China satellite player Galaxy Space achieves unicorn status

Other investors include Anhui Sanzhong Yichuang Industry Development Fund, Hefei Industrial Investment Group, and Zhenwei Investment Fund Management. Existing investors Legend Capital and Chaos Investment re-upped.

The start-up received initial funding in 2018 from Shunwei Capital, 5Y Capital, IDG Capital, Gaorong Capital, and Source Code Capital at a valuation of more than CNY 300m.

This was followed by a strategic round in 2019 led by JIC Technology Investment, with re-ups from existing investors. The reported valuation was CNY 5bn. A year later, Nantong Investment Management took the lead in a new round, joined by Matrix Partners China, CICC Capital, and existing investors.

Satellites have three main applications: communication, which typically involves serving users in off-the-grid areas; navigation, where China’s Beidou is supposed to serve as an alternative to the US-developed Global Positioning System (GPS); and remote sensing, for example providing high-definition images of areas blighted by a natural disaster to support the search for survivors.

Galaxy Space focuses on communication. It aims to build a 5G or  6G network to provide cost-effective broadband services. However, some investors argue that satellites may not be the most efficient means of achieving this, especially in large cities where population density means network base stations are preferable. Meanwhile, it could be difficult to monetise customers in sparsely populated areas.

Another challenge is the need for a constellation of satellites to support communication services. Three years ago, Galaxy Space outlined planned to launch 1,000 satellites, but it is still far from this goal. Six low-orbit satellites were launched in March, which together with an existing network, will create a test constellation to establish the viability of 5G  services.

The global space economy will be worth USD 1trn by 2040, according to Morgan Stanley. US-based SpaceX has launched more than 3,200 satellites and offered services to the US government during the Russia-Ukraine war.

Beijing Taihe Dingcheng Investment Advisory served as the financial advisor for Galaxy Space's latest round.

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