Gilmour Space: New capital raise this year

… which led a $5 million Series A round a year earlier with backing from US-based 500 Startups. The startup’s ambitious plan to launch low-cost hybrid …

Gilmour Space Technologies, the Australian rocket startup gunning for business from SpaceX and its Starlink satellite broadband constellation, will soon begin the search for more venture capital ahead of its premier commercial space launch in 2022.

“We are going to do another capital raise at the end of the year,” Gilmour Space Technologies chief and co-founder, Adam Gilmour, told InnovationAus.

Gilmour Space, a Queensland-based hybrid rocket launcher, raised $19 million in a Series B in 2018 from Main Sequence Ventures and Blackbird Ventures, which led a $5 million Series A round a year earlier with backing from US-based 500 Startups.

The startup’s ambitious plan to launch low-cost hybrid rockets has faced some setbacks. Last August its One Vision proprietary hybrid rocket failed to launch, but Gilmour said the company is now applying the lessons his team of 40 engineers learned to its first commercial rocket launch scheduled for 2022.

Adam Gilmour
Adam Gilmour: The R&D tax incentive is one of the best things going for startups in this country

“After the failure, we did an extensive failure analysis and came up with 24 items that we want to do to change the way we do things. We have a monthly meeting about the 24 lessons learnt that we’ll carry forward to the next vehicle,” said Gilmour.

Gilmour started the rocket company in 2014 after two decades as an investment banker with Citibank in Singapore, deciding to take a gamble on an emerging space industry based on small satellite technology. Today, the industry’s most visible player is SpaceX CEO Elon Musk.

Adam Gilmour was speaking on InnovationAus‘ Commercial Disco podcast.

Gilmour sees a massive opportunity for his company in SpaceX’s Starlink satellite broadband project, which aims to bring high-speed broadband to underserved parts of the world. It currently has just under 600 satellites in low-Earth orbit after 11 launches since February 2018 on the back of SpaceX’s reusable Falcon 9 rockets.

However, SpaceX has been approved by the US Federal Communications Commission (FCC) to send up to 12,000 Starlink satellites into space and this year applied for permission to launch a further 30,000 Starlink satellites.

The FCC also recently approved Amazon CEO Jeff Bezos’ Project Kuiper to launch over 3,200 broadband beaming satellites into space. Amazon plans to invest US$10 billion into the Kuiper satellite broadband service, which will begin operating after 578 satellites have been launched.

While SpaceX’s Falcon 9 rockets carry 60 Starlink satellites per launch, Gilmour reckons there’s an opportunity to provide ultra-cheap and smaller rocket launch services that carry a payload of just one or two satellites.

“Sometimes you have to be lucky. I think we got lucky when all of these broadband constellations started to be developed,” said Gilmour.

“So with OneWeb, Space X’s Starlink and now the Amazon Kuiper system — when they started launching, that’s a massive business opportunity for us,” said Gilmour.

“Those satellites go into particular orbits and to move from orbit to another is very expensive in terms of fuel and once you’ve put all these massive constellations up there, they’ve got a lifespan of five to seven years and they start to die.”

“The service we can provide is to take them back up in ones and twos to replace them. And so the [satellite] service doesn’t get disrupted and it’s uneconomical for a massive rocket like a Falcon 9 to take up a satellite but it’s very economical for us to do it.”

OneWeb, a would-be UK rival to Starlink, launched 74 small broadband satellites but it filed for Chapter 11 bankruptcy in the US this March after additional funding fell. The company cited volatility in financial markets caused by the coronavirus COVID-19 pandemic.

Gilmour says his company also stopped hiring talent and halted major investments after the pandemic hit, but he says things have changed “reasonably rapidly”, and it’s now started to accelerate again.

The company’s other opportunities lie with the government. In May, Gilmour Space signed a strategic deal with Defence Science and Technology Group to collaborate on tech advances in areas such as rocket propulsion, materials and avionics. Last year it also signed a statement of strategic intent and cooperation with the Australian Space Agency.

But Gilmour believes the fragmented nature of financial support from the Australian government doesn’t serve companies like his well.

“We have been openly critical of the Space Agency and the government about giving a little bit of money to a whole lot of different people,” said Gilmour.

“I have a strong view that especially in the infancy of an industry you’ve got to back the champions. So far the Space Agency hasn’t given out any money to any of the venture backed space companies in Australia, which I think is a very wrong decision to make.

“If you look at trying to grow the industry, if you’re venture-backed, at least you’ve got some smart people that say you’ve got a chance of doing well. You’ve got access to big pools of capital and leverage to getting more money.”

“I like to tell a story that if I get a $2 million grant from the Space Agency, I can get $10 million of venture capital on the back of that. So you get five times the power. And what do startups do? They hire people. So we’ve grown rapidly. We’re at 55 people now and we will be at 60 by the end of the year. I think at the beginning of last year we had 30 people, so we’re growing fast.”

However, he is a fan of Australia’s research and development (R&D) tax incentives, which are under threat as the government considers cutting $1.8 billion from the scheme. Gilmour said the incentives were a key reason he moved his rocket business from Singapore to Australia.

“One of the great things that attracted me back to Australia was the R&D tax grants. That is a fabulous system to encourage people to do R&D activities. I’ve been telling a lot of people in the global community to come to Australia in the early days of your company for the R&D tax grants. That was another big enabler for us,” said Gilmour.

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