Billionaire's Space Unicorn Axiom Is In Crisis Amid Funding Struggles

Forbes

With SpaceX and NASA as partners, Axiom pioneered commercial space flight to the International Space Station. Its next act was to be a commercial space station of its own. But missteps, dire financials and delays have sent it spiraling out of trajectory.  Read the full story on Forbes: https://www.forbes.com/sites/jeremybogaisky/2024/09/17/axiom-space-station/  Subscribe to FORBES: https://www.youtube.com/user/Forbes?sub_confirmation=1  Fuel your success with Forbes. Gain unlimited access to premium journalism, including breaking news, groundbreaking in-depth reported stories, daily digests and more. Plus, members get a front-row seat at members-only events with leading thinkers and doers, access to premium video that can help you get ahead, an ad-light experience, early access to select products including NFT drops and more:  https://account.forbes.com/membership/?utm_source=youtube&utm_medium=display&utm_campaign=growth_non-sub_paid_subscribe_ytdescript  Stay Connected Forbes newsletters: https://newsletters.editorial.forbes.com Forbes on Facebook: http://fb.com/forbes Forbes Video on Twitter: http://www.twitter.com/forbes Forbes Video on Instagram: http://instagram.com/forbes More From Forbes:  http://forbes.com  Forbes covers the intersection of entrepreneurship, wealth, technology, business and lifestyle with a focus on people and success.

Transcript

00:00Today on Forbes, this billionaire startup wanted to build a space station.

00:05Now it can barely pay its bills.

00:09Axiom Space, a startup co-founded by billionaire Cam Ghaffarian, has a lofty goal—to build

00:15private space stations that allow humans to live and work off-planet, en masse.

00:22But lately, the Houston-based company has been grappling with a more earthly concern—a

00:27struggle for survival.

00:29According to internal documents, seven former employees who spoke on the condition of anonymity

00:33due to nondisclosure agreements, and space industry experts, a severe cash crunch, business

00:40challenges and a cold reception to its latest fundraising efforts have hamstrung Axiom and

00:45led to extensive layoffs and pay cuts.

00:49Axiom had intended to build an orbiting outpost using the International Space Station, or

00:53ISS, as a base.

00:56The plan was to build modularly, connecting sections of its so-called Axiom station to

01:01the ISS, finishing work on them in space, and finally detaching the completed station

01:06to fly free.

01:08It would make money by hosting tourists and companies looking to use microgravity conditions

01:13for things like drug development and semiconductor manufacturing.

01:17But Forbes has learned that plan has been upended by Axiom's slow progress on the first

01:22module and the prospect that the ISS may have to be de-orbited two years earlier than

01:27planned.

01:28Now, a year after raising $350 million in a round led by Saudi Arabia's Al Jazeera

01:34Capital and South Korean pharma company Boryeong at a valuation of $2 billion, giving it a

01:41total of $500 million in funding, the startup is struggling to convince investors to give

01:46it more money to fund a smaller, less commercially lucrative station.

01:51This according to former employees who spoke to Forbes.

01:55The lack of fresh capital has exacerbated long-standing financial challenges that have

02:00grown alongside Axiom's payroll, which earlier this year was nearly 1,000 employees.

02:06Sources familiar with the company's operations told Forbes that co-founder and CEO Michael

02:11Soffredini, who spent 30 years at NASA, ran Axiom like a big government program instead

02:16of the resource-constrained startup it really was.

02:20His mandate to staff up to 800 workers by the end of 2022 led to mass hiring so detached

02:26from product development needs that new engineers often found themselves with nothing to do,

02:32according to our sources.

02:34In an interview discussing a range of issues raised by Forbes reporting, Ghaffarian conceded

02:39that Axiom was facing challenges, including a tough fundraising environment that required

02:44a quote, right-sizing of staff.

02:47But he said he expects to close on fresh funding by the end of the year and that the

02:51future is bright.

02:53He said, quote,

02:54All my space companies where we are doing things that have never been done before, it

02:58is not a straight line.

03:01When Axiom was founded in 2016, it promised investors the first station module would be

03:06aloft in 2020.

03:09With that target receding, Axiom looked to expand into two new lines of business to bring

03:14in badly needed revenue while the station was under development.

03:18In 2020, it began lining up passenger trips to the ISS on SpaceX rockets.

03:24The company pitched these private missions as a way to develop the capability to bring

03:27business one day to its own orbital outpost.

03:31And in 2022, it won $228 million in NASA funding to design spacesuits for the Artemis III moon

03:38mission.

03:40But the suits program sucked engineers and resources away from the station effort, and

03:44the passenger service to the ISS proved to be a money-hemorrhaging distraction, former

03:49employees said.

03:50A former Axiom executive told Forbes, quote,

03:55Turns out there's not a lot of billionaires that want to set aside their life for 18 months

03:59to go train to be an astronaut for the ISS.

04:03Axiom found itself struggling to make payroll, which hit $10 million a month in early 2023,

04:09per an internal document, and it fell behind on payments to suppliers, former employees said.

04:16The former Axiom executive told Forbes, quote,

04:19The fundraise rounds were never enough to keep us ahead of the curve, and the revenue

04:23certainly wasn't closing the gap.

04:27For full coverage, check out Jeremy Bogaski's piece on Forbes.com.

04:33This is Kieran Meadows from Forbes.

04:35Thanks for tuning in.

04:39♪♪♪

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