Bengaluru and California-based space tech startup Pixxel on June 1 said it raised $36 million in a series B funding round led by Google, highlighting the growing value of India's space tech firms in the times of the so-called funding winter.
The round also saw participation from Pixxel's investors such as Radical Ventures, Lightspeed, Blume Ventures, GrowX, Sparta and Athera.
"It was good that we were able to raise $36 million in the market. Not a whole lot of companies in the space sector are being able to raise at this point in time," Pixxel CEO and co-founder Awais Ahmed told Moneycontrol.
The funding is in the form of a 100 percent primary capital infusion, Ahmed said. Regulatory filings showed that Pixxel was in the market for a $50-million round. Ahmed, however, said that they kept the remaining sum as a "buffer in case you want to go out and raise something later".
The startup plans to use the funds for developing satellites and infrastructure as it plans multiple launches early in 2024. Six "Firefly" satellites are planned in 2024 and 18 other in 2025.
Multiple launches, team expansion planned
The startup also plans to expand its team to work on multiple projects simultaneously. As of now, it has 120 employees in Bengaluru and the US, and it plans to hire up to 200 employees by the end of the year. While the majority of the hiring will be in Bengaluru, Ahmed said that they would also hire for Europe and the US for partnerships and business development.
The funds will also be used to develop Aurora, the start-up's AI-powered analytics platform, which aims to make hyperspectral imagery analysis accessible to everyone.
Pixxel develops and launches hyperspectral imagery satellites, which take a spectrum of light and divides it into hundreds of narrow spectral bands so one can better understand and discern anything on the planet
Founded by BITS-Pilani alumni Ahmed and Kshitij Khandelwal in 2018, the startup aims to build a constellation of hyperspectral earth-imaging satellites and analytical tools to mine insights from space data.
The latest round brings Pixxel's total venture funding to $71 million. in 2022, it raised $25 million in a Series A funding. Ahmed added that the company raised an additional $2 million bringing the Series A corpus to $27 million. IT consulting firm Accenture is also an investor in the startup.
Raising funds during market slowdown
"It took us a lot more time than it has taken us in the previous rounds. We could see the market slowdown. But I think the fact that we had gotten recent contracts and the fact that our satellites are almost built helped us," Ahmed said.
In April, United States' National Reconnaissance Office (NRO) announced that it awarded a five-year contract to Pixxel for providing hyperspectral imagery (HSI). The startup is also keen to use its satellites for the Indian defence sector.
'Harder for space startups to raise money'
Ahmed said that in the lead-up to raising the Series B funding, the startup talked to almost every investor in India and many international ones. However, he said, a lot of funds weren't even willing to meet, highlighting the lack of appetite when it comes to funding the space sector.
"I think the appetite that we had seen previously versus the appetite we have seen now could be a function of two things. It could be a function of the round size. The larger the round size becomes the lower the number of funds that would be willing to take that risk, especially in India, given it's still a nascent market," he said.
"When people talk about a Series B funding, usually, for a SaaS company or an enterprise company, they're looking for a certain amount of revenue that is coming in already, which is quite different from a hardware company that is building satellites. It has to wait until the satellites have to go up and so on."
However, for Pixxel it just took longer to get responses. The number of funds that converted from the top of the funnel to actually getting to conversations was much smaller "and from there to conversion also was much smaller", Ahmed said.
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