SpaceX to Raise Hundreds of Millions of Dollars Through a Funding Round That Will Value It at $36 Billion

Mar 9, 2020 13:37 EDT
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SpaceX is reportedly looking to raise at least half a billion in new funding as the company continues to plough ahead with its ambitious Crew Dragon, Starlink and Starship projects.

According to CNBC, the company has authorized the private placement of new shares worth around $500.6 million at $220 per share. This funding round, should it go through, will raise SpaceX’s value to $36 billion from $33.3 billion recorded last year. Interestingly, the magnitude of this new funding round is double what the company originally envisaged, having previously pegged it at around $250 million.

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Of course, SpaceX needs a fresh injunction of cash for its operations to keep pace with the company’s three different flagship projects. Of those three, the Crew Dragon and Starship projects represent SpaceX’s efforts to transport people and equipment to the space and beyond. Although NASA has awarded over $3.1 billion to the space enterprise in order to develop the Crew Dragon capsule, Elon Musk has previously conceded that SpaceX spent “hundreds of millions of dollars” of its own funds to develop the capsule.

SpaceX’s Starlink is a satellite-based internet venture that envisages the provision of a high-bandwidth, lost-cost internet throughout the globe by utilizing a network of low-orbit satellites. Starlink will eventually comprise of around 12,000 satellites – collectively known as the ‘megaconstellation’.

As per SpaceX’s VP, Jonathan Hofeller, the company’s sixth Starlink launch is scheduled for this Sunday that would see another 60 satellites launched into orbit, raising the tally to 302.

Highlighting the hectic pace of the project, Hofeller said at a press conference:

“We produce six satellites per day.”

Even though Starlink will ultimately cost around $10 billion, Hofeller noted that the company’s fundraising efforts have not been directed towards the project so far as “we’ve been able to fund the development of Starlink primarily from our internal businesses”.

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He went on to add that:

“That’s why, in general, we’ve been very quiet about what we’re doing because we don’t need to go out and raise money for this particular venture.”

Nonetheless, SpaceX is considering an IPO for the Starlink project. As we’ve previously reported, a Starlink spin-off is a viable and shrewd strategy as it entails a lucrative financial windfall for SpaceX. Moreover, the venture’s structure is akin to a more traditional business, in relative terms, as evidenced by a subscription model of service and the attendant recurring revenues.

It should be noted though that the idea of a Starlink IPO is still in its infancy and that SpaceX has not delineated a specific timeline for the venture’s public debut.

SpaceX's Chief Operating Officer and President Gwynne Shotwell made the following remarks during a JPMorgan Chase investor conference:

“Right now, we are a private company, but Starlink is the right kind of business that we can go ahead and take public. That particular piece is an element of the business that we are likely to spin out and go public.”

SpaceX is considered one of the most valuable private companies in the world with its capital raising exercises routinely entering the over-subscribed territory. In 2019 alone, the company managed to procure funding of $1.33 billion.

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