Virgin creates Vox Space for its government-related launches

Jonathan Shieber

The universe can welcome yet another entrant into the space race, and yet another company into Richard Branson's portfolio.

TechCrunch has learned that Branson's Virgin Orbit has quietly created VOX Space, a wholly owned subsidiary of its space freight business, that will focus on servicing government contracts from the U.S. and its political allies.

For Virgin Orbit, the creation of VOX Space is an indicator of how seriously the company takes the potential revenue stream that could come from government contracts.

According to people with knowledge of the company's plans, the military and defense industry will likely never be the bulk of Virgin Orbit's contracts, but created the subsidiary to be able to compete in that market.

Right now, the book of business including a likely contract with a government agency, will be roughly 90% commercial and 10% government, according to a person with knowledge of the firm.

A spokesperson for Virgin Orbit said the company would not comment officially on any unannounced plans.

At its core, its an opportunity to further loosen the iron grip that America's two main aerospace companies, Boeing and Lockheed Martin, have on the space business, according to investors with knowledge of the industry.

"There are bureaucratic requirements that exist for this part of the market and not for the commercial market," said a person familiar with the company's plans.

Vox's parent company, Virgin Orbit, itself began as a spin out from Branson's Virgin Galactic business. Launched last year, Virgin Orbit is the company's attempt to commercialize an alternative launch system, which uses a Boeing 747 retrofitted to carry a two-stage rocket as its method for getting payloads into low earth orbit.

Think of it this way. If Virgin Galactic is the way that Branson envisions getting people into space, Virgin Orbit is the way that he hopes cargo will get to space. That means Vox is the way that highly sensitive, government cargo will get to space.

Branson actually now has four companies focused on different aspects of the space business. There's Virgin Galactic for people, Virgin Orbit for cargo, Vox for government missions, and The Spaceship Company, which builds... spaceships.

This separation of the government business from its commercial arms becomes even more important as Virgin starts taking money from outside investors -- like the $1 billion commitment the company received from the Saudi Arabian government just last week.

Through the investment, The Public Investment Fund of Saudi Arabia committed to invest $1 billion into Virgin Galactic, The Spaceship Company and Virgin Orbit, with an option for another $480 million spent on future space services.

Virgin has lofty expectations for its small cargo business. The company is expecting to conduct 12 launches, with payload, by 2019 and would expects to be conducting 24 launches by 2020. To put that in perspective, there were 86 space launches last year worldwide, according to a Virgin Orbit spokesperson.

One of Virgin Orbit's key early customers is OneWeb, which is building a network of satellites to provide global internet access. The company, backed by over $1 billion in funding from Softbank, is planning to use Virgin Orbit for operations and management services on its vast array of satellites. With customers like OneWeb, Virgin Orbit actually has its full launch schedule for 2018 booked, and is mostly sold for 2019.

That a company whose technology has not been proven outside of test facilities can book through 2019 shows just how much demand there is for a ticket to outer space.

Prices to develop satellite technologies have dropped precipitously and there are new applications being developed nearly daily for systems that monitor the earth. There's also a flood of interest from countries in developing markets to grab a piece of space real estate before it's all claimed by the major economic powerhouses in North America, Asia, and Europe.

Indeed, this land grab is perhaps one reason why the Saudi government was eager to plant such a large flag to declare its interest in investing in outer space.

The great game to claim a corner of space has, in fact, created interesting political initiatives among a number of countries. China has arrayed a slew of public and quasi-private initiatives to challenge the U.S. in the space race. Meanwhile, legislators in the U.S. have called for the creation of a new branch of the military that would defend the nation's interests in outer space.

Meanwhile, private companies from India and Israel are among the finalists for the Google-sponsored Lunar X-Prizeand Nigeria has a multi-billion space program of its own. Taken together, its clear that the final frontier is no longer the purview of the world's superpowers.

That's a commercial opportunity for Virgin's fleet of space businesses, but one which requires the company to tread carefully.

Luckily for Virgin, its government business is in seemingly capable hands. Vox Space is headed by Mandy Vaughn, who previously worked as the director of business development at Virgin Galactic and Virgin Orbit.

Vaughn has a long career in the space and aerospace industry, getting her start in 2004 working for the US Air Force in the Los Angeles-based Space Superiority Systems Directorate after completing a masters of science at the Massachusetts Institute of Technology two years earlier.

 

 

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