Houston-based Axiom Space is going full tilt into scaling production of private space stations, while also flying paying passengers on trips to orbit, with the company announcing Tuesday it received $130 million in a new round of funding.
“This round lets us go make a major payment in the build of our [space station] module and lets us build up the team, which we’ve been expanding at just a crazy pace,” Axiom President and CEO Michael Suffredini told CNBC.
Axiom declined to comment specifically on its valuation, but Suffredini said the company is now “well past the point” of becoming a unicorn, meaning its valuation has surpassed $1 billion. This puts Axiom among the 10-most valuable private U.S. space companies.
The company’s latest funding round was led by C5 Capital and was joined by Declaration Partners — which is backed by The Carlyle Group’s David Rubenstein — and by TQS Advisors, Moelis Dynasty Investments, Washington University in St. Louis, The Venture Collective, Aidenlair Capital, Hemisphere Ventures and Starbridge Venture Capital.
Rob Meyerson, operating partner at C5 and former Blue Origin president, will also join Axiom’s board.
“Axiom Space is a force in the space sector, and it will become a centerpiece of the C5 Capital portfolio and enhance our vision for a secure global future,” Meyerson said in a statement.
Suffredini noted that C5 approached Axiom about leading the round in June. However, it took through December to get the funding round done as some investors struggled with “getting the money together.”
He emphasized the delays weren’t because “of a lack of interest.” “The market is excited about what we do” since it falls distinctly in an emerging sector of the space industry, whereas many companies focus on rockets or satellites, he said.
Axiom did discuss going public, Suffredini said, especially because special purpose acquisition companies have become an option for space companies looking to raise money. Suffredini expects the company will again assess the “public-versus-private” conversation the next time it seeks capital. He added that Axiom has “two-to-three acquisitions we’ll look at over the next year” as it examines ways to add complementary capabilities while the company grows.
Axiom has now raised $150 million since its 2016 founding, with Executive Chairman Kam Ghaffarian having provided its seed funding through IBX, his family office. Ghaffarian co-founded Axiom with Suffredini shortly after the latter retired as NASA program manager for the International Space Station.
Axiom’s private astronaut missions
Flying a crew of four private astronauts using SpaceX’s Crew Dragon spacecraft is Axiom’s near-term focus. Called AX-1, the mission expects to launch as early as January and will be the first fully private flight to the ISS.
Axiom plans to make flying private astronauts a routine part of its business, with the new funds helping to “make payments on things we need to buy,” Suffredini said
“We intend to do a couple of flights a year,” he said.
He said the missions — which cost upwards of $200 million each — “really pay for themselves” in the long term, with Axiom’s funds helping to establish a payment plan for its customers and SpaceX.
“Particularly for these flights, where we make payments for certain services and items we do, the customer’s payments catch up and then we pay ourselves back,” Suffredini said.
Axiom’s AX-1 mission will launch former NASA astronaut Michael Lopez-Alegria, real estate investor Larry Connor, Canadian investor Mark Pathy and former Israeli fighter pilot Eytan Stibbe to the space station. Lopez-Alegria is the spacecraft’s commander and Connor is the pilot, while Pathy and Stibbe are mission specialists.
Building destinations in space
Axiom’s focus on spaceflight extends beyond flying passengers. The company is working on habitable modules that will connect to the ISS as well as operate on their own in orbit.
“Everybody’s building rockets, but nobody was building any destinations to go to,” Ghaffarian said. “Lots of companies are building rides to space, but where are they going to go, especially when the International Space Station retires?”
Axiom is looking to double the size of its 110-employee workforce this year and to reach 1,000 employees by the end of 2024. The company is also building a 322,000-square-foot headquarters at the Houston Spaceport at Ellington Field, near NASA’s Johnson Space Center.
The company will first build a manufacturing high bay similar to the one at Kennedy Space Center where modules of the ISS were built, and then grow from there. Axiom’s headquarters will feature assembly areas, a control center, training facilities, and even hangars for the jets needed for astronaut training flights.
Given the cost of scaling its ambitions, Suffredini expects Axiom will continue raising money over the next four years. But the opportunity represents “a huge market,” Ghaffarian said.
“It’s not just building a space station, where there’s a destination,” Ghaffarian said. “Whether it’s manufacturing, pharmaceuticals, private astronauts or even satellite servicing, all kinds of infrastructure as a service is really the model that we’re thinking about.”
Suffredini said Axiom has begun talking to companies in other industries, some of which “don’t even realize that microgravity can help them” and others that don’t have access to the ISS. Some corporations, including Procter & Gamble and retinal implant specialist LambdaVision, have conducted research aboard the ISS.
“Some aspects that we haven’t even thought about are going to be there, just like in the early days of internet when we couldn’t anticipate everything that we could do with internet,” Ghaffarian said. “We’re building a platform where the entire [low Earth orbit] economy or space economy can build from.”
First step: Connecting to the ISS
Ghaffarian said “successful companies are the companies that are profitable, as otherwise they’re not sustainable.”
Axiom has begun bringing in revenue for its space stations already, with NASA awarding the company a contract to connect one habitable module to the ISS as early as 2024. The seven-year contract has a maximum award value of $140 million, which Suffredini said goes beyond development to include launching and operating the module once connected to the space station.
“It’s exciting because it’s the world’s first commercial space station and we’re going to be attached to ISS,” Suffredini said.
It’s an addition that NASA is eagerly awaiting, with the space agency noting that Axiom’s latest round of fundraising “is further evidence that NASA’s commercial low-Earth orbit strategy is getting traction.”
“Capital markets are responding, and many companies have approached NASA to partner with us on our various commercial initiatives for low-Earth orbit,” said Phil McAlister, NASA’s director of commercial spaceflight development. “We are still in the early stages of transitioning low-Earth orbit from a government dominated arena to one in which the private sector takes the lead.”
“There’s more work to be done, and we will need many companies to be successful to build a sustainable economy in space. But, this is a positive sign,” McAlister said.
The Axiom Station modules will help increase the usable and habitable volume of the ISS. Suffredini said Axiom has procured the parts of its modules that take the longest to arrive, with “contracts in place with major providers” and “early design work” completed.
“The most important part of this procurement that we competed for and ultimately won was the fact that it wasn’t about how NASA gave enough money to do the development — because if NASA did that they would end up just owning the next space station,” Suffredini said. “If we could make all of our money off the NASA contract, we wouldn’t be working very hard on building the market.”
The company then plans to detach its Axiom Station modules in late 2028, when the 20-year-old ISS is expected to retire. But if NASA extends use of the ISS, Suffredini said the Axiom Station will stay attached while the company builds other free-flying private space stations.
“The most important part of this concept is that, with everything [happening] on the ISS, there’s a very smooth transition from the government-owned-and-operated facility to a commercial facility,” Suffredini said.
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Source: Business - cnbc.com
