Leo Aerospace was one of many dozens of companies pursuing small launch vehicles. The number of companies far exceeded any projections of demand for their vehicles, leading to the belief among both industry executives and investors that a shakeout was inevitable
FREMONT, CA: A startup developing a balloon-borne small launch vehicle has stopped operating after struggling to raise money, a fate that may be hunting many other companies in the sector.
In a March 13 letter to the company’s investors and other associates, Leo Aerospace said challenges raising funding and concerns about market timing led the startup to decide to suspend operations, with the understanding that it may never resume work.
In the letter, the California-based company said it struggled to raise money from outside investors. “Fundraising proves increasingly difficult as investors place greater emphasis on revenue-generating businesses with shorter time horizons,” the company stated. Also, the company had yet to receive a decision on a U.S. Air Force Small Business Innovation Research (SBIR) grant it applied for last year. “After a four-month delay, we are at the end of our financial capacity.”
A second factor, the company said that its plans to offer dedicated launches of very small satellites might be too far ahead of market demand. “Although growing at an incredible rate, our customers are early-on in a nascent market that continues to mature. Looking objectively at our timing, we believe that our focus on servicing such a specific niche is early.”
Leo Aerospace was developing a small launch system designed to place up to 25 kilograms into a sun-synchronous orbit. The company’s launch vehicle would use solid-propellant motors for its first two stages and a storable liquid propellant upper stage. The company planned to source those propulsion systems commercially.
What sets the company apart is that the rocket would launch from a balloon flying at an altitude of about 18,000 meters. That concept called a “rockoon” dates back to the early Space Age, but struggled because of the challenges of controlling the launch platform. Leo Aerospace said it had developed proprietary technology that provided a stable platform for the rocket, which after launch, could descend back to Earth for reuse. The company also said the platform, known as Regulus, could also be used for supporting suborbital launches as well as high-altitude payloads.
Leo Aerospace did not cite the ongoing coronavirus pandemic as a reason it was suspending operations. However, Sequoia Capital, a leading VC firm, called the outbreak the “black swan” of 2020, with unpredictable effects on the market.
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