Since last year, VC investment in rockets and satellites has become more common, which also opened a channel for early investors to release liquidity. This article from the micro-channel public number: cast the net (ID: China-Venture) , Author: Gongxiao Zhen, edit : Dong Lihan, the title picture comes from: Visual China

Private rockets come to the front of the Science and Technology Innovation Board

A group of private rocket companies are carrying out a new round of financing and will sprint into the science and technology innovation board.

The news circulating in the market last week said that the new round of pre-IPO financing of Sequoia Capital and Blue Arrow Aerospace, a private rocket company invested by Jingwei China, is about to close. An FA told China Investment Network, “A month ago, I heard from the old shareholders of (Blue Arrow Aerospace) that they were uncomfortable. We will start financing in the second half of the year.” At the same time, the FA told China Investment Network that Zero One Space and Galaxy Power are in a new round of financing.

Similar to the start of the chip and autonomous driving tracks, the popularity of the private rocket track also came suddenly. Five years ago, few people paid attention to the rocket company, but it has rapidly become hot in the past two years. Last year, the top two companies, Blue Arrow and Interstellar Glory, raised nearly 1.2 billion in C+ rounds and B rounds respectively, and even Interstellar Glory applied for the science and technology innovation board at the end of last year.

However, the mentality of investment institutions is very complicated. Some investors predict that hundreds of billions of companies will be born on the commercial aerospace track, but there are also organizations that have invested early but are reluctant to talk too much.

A publicist told the author that investors can talk about online education, medical, consumer, and corporate services, which are visibly rewarding or popular industries, but it is not convenient to talk about the story of rockets and satellites. This is completely different from the mentality of investing in autopilot and chips.

Why is there such a difference?

Autonomous driving and chip investment have both experienced a boom. According to the companyAccording to reports, the peak of the investment boom in autonomous driving was in 2017 and 2018, when the investment amount exceeded 80 billion. According to statistics from Yunxiu Capital, investment in the chip industry exceeded 140 billion last year.

Compared horizontally, commercial aerospace is not so popular. According to statistics, from 2015 to 2019, the total investment of commercial aerospace in 5 years exceeded 10 billion, which is not the same as the inflow of funds in the field of chips and autonomous driving.

But it’s worth noting that, after all, aerospace is a track with a higher barrier in terms of technology and scale. There are already far fewer players. In 2020, the total financing of this track is more than 6 billion yuan, which is higher than that of 2019. 1.9 billion yuan, a growth rate of over 200%. In addition, private rocket companies have also come to the door of the secondary market, and whether they are ready or not, they have to face the IPO test.

At this stage, the valuations of the top companies are far from reaching market expectations. Sky Eye Check shows that in December C round of financing last year, Blue Arrow was valued at US$1 billion. A person familiar with the matter told China Investment Network that the current valuation of Star Glory is around RMB 6 billion.

Butfor early investors, the time has come to consider exiting. Most of the private rocket companies were established in 2015 and 2016, while the financial investors at Sequoia Jingwei Lightspeed only started to participate after 2018, and those who entered the market five or six years ago were mainly industrial capital and local funds , The exit pressure has approached.

Since last year, it has become more common for VCs to invest in rockets and satellites, which also opened a channel for early investors to release liquidity. After all, the science and technology innovation board has a clear exit direction for the loose policy of loss-making technology companies. Investing in rockets and satellites is no longer the risk of “betting on the future” in the past.

The problem is that, similar to the situation of AI companies, with no major technological breakthroughs, and the successful launch is still unstable, the financing path of the primary market has become shorter and shorter with the naked eye, even if you insist. Scalp, private rocket companies also have to meet the IPO test.

Satellite war attracts more entrants

Last year, a satellite company founded in 2014 and located in the northeast of Shenyang set a new record for financing in the commercial aerospace sector. In December last year, Changguang Satellite pre-IPO raised 2.664 billion yuan. Shenzhen Venture Capital, CICC Capital, Jingwei, and iFlytek all participated.

An engineer commented that there was no investmentShanhaiguan, Changguang Satellite is a wonderful flower. With the same function of the satellite, he can reduce the weight and volume by 70%. “For the rocket, this is like a truck that can pull 1 pig before, but now it can pull 5 pigs.”

Now the world has entered the PK of a satellite war. A place not far from the earth has become a strategic position that others will occupy if you do not occupy it. In 2015, SpaceX launched the Starlink project, which plans to launch 30,000 satellites, and has launched more than 1,300 satellites.

From 2015 to April 2019, the British satellite company OneWeb has successively received nearly US$4.5 billion in investments including SoftBank and Qualcomm. US$4.5 billion is equivalent to the sum of the financing before the listing of the two companies Weilai and Ideal Auto.

And even if Oneweb filed for bankruptcy in March last year because of its mismanagement, there is no shortage of people to take over. In July last year, a consortium led by the British government and Bharti Enterprises stated that the two sides planned to invest US$500 million each, for a total of US$1 billion to acquire the company.

China is also involved. In April last year, the National Development and Reform Commission officially included satellite Internet in the new infrastructure plan. The domestic State Grid Corporation, also known as “Xingwang”, is taking the lead in setting up a space-based Internet. According to people familiar with the matter, it plans to launch at least 2,000 satellites within five years.

With the precedent of SpaceX and other private companies that have made rocket technology and saved a lot of money for NASA, my country’s policy support for commercial aerospace is increasing. The first was the military-civilian integration strategy proposed in 2015. After 2018, there have been examples of private rocket companies Interstellar Glory entering into national launch sites such as Jiuquan, Gansu to launch satellites.

