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China’s surging private space industry is out to challenge the US

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China’s space program might have been slowed by the pandemic in 2020, but it certainly didn’t stop. The year’s highlights included sending a rover to Mars, bringing moon rocks back to Earth, and testing out the next-generation crewed vehicle that should take taikonauts into orbit—and possibly to the moon—one day. 

But there were a few achievements the rest of the world might not have noticed. One was the November 7 launch of Ceres-1, a new type of rocket that, at just 62 feet in height, is capable of taking 770 pounds of payload into low Earth orbit. The launch sent the Tianqi 11 communications satellite into space.

At first glance, the Ceres-1 launch might seem unremarkable. Ceres-1, however, wasn’t built and launched by China’s national program. It was a commercial rocket—only the second from a Chinese company ever to go into space. And the launch happened less than three years after the company was founded. The achievement is a milestone for China’s fledgling—but rapidly growing—private space industry, an increasingly critical part of the country’s quest to dethrone the US as the world’s preeminent space power. 

The rivalry between the US and China, whose space program has surged over the last two decades, is what most people mean when they refer to the 21st-century’s space race. China is set to build a new space station later this year and will likely attempt to send its taikonauts to the moon before the decade ends. But these big-picture projects represent just one aspect of the country’s space ambitions. Increasingly, the focus is now on the commercial space industry as well. The nation’s growing private space business is less focused on bringing prestige and glory to the nation and more concerned with reducing the cost of spaceflight, increasing its international influence—and making money.

“The state is really great at large, ambitious projects like going to the moon or developing a large reconnaissance satellite,” says Lincoln Hines, a Cornell University researcher who focuses on Chinese foreign policy. “But it’s not responsive to meeting market needs”—one big way to encourage rapid technological growth and innovation. “I think the government thinks its commercial space sector can be complementary to the state,” he says.

What are the market needs that Hines is referring to? Satellites, and rockets that can launch them into orbit. The space industry is undergoing a renaissance thanks to two big trends spurred by the commercial industry: we can make satellites for less money by making them smaller and using off-the-shelf hardware; and we can also make rockets for less money, by using less costly materials or reusing boosters after they’ve already flown (which SpaceX pioneered with its Falcon 9). These trends mean it is now cheaper to send stuff into space, and the services and data that satellites can offer have come down in price accordingly. 

China has seen an opportunity. A 2017 report by Bank of America Merrill Lynch estimates that the space industry could be worth up to $2.7 trillion by 2030. Setting foot on the moon and establishing a lunar colony might be a statement of national power, but securing a share of such a highly lucrative business is perhaps even more important to the country’s future. 

“In the future, there will be tens of thousands of satellites waiting to launch, which is a major opportunity for Galactic Energy” says Wu Yue, a company spokesperson.

The problem is, China has to make up decades’ worth of ground lost to the West.

How did China get here—and why?

Until recently, China’s space activity has been overwhelmingly dominated by two state-owned enterprises: the China Aerospace Science & Industry Corporation Limited (CASIC) and the China Aerospace Science and Technology Corporation (CASC). A few private space firms have been allowed to operate in the country for a while: for example, there’s the China Great Wall Industry Corporation Limited (in reality a subsidiary of CASC), which has provided commercial launches since it was established in 1980. But for the most part, China’s commercial space industry has been nonexistent. Satellites were expensive to build and launch, and they were too heavy and large for anything but the biggest rockets to actually deliver to orbit. The costs involved were too much for anything but national budgets to handle.

That all changed this past decade as the costs of making satellites and launching rockets plunged. In 2014, a year after Xi Jinping took over as the new leader of China, the Chinese government decided to treat civil space development as a key area of innovation, as it had already begun doing with AI and solar power. It issued a policy directive called Document 60 that year to enable large private investment in companies interested in participating in the space industry. 

“Xi’s goal was that if China has to become a critical player in technology, including in civil space and aerospace, it was critical to develop a space ecosystem that includes the private sector,” says Namrata Goswami, a geopolitics expert based in Montgomery, Alabama, who’s been studying China’s space program for many years. “He was taking a cue from the American private sector to encourage innovation from a talent pool that extended beyond state-funded organizations.”

As a result, there are now 78 commercial space companies operating in China, according to a 2019 report by the Institute for Defense Analysis. More than half have been founded since 2014, and the vast majority focus on satellite manufacturing and launch services.

For example, Galactic Energy, founded in February 2018, is building its Ceres rocket to offer rapid launch service for single payloads, while its Pallas rocket is being built to deploy entire constellations. Rival company i-Space, formed in 2016, became the first commercial Chinese company to make it to space with its Hyperbola-1 in July 2019. It wants to pursue reusable first-stage boosters that can land vertically, like those from SpaceX. So does LinkSpace (founded in 2014), although it also hopes to use rockets to deliver packages from one terrestrial location to another.

