Space tech scaleup EnduroSat specialized in engineering, building, and operation of NanoSatеllites, and the European Investment Bank (EIB), announced a venture debt financing agreement of up to €10M. EnduroSat will receive the financing under a novel venture debt instrument backed by the European Guarantee Fund (EGF). It was set up by the EIB to support EU businesses during the COVID-19 pandemic.
The money will be used for the further development of EnduroSat’s NanoSatellites. It will also be utilized for supporting the scaleup’s Shared Satellite Service that makes room for space democratization. It enables clients to hire the company’s satellites to station sensors and instruments instead of engineering their own satellites.
The deal makes EnduroSat the first Bulgarian company to participate in a venture debt agreement under the European Guarantee Fund (EGF) and the third space tech company, backed by the European Investment Bank. In 2020, EIB concluded two other agreements with Spire Global and D-Orbit, for the financing of up to €20M each. Spire Global is the space-to-cloud analytics company with the world’s largest multi-purpose constellation of satellites, and D-Orbit specializes in sustainable space economy and space logistics.
“We are honored to begin our partnership with the European Investment Bank (EIB). The investment will streamline our mission of empowering academia, businesses, and science teams across the globe to test and excel in their technologies and services in space. EnduroSat is working hard to develop simple in-orbit operations and data handling. We have a lot of work in front of us and I am really excited for the journey ahead, as it will be quite challenging,” shared with The Recursive Raycho Raychev, founder of EnduroSat.
EIB venture debt financing
Venture debt or venture lending is a type of debt financing provided for the purpose of funding working capital or capital expenses. Unlike traditional bank lending, venture debt is accessible to emerging companies and scaleups that do not have positive cash flows or significant assets to use. Venture debt providers usually issue warrants, or rights to purchase equity, to make up for the increased risk of default.
The financing scheme of the venture debt financing model incorporates bullet repayment and remuneration that is connected to the equity risk of the investees. It can be combined with existing VC capital. In the case of EIB venture debt financing, apart from serving as a quality stamp, venture debt is non-dilutive, meaning it does not change the founders’ ownership stake. The EIB also does not engage with daily management decisions.
EnduroSat on its way to democratizing space access
Endurosat is one of the fastest-growing space companies in Europe with an annual growth of 300% year to year. With a team of over 80 people, the Sofia-based company is planning on executing nine shared satellite missions until the end of 2023.
EnduroSat has already participated in Kuwait’s first satellite mission, with its Shared Satellite Service back in June. Through this mission businesses and science programs were able to capture signals from the satellite and decipher them, upload code, and test their software in flight.
With a similar goal but a different target group, EnduroSat and IBM just announced the launch of a joint CubeSat Mission, named “Endurance” that would allow school-aged children to interact directly with a CubeSat in Low Earth Orbit for performing computations, accessing data from different sensors, and taking pictures.
In December 2020, EnduroSat joined forces with US-based space tech company Momentus for two service agreements: for the enclosure of Kuwait’s first spacecraft and EnduroSat’s SPARTAN CubeSat in Momentus’s Vigoride orbit transfer vehicle for the SpaceX Falcon 9 launch.
In 2020, the Bulgarian deep tech company also announced its partnership with South African space tech startup Hypernova to fly the latter’s first electric thruster on a Shared Satellite Mission in the fourth quarter of 2021.
Prior to the venture debt financing, EnduroSat had closed a €2.5M fundraising round from Neo Ventures and Freigeist Capital.
The EU working towards autonomous space capabilities
For over two decades, the European Union has been building on establishing its own space capabilities through programs, such as Copernicus and Galileo. According to the European Space Agency (ESA), every €1 invested in the space sector returns an average of €6 to the economy. The growing economic importance of space tech innovations is the reason why European institutions are aiming to stimulate the private sector and the democratization of space through new, non-financial mechanisms, as well as funding instruments. Apart from the financing, the EIB will support the development of a European tech space sector through advisory services, along with the European Commission. So far, the two institutions have created a market study on the European space sector and have established the EIB Space Finance Lab, which facilitates the connection between prospective tech companies and investors and access to EIB capital resources.