There is also a reference to the rocket launch service revenue spawned by satellite wars. SpaceX’s launch service revenue last year was $2 billion.

Winning orders from satellite companies is also the goal of private rocket companies. They are facing the challenge of the “national team”. Last year, Wei Ya’s live broadcast studio sold a rocket with a launch price of 40 million yuan, which was produced by Hubei Aerospace Science and Industry Rocket Technology Co., Ltd. invested by the National Team Fund.

“If you launch a rocket with 40 million yuan, advertising costs 5 million yuan, 10 times a year, this cash flow is already very good, enough to live for more than ten years.” A person familiar with the matter said.

Zhang Hui, the managing director of Zhongke Chuangxing, said that there is no problem with the above point of view, but it still depends on whether the profit margin and market demand can be matched. For example, if the cost of the rocket or launch cost is relatively low, the profit margin is sufficient.Enough, and at the same time, there are advertising fees, which is enough to support, “but at the same time, it depends on whether 10 rounds can be issued a year? Is there so much market demand?”

Mi Lei, the founding partner of China Science and Technology Star, said that the demand problem is focused on two points: One is that potential customers do not understand the service capabilities of commercial aerospace, and the other is that customers only know what the problem is, but they don’t know how to The problem is “translated” into a demand, and then the demand is transformed into a satellite technical solution.

The financing amount is benchmarked against Space X, can the technology be benchmarked?

But now, rocket companies are also facing a technical barrier.

Blue Arrow Aerospace has raised 2.6 billion in five years, which is close to the nearly $400 million cost of SpaceX to develop the Falcon 1 and Falcon 9 rockets. Although Musk almost went bankrupt in the first six years of building rockets, in the sixth year of its establishment, SpaceX created the miracle that a private enterprise developed and successfully launched a liquid fuel carrier rocket, making the impossible possible.

If the rocket fails to launch successfully, orders and financing will be problems.

An engineer told me that the success of building rockets is very rigid. The success of autonomous driving is graded, from L1 to L5, but the success of a rocket is only the difference between 0 and 1, and only when the satellite is sent to a designated location in space is counted.

“Successful launch” is the lifeline. Without success, no matter how good the technology is, no matter how large the initial investment is, it will not be possible to win the favor of customers and venture capital institutions. SpaceX first developed the Falcon 1 rocket, which failed three previous launches, and only after the fourth success did it win a $1.6 billion NASA order.

The technology to build a small solid fuel launch vehicle is more mature, less difficult, and less costly, about 30-50 million, but this is not a profitable route. The engine cannot be recycled. “Just like A gunpowder keg,” the engineer said.

The cost of building a small liquid fuel carrier rocket is at least 100 million, but if it can be recycled and reused like Space X’s Falcon 9 rocket, it can save costs greatly, but it is extremely difficult.

In the early days, startups that imitated SpaceX’s route and tried to build more difficult liquid launch vehicles have blocked the advancement of a group of companies. For example, Lingke Aerospace, which was established in 2014, has not announced financing information since 2017.

But Currently, several leading private rocket companies have not proven the ability to continuously send satellites into space. For example, in 2018, the launch of solid carrier rockets manufactured by Blue Arrow Aerospace and Zero One Space failed.

Although Interstellar Glory’s solid-fuel carrier rocket delivered three satellites to designated locations outside the earth at a time, this year it encountered a launch failure. Perhaps in order to build momentum for the IPO, the company plans to launch another one in May. The solid fuel carrier rocket developed by Galaxy Power has only succeeded once.

At present, Blue Arrow, Interstellar Glory, and Galaxy Power are all developing liquid fuel carrier rockets. The liquid rocket engines of Blue Arrow and Interstellar Glory have been launched, but it is still unknown whether they will succeed.

In Zero One Space, where there is no breakthrough in solid and liquid rockets, even if the founder is a background investor, he was supported by star capital StarVC in the earliest stage, but it has not yet received a round of large sums of over 1 billion. Financing, financing ability is not as good as Blue Arrow and Star Glory.

The fortunate thing for companies in the commercial aerospace field is that even if they go bankrupt, there is no shortage of people to take over, but this also requires technical endorsement.

At that time, Oneweb filed for bankruptcy, and SpaceX and Amazon both had intentions to acquire it. The resurgent Oneweb is still a strong rival of SpaceX’s Starlink business, and there are many companies that cooperate with Oneweb, such as ArianeSpace.

The same goes for the company that makes the rocket. In 2016, the founder of Firefly Space Systems, Tom Markusic, was arbitrated for the misappropriation of the intellectual property rights of his former owner, Virgin Atlantic. The investor withdrew and all employees were disbanded. In March 2017, the three-year-old American Firefly Space Systems Company went bankrupt and liquidated, and Noosphere Ventures reorganized it into Firefly Aviation.

In January of this year, Firefly Airlines had 350 employees and won a NASA contract of 93.3 million U.S. dollars. Tom Markusic was the manager of Rocket Test Center in Texas at SpaceX, and held senior positions at Virgin Galactic and Amazon Blue Origin (blue origin).

Compared with SpaceX, which was established in 2002 and is currently valued at US$74 billion, domestic private rocket companies still have no technical concerns about the market, and the amount of financing is comparable to that of the early SpaceX., Can the technology be benchmarked?

This article is from WeChat official (ID: China-Venture) span> , author: Gongxiao Zhen, editing: Dongli Han