Meet Galactic Energy, China's leading private space company
Founder Liu Baiqi talks about rocket technology, satellite constellation, and Elon Musk
Pekingnology today features an interview with 刘百奇 Liu Baiqi, founder of leading private space company 星河动力 Galactic Energy, conducted by 极客公园 Founder Park, a project of GeekPark, one of China’s largest internet and technology innovation communities.
Founder Park has been interviewing leading Chinese start-up entrepreneurs in its #Founder 100 series. This newsletter is based on its 12th piece 星河动力 刘百奇：商业航天不必照搬 SpaceX Liu Baiqi of Galactic Energy: Commercial space companies do not have to copy SpaceX. The content has been edited and condensed.
Founded in 2018, Galactic Energy is China’s first private space company to achieve successive launches into orbit, the first to enter the 500km Sun-synchronous orbit (SSO), and the first to send multiple satellites on a single rocket.
Galactic Energy launched its second 谷神星一号 Ceres-1 rocket late December 6, 2021, becoming the first Chinese private firm to reach orbit twice. The four-stage placed five satellites into the SSO. That follows the company’s first launch in November 2020, which at the time made Galactic Energy the second Chinese private rocket firm to reach orbit.
Its investors include 东方富海 Oriental Fortune Capital, 华强资本 Huaqiang Capital, 普华资本 Puhua Capital, 安芙兰资本 Amphora Capital, and 元航资本. Galactic Energy raised 1.27 billion yuan RMB ($190 million) in Series B funding.
Q: The Chinese public became aware of domestic space start-ups around 2015 when funds and talents started to pour in. Why?
A: In 2014, China said it would encourage commercial spaceflight. In 2015, a series of policies were introduced, so the industry generally believes that 2015 is the first year of commercial spaceflight in China, mainly for the following reasons:
Policy. China introduced a series of policies to encourage private capital and non-governmental forces to participate in space research and production activities.
Capital. In 2015, capital began to move from the mobile Internet sector to emphasize “hard“ science and technology. Space is the hardest of the hard. It’s a niche field that the public is unfamiliar with, but some investors have taken notice.
Market demand. Private satellite companies emerged in 2014 and 2015. In addition to the Chinese government launching satellites, private companies, some universities, and research institutions began launching satellites, creating a market.
Talent. China’s two major state-owned space groups employ more than 300,000 people. With the development of the domestic economy, especially the mobile Internet industry, the employees now have diversified channels to realize their self-worth. Many left aerospace to do investment, artificial intelligence, autonomous driving, big data, etc. They are also a talent pool for private space ventures.
The history of commercial spaceflight in the United States can be for reference. In 1984, the U.S. allowed private companies to participate in commercial launch vehicles and opened the remote sensing satellite field. By the time SpaceX was established, the private industry had matured more.
The sustainable development of spaceflight does not have to depend entirely on endless government spending. Commercial spaceflight is inevitable.
Q: What were your thoughts when you left the state industry to pursue private commercial spaceflight in 2018?
A: I have been engaged in rocket design-related work since 2011, during which I participated in research on development planning and strategy of the space field. I also looked at it from the perspective of the industry. I mainly considered two points.
It was time. The opportunity has come for commercial spaceflight in China, and it is becoming a trend.
Second, we started our entrepreneurial work in 2018, three years after the first year of commercial spaceflight in China. We have been observing and thinking about how to start a business. We found that domestic, commercial launch vehicles took some detours in the initial stage, and from the beginning, the private industry fell into the idea of imitation plus system integration. The practice was to imitate mature launch vehicles and purchase the corresponding core subsystems or components, to become the first private company to mount a successful launch.
The most significant advantage of this approach is that it saves time, attracts capital quickly, and can iterate quickly. The disadvantage is that the rocket made in this way does not meet the market demand and is not commercially competitive.
At that time, we thought that if we wanted to develop China’s commercial launch vehicles, we must first analyze the market. A rocket such as the Chinese government’s Long March 5 would not be suitable for private enterprises.
Secondly, we must base ourselves on independent innovation to have independent research and development of core engine systems, subsystem components, etc. Only by doing that can we make a launch vehicle product that meets the market demand and is competitive, and only then can we hope to create commercial value for our private enterprise. To validate the idea, we decided to enter the market and set up the company according to our ideas.
Q: Galactic Energy was founded in 2018, which is 3 years later than many peers. Why doesn’t the lag appear to have an impact?
A: We were officially incorporated in February 2018 and got our first funding in July. At that time, the first batch of rocket companies might have raised financing of 400 to 500 million yuan RMB, and their rocket products were almost finished, so yes, we were late in the game.
But speaking from now, Galactic Energy was the first to achieve successive launches into orbit, and we plan to complete six commercial launches this year. So we are leading the pack in the market, and maybe the entry wasn’t exactly late.
