SpaceX sells 10 percent stake to Google, Fidelity for $1B
The money gives SpaceX cash as it explores new ways to connect people to the Internet.
Space Exploration Technologies, the rocket-maker run by billionaire Elon Musk, said that Google and Fidelity Investments have invested $1 billion that will give them a combined stake of almost 10 percent.
The money gives SpaceX cash as it explores new ways to connect people to the Internet. Mountain View, Calif.-based Google is racing to spread Internet access as it looks for new ways to boost its user base and sell more digital advertising.
By teaming up with SpaceX, Google would be seeking to gain an edge over rivals such as Facebook, which is working on projects to deliver Internet service to underserved regions by building drones, satellites and lasers. WorldVu Satellites, backed by Qualcomm and Virgin Group, has begun a similar effort.
“Google needs to find additional sources of revenue,” said Greg Sterling, vice president of strategy and insights for Local Search Association, whose members operate in the location-based advertising market.
“If they can expand into new markets, obviously they can expand their revenue and keep investors happy.”
Google and Fidelity join Founders Fund, Draper Fisher Jurvetson, Valor Equity Partners and Capricorn as SpaceX owners, the Hawthorne, Calif.-based company said in a statement.
In an interview with Bloomberg News on Jan. 12, Musk spoke of the need to launch smaller, more advanced satellites with greater frequency, and said SpaceX would expect to “spend at least a billion, maybe $2 billion” on satellite activities. Musk plans to center his new satellite venture in Washington state, with software and aerospace engineers designing the satellites in SpaceX’s new engineering office in Redmond.
Google has already unveiled Project Loon, a network of balloons designed to connect people to the Web in hard-to-reach areas of the world. The Internet company also said the acquisition last year of satellite startup Skybox Imaging may eventually help improve Internet access.
“Space-based applications, like imaging satellites, can help people more easily access important information, so we’re excited to support SpaceX’s growth as it develops new launch technologies,” Aaron Stein, a spokesman for Google, said in an emailed statement.
Don Harrison, Google’s vice president of corporate development, will join the board of SpaceX, according to Google. Harrison is also an observer on the board of visual-computing startup Magic Leap, which Google and others invested $542 million in last year.
Musk has gained a reputation as an innovator and successful entrepreneur, first as a co-founder of digital-payments provider PayPal and more recently as the leader of Tesla Motors.
SpaceX’s goal is to advance rocket and spacecraft technology and eventually establish a city on Mars. Musk said he has no immediate plans to hold an initial public offering for SpaceX, given the long time frame for a Mars settlement.
“If Google is committing money to SpaceX, they are likely to be a major investor and a real partner,” said Marco Caceres, director of space studies at consultant Teal Group. “Google brings the applications for the satellites to the table, and SpaceX has the technical know-how and the launch capacity.”
The Information publication earlier reported on Google’s investment, saying it would be used to spread online services to underserved parts of the world.