Kepler Communications Inc., a Toronto-based startup that’s delivering telecom services from a fleet of miniature satellites, has raised US$60-million amid growing investor interest in the burgeoning space economy.
The series B financing round was led by Tribe Capital. Canaan Partners and Kepler’s existing investors, including IA Ventures and Costanoa Ventures, also participated. The financing brings the total amount raised by Kepler to more than US$90-million.
Tribe and Canaan Partners are San Francisco-based venture capital funds that have both funded space startups; Tribe, founded by former partners of Chamath Palihapitiya’s Social Capital, have backed space transportation infrastructure builder Momentus and rocket builder Relativity; Canaan, meanwhile, has invested in rocket maker Astra, Capella Space, which is also launching a constellation of small satellites, and World View, maker of a high altitude flight platform.
The cash injection will allow Kepler to nearly double its 80-person team by the end of the year, open a U.S. office, expand the size of its existing fleet and introduce next-generation satellites that will provide connectivity in space – for instance, to the nascent space tourism industry.
Kepler currently has 15 nanosatellites in low-Earth orbit and is focused on serving the maritime and aviation industries as well as governments. Its satellites, which are roughly the size of a cereal box, are about one-tenth the size and cost of traditional satellites, the company says.
Using smaller, less expensive satellites and replacing them more often allows the company to take advantage of the “latest and greatest” technologies says Kepler CEO Mina Mitry. “When you go much, much smaller with satellites, you’re actually treating it like technology, rather than infrastructure.”
The space sector has drawn a lot of attention as several U.S. companies in the sector – including those backed by Tribe and Canaan – have rushed to go public by merging with special purpose acquisitions corporations, or SPACs. Among them are reusable rocket maker Rocket Lab, satellite imagery provider BlackSky, Canaan-backed Astra Space and Spire Global, an Earth-observation satellite constellation operator. They followed Virgin Galactic , which also took the SPAC route for a public listing in 2019.
In Canada, space technology maker MDA Ltd. raised $400-million in its initial public offering on the Toronto Stock Exchange earlier this year.
The flood of go-public transactions has shown investors that “space is a really exciting market to be a part of,” said Mr. Mitry.
“You’re seeing this huge insight now into what happens when these space ventures go public. That’s not an insight that investors had in early 2020,” Mr. Mitry said.
The space sector has also seen a surge of private capital investment. According to London U.K.-based space industries investment firm Seraphim Capital, venture capitalists invested a record US$8.7-billion in the sector in the 12 months ended March 31 – a 95 per cent increase over the same period a year earlier.
Investors’ growing appetites for space ventures are being fuelled partly by shrinking launch costs, which have decreased dramatically since Elon Musk’s SpaceX started an UberPool-style service that allows small satellites to hitch a ride on its Falcon 9 rocket. “In the last five years we’ve seen launch costs drop to a quarter of what they used to cost,” said Mr. Mitry. “That’s huge.”
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