SEATTLE — Capella Space has raised $60 million to allow the company to accelerate the deployment of its constellation and meet growing demand for its synthetic aperture radar (SAR) satellite imagery.
The company announced Jan. 10 it raised the growth equity financing from the U.S. Innovative Technology Fund. That fund was established last year by Thomas Tull, a billionaire former entertainment industry executive, to invest in technologies he felt critical for the country’s competitiveness.
“Technological competitiveness is vital to our country’s future,” Tull said in a statement about the investment. “Capella’s cutting-edge SAR technology allows us to have accurate, real-time information about what is happening on our planet, enabling decision-makers to more quickly make critical decisions about pressing geopolitical challenges.”
“Thomas is looking for companies that are dual-use: they’re important for national security and governments but they also have applicability in the commercial world,” said Payam Banazadeh, chief executive of Capella, in an interview Jan. 11. “He really believes in SAR and it becoming more and more important for national security.”
The funding, he said, will allow the company to scale up the development and launch of the Acadia line of SAR satellites, with improved image resolution and quality, that it announced in August. He said Capella is planning “many” launches of Acadia satellites this year but declined to provide a more specific estimate. It also has two more of the older Whitney class of satellites to launch.
“We’re growing the team across all the departments — engineering, sales, marketing — to be able to move faster and cater to the demand that we’re seeing,” he said. “It’s going to enable us to be able to pick up on the big spike of demand that’s coming our way.”
That demand has been driven in part by the war in Ukraine, which Banazadeh said has demonstrated the value of SAR imagery that can be collected day and night and in all weather conditions. “What Ukraine has done is that it’s shown to other customers that SAR is a critical tool,” he said. “We’re seeing demand coming from everywhere, not just Ukraine.”
Capella has emphasized working with governments. Banazadeh said a majority of the company’s business is from government customers, with a majority of that coming from U.S. government agencies. That comes from a product-market fit between what Capella’s satellites can provide and the needs of government customers, an urgency those customers have for SAR imagery and supply constraints. “They want more of it. They don’t have enough of it,” he said of such imagery.
He said the company, whose annual revenues tripled in 2022, foresees continued strong growth from government customers, while demand from commercial customers grows at a slower pace. “Commercial growth is going to lag but it’s going, at some point, to pick up,” he said. “We’re just being realistic on where the commercial market is for SAR relative to the government market.”
The 200-person company added about 80 to 90 people last year, Banazadeh said, and plans similar growth in 2023. He said the company has found it hard to find talented people “across the board” from satellite engineering to sales but that the company’s approach to hiring has worked well do far.
Capella’s new funding round comes less than nine months after it raised a $97 million Series C round. Banazadeh described this new funding round as “opportunistic” given interest from U.S. Innovative Technology Fund as well as uncertainty about market in the near future.
“I think anyone who can raise capital in this market should, and they should probably raise more than they think they need,” he said. “Having a full war chest for a couple of years and making sure that you’re ready for whatever that’s going to come is going to be important.”
He said the company would continue to look for opportunities to raise more money that allows it invest in efforts like its new satellites that can accelerate revenue growth. “There’s a lot of capital out there that needs to be deployed in the right places. We have a lot of plans, we have a lot of a lot of things that we can do to grow even faster,” he said.