of space data businesses into the public eye. Radar imagery (technically, synthetic aperture radar) is valuable because it can collect data at night and through clouds, and because it can more effectively measure physical objects it detects.

But while there are numerous providers of visual imagery and radio-frequency tracking, commercial SAR providers are effectively limited to Capella and Finland’s ICEYE. (Other companies, including Synspective, PredaSAR, and Umbra are still bringing their products to market.)

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“We’ve now shown through the conflict in Ukraine and the work we’ve been doing there that the tool we’ve built is critical,” Banazadeh says. “Ukraine has catalyzed the demand in other regions as well. People are realizing that something like Ukraine could happen in other places.”

He didn’t elaborate, but it’s easy to speculate that Taiwan is top of mind. Between Russia’s belligerence and rising tensions with China, defense and intelligence contractors are having a moment; when Capella first opened its doors, part of its sales pitch was focused on monitoring North Korea’s nuclear arsenal.

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That defense-friendly capability brought Tull onboard; his new fund is focused on dual-use technologies, which have both national security and commercial applications. (Tull’s other investments with his new fund are in Shield AI, which is building “the world’s best AI pilot,” and Anduril, which is building an AI platform for the “software-defined conflicts of tomorrow.” )

Banazadeh admits that his firm is focused on the national security side at the moment simply because “there is a very clear product-market fit,” while the commercial market for radar data, which requires some expertise to use, is less mature. Capella is developing tools for those users, like machine-learning products that detect ships at sea, but the company’s focus in the next year is launching more satellites: two more of its current model, and then a number of new “Acadia” satellites that will offer higher resolution imagery and faster communications with users on the ground.

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Capella is not yet profitable because it is re-investing earnings into growth, Banazadeh says, but its future finances are getting more predictable. With markets still frowning at tech firms, the CEO says any kind of public offering isn’t in the company’s immediate plans. But Capella did announce, in conjunction with the fundraising, the hiring of three new executives in what you might call the IPO prep package: a CFO who previously took Zillow public in Chad Cohen; a top human resources exec to deal with a company growing beyond 200 employees in Glen Elliot; and a chief information security officer, Paul Stephen, to put in place the data protection required by a public company.

That means, Banazdeh says, the company will be “ready for any opportunity that might come.”

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IMAGERY INTERLUDE

You’ve probably seen plenty of pictures of the cupola on the International Space Station, but I had never noticed the shutters on the outside of the station that protect the windows from space debris when they’re not in use, a reminder of the harsh environment even in low-earth orbit:

Image for article titled Space Business: Legendary Pictures
Photo: NASA
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In this image from January 1, NASA astronaut Nicole Mann kicks off the new year by showing off the US flag through a cupola window.

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SPACE DEBRIS

A Soyuz replacement heads for the ISS. After assessing a leak on the Soyuz spacecraft currently docked to the International Space Station, Russia’s space agency has decided to send a new Soyuz vehicle to act as a lifeboat and eventually return astronauts to Earth. While deemed too risky for human occupants, Roscosmos plans to return the leaking Soyuz to Earth with cargo onboard later in the year.

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Virgin Orbit’s UK launch fails. The air-launched rocket maker had high hopes for its first international launch, but an anomaly led to the loss of its LauncherOne rocket and nine satellites onboard. The costs and delays associated with investigating and correcting this failure before future flights will put extra pressure on a firm already facing a dire cash burn rate.

ABL’s debut rocket launch fails. The Lockheed Martin-backed small rocket start-up’s vehicle fell back to the pad and exploded during a Jan. 10 launch attempt.

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Here comes Falcon Heavy. Now the second-most powerful operational rocket after the SLS (albeit at less than a tenth of its cost), SpaceX’s enormous triple-booster rocket is expected make its fifth flight and second mission for the US Air Force as soon as Jan. 14.

Human resources in space. Check out this fascinating feature on the different kinds of training astronauts will need to explore the moon versus their work on the far more regimented ISS. “At Apollo, we had this strategy we called T-cubed: Train ’em. Trust ’em. Turn ’em loose,” explains a former NASA official.

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Your pal,

Tim

This was issue 164 of our newsletter. Hope your week is out of this world! Please send your astronaut training strategies, solutions for this sad season of small rocket failures, tips, and informed opinions to tim@qz.com.