Axiom raises $350M, but is it enough to fly?

Axiom Space is continuing its march towards making commercial human spaceflight a reality with the close of a $350M Series C round on August 21st, 2023. Backed by Korean pharmaceutical company Boryung Co. and Saudi Arabian investment firm Aljazira Capital, the round complements recent Axiom wins for EVA spacesuit development and flying commercial astronauts, and gives the company a small war chest of cash to play with. The key question, however, is will it get them to flight? Diving deeper into Axiom’s current financial position provides some clues. Here is what we know so far: 

• Raised at least $505M to date from outside investors since 2016 

• Completed two flights with SpaceX; four astronauts each at an estimated ~$55M per astronaut 

• U.S. government obligations (guaranteed payments) of ~$170M to date 

By these calculations, we can estimate total cash inflow for Axiom is ~$1B to date, +/- 20% to account for potentially lower commercial flight revenues, additional smaller development contracts, or bootstrapped capital from the original founders. On the high side, reserves of $1.2B put Axiom in rarified air as far as NewSpace companies go, but with 750 employees now, they’re likely burning upwards of $100M per year in personnel alone. Throw in the additional hardware and facilities costs, not to mention the revenue pass-throughs to SpaceX on past commercial flights, and it’s likely that they didn’t just pick up $350M to pad the bank – they needed to close this round. 

With the round now in the background, they can breathe easier knowing that they have solid runway for at least a year or more and enough cash to start purchasing their long-lead hardware items. As for whether this round will get them through first-flight, that seems like a stretch. Human spaceflight is notoriously expensive, and most recent habitat programs have cleared $2B in cost easily: Northrop Grumman's HALO habitat's cost-to-first-flight is estimated at $2.1B (NextStep-2 + FFP procurement award), SpaceX's Crew Dragon at $2.6B (incl. first six flights), and JAXA's Kibo Module at $2.0B.

So, how does Axiom close the gap? To start, they’ll need to cut out as much new design and development as much as possible without sacrificing the customer experience. Early peaks at their design indicate a highly modular approach, so with the appropriate accounting method, they can share development costs across several different modules. That should help, but it won’t resolve their free cash flow problems. NASA may step in and offer support, but awards for Commercial LEO Destinations have been disappointing, to say the least, with competitor Voyager Space / Nanoracks pulling down only $160M to design their Starlab module. Perhaps their best bet is on the extravehicular spacesuit program, where despite only ~$140M in guaranteed obligations, Axiom has been awarded $370M in task orders (up from $228M initially) with a potential cap of up to $3.5B. No word on the margin profile for these efforts, but even a modest government contracting markup of 10% could add 100s of millions to their cash reserves over the next few years. Make no mistake – even with all the above, there will need to be more funding rounds before flight. Expect to see additional capital raises before we see Axiom astronauts orbiting on their own station. 

• Axiom closed a $350M Series C round in August, bringing total investment in the company to $500M+

• Korean pharmaceutical company Boryung and Saudia Arabian investment fund Aljazira Capital led the round

• Axiom’s customer demand continues to accelerate, with two more planned flights this year and nearly $370M in announced awards for their spacesuit program

• Current capital reserves are likely not enough to get Axiom’s station operational – expect to see additional rounds from the company

SOURCE: https://spacewatch.global/2023/08/axiom-space-raises-350m-in-series-c-round/