EXCLUSIVE: SpaceX is looking to raise another big round of funding and wants to double its valuation to up to $92 billion
- SpaceX is talking with investors to raise another round of funding, even though it recently raised a $1.9 billion round in August, according to two people with knowledge of the deal.
- SpaceX is looking to double its valuation from the $46 billion valuation of that August round, which would value it at $92 billion. It is expected to close this round of funding in mid to late January, they said.
- One person said the raise "shocked" them, adding: "What company jumps to double its valuation in six months?"
- This year, equity analysts at Morgan Stanley Research said SpaceX could become a $200 billion company if its Starlink satellite-internet service and reusable Starship rocket system take off.
- Are you a SpaceX insider with insight to share? Contact Dave Mosher or Candy Cheng.
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SpaceX, the rocket company founded by Elon Musk, is looking to pull in another significant new round of capital after raising $1.9 billion just four months ago, according to two people with knowledge of the deal.
SpaceX is in discussion to double its current valuation from $46 billion to as much as $92 billion, and is looking to close the deal in mid to late January, said the people, who are known to Business Insider but asked not to be identified because the talks are private.
The talks are still in early phases and exact pricing for the fundraising round has not yet been determined, one of the people said. Also, terms could still change and it could take several weeks to decide and firm up allocations, the person added, and SpaceX may not be able to convince investors to give it the lofty valuation that it desires. Allocations refers to which investors will be authorized to buy shares and how much they will pay for those shares.
"It's a pretty big shock to me, honestly," said one of the people. "What company jumps to double its valuation in six months? I don't care at what scale you're operating, it's kind of crazy," they added. "If you look at the series, every single valuation is a 10% to 20% bump."
The Hawthorne, California-based company has had a successful year with fundraising. As one of the most valuable venture-backed US companies, SpaceX last raised $1.9 billion in new funding in August, valuing the company at $46 billion. Before August, SpaceX raised $346 million of venture funding at a valuation of $35.5 billion in May. In total, SpaceX has raised $5.87 billion from investors since the company was founded in 2002, according to data from PitchBook.
This new round of funding comes at a pivotal time for the company, which just made history by launching four astronauts into orbit last month in the first operational flight for SpaceX's Crew Dragon spacecraft as part of NASA's commercial crew mission.
The company's current investors include Google, Founders Fund, DFJ, Fidelity, Baillie Gifford and Valor Equity Partners. The additional funding would mainly be used for research and development, particularly for its new Starship rocket system and Starlink satellite-internet service, said one of the people. SpaceX did not immediately respond to a request for comment.
In October, a Morgan Stanley Research report said SpaceX could become a $200 billion company if its Starlink business and a forthcoming rocket system, called Starship, both take off.
Cash needed for spaceflight, satellite internet
SpaceX is pursuing two audacious and cash-hungry efforts that could disrupt the rocket-launch and global telecommunications industries.
One project aims to build a revolutionary, nearly 400-foot-tall launch system called Starship. Both vehicles in the nearly two-stage system — a 16-story upper stage spaceship, called Starship, and a 23-story rocket booster, called Super Heavy — are designed to be fully and rapidly reusable.
If Starship works as envisioned by Musk, the system could propel a Starship into orbit with up to 100 passengers and 100 metric tonnes of payload, effectively reducing the cost of launching anything to space by about 1,000-fold. Such a system would dominate the global launch industry and bolster a commercial space economy. Starship might also help establish a base on the moon for NAS, ferry the first people to Mars, and enable hypersonic passenger travel around Earth.
SpaceX is using hundreds of workers to develop, build, and test Starship vehicles in Boca Chica, Texas, where the company is building a Starship factory and private spaceport. The most recent test — a jaw-dropping flight of a Starship prototype called serial No. 8, or SN8 — attracted investors to the area while advancing the system's development despite a huge explosion upon landing.
Meanwhile, SpaceX is launching roughly 60 new internet-beaming Starlink satellites into orbit every few weeks. By early 2021, the fleet of relatively low-flying fleet — which allows the space to provide more bandwidth, and with much lower latency or connection delay than traditional satellite internet — may top 1,000 functional satellites.
"For the system to be economically viable, it's really on the order of 1,000 satellites," Musk told Business Insider during a press call in May, 2019. He also said the business could rake in $30 billion to $50 billion a year once fully deployed, perhaps to nearly 12,000 satellites or more.
SpaceX even kicked off a public beta for the service this fall, in part to prove to the Federal Communications Commission that its service was acceptable for a big internet subsidy program called the Rural Digital Opportunity Fund. Early users reported strong connections even in adverse weather conditions, and SpaceX made out with rights to more than $885 million in federal cash.
But neither project is without significant cost or risk
With Starlink, Musk has repeatedly bemoaned the cost of user terminals, or high-tech satellite dishes, that users need to buy to connect to the service. Right now in its beta, SpaceX is charging $499 for a kit including a user terminal, plus $99 a month for service — prices the company sees as appropriate for the market.
But each user terminal costs about $2,400 to make, a person with knowledge of a manufacturing deal previously told Business Insider. This suggests SpaceX is absorbing perhaps $1,900 to $2,000 per unit. That's additional to the cash required to build and launch Starlink spacecraft on partly reusable Falcon 9 rockets. Gwynne Shotwell, SpaceX's president and COO, estimated in 2018 that it may cost $10 billion to build and launch the first phase of 4,400 satellites the company is currently approved by the FCC to fly.
"We are focusing on making it not go bankrupt," Musk said earlier this year of Starlink.
Analysts believe it may take SpaceX 3 million subscribers and several years to start breaking even, though such a market for satellite internet has not yet been realized.
Starship, meanwhile, is currently still undergoing early suborbital (or up-and-down flights). Before SpaceX can test the system flying to and from orbit, the company has a significant new regulatory hurdle to clear with the Federal Aviation Administration. Depending on how that process plays out, SpaceX may see a delay to orbit from a few months to a few years — an eternity in Musk's fast-paced world.
To keep the two projects on track, it's likely SpaceX will have to continue successfully raising billions per year while avoiding a serious misstep. But one of the sources doubts that will be a problem, given the company's 18-year history.
"There's a crazy amount of appetite from larger firms for investing in late-stage companies that have a proven track record," they said.
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