Virgin Orbit (VORBQ), a satellite launch startup founded by British billionaire Richard Branson, is living off of the cash reserve of Branson’s other Virgin entities as its satellite delivery business struggles to take off.
The company recently raised $10 million from Virgin Investments Limited (VIL), an investment subsidiary under the Virgin Group, according to a filing with the Securities and Exchange Commission on Jan. 30. It’s the third time Virgin Orbit raised money from VIL in less than three months, after a $25 million funding round in November 2022 and a $20 million found in mid-December—a sign that the company might be dealing with a cash problem.
All three rounds of new funding were raised in a form of debt known as unsecured convertible notes. These notes can be converted into Virgin Orbit equity under certain conditions and give VIL the the first priority to Virgin Orbit’s assets in case of default, according to the SEC filing.
Virgin Orbit delivers small satellites to low Earth orbit using a modified Boeing 747 aircraft with a rocket attached under one of its wings. During a launch mission, the 747 first flies to about 35,000 feet in the sky and releases the rocket mid-air, where the rocket then propels itself to reach its designated altitude. The method is known as horizontal launch. Branson’s other space venture, Virgin Galactic, uses a similar system to fly tourists to suborbital space.
Three Virgin Orbit launches in two years
Virgin Orbit achieved its first successful flight in January 2021. Since then, it has completed three more missions, one in 2021 and two in 2022. Virgin Orbit boasted a 100 percent launch success rate up until this year, but its slow pace of launches is not financially viable.
In its most recent earnings report, Virgin Orbit recorded a quarterly loss of $44 million on $34 million in revenue for the three months ended Sept. 30, 2022. In the first nine months of 2022, the company lost $140 million and had $71 million in cash at the end of the period.
At its current rate of losses, even with the $55 million in fresh capital raised since September, the company risks running out of money by June this year.
The $10 million funding raised recently will be used as working capital for the company, Virgin Orbit said in this week’s SEC filing. The company didn’t immediately respond to an inquiry to comment about its cash situation.
Virgin Orbit’s most recent mission, attempted on Jan. 9 in the U.K., failed to reach orbit due to an “anomaly” with the rocket’s upper stage engine. The incident is under investigation by the U.K.’s Air Accidents Investigation Branch and the U.S. Federal Aviation Administration. Virgin Orbit is headquartered in Long Beach, Calif.
Virgin Orbit went public in December 2021 in a SPAC merger that valued the company at $3 billion. Its market cap has shrunk by more than 80 percent to $566 million.