Spacety, founded in 2016, wants to turn around customer orders to build and launch its small satellites in just six months. In December it launched a miniaturized version of a satellite that uses 2D radar images to build 3D reconstructions of terrestrial landscapes. Weeks later, it released the first images taken by the satellite, Hisea-1, featuring three-meter resolution. Spacety wants to launch a constellation of these satellites to offer high-quality imaging at low cost. 

To a large extent, China is following the same blueprint drawn up by the US: using government contracts and subsidies to give these companies a foot up. US firms like SpaceX benefited greatly from NASA contracts that paid out millions to build and test rockets and space vehicles for delivering cargo to the International Space Station. With that experience under its belt, SpaceX was able to attract more customers with greater confidence. 

Venture capital is another tried-and-true route. The IDA report estimates that VC funding for Chinese space companies was up to $516 million in 2018—far shy of the $2.2 billion American companies raised, but nothing to scoff at for an industry that really only began seven years ago. At least 42 companies had no known government funding. 

And much of the government support these companies do receive doesn’t have a federal origin, but a provincial one. “[These companies] are drawing high-tech development to these local communities,” says Hines. “And in return, they’re given more autonomy by the local government.” While most have headquarters in Beijing, many keep facilities in Shenzhen, Chongqing, and other areas that might draw talent from local universities. 

There’s also one advantage specific to China: manufacturing. “What is the best country to trust for manufacturing needs?” asks James Zheng, the CEO of Spacety’s Luxembourg headquarters. “It’s China. It’s the manufacturing center of the world.” Zheng believes the country is in a better position than any other to take advantage of the space industry’s new need for mass production of satellites and rockets alike. 

Making friends

The most critical strategic reason to encourage a private space sector is to create opportunities for international collaboration—particularly to attract customers wary of being seen to mix with the Chinese government. (US agencies and government contractors, for example, are barred from working with any groups the regime funds.) Document 60 and others issued by China’s National Development and Reform Commission were aimed not just at promoting technological innovation, but also at drawing in foreign investment and maximizing a customer base beyond Chinese borders.

“China realizes there are certain things they cannot get on their own,” says Frans von der Dunk, a space policy expert at the University of Nebraska–Lincoln. Chinese companies like LandSpace and MinoSpace have worked to accrue funding through foreign investment, escaping dependence on state subsidies. And by avoiding state funding, a company can also avoid an array of restrictions on what it can and can’t do (such as constraints on talking with the media). Foreign investment also makes it easier to compete on a global scale: you’re taking on clients around the world, launching from other countries, and bringing talent from outside China. 

Although China is taking inspiration from the US in building out its private industry, the nature of the Chinese state also means these new companies face obstacles that their rivals in the West don’t have to worry about. While Chinese companies may look private on paper, they must still submit to government guidance and control, and accept some level of interference. It may be difficult for them to make a case to potential overseas customers that they are independent. The distinction between companies that are truly private and those that are more or less state actors is still quite fuzzy, especially if the government is a frequent customer. “That could still lead to a lack of trust from other partners,” says Goswami. It doesn’t help that the government itself is often very cagey about what its national program is even up to.

And Hines adds that it’s not always clear exactly how separate these companies are from, say, the People’s Liberation Army, given the historical ties between the space and defense sectors. “Some of these things will pose significant hurdles for the commercial space sector as it tries to expand,” he says.

Other challenges

None of these new companies are yet profitable, and it will be quite some time before they are. “There isn’t any sign of indication that this industry will flop,” says Hines. “But many experts do think a lot of these companies will go out of business.” Apart from the challenge of attracting customers outside China, many companies are still trying to figure out who exactly their customers ought to be. 

American companies like SpaceX and Blue Origin had billionaire founders ready to burn cash to take on large risks, push past big failures, and finally get off the ground. And while a Chinese billionaire entered the industry last year“there is no Chinese Elon Musk to push these riskier ventures forward,” says Hines. It’s also unclear whether Chinese companies, even those supported by wealthy backers, will have that appetite for risk.

Zheng says one thing Spacety has offered is exceptional transparency with clients for whom it is developing satellites—something that’s still uncommon for Chinese firms. “Many of them have no kind of spaceflight experience,” he says. “They want to see and learn what goes on, but the large companies won’t allow for that. We’re different.”

Lastly, China needs to figure out a legal framework that can guide the commercial industry in more explicit terms, and specify what’s allowed and what is not. It is the only major space power without a specialized space law. (The American version is Title 51 of the United States Code.) While the hope is that free enterprise can generate innovation, national governments are still liable for whatever space activities a country’s private companies conduct. There’s a need to license and approve these missions, ensuring that governments know what they’ve signed up for. 

