The Chinese race for space is on
A senior iSpace executive tells FinanceAsia that the private rocket firm is preparing for a record-breaking launch in 2019.
Carol Huang
iSpace, a Chinese rocket startup, hopes to catch the tailwinds of the excitement of this week's Chinese probe landing on the moon to launch its future fundraising.
Investors poured Rmb700 million ($101 million) into the company up to September last year, the company said about its A-plus round on Thursday.
Huo Jia, vice president of iSpace, told FinanceAsia that proceeds will be used for rocket engine development and to enhance adaptivity of the whole rocket.
He also said that iSpace plans to launch an orbital rocket in the first half of the year. It is a huge step forward for Chinese private companies to participate in the military-civilian integration strategy.
The Chinese government has allowed civil aerospace licenses since 2002, but for years no private companies could touch state projects. This situation has changed in recent years as the government began to allow and promote private capital and companies to fund the state-owned military-related industry. Aerospace is one of those targeted areas.
It is also related to the rapid development of internet technology. Huo told FinanceAsia that the rocket launching service the company provides is mostly used for three kinds of satellites: navigation, telemetry and telecommunication.
"Most of our clients are communication satellites - the kind that helps internet transmission and may replace broadband in the future," Huo said. "But others have a wide range of applications. We help to launch satellites that can enhance the Beidou Navigation Satellite System too."
Although global space budgets decreased by 2% in 2016 to $62.2 billion, many people believe it is now an ideal time for private companies around the world to increase spending on rockets, satellites and other related research.
US commercial space companies are currently ahead on the launchpad. SpaceX, founded by Tesla chief executive Elon Musk, is the leading company in the field. SpaceX's valuation is about to hit $30 billion after it successfully retrieved a launched rocket in August.
And Blue Origin, founded by Amazon's Jeff Bezos, is also making progress. It landed orders in September last year from the US Department of Defense.
Compared to these players, iSpace is a young startup. It was only founded in 2016. However, by recruiting talent from state-owned China Aerospace Science and Technology Corporation, the company has captured the attention of multiple investors.
iSpace completed its Series A fundraising in June 2018, with a cumulative Rmb600 million from its investors, including Matrix Partners China, Fosun, Shunwei Capital, CITIC Juxin, Rising Fund, and a dozen other institutes. Investors are betting on the company's prospects and the aerospace market.
Research expenses are not that high. "Building a rocket is not as costly as people assume," Huo said. "But it has a high technical threshold." It took one and half years and 100 scientists for iSpace to develop a solid-propellant engine. Huo said that they will finish the R&D of the reusable liquid-propellant engine in 2019 and are aiming for a trial launch in 2021.
It is a developing market. Liu Yinhang, director with China Renaissance and leader of the technology practice within its advisory business, said that the demand for rocket launches is increasing in China as more companies want to form satellite networks. There are currently 2,505 satellites waiting to go, but no private company can launch them into orbit. Demand exceeds supply in the satellite launching market.
Given the support of the Chinese government, Liu also expects commercial developments in the aerospace industry to blast off in 2019.
And with the countdown to launch of iSpace's rocket, we may finally see a Chinese private company able to shoot satellites into orbit.
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