Astra founders looking to take company private before it runs out of cash

The two founders of Astra Space, Chris Kemp and Adam London, have sent a proposal to the company’s board to take it private with a $30 million valuation. This comes about a week into the search for new funds before its bridge loan comes due on November 17.

Astra could go private to help solve funding shortage

In the latest news from Astra’s financial troubles, the two company’s founders have offered to take the company private. Chris Kemp, Astra’s CEO, and Dr. Adam London, Astra’s CTO, would do this by purchasing the rest of the company’s outstanding common stock.

The purchase would come at a premium, the two plan to buy each share for $1.50 a piece. As of market close on Friday, Astra’s shares were trading at $1.36 and decent uptick from where it was earlier in the week.

Kemp and London’s proposal was given to Astra’s board of directors, of which both of them sit on, Kemp is also the board’s chairman. The company hasn’t shared if it planned on taking the offer, however, it did cancel its Q3 earnings call because of the proposal. The earnings call was suppose to take place on Monday.

Astra has struggled to meet its goal of mass producing a rocket since its creation in 2016. The company retired its Rocket 3.3 design after only reaching orbit twice during its five flights and moved on to its Rocket 4 design.

The company has since struggled to get Rocket 4 off the ground. With dwindling cash, Astra laid off 25% of its staff to focus more on its satellite engine division which it acquired in 2021.

Last month it defaulted on a $12.5 million loan which required Astra to take out a new interim loan to pay it and survive long enough to find further funding. Right now, it looks like taking the company private through its founders is the only option.

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Should the board take the offer?

Astra went public in 2021 through a SPAC merger, which it was valued at $2.1 billion. At the time, the company did not have a stable form of revenue, nor even close to having a functional rocket. It used those funds to purchase Apollo Fusion for its satellite engine technology and then went on to continue its rocket development.

Safe to say in my opinion, it probably wasn’t ready to go public just yet.

Back during the Space Spacpaluzza of the early 2020s, interest rates were low, VC money was flowing, and the markets looked up – even though the world was still dealing with the Covid-19 pandemic. Post pandemic, interest rates are at record highs, the market has slowed down, and VCs are being more strategic with investments.

While back in 2021, space launch was hot, however, now the market looks overcrowded. So for Astra, finding new investment might be difficult.

This deal, which looks like will come to a total of $60 million to $65 million, of which they would still have to raise funding for. This might be the best offer the board will get to see.