When Volkswagen boss Herbert Diess stopped by the newly opened plant of small rocket maker Isar Aerospace in Ottobrunn near Munich in December of last year, the mechanical engineering doctor spoke a lot about engineering. . “We discussed with Mr. Diess the technologies and possible applications,” says Isar Aerospace boss Daniel Metzler, who, like Diess, also studied at the Technical University of Munich – albeit in space technology. So we are talking about a shop among the elders. And about the business model: Isar Aerospace wants to earn its money with commercial flights in Earth orbit, perhaps also with the development of a broadband satellite network. However, the visit did not concern the Volkswagen entrance. “At that time, we had not even thought of extending the round table which had just ended”, explains Metzler, “it was a first meeting”.
Seven months later, Volkswagen AG’s majority shareholder, Porsche SE, is now investing in the rocket start-up. After the first round of funding B, which raised 75 million euros at the end of 2020, Isar Aerospace raised an additional 64 million euros. The second round of financing B will be led by HV Capital, Porsche Automobil Holding SE and the Lombard Odier banking group, with Porsche contributing $ 1 million. Existing investors Earlybird, Lakestar, Vsquared, Apeiron and UVC Partners are also involved again, with Earlybird taking the largest share. Isar Aerospace’s financing volume amounts to more than 150 million euros. “This will make Isar Aerospace the best funded and most dynamic space start-up in the EU,” the company said.
What does Porsche expect from the investment? They are convinced that access to space “will be an essential key for innovations in traditional industries as well as for new technologies and disruptive business models”, says Lutz Meschke, member of the board of directors of Porsche SE. They wish to support Isar Aerospace on the path to “becoming the leading European supplier of launch services with an emphasis on small and medium-sized satellites”.
Geely invests in its own satellite network
Even though Porsche Holding stresses that it will invest for Volkswagen regardless of possible synergies, it is clear that automakers will also ask for such start-up capacities in the medium term. Chinese automaker Geely is currently investing $ 326 million in a satellite network that will provide broadband communication and navigation for autonomous driving. “Space issues affect many industries and are of interest to the automotive industry as well,” Metzler explains, “for example when it comes to autonomous driving, automotive entertainment or factory linkage”. Many applications are possible. For Porsche SE, however, it is not a question of finding a supplier. “Above all, you see a business case for investing.” In any case, the entry of the Porsche Holding is also a signal for the so-called old economy. Satellite technologies have the potential to “become the backbone of traditional and emerging industries,” Metzler said. Starting skills are essential for this. There are other car manufacturers interested in Isar Aerospace, not just in Europe.
Isar Aerospace, which now has 180 employees, wants to invest the money in its launch, test and production infrastructure for the construction of its 27-meter-long two-stage Spectrum launcher, which will be powered by hydrocarbons and gas. liquid oxygen. “Largely automated production” has already started and the first flight is scheduled for the middle of next year in Andøya, Norway. Engine tests are underway in Kiruna, Sweden.
Open detailed view
Construction of the upper stage of the “Spectrum” rocket at Isar Aerospace in Ottobrunn.
(Photo: Isar Aerospace / oh)
What future customers will pay is still unclear. “Our goal is to get the payload price below 10,000 euros per kilogram,” explains Metzler. By way of comparison: The start-up RFA Augsburg is targeting 2,300 euros with its Hyimpulse micro-launcher, 7,000 euros. “We cannot assume that we will get government contracts at all costs, we have to be realistic to become profitable,” Metzler said. He wants to sell ten rockets a year in five years, up to 30. The Isar, however, makes money earlier and that does not require ten launches. According to his information, another round of funding will not be available either. “We are fully funded until the first launch.”
An IPO is also possible
And after? “An IPO is possible in the future, but it won’t happen until our first launch,” says Metzler. “We can build the business better and faster if we are privately funded and have fewer obligations like the stock market.”
New Zealand-American small rocket maker Rocket Lab, which has made 20 launches since 2017, including three false starts, will soon be heading to the trading floor with an empty wallet, so it’s using a Spac (Special Purpose Acquisition Company) . This is not an option for Isar Aerospace, Metzler says. He is now focusing on the start of the first one.
In any case, the interest of donors in the industry is growing: analysts at Allied Market Research estimate the market for launch services at a good 30 billion euros for 2027, of which a third for small and medium-sized satellites. medium size. “Own launcher systems play a huge role in the value chain of the emerging space economy,” says Herbert Mangesius of investor Vsquared. “We are confident that one of the few new launch companies in the world will come out of Ottobrunn, which is why we are increasing our engagement as investors.”