Investing in Space: Digital orbital danger

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Companies and governments are now launching satellites by the thousands each year, and that changing landscape brings with it the evolving challenge of cybersecurity in space. Think, scores of sensitive data, some of national security, flowing between Earth and remote devices constantly moving miles above the surface. 

The concept of space security arguably doesn’t get talked about enough, but a quick search for something like “cyber,” “space,” and “Pentagon” gives you an immediate sense of how U.S. military leaders see the digital threat to satellites.

SpiderOak, which has been in the “terrestrial” cybersecurity game for quite some time, wants to change that. The company just raised $16.4 million in an oversubscribed round, to make a full-tilt push into building its space business. 

The fundraise was led by Empyrean Technology Solutions – which SpiderOak notes is backed by funding via Chicago private equity firm Madison Dearborn Partners – and joined by Method Capital and OCA Ventures.

“It’s very difficult to secure networks in space because, as satellites go around, you have periods of time where they’re out of contact with anybody else,” SpiderOak chairman Charles Beames told me.

Through its software, SpiderOak encrypts data so that it can securely flow from one company’s ground station to another’s spacecraft.

“Cybersecurity is a huge problem … the three or four star generals talk about how it’s the soft underbelly – it’s actually the thing that they’re most worried about, the biggest problem the Space Force has, in terms of a vulnerability. It’s not satellites being shot out of the sky,” Beames added.

Beames has been around the money side of this industry as long as anyone. His career has ranged from leading the Pentagon’s space and intelligence acquisitions, to serving as president of the late Paul Allen’s Vulcan Aerospace and then executive chairman of spacecraft manufacturer York Space.

While SpiderOak was founded in 2006, and boasts about 75,000 individual customer accounts currently, the company has raised minimal outside funding, with just $25 million before this new round. It entered the space market in late 2019, and Beames stepped in as chairman early last year.

SpiderOak has completed demonstrations of its OrbitSecure product in lab-based simulations, and has won small early contracts from the Air Force to prove out the tech. Beames noted that defense giants like Raytheeon, Lockheed Martin and Northrop Grumman have contracts with SpiderOak and are testing it as well. 

Next up: Demonstrating its technology with a satellite in orbit, on a mission scheduled to launch in the first half of this year – while SpiderOak builds out its Reston, Virginia headquarters and gets OrbitSecure 2.0 out and rolling.

Correction: SpiderOak’s customer base is about 75,000 individual accounts. A version of this newsletter that was sent to inboxes misstated that figure.

• ABL Space inaugural launch fails: Shortly after liftoff, an anomaly in the RS1 rocket shut down its nine engines, causing the vehicle to return and impact “directly on the launch pad,” resulting in damage. The FAA said in a statement to CNBC on Thursday that there were no reports of injuries and no public property damage, and that “all debris was contained within the designated hazard area.” – CNBC
• SpaceX returns 26th ISS cargo mission, with the company’s Dragon capsule splashing down to complete the flight. – SpaceX
• Japanese lunar mission completes fifth milestone as flight continues: ispace’s Mission 1 lander is now over 1.3 million kilometers from the Earth as it heads to the moon. – ispace
• OneWeb deploys 40 more satellites after second SpaceX launch, bringing the company’s constellation to 542 satellites in orbit. OneWeb has two launches remaining to complete its first generation constellation. – OneWeb

• Capella Space raises $60 million from billionaire Thomas Tull’s fund, as the synthetic aperture radar (SAR) satellite imagery company prepares to launch its next-generation Acadia satellites this year. – CNBC
• European airline airBaltic signs with SpaceX to equip fleet with Starlink, and plans to begin offering the service, free of charge, inflight. – airBaltic
• General Atomics Electromagnetic Systems wins contract from Advanced Space to build a deep space detection satellite under $72 million Air Force Research Laboratory contract. – SpaceNews
• NASA names A.C. Charania as chief technologist, who joins after previous roles at Blue Origin and Virgin Galactic. – NASA
• ST Engineering iDirect names Don Claussen as CEO. He comes to the satellite communications company from Intelsat where he was a vice president with a wide variety of roles. – ST Engineering iDirect
• Retired Air Force three star general Steven Kwast named CEO of Skycorp, a California-based space logistics company. – SpaceNews
• EchoStar fires senior vice president and Chief Accounting Officer Muhammad Ali Butt, with subsidiary Hughes Network’s Jeffrey Boggs taking over as interim principle accounting officer. An EchoStar spokesperson told CNBC that Butt’s termination “was strictly a personnel issue and not the result of any concern over controls, processes, or financial reporting.” – EchoStar
• Astranis brings on Doug Abts as Chief Commercial Officer. He joins after more than seven years at Viasat, most recently as SVP of strategy and corporate development. — Astranis CEO John Gedmark
• Slingshot Aerospace hires Thomas Arend as Chief Product Officer. He joins after 18 months at Astra, most recently as VP and head of product management. – Slingshot
• Habitat startup Vast Space moves headquarters to Long Beach, California, expanding facilities footprint for future growth. – Vast

• Virgin Orbit is down 20% week to date, after its first launch of the U.K., and sixth to date, failed mid-flight. The company has begun an investigation into the cause, as the anomaly led to the upper stage engine cutting off early. – CNBC / Virgin Orbit

• Jan. 14 – SpaceX Falcon Heavy launching Space Force mission from Florida.
• Jan. 15 – SpaceX Falcon 9 launching Starlink mission from California.