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Vector Launch, on the edge of total failure

Craig Bailey/FLORIDA TODAY

Space technologies are one of the fastest-growing but most risky industries today. Usually, investors give their money, and entrepreneurs enter into contracts, not having complete confidence that promising innovations will be successful. Sometimes space companies have to wait years to achieve satisfactory results, and, in some cases, they fail and try to get back on their feet as Vector Launch.

Early Years of Operation and Rapid Success

Vector Launch is a rocket design company for launching suborbital and orbital payloads. It was founded in 2016 by Jim Cantrell, who became CEO, John Garvey, Shaun Coleman, Ken Sunshine, and Eric Besnard. Vector has achieved significant results in just a couple of years, attracting large investors and contracts. As such, in 2018, the company closed a series B round of financing with approximately $100 million from Kodem Growth Partners, Morgan Stanley, Sequoia Capital, Lightspeed Venture Partners, and Shasta Ventures. Moreover, in 2019, it signed a contract to launch the ASLON-45 spacecraft for $3.4 million with the U.S. Air Force.

Such trust was caused by the previous successes of the company. It had the platform Galactic Sky in California, which was developing software-defined satellites to increase their capabilities for commercial usage. In 2017 and 2018, engineers successfully tested the Vector-R rocket, its telemetry, and the process of refueling with propylene without liquid oxygen. In addition, the company received confirmation for three patents: a liquid oxygen-propylene rocket engine, a rocket-fuel injector, and a satellite platform control system. Such achievements looked promising, which prompted many companies to sign contracts and agreements with Vector. After the planned Vector-R launch in 2018, the company had to deliver dozens of satellites to space for Kanematsu Corporation, York Space Systems, Iceye, Astro Digital and Alba Orbital. However, none of the agreements was implemented.

Unexpected Troubles

In August 2019, Vector announced the dismissal of CEO Jim Cantrell, while John Garvey took his place. Simultaneously, dozens of employees were fired, and several offices closed. The new CEO stated that Vector should suspend some of its activities due to the complicated financial situation. In December 2019, the company filed for bankruptcy.

The financial problem cause is that one of the largest Vector’s investors’, Sequoia Capital, pull off its funds. However, according to the company’s spokeswoman, Sequoia didn’t pull off any investments, it just didn’t want to give any more money. Other investors followed Sequoia’s lead, and Vector was left without sufficient funding to rebuild the launch pad, complete spacecraft development, and conduct tests. The assets of Vector’s GalacticSky were sold to Lockheed Martin for $4.25 million.

The company’s bankruptcy also resulted in several lawsuits from employees, shareholders, and partners. For example, three investors sued Vector for fraud. Rincon Etal Investments, Broadmont Associates LP, and Robert Draper allege that the executives withheld information about Sequoia’s exit to get $400,000 of investment from them. If the companies had known that Sequoia was leaving, they would not have invested their money. Another lawsuit was filed by Doug Nelson, Vector’s former vice president of facilities, seeking more than $100,000 in severance pay.

Former CEO Jim Cantrell also demands payments from Vector for terminating a contract without sufficient reasons. In 2018, Vector denied the allegations and filed a counterclaim. In 2021, the bankruptcy trustee also sued Cantrell due to his “disloyal and systematic looting of Vector for his own personal financial gain in order to fund Cantrell’s personal racing hobby and other business ventures unrelated to Vector.”

A New Start

Since Vector has filed for Chapter 11 bankruptcy protection, it still stands a chance of being revived. First, this law suspends all claims against the company until it pays off debts to creditors. Secondly, in November 2020, Vector’s launch assets were bought by John Moran, president and chief executive of Moran Logistics, and Robert Spalding, who became chief executive. Thirdly, in January 2021, the stakeholders also signed a liquidation plan, which means selling the remaining assets to pay off the company’s debts. Therefore, Vector can gradually deal with all financial problems but keep his main activities.

Vector’s new owners, Moran and Spalding, want to relaunch the company using some of the technology and resources purchased before the bankruptcy. According to them, the reason for the Vector’s failure was the wrong choice of technologies as it used an insufficiently tested combination of propylene and liquid oxygen propellants for engines. Maybe, realizing the shortcomings of this technology, Sequoia stopped funding. For this reason, the updated Vector intended to use more traditional technology and launch the revised Vector-R in 12-15 months.

Such a reason for the failure could explain investors’ exit if Moran and Spalding’s ideas would have been realized. However, the Vector likely faced other problems hidden from the public, as no news about testing or developing spacecraft appeared. For example, Cantrell says he offered an emergency financing plan to Vector’s board, but they never delivered it to shareholders. This fact may indicate the failure of Cantrell’s idea or the lack of the board members’ experience and rationality. Considering that the reviews of former employees before and after bankruptcy tell about “terrible management and communication, especially upper level”, the latter option is quite likely.

However, the public will be able to draw conclusions about the work of the renewed Vector Launch only after the end of all legal processes associated with bankruptcy or the first significant news. In the meantime, Vector’s website can only offer a “Contact Us” button instead of complete information about its activities and achievements.

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