RUTH SUTHERLAND reveals how Richard Branson’s space dreams crashed to Earth

Many stories are told in the City of London about Sir Richard Branson, the tycoon who stamped his Virgin brand on everything from banking services to expensive gym memberships.

One story goes that, a few years ago, a group of Seti advisors arrived for a morning meeting at Branson’s former mansion in London’s Holland Park to discuss financing his labyrinthine business empire.

Not only was the bearded tycoon still in his gown as he greeted the perfectly suited bankers, but, to their surprise, he took absolutely no interest in their proposals and insisted instead on talking about rockets and space travel.

Tales like this may be the stuff of urban legend, but Branson’s fascination with the mysteries of the universe is beyond question. For him and his peers, the old billionaire’s trinkets like private jets, islands and yachts date back to the last century.

Branson has positioned himself as Britain’s answer to America’s off-the-beaten-path capitalists, Tesla boss Elon Musk, and Amazon founder Jeff Bezos. For these entrepreneurs, when it comes to status symbols, nothing less than a space rocket will do.

Musk’s Starship was on the launchpad in Texas last week, and is preparing to take off for a test flight later this month.

Blue Origin, Bezos’ space company, plans to send an all-female crew into space next year, led by his girlfriend, 53-year-old Lauren Sanchez.

But Sir Richard Branson couldn’t help but look on from the sidelines as his ambitions exploded from the sky. Last week, his satellite launch company, Virgin Orbit, filed for bankruptcy protection in America.

Perhaps these financial repercussions were inevitable after one of his rockets, launched in January from a spaceport in Newquay, Cornwall, a hundred miles above Earth, malfunctioned.

The event, which was the first-ever orbital space launch from British soil, not only saw the rocket carrying nine satellites go missing over the Atlantic, but also resulted in Virgin Orbit, at one point worth £2.4 billion, crashing into Earth. .

After building an empire that includes airlines, trains, fitness, financial services, and media, it might have been the natural next step for Branson to reach for the stars.

His first step in 2004 was to start a space tourism company, Virgin Galactic. With tickets priced at $450,000, “future astronauts” can sign up for this one—for flights that haven’t yet taken off.

Virgin Orbit was spun off from that business in 2017, after Branson boffins discovered that the technology being researched could be used in the satellite industry.

No doubt his critics—and he’s attracted many since he launched his music career in the 1970s—will enjoy humiliation over his favorite project.

Some have raised concerns that the downfall of Virgin Orbit also bodes ill for the UK’s nascent space industry – an increasingly important part of our economy. But the bankruptcy is primarily a consequence of Branson’s inflated business model, which was insufficiently resilient to face the inevitable setbacks.

In the broader space and satellite industry, there are still many reasons for optimism.

In fairness to Virgin Orbit, despite the cynicism surrounding the botched launch, its technology has won praise from experts. Before the Corniche disaster, the company succeeded in carrying out several space flights, launching 33 satellites into orbit.

However, there is no denying that bankruptcy is a very costly embarrassment for Branson. He is injecting around £25m of funding through his Virgin Investments to keep the company on the move while it searches for a buyer to bail it out.

In all, Branson and Virgin Group have invested more than £800m in the company.

Virgin Orbit’s business was based on its claim to have embarked on an innovative approach: high-altitude satellite launches.

Unlike competitors who sent her from Earth, she propelled satellites from a rocket under the wing of a modified Boeing 747, Cosmic Girl (named after a 1990s song by Jamiroquai). It said this “air-launch” technology made its satellite services cheaper and more flexible.

That was at least in theory.

In fact, the company has been plagued with problems from the very beginning. It floated on the high-tech Nasdaq Stock Exchange in New York in 2021, in the midst of the frenzy of high-risk businesses that were commanding sky-high valuations. Instead of a traditional stock listing, Branson has used what’s called a “special purpose acquisition company,” or Spac.

These Spacs briefly enjoyed popularity a couple of years ago as a way for money-losing companies to quickly list their stock. But wiser investors always viewed them with skepticism, and have since fallen out of favor.

At the time of the Virgin Orbit float, interest rates were at their lowest and investors were willing to take gambles on risky investments, hoping for good returns. But as prices began to rise, the mood changed and stock prices fell in technology and other high-risk sectors.

As for Virgin Orbit, its market capitalization has fallen from a peak of around £2.4 billion to around £56 million today. However, there were ominous signs from the very beginning. The float from investors brought in much less than hoped, and early last year Virgin Orbit CEO Dan Hart began working with Goldman Sachs and Bank of America to try to raise more capital or sell the company.

The company incurred losses of around £120m in the first nine months of last year. In plain terms, he was running out on big bills without making sure he’d have a chance to break into the lions.

Experts say the company was aiming to launch 50 times a year – a very challenging target. The amounts just didn’t stack up.

With Branson and other investors unwilling to commit new capital, entry into Chapter 11 bankruptcy became inevitable.

“The bankruptcy is very specific to Virgin,” says Mark Pugett, chief executive of Seraphim Capital, which invests in space companies. “There was an unfortunate chain of events. They didn’t raise enough capital when they floated and then when the UK launch failed, that left them in a difficult position. truly.

They had to try and raise money on the back of a failed launch and Spac, which was toxic, and in a tough economic environment. It does not reflect what is going on in the market. Premium companies are able to raise money, no problem. Virgin Orbit’s failure is a blow to Cornwall – and UK taxpayers, who have provided around £9.5m in grants to fund the mission.

Spaceport Cornwall, where Virgin Orbit was the primary operator, is putting on a brave face. Its boss, Melissa Quinn, who was in tears when the Virgin launch failed in January, says the plan is to lobby with other satellite operators.

Critics will view the episode as evidence of Branson’s enduring ambition and personal arrogance.

Whatever one’s views on the 72-year-old Virgin founder, whose image is still celebrated as an independent and anti-establishment figure, he was right about one thing: space is an area in which Britain can excel.

But venturing into space isn’t just financially risky. Branson’s worst accident was the 2014 crash of a Virgin Galactic spaceship in California’s Mojave Desert, killing the co-pilot and seriously injuring the pilot.

Orbit’s bankruptcy will raise new questions about Galactic, which lost $500 million last year.

Potential buyers, including Texas investor Matthew Brown and possibly Musk or Bezos, will look to search for Virgin Orbit remnants.

However, it is unlikely to be the end of Branson’s personal space saga. Having flown to the edge of space on a Virgin Galactic rocket plane two years ago, he will be reluctant to give up his hopes of boldly going where no British billionaire has gone before.