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In a nutshell: One of Sir Richard Branson's space startups is in trouble if it doesn't find new investors soon. Virgin Galactic spinoff Virgin Orbit faces insolvency after a disastrous UK launch attempt destroyed nine satellites. The company was already in financial peril since at least last year and has floundered despite a cash injection from Branson and investors worth $1.05 billion.
Billionaire Richard Branson's satellite-launching startup Virgin Orbit is close to shutting its doors. In January, the company attempted to send nine satellites into low-Earth orbit. It would have been its first successful satellite launch from UK soil. However, the LauncherOne rocket crashed.
The company attributed the failure to a $100 fuel filter that came loose, causing the engine to overheat and abort. The mishap destroyed the rocket's cargo, triggering ongoing investigations from the UK and the US authorities.
The incident triggered an immediate 22-percent dip in Virgin Orbit's stock. Sky News notes the company was already in economic peril, with Branson's Virgin Group providing over a billion in funding including a $60 million loan in November 2022. The generous endowment came even though Virgin has only had five successful missions since its first flight in 2021. However, the cash injection still was not enough.
Last week, Virgin Orbit announced it would furlough most of its staff and halt operations as it seeks further funding. The company has remained quiet about how much capital it needs to stay afloat, but it will likely go bankrupt if it does not find financing soon. It is currently working with two restructuring firms to develop a contingency plan for moving forward if it cannot gather more capital.
Richard Branson's Virgin Group spun off the company from Virgin Galactic in 2017, looking to launch payloads into orbit using a rocket that piggybacks into high altitude on a modified Boeing 747 called Cosmic Girl instead of taking off from the ground. After several years of research and development, Virgin Orbit successfully launched 10 cubesats in January 2021.
In December 2021, the startup underwent a SPAC merger with special-purpose acquisition company NextGen Acquisition Corp, which opened the opportunity for an initial public offering (IPO). NextGen valued Virgin Orbit at $3.7 billion before the IPO. Currently, its listed shares are worth only $217 million.