Canada-based startup UrtheCast (TSX:UR) has secured US$175m-plus in financing from undisclosed institutional investors to fund its UrtheDaily smallsat constellation, and expects to finalise agreements in mid- to late-December.
In November 2016, CEO Wade Larson told SatelliteFinance that the company is talking to “several parties” about funding its next steps.
In addition, UrtheCast has signed a contract with Airbus Defence and Space (EPA:AIR)-owned UK smallsat specialist Surrey Satellite Technology to build the Earth observation birds, which will focus on machine-learning and artificial intelligence. UrtheCast EVP Jeffrey Rath told SatelliteFinance for this report that the funding will support “the entire constellation” but declined to say if it would entail eight satellites, the number that the company has previously said would make up the network. UrtheCast and Surrey Satellite Technology are longtime partners.
On UrtheCast’s Q3 2017 earnings call, Larson said that the company has received “strong interest in excess of our needs” from investors to build and launch UrtheDaily. Providing more detail, CFO Sai Chu said the package is primarily composed of senior secured debt but also contains a subordinated capital portion for which UrtheCast has identified “a number of different financial instruments” that are available for funding.
(Source: UrtheCast)
Rath declined to elaborate or provide other information to SatelliteFinance.
UrtheCast has secured an “additional multiyear, multimillion-dollar UrtheDaily data buy” from a “major” international aerospace company, Larson said. It is in “advanced discussions with another large industry” company and expects to make an announcement about it before the year-end. It has prior commitments from other industry players, including US-based agriculture technology company Geosys.
UrtheCast’s financial performance, however, was negatively impacted by an unexpected delay in the award of a multimillion-dollar contract by one of its largest Earth observation customers. The company expects the contract will be awarded “in the coming months”, Larson said.
In other financing news, UrtheCast has obtained a US$10m revolving demand credit facility from the Royal Bank of Canada, Larson said.
In the November 2016 SatelliteFinance interview, Larson said UrtheCast aimed to secure as much as C$250m (US$186m) in export credit agency-backed funding in the ensuing months, but there has been no update on these plans.
2020 launch planned
As for as the constellation, plans call for launch and the start of operations in 2020.
The network will be capable of scientific-grade and high-resolution quality, in multispectral imagery and targeted specifically at geoanalytics applications, said Surrey Satellite Technology, which was unable to respond to a message before the press deadline.
The UrtheDaily spacecraft will be based on the SSTL-250 platform. The birds will deliver imagery using spectral bands that have been specifically selected to match those of US’ Landsat-8, the EU’s Sentinel-2, Planet Lab’s RapidEye as well as UrtheCast’s Deimos-1 to ease cross-calibration with “trusted” references and to minimise the effects of atmospheric variations.
Surrey Satellite Technology director of Earth observation Andrew Cawthorne said: “We have worked closely with UrtheCast to develop an imaging system capable of detecting subtle changes on the planet, and we are very much looking forward to supplying the satellites for this landmark Earth observation constellation.”
New partners, business model
Meanwhile, UrtheCast has entered into strategic collaboration agreements with several industry players to enhance its offering and capabilities to compete in the Earth observation market. They comprise Telespazio- and ASI-owned geospatial data and service provider e-Geos of Italy, US mapping and software company Esri and China-based remote sensing satellite operator and data and service provider 21AT.
UrtheCast is shifting its business model, Larson said. The company’s goal is to transform into a long-term, high-margin, recurring business through the commercialisation of its technologies. This would move UrtheCast from a contract-to-contract existence.
“In fact, this takes our EO business from being project-based to being a [software as a service] model-based with more predictable and visible revenue streams,” he added.
Others are developing or have developed satellite-imagery systems, including BlackSky, Iceye and Terra Bella as well as Planet Labs.
As observers sort through this, a flurry of activity has characterised UrtheCast and the Earth imagery or analytics sector overall of late.
In January UrtheCast’s OptiSAR constellation – a separate, synthetic aperture radar system – converted the first of its MoUs into a US$210m contract, also with Surrey Satellite Technology, for construction start.
Two years ago UrtheCast gained two in-orbit birds through the acquisition of Deimos Imaging in Spain. The €74.2m (US$83m) deal in cash also included operations and full imagery archive.
Taking a broader look, analytics company OmniEarth had abandoned its own EO constellation plans to partner with UrtheCast and help improve its services and access to customers. In May Vista Equity Partners-backed EagleView acquired OmniEarth for an undisclosed amount in the third acquisition this year in the sector.
Maxar Technologies (NYSE:MAXR) completed its C$4.7bn (US$3.76bn) acquisition of satellite imaging operator DigitalGlobe in October. Earlier in the year, Planet closed a cash-and-equity acquisition, for an undisclosed sum, of Terra Bella from Google (NASDAQ:GOOGL) only two and a half years after it had bought the company for US$500m, as the emphasis of the imaging sector shifts from capturing data to processing it.
Through the first three quarters of 2017, UrtheCast lost C$15.4m (US$12.1m) on C$31.4m (US$24.6m) in revenues. This compares to a C$21m loss (US$16.4m) on C$38.2m (US$30m) in revenue for the comparable period of 2016.