Rocket Startup Without a Launch Gets NASA Award for Lunar Lander

(Bloomberg) -- Five years ago, Tom Markusic's rocket company Firefly Space Systems filed for bankruptcy. This week, Tom Markusic's rocket company Firefly Aerospace announced that it will aim for its first launch in mid-March, try to raise $350 million in capital and attempt a Moon landing on behalf of NASA in 2023.

Based just outside of Austin, Tex., Firefly has been trying to carve out a unique path in the suddenly frenetic commercial space industry. The company does not make huge rockets like Elon Musk's SpaceX, nor does it make small rockets like Peter Beck's Rocket Lab, and a number of other start-ups. Its first rocket — called Alpha — can carry about 2,200 pounds of cargo into orbit for $15 million per flight, making it the space transport equivalent of a minivan in a landscape so far dominated by 18-wheelers and sedans.

Whether or not Alpha can fly and do its job remains anyone's guess. The first Alpha is currently being primed for takeoff at a pad located at Vandenberg Air Force Base, a little more than an hour northwest of Santa Barbara, California. The launch — months, arguably years, behind schedule — does finally seem ready to occur next month so long as the ever-fickle Rocket Gods feel generous. “This is the final push,” said Markusic, Firefly's CEO. “We are all-in every day.”

It's a business miracle that Markusic, a veteran of NASA and SpaceX, is in the position to give Alpha a go. When the start-up he co-founded in 2014 went bankrupt two years later, it appeared that Firefly Space Systems would have its story end before it ever really began. Markusic, though, found a rescue plan in the form of Max Polyakov, a Ukrainian multi-millionaire who made his fortune in business software and a mix of gaming, dating and advertising web sites. Over the past few years, Polyakov has put $200 million into the rebranded Firefly Aerospace and ranks right alongside Musk and Jeff Bezos, who founded the rocket company Blue Origin, in terms of individuals who have sunk the most personal capital into space ventures.

The company is aided by government contracts. On Thursday, it revealed a $93.3 million deal to build a lunar lander for NASA. Dubbed “Blue Ghost,” the lander will carry various scientific instruments to the Moon as NASA conducts a number of missions ahead of a hopeful 2024 return of humans to the lunar surface through the Artemis mission.

Firefly had earlier acquired technology tied to Israel's Beresheet lunar lander that crashed into the Moon in 2019. Markusic, however, said that Firefly will largely build Blue Ghost from scratch. “This is 100 percent American technology,” he said. The company has created preliminary designs for the spacecraft and will have much work to do to meet its second half of 2023 launch date target.

Blue Ghost would likely fly to the Moon aboard a SpaceX rocket. It would carry the scientific instruments for NASA and still have room for hardware from other customers. Firefly could make up to $50 million in additional revenue from these customers, according to Markusic. Eventually, Firefly hopes to perform these types of missions with its own rockets.

A somewhat stunning announcement made Wednesday was that Polyakov would no longer be on its board of directors. He remains the largest shareholder and the guy who is keeping the company alive, but has given up any active role with the rocket maker. The reason for the move became clearer as Firefly also announced a pair of new board members: Deborah Lee James and Robert Cardillo. James served as secretary of the Air Force for four years, among numerous military and government jobs; Cardillo is the former director of the National Geospatial-Intelligence Agency. Together, the new directors have bolstered Firefly's credentials as it looks to do more business launching satellites for the government.

“It's a business decision,” Markusic said of Polyakov's board departures. “As Firefly continues to work more closely with the U.S. government, Max and I decided it was best to have a leadership team made up of U.S. citizens. Max is not a U.S. citizen, but he is a very astute businessman.”

Last month, Mikhail Kokorich, the Russian founder and CEO of space start-up Momentus, announced his resignation from his company. In a statement, Momentus said the move was “an effort to expedite the resolution of U.S. government national security and foreign ownership concerns surrounding the company.” These two executive shuffles serve as a reminder that as much as the space industry tries to move away from its government roots some baggage will hold, particularly around national security. “What we are doing is essentially missile technology,” Markusic said. “It's dual-use. By nature, there has to be that segmentation.”

Over the past couple of years, Firefly executives were surprised to see NASA and other government awards go to less well-funded, less-mature space start-ups. Some people within the company suspected that the U.S. government blocked Firefly because of Polyakov's Ukrainian roots. During the Cold War, Ukraine served as a major manufacturing hub for missiles and the Soviet Union's best space-faring rockets. 

For his part, Polyakov put a positive spin on the changes at the company, focusing on the launch and the deal with NASA. “Our new board changes bring a new level of expertise and contacts that further strengthen the company,” he said, in a statement. “It's an exciting time.”

After living in Silicon Valley for several years, Polyakov moved to Scotland in December. Moving forward, it will no longer be up to him to foot all the bills at Firefly. The company hopes to raise as much as $350 million in the coming months, Markusic said. Whether this will be through venture capital or a blank-check company or some other means remains to be decided.

Firefly plans to manufacture a number of its Alpha rockets and then a larger rocket called Beta. According to Markusic, the $350 million would be enough to carry Firefly through five years of development and expansion.

Markusic, who flew hobbyist rockets as a kid, remains as committed as ever to the idealistic slog that is commercial space. “It's still really hard,” he said. “Like most important things, it gets harder and harder until the end.”

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