Set to initiate the first orbital launch out of Australia, the company will need more capital as it looks to meet an expected surge in global demand for satellite transportation services

Within a couple of months, Gilmour Space Technologies (GST) could become the first Australia-based rocket developer to complete an orbital launch. The rocket is already at the launch site in Queensland undergoing final checks and awaiting final approval from the Australian Space Agency. Adam Gilmour, GST’s founder, hopes a successful demonstration will give flight to capital-raising plans as well.

“It’s not like we haven’t tried to get investment from overseas, but VCs in the US prefer US rocket companies. They understand the business model, they see the government contracts, and they are in the same time zone. But after our first launch attempt, I think we will attract these investors,” he said.

“In the Western world, only about six companies have made launch attempts at our scale in the last 10 years, and only four of them – all in the US – are still operating.”

GST’s recently closed Series D, which saw investors contribute AUD 55m (USD 36m) at a valuation of AUD 605m, has a distinctly local flavour with Queensland Investment Corporation (QIC) taking the lead. It was joined by Blackbird Ventures, Main Sequence, and superannuation funds HESTA and Hostplus.

Overseas participation has been limited to 500 Startups, which featured in the Series A and B rounds in 2017 and 2018, and Fine Structure Ventures, which backed an AUD 61m Series C in mid-2021. The Series A and B rounds were led by Blackbird and Main Sequence, respectively. Three Blackbird LPs – HESTA, Hostplus, and NGS Super – came into the Series C round. QIC also took part in the Series C, Gilmour added.

The timing of the Series D was driven by GST’s launch plans. It had anticipated achieving the milestone 12 months after the Series C but fell behind schedule. A decision was made to raise a small amount of additional capital as a precaution before launch and return to market for more funding afterwards.

“We told investors that we would take a valuation hit because we haven’t launched, but we wanted some money now. They said, ‘We don’t want to give you enough money for one launch, you must do at least four, so work out how much you need,’” Gilmour explained. “We sat down with the investors, ran the calculations, taking into account contracts we had in place, and that’s where the raise came from.”

Optimal cost, size

Nevertheless, he described a markedly different fundraising environment from when GST closed its Series C, characterised by a pullback in risk appetite and a preference for start-ups with a clear line of sight to break even or profitability. Rocket companies don’t fit this profile, but GST claims to be only a couple of years away: with four of five launches a year, Gilmour said, the company could break even.

“Our competitors are in the teens and 20s. Rocket Lab, for example, does 12 launches a year and it’s still not at breakeven,” he added. “We have been careful about our costs. Many of our competitors overcapitalised their businesses too early, investing heavily in people and factories. We have been right-sized capitalised all the way through. A lot of that has to do with my banking background.”

Gilmour founded GST in 2015, having decided to pursue his passion for space after a two-decade career at Citi. Australia’s space industry – and its space agency – were non-existent at the time, but the country offered plentiful land for rocket testing and a stable of talented engineers who could be repurposed.

A fledgling local supply chain has emerged around the first generation of space start-ups, several of which have raised several rounds of VC funding, moved past the early R&D phase, built teams of 50-plus, and accumulated customers around the world. As a rocket developer, GST is unusual. Most companies are building satellites and related components, which represent a quicker route to commercialisation.

GST added a business unit that produces satellite buses – the main body of a satellite that carries the payload – to provide an end-to-end service: the company builds the satellite, launches it, and hands it over to the customer for operation. However, orbital launch vehicles have always been the core focus.

New Zealand-based Rocket Lab, which went public through a merger with a US-listed special purpose acquisition company (SPAC) in 2021, completed its first launch in 2017 when GST was still conducting ground tests. This gap is significant. According to Gilmour, Rocket Lab emerged at a time when the market was preoccupied with making satellites as small as possible – almost the size of a shoebox.

Rocket Lab started out transporting commercial payloads of 150 kilograms at a cost of around USD 8m per launch. Its business model has evolved over time – designs for a rocket capable of carrying up to 13,000 kg were unveiled in 2021 – but GST focused on larger payloads from the outset.

“A shoebox-sized satellite is a cheap way to get into space, but you can’t put in a big camera or radio frequency receiver or deploy a lot of solar panels to give you power,” said Gilmour. “The market went down in size, then it went up in size. We saw that in the middle of our development, so we designed a rocket that can carry 400 kg. We can launch two satellites for USD 10m instead of one of USD 8m.”

Feeding a need

His ambition is for GST to be one of a handful of companies globally that operate small launch vehicles in low earth orbit over the next three years. Firefly Aerospace and ABL Space Systems in the US – the former has done a couple of successful orbital launches; the latter made its first attempt last year – and Isar Aerospace and Rocket Factory Augsburg in Europe are identified as peers targeting similar sizes.

“We are all moving towards 1,000 kg-plus launch vehicles, but the market is for 500 kg-1,000 kg right now,” Gilmour said. “There aren’t enough launch vehicles of our size. Everyone is launching whatever they can, and it’s mainly on SpaceX.”

Demand is coming from international satellite companies and government agencies, largely to provide low-latency broadband internet connectivity. Amazon’s Kuiper Systems wants to have a constellation of more than 3,200 satellites in place by 2029; SpaceX’s Starlink already has 5,200 and is planning for 12,000; and OneWeb, now merged with Eutelsat, is expected to add to its current fleet of 630 satellites.

While Starlink can rely on SpaceX’s orbital launch vehicles to replace satellites that go out of commission, other companies do not have this resource, which could lead to lucrative outsourcing opportunities. GST claims to be cheaper than SpaceX – which charges around USD 60m per launch – and capable of taking customers where they want to go.

“There’s a lot of talk about cost per kilogram, but that’s not really relevant,” Gilmour said. “It’s like saying that the cost per mile to Los Angeles is cheaper than Sydney, so why don’t you all go to Los Angeles? But if I want to go to Sydney, I must pay to go to Sydney. The real question is: What’s the mission cost of taking your satellite to where you want it to be? And we are far cheaper than SpaceX at doing that.”