Spaceflight Industries Raises $18M, Acquires OpenWhere
To tap into the multi-billion dollar market for Earth observation, companies are deploying new satellites with modern sensors and communication equipment.
But innovation is needed back on the ground, too, in the technology to process and analyze high-resolution images of Earth for customers. With that in mind, Seattle-based Spaceflight Industries is acquiring a company called OpenWhere, which Spaceflight has been working with for the past year on the user experience for satellite imagery purchasers. Spaceflight raised $18 million from Mithril Capital Management, the fund co-founded by Peter Thiel, and previous investors, in part to finance the acquisition.
Spaceflight last summer launched its BlackSky Global business to provide satellite images that it says will cost a tenth of what’s available now. The company’s planned cluster of 60 small imaging satellites will be capable of capturing images of certain points on the planet as frequently as 70 times a day.
Spaceflight Industries CEO Jason Andrews says BlackSky aims to “provide a revolutionary user experience.”
“Today, there’s not really a website you can go to to order imagery and get it back in a short amount of time, as well as to do analytics and insights on that imagery,” Andrews says. “[OpenWhere] set out to create basically a cloud platform that is highly scalable and provides a compelling user experience that minimizes the friction for acquiring satellite data.”
(Andrews is speaking today at the NewSpace conference being held in Seattle for the first time, showcasing the region’s nascent commercial space industry.)
Its purchase of OpenWhere, which has 29 employees and is based in Herndon, VA, will also give Spaceflight a base of operations near Washington, D.C., a region that’s home to many of the company’s customers. “I go back there at least eight or nine times a year,” Andrews says. “So it was really strategic to have them near our customer set.”
The company says it raised $18 million of a Series B round that could grow to $25 million. In addition to Mithril, which led the round, prior Spaceflight backers that returned to participate in the latest round include RRE Venture Capital, Vulcan Capital, and Razor’s Edge Ventures. Not all the capital will be used for the OpenWhere acquisition, says Andrews, who declined to reveal the purchase price.
Spaceflight wasn’t planning to raise more capital now, Andrews says. It raised a $20 million funding round in spring 2015 and generates tens of millions of dollars in revenue, he says. But the opportunity to acquire OpenWhere was compelling enough that it persuaded Spaceflight to raise additional money.
The company intends to raise more capital this fall to support its planned BlackSky satellite constellation, Andrews says.
Spaceflight, which also provides satellite construction, launch, and communication services, plans to put a pair of Pathfinder demonstration satellites (pictured at top) into orbit this year, followed by another six satellites in 2017. It aims to have the full BlackSky constellation orbiting by 2020.
Competition in the market for real-time Earth observation is growing. Last month, Planetary Resources, the Bellevue, WA-based company set up to mine asteroids, announced a $21 million funding round to help develop satellites with hyperspectral and thermographic sensors for Earth observation.
“There’s a market to look at the planet in every spectrum,” Andrews says, adding that high-resolution visible imagery is the largest part of that market today.
Eventually, he says, Earth observation, which is useful to a wide range of businesses and organizations from farmers to commodities traders to humanitarian relief groups, could grow to tens of billions of dollars a year.
“Right now, the commercial markets are only measured in single digit billions of dollars,” he says. “So that upside opportunity is what gets the investors all excited. And they see big dollars, and big opportunities.”
Andrews, who is a long-tenured space entrepreneur—Spaceflight is 17 years old—says more venture investors are becoming familiar with the opportunities in the new space sector than in years past.
“Companies like PlanetLabs and Skybox really pioneered this new wave of VC investment in space companies,” he says.
He counts his company, Spire, Orbital Insight, and a few others in a second wave of VC investment.
“Now you’re seeing a third wave of companies come to market,” Andrews says. “And with each wave, I think the investment pool has grown a little bit. Those early investors were the likes of DFJ, Founders Fund, Bessemer. And they’re still in there, especially people that were in Skybox, because they got a pretty good exit with Google.”
Google acquired Skybox Imaging to support Google Maps in 2014 for $500 million, a deal Andrews calls “very catalytic” in that it opened investors’ eyes to the money-making opportunity in the new space industry. Last year, the Internet giant invested $1 billion, along with Fidelity, in SpaceX, helping drive a record $1.8 billion in venture capital investment in space companies in 2015.
“The momentum will only be sustained if companies continue to execute, generate revenue, and at some point exit,” Andrews says.