Despite all this, China’s space industry is rolling forward. These new startups haven’t just adopted American business practices—they’ve also begun to embrace American startup culture as a way to foster business relationships and grow. During my video call with Spacety’s Zheng, the company’s Beijing CEO, Yang Feng, briefly dropped in to say hello, on his way back from a party where he’d been schmoozing and enjoying drinks with many peers and partners in the industry. “It’s part of the way we do business now,” Zheng said. “Innovation is not just new technology itself—it’s also a new way of doing things.” 

Lyron Foster is a Hawaii based African American Musician, Author, Actor, Blogger, Filmmaker, Philanthropist and Multinational Serial Tech Entrepreneur.

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Proptech startup States Title, now Doma, going public via SPAC in $3B deal

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Real estate tech startup Doma, formerly known as States Title, announced Tuesday it will go public through a merger with SPAC Capitol Investment Corp. V in a deal valued at $3 billion, including debt.

SPACs, often called blank-check companies, are increasingly common. They exist as publicly traded entities in search of a private company to combine with, taking the private entity public without the hassle of an IPO.

When it floats later this year, Doma will trade on the New York Stock Exchange under the ticker symbol DOMA. The transaction is expected to provide up to $645 million in cash proceeds, including a fully committed PIPE of $300 million and up to $345 million of cash held in the trust account of Capitol Investment Corp. V. 

CEO Max Simkoff founded San Francisco-based Doma in September 2016 with the aim of creating a technology-driven solution for “closing mortgages instantly.” While it initially was founded to instantly underwrite title insurance, the company has expanded that same approach to handle “every aspect” of closing and escrow.

Doma has developed patented machine learning technology that it says reduces title processing time from five days to “as little as one minute” and cuts down the entire mortgage closing process “from a 50+ day ordeal to less than a week.” The startup has facilitated over 800,000 real estate closings for lenders such as Chase, Homepoint, Sierra Pacific Mortgage and others.

The name change is designed to more accurately reflect its intention to expand “well beyond” title into areas such as appraisals and home warranties.

Its goal with going public is to be able to “continue to invest in growth, market expansion and new products.”

Anchoring the PIPE include funds and accounts managed by BlackRock, Fidelity Management & Research Company LLC, SB Management (a subsidiary of SoftBank Group), Gores, Hedosophia, and Wells Capital. Existing Doma shareholder Lennar has also committed to the PIPE and Spencer Rascoff, co-founder and former CEO of Zillow Group, has committed a personal investment to the PIPE.

Up to approximately $510 million of cash proceeds are expected to be retained by Doma, and existing Doma shareholders will own no less than approximately 80 percent of the equity of the new combined company, subject to redemptions by the public stockholders of Capitol and payment of transaction expenses.

In mid-February, Doma announced it had closed on $150 million in debt financing from HSCM Bermuda, which had previously invested in the company. And last May, it announced a massive $123 million Series C round of funding at a valuation of $623 million.

Doma joins the growing number of proptech companies going the public route. On Monday, Compass, the real-estate brokerage startup backed by roughly $1.6 billion in venture funding, filed its S-1

In 2020, Social Capital Hedosophia II, the blank-check company associated with investor Chamath Palihapitiya, announced that it would merge with Opendoor, taking the private real estate startup public in the process.

Porch.com also went public in a SPAC deal in December. And, SoftBank-backed View, a Silicon Valley-based smart window company, will complete a recent SPAC merger to be publicly listed on the NASDAQ stock exchange on March 8. The company is expected to debut trading with a market value of $1.6 billion.

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Fluid Truck, the Zipcar of commercial trucks, raises $63M to take on rental giants

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Fluid Truck has built an app-based platform that aims to take away the pain and cost of owning or leasing commercial vehicles, all while grabbing market share from established companies like Penske, Ryder and U-Haul. 

Now, it has the capital to help it get there. The Denver-based company said Tuesday it raised $63 million in a Series A funding round to expand its truck-sharing platform, which helps mid-mile and last-mile delivery companies remotely manage an on-demand rental fleet via web or mobile app. Private equity firm Bison Capital led the round, with participation from Ingka Investments (part of Ingka Group, the main Ikea retailer), Sumitomo Corporation of Americas and Fluid Vehicle Owners.  

The investment, its first external round, comes after rapid growth at the four-year-old company. Founder and CEO James Eberhard told TechCrunch that revenue increased 100x in the last two years. That type of growth sounds promising, but the company did not provide a baseline, so it’s hard to judge scale. 

With e-commerce expected to continue to rise at a global 9.5% compound annual growth rate from 2020 to 2025, the demand for accessible trucks for hire might see correlative growth. It’s no surprise that e-commerce is one of the industries Fluid Truck has targeted. 