Any industry in the early stage of development will go through a period of exploration. The government’s policy would not be unambiguous, and the market demand and technical routes would have to be explored.
The adventures of the predecessors also helped the later established companies to take fewer detours and focus more on their business and products.
Q: In your view, where was the demand for private commercial spaceflight at that time?
A: The tasks that private companies could do fall into three categories:
The first category is the launch of micro and nano satellites on a retail basis. Micro and nano satellites refer to small satellites under 200 kilograms. What is on a retail basis? In the domestic market, we see each of the respective satellite companies, universities, and research institutes rarely launch more than five satellites a year. Some companies may launch just one a year. These satellites are not the same in appearance, the target orbit is not the same, and the launch time is not the same. So even if we have a rocket as Elon Musk does that can launch 60 satellites with one single launch, we can’t find so many suitable satellites.
This is similar to going out and taking a cab, meaning that the market needs small rockets. For small rockets, small solid-fueled rockets have incomparable advantages over small liquid-fueled rockets because of their low cost, simple technical composition structure, and ease and speed of launch.
The second category is the low-orbit satellite constellation network that we see now. I always think that the satellite constellation is critical. In the tech field, people often say apply the tech way to the traditional sectors [meaning scale things up at low marginal cost]. Then in the area of low-orbit satellite constellation, the course may be to use low-orbit satellite constellation to accomplish traditional space tasks.
That is, use inexpensive and small low-orbit satellites via the constellation to replace the higher-orbit, higher-value satellites. That could entail future remote sensing and communication enhancement using low-orbit satellite constellations.
However, this also means that there would be many satellites at the same destination, so we can no longer use small rockets. Then we must use a multi-satellite rocket to launch and reduce the cost through reuse. To meet this category of market demand, we need medium and large liquid-fueled launch vehicles that are reusable.
We believe that 200-500 tons rockets are more appropriate. The cost-effectiveness for rockets smaller than 200 tons would be too low because liquid fuels are the cheapest among different fuels, and the control system cost is about the same.
The larger the rocket, the more fuel it consumes and the more cargo it carries, but it should not be too large. The technical difficulty and cost grow exponentially if the rockets are huge, which would be difficult and risky for domestic private enterprises.
The third category is the traditional, large tasks from the government. Although the Chinese government hasn’t contracted any private companies so far, we feel it’s just that the time has not come. With the increase in their launches, private companies will have the opportunity to participate in the bidding of large, national tasks.
These three categories of market demand will present themselves in due course. Micro and nanosatellite launch is here already. A few years later, the market for low-orbit satellite constellations will emerge. After that, when the success and reliability of private companies are high, they would get contracts from the government.
Q: It’s been four or five years for China’s domestic, commercial space companies. In your opinion, is the gap with the U.S. commercial space widening or narrowing?
A: From the technical point of view, the gap has widened, but the progress of technology itself is a spiral, so there is no need to be pessimistic about the current widening of the gap.
Starship is for going to Mars. In low-orbit satellite launches, our gap will gradually narrow in the next two or three years. Because from the commercial point of view, we are pursuing the low-orbit constellation from the ground to space, reducing the launch cost per kilogram of a rocket and improving the launch success rate. Although the two countries have a particular gap in the industrial base, we can rely on low-cost and highly reliable commercial launches to shorten the gap as a matter of business.
Q: What are the main differences between solid and liquid rockets?
A: In layman’s terms, the main difference between solid and liquid rockets is the engine. Solid rockets are relatively cheap except for fuel, and the most expensive thing is fuel. On the other hand, liquid rockets are very expensive except for fuel. So when the rocket’s size increases and the fuel’s quantity increases, the advantage of liquid rockets will be shown; and when the size of the rocket is small to a certain extent, the cost of liquid rockets will be relatively higher.
Q: Now there is the solid rocket route, there is the liquid rocket route, and there is the route of reusable rockets. In your opinion, which route is easier, or more difficult?
A: Let’s be clear about one fact: all private rocket companies in China are currently pursuing reusable rockets. Only Astra in the U.S. has explicitly stated that it does not do reusable small rockets, while all other companies are aiming for reusables.
Galactic Energy not only builds solid rockets but also is testing liquid rocket engine power systems. The key technology of reusables is being explored by everyone. But we need to be aware that SpaceX is the only company in the world that really achieves orbital-class reusable rockets. There is a long way to go.
And whether it is a solid rocket or a liquid rocket, no matter big or small, it is a complex system, not as easy or difficult as we simply think about the technical route. The success of a company’s rocket launch marks its comprehensive ability - to develop a launch vehicle, control all the risks, and achieve the ultimate goal. There are only 11 countries in the world that have such capability and only 7 countries that maintain a continuous and stable capability.
