Isar defies space tech downturn to raise $165mn in countdown to launch

Munich-based rocket start-up Isar Aerospace has defied a gloomy funding environment in the space tech sector to raise $165mn from new and existing investors as it accelerates towards its planned launch this year.

Daniel Metzler, co-founder and chief executive, said the funds would help ramp up manufacturing of its Spectrum rocket and would be sufficient to carry Isar through several launches whether or not they are successful.

“Even if we have multiple failures, we would still not need to raise more cash to ramp up manufacturing and operation of the current rocket,” he told the Financial Times. “This puts us into a comfortable position.”

Isar has raised $330mn in total since its foundation in 2018, but has used up just $150mn, Metzler said. “We can be very capital efficient.”

Metzler’s comments came as Sir Richard Branson’s Virgin Orbit struggles to find investors willing to bail out his rocket company.

Virgin Orbit is facing a cash crisis, having burnt through most of its funds during its attempt to be the first to launch satellites from the UK last January.

The mission failed and the company earlier this month suspended operations for a week while it sought emergency funding. Branson has invested a total of more than $1bn in Virgin Orbit.

Other rocket companies are also seeking new investors. Rocket Factory Augsburg’s majority owner OHB has signalled it is looking to reduce its 56.6 per cent shareholding in the microlaunch company by selling “a significant stake”.

Yet investors last year retreated from the space tech sector with private investment falling 58 per cent, according to Space Capital.

Isar’s fundraising could signal the beginning of a return of investor appetite, however.

The group has chosen to follow the Elon Musk model of vertical integration, designing, manufacturing and testing its vertical launch system in-house. It has also adopted automotive processes in manufacturing, attempting to fully automate the production process.

This is the fourth funding round since Isar was founded by three post-grad students from the Technical University of Munich. Metzler refused to reveal the valuation attributed to the company by the latest fundraising, but said it had increased since the last round in July 2021. At that time estimates put the valuation at about $550mn.

The group was on track to deliver a rocket capable of carrying satellites to their specific orbits at a price of about $10,000 per kilogramme, Metzler said.

This was still substantially higher than the low cost rideshare service offered by Musk’s SpaceX. But the Isar chief executive said the imminent maiden flight of Musk’s superjumbo rocket, Starship, was not a fundamental threat to his company’s service that delivered satellites to specific, dedicated orbits, unlike rideshares.

“I definitely think for a few standard orbits, they will drive down the pricing,” he said. “But as soon as you deviate from those very, very standard orbits, it starts not really being very effective. Just the fuel cost of Starship is more than what we will actually charge for our full vehicle.”

The European Space Agency is strongly supporting Isar and other launch start-ups as it faces the prospect of losing access to space later this year. The agency has faced serial setbacks on Europe’s latest rocket programmes, Vega C and Ariane 6, and will have no launch capability once the Ariane 5 rocket is retired this year.

Two new investors joined existing Isar shareholders Porsche, Lombard Odier, and others. They are 7-Industries Holding, a German family office focused on industrial companies, and Bayern Kapital, the venture arm of the Bavarian state.