Fluid Truck, which operates in 25 U.S. markets, operates like the car-sharing company Zipcar, with a commercial bent. Businesses such as moving and e-commerce delivery companies can use the platform to rent trucks. Fluid Truck’s pitch to businesses extends beyond the “you don’t need to buy or lease” argument. The platform also allows delivery companies to dispense with having a manager on staff who would manage, maintain and eventually sell the fleet. 

Businesses eager to outsource the purchasing and managing of their trucks can find fleets for hire in industrial parks and retail areas within Fluid’s service network. 

“You can hop on our platform, rent a truck and be in it in a matter of minutes, which really allows businesses to scale up and scale down,” said Eberhard. “We’re watching our user behavior go from a place where they used to own every vehicle they needed at a time to a place where they’re now grabbing spare capacity off Fluid.”

Eberhard hopes to see that type of supplementary use morph into an end state where companies don’t own a single truck and run solely on Fluid Truck’s platform. 

Fluid Truck argues that its tech stack, which is designed to smooth out the booking and renting process, gives it a competitive edge in a market dominated by the likes of U-Haul, Ryder and or other small depots. Eberhard said the process of going to a depot and waiting in line is slow and sloppy, whereas Fluid Truck’s app makes renting a van as easy as calling an Uber.

“We take all those complexities away and allow people to have a virtual fleet,” Eberhard told TechCrunch.

Fluid Truck’s fleet is made up of thousands — and soon to be tens of thousands — of cargo vans, pickup trucks, large box trucks and various other vehicles. The company also claims to have the largest medium-duty EV rental fleet in the United States, which it continues to expand as it works with OEMs to increase fleet capacity. Electric vehicles still make up less than 1% of its total portfolio due to the slower adoption of EVs on the commercial side. 

Eberhard wants Fluid to be a dominant force in the trucking industry. But Fluid Truck is not the only truck sharing app on the streets. Competitors GoShare and Bungii have similar offerings.

This sizable round could provide an advantage as it tries to become the household name in digital truck sharing. Perhaps, as importantly, the company has the attention and investment of Ikea. 

“This is another step in enabling Ikea retail to provide last mile delivery services to our customers, continue to improve on our customer promise, while also reducing our environmental footprint,” Krister Mattsson, managing director of Ingka Investments said in a statement, a comment that suggests a future partnership with Fluid Truck. 

With this latest capital round, Fluid’s goal is to (you guessed it) scale outwards, with a focus on expanding the team, adding dozens more markets in the U.S. and preparing to take Fluid into the EU and Canada. 

Fluid Truck will also be investing back into its own tech stack, which includes an internal proprietary telematics platform to predict and automate servicing and maintenance of the company’s fleet. 

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Twitter Spaces arrives on Android ahead of Clubhouse

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Twitter announced today it’s opening up its live audio chat rooms, known as Twitter Spaces, to users on Android. Previously, the experience was only open to select users on iOS following the product’s private beta launch in late December 2020. The company says that Android users will only be able to join and talk in Spaces for the time being, but won’t yet be able to start their own.

That added functionality is expected to ship “soon,” Twitter says, without offering an exact timeframe.

The company has been working quickly to iterate on Twitter Spaces in the months since its beta debut, and has been fairly transparent about its roadmap.

Last month, the team developing Twitter Spaces hosted a Space where users were invited to offer feedback, ask questions, and learn about what Twitter had in the works for the product in both the near-term and further down the road. During this live chat, Twitter confirmed that Spaces would arrive on Android in March.

It also promised a fix to how it displays listeners, which has since rolled out.

Other Spaces features are being shared in public as they’re designed and prototyped, including things like titles and descriptions, scheduling options, support for co-hosts and moderators, guest lists, and more. Twitter has also updated the preview card that appears in the timeline and relabeled its “captions” feature to be more accurate, from an accessibility standpoint.

The time frame of some of its new developments  — like Android and scheduling options — were being promised in a matter of weeks, not months.

This fast pace has now led Twitter to beat its rival Clubhouse — the app currently leading the “social audio” market — to offer support for Android. Today, Clubhouse remains iOS-only in addition to being invite-only.

It’s also indicative of the resources Twitter is putting into this new product, which was first announced publicly just in November. Clearly, Twitter believes social audio is a market it needs to win.

The company also sees the broader potential for Spaces as being a key part of a larger creator platform now in the works. During its Investor Day last week, Twitter spoke of tying together its new products like Spaces, Newsletters along with a “Super Follow” paid subscription, for example.

It’s now also testing a Twitter “Shopping Card” that would allow users to tweets posts that link directly to product pages via a “Shop” button — a feature that would seem to fall under this new creator focus, as well.

Some Twitter users on Android had already found their way to Spaces before today’s announcement by way of the Twitter beta app on Google Play.

But now, a separate beta app won’t be required — when live Spaces are available, they’ll appear at the top of the Twitter timeline for Android users to join.

 

 

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