By Harry Mottram: Investing or supplying a new business is risky but the rewards are great and in general this is true of space projects to send either space tourists into orbit or station satellite systems in the heavens.
This month (April 2023) British billionaire Richard Branson’s rocket company Virgin Orbit in the USA. In America a firm in trouble can file for Chapter 11 bankruptcy which protects a core business from being totally wiped out. The cause was due to the failure of its rocket fired from a Boeing 747 at high altitude when a fuel filter malfunctioned and the controllers aborted the mission sending the rocket into the Atlantic Ocean along with millions of pounds of kit. It’s also been a blow to the local economy at Spaceport Cornwall at Newquay where investment from accommodation for workers, supplies to the Spaceport have all but dried up.
The result has been for a collapse in the firm with no more cash to have a second go. By filing for Chapter 11 a small number of their 750 workforce can be kept on, their debts dumped, suppliers not paid and they can phoenix once they’ve secured new financial backing and a business plan that will convince a judge to let them trade again.
Ian Carrotte of ICSM said supplying firms in the space rocket business is high risk as although it is billed as the future the numbers of projects that literally blow up is quite high. “Like all space rocket projects, the Virgin Orbit only needed one thing to go wrong for the who thing to go up in smoke. There was Astra’s two-stage LV0008 that lifted off from Cape Canaveral last year losing four highly expensive satellites. The Chinese firm iSpace has seen successive failures while India’s Small Satellite Launch Vehicle (SSLV) failed to get into space and Blue Origin’s New Shepard barely reached the height of Everest before its booster stage failed. Yes there are successes but suppliers to space companies need to be mindful that one disaster can spell a collapse and potentially all their invoices left unpaid.”
With the collapse of Silicon Valley Bank which has been a lender to many high tech start ups with some linked to the space rocket business there may be a reluctance for new lenders to come forward to invest in the dormant Virgin Orbit. The BBC reported on Danni Hewson of investment firm AJ Bell who said Virgin Orbit was a poor advert for the technology and said: “Neither is Virgin Orbit’s collapse the best advert for the space investment theme. This industry may have significant potential at some point in the unknown future but investors tempted to reach for the stars have only had their fingers burned so far.”
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For information on ICSM visit www.icsmcredit.com or call 0844 854 1850.
ICSM, The Exchange, Express Park, Bristol Road, Bridgwater, Somerset TA6 4RR. Tel: 0844 854 1850. www.icsmcredit.com. Ian.carrotte@icsmcredit.com