People may be obsessed with solid, liquid, kerosene, or methane. But trying to make a rocket is a big challenge for any private company. Space Services Inc., the first commercial rocket company established in the United States, was founded in 1980 and lasted until 1994 when the rocket did not make it to orbit and the company folded.
Another company, Rocketplane Kistler (RpK), was awarded a contract along with SpaceX, but the funding broke down, and its rocket never it to orbit. The company went bankrupt.
Q: What is the next goal in your commercialization? Will Galactic Energy become a company with volume launch capability or sustained launch capability?
A: We are working in parallel on solid and liquid launch vehicles. The former can be described as a cab and the latter as a bus.
The solid rocket is Ceres-1. After the successful launch on December 6, 2021, we plan to complete 5 to 6 launches this year. From the production point of view, we have started mass production of rockets, which is also a leap forward for the company. There is a market demand for solid rockets, and this series of products will continue to exist even after the success of medium and large liquid rockets.
The liquid rocket is under full development. The main engine and auxiliary engine have been successfully tested, and the related products have been put into production and are planned to be put into orbit in 2023 to achieve an orbital class reusable rocket in 2025-2026.
Our market positioning is a 254-ton rocket as the basic model, which can reach 650 tons through bundling that has a capacity of 14 tons to reach the low orbit. That would be the biggest rocket among those that domestic private companies are indeed working on.
Regarding reusability, our attitude is like this: the first step is to be a carrier rocket, which means that only when the rocket reaches orbit can it launch satellites and spaceships. It is only meaningful to reuse a rocket if it can send satellites and spaceships to orbit.
Galactic Energy has chosen to start by reaching orbit, to make a launch vehicle that can enter orbit and make money, and then to transplant the technology of vertical landing and reusability to the rocket.
Other companies choose to start with jumping experiments. Both paths have their characteristics and are different technical paths in the development process. One is bottom-up, and the other is top-down, but both are possible.
For Galactic Energy, we pursue commercial viability. A company needs money to develop. In addition to raising funding from the capital market, we hope to earn money from the market. To make money, we must create a rocket that meets the market demand and has a super-high cost-effective performance. Even without reusability, it should be cheaper than other existing rockets. Then we aim to further reduce the cost through reuse, which is the only way to show competitiveness. This is also our thoughts for the future.
Q: Can Galactic Energy now feed itself by the launching business, or do you still need the support of the capital market?
A: The revenue from a small solid rocket is about 35 million yuan per launch, which is profitable from the current point of view. If Galactic Energy aims at solid rockets only, it can achieve profitability in the next one to two years. However, because the investment in the R&D of liquid rockets is relatively significant, the money earned from launching solid rockets is not enough.
Therefore, the money will come in two ways. One is the money earned from rocket launches in the commercial market, and the other is the equity financing to pay for the research and development of liquid rockets and reusability. After our liquid rocket is successfully developed, the rocket-launch business can support the company’s everyday operations.
Q: Your first rocket was named “Ceres.” Why?
A: The name has to do with the company’s long-term planning. Ceres was the first asteroid discovered by humans, and our liquid rocket was called 智神星 Pallas, the second asteroid discovered.
When Galactic Energy was founded, we made a three-step development plan.
The first step was to develop a successful small solid launch vehicle to meet the market demand for retail launches of micro and nano satellites, to ensure the company’s survival and revenue generation, and to free the company from relying entirely on equity financing for development.
The second step is to achieve the vertical reuse of medium and large liquid launch vehicles by 2025, which can provide strong support for future low-orbit constellations.
The third step is that after 2030, we may face the market demand for asteroid mining and need to develop a larger and more powerful transport vehicle that can realize round space trips. It will still be a rocket, but it can go and return. Because the distant goal is related to asteroids, we named the company’s two rockets after asteroids.
Q: Commercial spaceflight has to be both innovative and efficient and cannot be done according to the standards of state spaceflight. What is the difference in approach from conventional spaceflight?
A: Compared with traditional spaceflight, the starting point is different. Government-run spaceflight aims to accomplish a national task. For example, Long March 5 is to launch a space station, and Long March 7 is to launch a cargo spacecraft - both to accomplish major national tasks.
Commercial spaceflight is different. It needs to find the demand from the commercial market, locate itself, and then make decisions quickly. The decision-making process is much faster than the state’s because decisions are made only at the company level. Major national projects must be fully justified, with many R&D funds and a long time. In this respect, commercial spaceflight saves a lot of time.
Secondly, commercial spaceflight should select small technical innovations to cut costs and improve efficiency upon meeting commercial needs.
Mature talents make up our whole team. So during the development process, we omitted some experiments. We believe that computer simulations can cover the environment a rocket will be exposed to, and by cutting some experiments, we also achieved a shorter development cycle.
