Rocket Startup Astra Space Poised to Go Public at $2.1 Billion Valuation

Alameda-based Astra, which has about 120 employees, late last year blasted a rocket to the edge of space from a launchpad in Kodiak, Alaska. The booster failed to reach orbit velocity during that demonstration flight in December. Company founder and Chief Executive Chris Kemp, a former high-ranking NASA official, said he expects another test soon, followed by an initial commercial mission as early as summer.

In going public, Astra seeks to stand out from a bevy of small-rocket competitors by locking in funding despite fallout from the coronavirus pandemic and an anticipated shakeout of rivals targeting the same market segment.

The company says it is able to lift satellites weighing about 100 pounds into low-earth orbit, but gradually hopes to increase that capacity about fivefold. Astra’s move comes amid a boom in the use of relatively compact satellites for internet access, earth imaging, military applications and other purposes.

“We are at a transformational period” for space access, Mr. McCaw said, adding that an explosion of opportunities and services potentially provided by fleets of small, versatile satellites “is the place where there is the biggest vacuum of unmet demand.”

One of the features differentiating Astra from competitors is its plan to blast off weekly—and eventually daily—relying on a mobile launch system, a handful of technicians, and operations from remote locations if necessary. Bigger rockets typically have a much slower launch tempo and require significantly greater investment in ground facilities.

In addition, Astra’s strategy is to provide a basic satellite design and then integrate that with customer cameras or sensors—effectively creating a one-stop shop for scientists, fledgling satellite manufacturers and other space newcomers looking for fast and inexpensive rides to orbit.

“By launching more frequently, we can test all of the satellite components more frequently than any company out there,” Mr. Kemp said. That, he argued, will allow engineers and designers to send “the best microprocessors, memory chips, sensors and radios” beyond the atmosphere.

Mr. McCaw, a wireless pioneer and early advocate of the use of swarms of small satellites to provide space-to-ground services, in the mid-1990s backed an ambitious, multibillion-dollar project called Teledesic, which imploded. The high-profile failure became a symbol of overly optimistic technical and financial assumptions regarding satellite ventures during the dot-com investing bubble.

Today, “it’s like a dam bursting, there’s all this pent up energy” for connectivity, Mr. McCaw said. According to Mr. Kemp, listing the stock is envisioned to fully fund the company’s business plan through roughly the middle of the decade, based on a published price of $3.5 million per launch.

In recent months, SPACs have exploded in popularity, with scores of new blank-check companies now hunting for startups to bring public. Other startups involved in the space industry have struck comparable deals with SPACs, including satellite-servicing provider Momentus Inc. and AST & Science LLC, which aims to beam satellite signals directly to individual cellphones.

SPACs have proven particularly appealing to industries in early stages of development, such as space and electric vehicles. Unlike in an IPO, where companies are restricted in their ability to talk about the future, the rules around SPACs allow these companies to emphasize future projected revenues to attract investors.

The rush of cash into speculative, early-stage companies has caused valuations to soar. The stock of space-tourism company Virgin Galactic Holdings Inc., which had been relatively stable ever since it went public through a SPAC in late 2019, has nearly tripled since fall 2020, when the SPAC boom accelerated. Its market capitalization Monday stood at $12.6 billion.

The merger between Astra and Holicity Inc., Mr. McCaw’s SPAC, is expected to be completed during the second quarter pending regulatory and shareholder approvals.

Write to Andy Pasztor at [email protected] and Eliot Brown at [email protected]