Richard Branson’s Virgin Orbit, one in a series of high-risk tech investments from the British billionaire, appears to be at death’s door.
Weeks after the attempted launch of a payload from U.K. soil failed, a major milestone for the satellite deployment startup, the company is now running out of money.
As a result it will have to cut 675 employees, or roughly 85% of its entire workforce, and book charges of $15 million in the first quarter to cover the cost of the layoffs.
Founded by Branson in 2017, Virgin Orbit said it needed to downsize “in order to reduce expenses in light of the company’s inability to secure meaningful funding,” according to an SEC filing on Thursday.
This comes even as Branson’s Virgin Investments Limited has now agreed to lend Virgin Orbit $10.9 million in the form of a senior secured bond convertible into shares.
Shares in Virgin Orbit, which first listed on the stock exchange at a valuation of $3.7 billion in August 2021, are expected to halve when trading begins on Friday.
Best known for founding Virgin Records and Virgin Atlantic, Branson controls a vast empire of businesses more varied than that of Elon Musk. Already a decade ago, The Observer described his 400-odd operations as a “tangled web of enterprises owned via a complicated series of offshore trusts and overseas holding companies.”
Lately, however, his more ambitious gambles have failed to pay off.
Both his space tourism and hyperloop investments have been huge disappointments
Space tourism firm Virgin Galactic is still waiting to commence its first-ever commercial service, which is slated for the second quarter but follows repeated delays and safety concerns that recently led to the departure of its president for aerospace systems.
The listed company, currently worth little more than $1 billion, is financially on the ropes. In February, it said it burned through $400 million in cash last year amid a net loss of half a billion and revenue of just $2.3 million.
It already had to hit up shareholders in August for more funding and would only venture so far as to forecast its cash burn rate in the first quarter, predicting the business would require another $130 million just to maintain operations, let alone invest in new equipment.
A spokesperson for Virgin Galactic told Fortune the company enjoyed a “strong capital position,” citing the $980 million in cash it had in the till at the end of last year, and clarified the aerospace executive’s departure was part of an “organizational change ahead of Virgin Galactic’s launch of commercial service.”
Branson’s investment in Hyperloop One, later rebranded as Virgin Hyperloop, has also proved to be a disaster. The futuristic technology, in which people are transported at blindingly fast speeds along a vacuum tube, was famously touted by Musk nearly a decade ago as “not that hard.”
To date, however, the technology has gotten nowhere, with only one successful passenger test along a 500-meter tube at a speed of 100 miles an hour—almost a tenth of what it was supposed to do.
In October 2021, its cofounder and CEO departed, and four months later half of its staff were eliminated after it ditched plans for passenger transport to focus on freight.
Musk himself has still failed to deliver on his own promise for a hyperloop.