In general, firstly, the positioning of our product is precise. Second, when choosing a solution, we will select an innovative small-scale solution that can reduce cost and increase efficiency while meeting the demand. When we developed Ceres I, it took us two years, nine months, and one day. That is the shortest record from inception to orbit for any rocket company in the world.
Q: Why didn’t Galactic Energy do it as Elon Musk did?
A: Many companies in China want to benchmark SpaceX and Elon Musk, and many investors wish you to benchmark Musk.
But we can look back. Musk established SpaceX in 2002. By 2008, its rockets blew up three times, Falcon 1 had only a few hundred kilograms of capacity, and the engine performance was a mess.
SpaceX successfully made it to this day. Who did it benchmark against? At that time, the mountain in front was the United States NASA, China Space, the Russian Space Agency, and the Japan Aerospace Exploration Agency. SpaceX did not target them but found its position in the market.
For us today, if we think that the first principle is correct, then we cannot copy Musk because the environment of the two countries is different, and the stage of development is also different. Commercial spaceflight in the United States has been developing for decades, the technology basis in the two countries is different, and the problems to be solved are also different.
SpaceX was initially established to go to Mars, but it was too difficult, so it chose to do Falcon 1 to meet the needs of the U.S. military and then got the contract of transportation to the space station in 2007. The market demand drove its development until the rocket capacity was upgraded to 22.8 tons when the market for Starlink was opened up.
In the same way, we have to consider what kind of policy and technology environment is in the current market and what are the problems to be solved. The problem we are facing now is that there are more satellites and fewer rockets, or even that there are satellites but are no rockets.
Now the production speed of satellite companies is faster than rocket companies, and the government’s rockets mainly meet the national missions, not the commercial demands.
Many satellites can’t find rockets. For one, there are few rockets; for another, the price is too high. Our country’s rocket-launch price is still relatively high compared with SpaceX, which leads to the high cost of building a satellite constellation. How to reduce the cost of a rocket launch, increase the capacity of a rocket launch or increase the frequency of launches is a problem we have to solve. There is no need to tread the path that SpaceX took again.
Q: Your latest funding is 1.27 billion yuan. What exactly will this money be spent on? What is the difference between the models of financing in the aerospace field and the Internet?
A: The money will be spent on the research and development of rocket products, and also the daily operation of the company like salaries, rent, etc.
The main expenses are in the later stage of R&D. In the domestic, commercial space field, we are the fastest in developing rockets and also the most economical in spending money. From the company’s establishment to the successful launch of the rocket into orbit, only about 100 million yuan was spent on the development of Ceres-1. This volume is 1/5 to 1/10 of the cost of developing rockets in the traditional state system.
Many people think rocket companies burn a lot of money, and they must spend a lot of money to develop rockets, including investing in products, doing experiments, and paying staff. However, the use of funds by rocket companies is different from that of Internet companies. The main difference is in the certainties and the uncertainties.
From the beginning of a rocket project, there will be detailed planning, how much manpower will be equipped, what products will be made, and what experiments will be done. There is also a clear plan of how much money will be used. If we know the amount of money, we won’t have a fear of money - fear only exists because one doesn’t know how much is needed.
The aerospace field has certainties because it is a ToB (Technology to Business) industry after all, and the volume and scale of the whole sector are still small compared with the Internet.
With the scale of the Internet industry, the ceiling is higher, and there is more imagination and more significant market space. One can burn money through the development to get up rapidly. But in spaceflight, that is not possible. A rocket launch failure is not because of a lack of money but because of various other reasons. The methodology is different for each industry.
Q: Today’s Internet has given birth to various outstanding talents. Will these people have the opportunity to play their role in the aerospace field in the future?
A: The aerospace field is big: rocket manufacturing and launch, satellite manufacturing, satellite in-orbit measurement and control, and constellation operation, as well as some applications and services after data, become available from these satellites.
The back-end applications and services will overlap with the mobile Internet industry. For example, Starlink is a (de facto)communications service that needs the same talents as the telecommunications companies. A company in remote sensing based on a satellite constellation would have a large amount of remote sensing data. The data would birth to applications for agriculture, forestry, urban development, land planning, and others, which would need many programmers and algorithm experts.
What we do in the space industry is manufacture rockets and launch them. When whole back-end applications and services are up, there would be a huge industry, and it’s possible to be as prosperous as the Internet industry.
Again, this is an interview with 刘百奇 Liu Baiqi, founder of China’s leading private space company 星河动力 Galactic Energy, conducted by 极客公园 Founder Park, a project of GeekPark, one of China’s largest internet and technology innovation communities.
Founder Park has been interviewing leading Chinese start-up entrepreneurs in its #Founder 100 series. This newsletter is based on its 12th piece 星河动力 刘百奇：商业航天不必照搬 SpaceX Liu Baiqi of Galactic Energy: Commercial space companies do not have to copy SpaceX. The content here has been edited and condensed.