Virgin Orbit is a subsidiary of the Virgin Group that offers launch services for small satellites. The firm was founded in 2017 as a spin-off from Richard Branson’s Virgin Galactic space tourism venture to develop and commercialise the LauncherOne rocket, which had previously been a project under Virgin Galactic. LauncherOne is a two-stage air-launched launch vehicle capable of transporting 300 kg of cargo to low-Earth orbit. In a span of two years, the corporation fell from a prospective satellite launch sector to a “space nightmare” due to a series of major failures.
The bankruptcy of Virgin Orbit, a $3.7 billion SPAC controlled by Richard Branson, can teach startups and company owners valuable lessons. By studying these failures, entrepreneurs can prevent making the same mistakes and improve the judgements they make for their own ventures.
The following are Nine Failures and Vital Startup Lessons from Richard Branson’s Space Venture’s Bankruptcy Analysis.
Highlights of the failure include:
• Lack of Leadership Experience: The hiring of Dan Hart, a VP with experience working for large corporations, created management problems as he failed to deal with the difficulties of a cash-strapped startup.
• Late Entry in a Competitive Market: As Virgin Orbit developed its technology, rivals SpaceX and RocketLab, which had already successfully launched multiple tiny satellites, gained an advantage.
• Overreliance on Complex Technology: Virgin Orbit’s horizontal launch strategy, which involved modifying a 747 and attaching a rocket to it, increased operational complexity and risk unnecessarily.
• First Launch Failure: Virgin Orbit’s debut launch failure revealed design and engineering deficiencies, in contrast to SpaceX, which overcame early difficulties as a first-mover.
• Premature SPAC Announcement: Virgin Orbit gave in to the frenzy of the market and announced a SPAC before the time was appropriate, despite having only two successful launches and little revenue.
• Poor SPAC management: As the SPAC bubble broke, Virgin Orbit raised just $228 million of its intended $483 million, which put company in a tight financial situation.
• Going Public Too Soon: Virgin Orbit struggled as a public company and ran into investor scepticism due to its meagre revenues.
• Subsequent Launch Failure: Virgin Orbit’s most recent launch failure cost the company all 10 of its satellites, further damaging its reputation.
• Inability to Obtain Funding: In an effort to save money, Virgin Orbit let 85% of its employees go in March, but in the end, it was unable to secure the funding required to carry on with business as usual.
Important Lessons for Entrepreneurs and Startups:
- Choose the correct leadership: Select a CEO with relevant expertise in handling the unique difficulties faced by startups, such as managing cash flow, lean operations, and quick growth.
- Strategically coordinate market entry: Determine the ideal time to enter the market by conducting a competitive analysis. A late launch should be avoided because it can be difficult to catch up to established competitors.
- Simplify technology: Instead of creating unnecessarily complicated or unproven technologies, concentrate on creating useful and effective solutions. Reduced risk and lower costs are frequently the results of simpler technologies.
- Learn from failure: When faced with setbacks, examine the underlying factors and use the lessons learnt to enhance future performance. Recognise that failure is a necessary component of the business path, but strive for continuous improvement.
- Avoid market hype: Take care not to become distracted by cash prospects or fall victim to market hype before developing a reliable and expandable business plan. Prior to requesting outside investment, concentrate on establishing a solid basis.
- Obtain reliable finance: Make realistic plans for your financing requirements, taking into account probable market swings and shifting investor opinion. Aim to raise enough money to keep your company operating during its expansion phase.
- Be ready for going public: Before going public, make sure your company has a reliable cash stream and room to develop. Think about the increased oversight and reporting demands that come with being a public firm.
- Manage reputation: To keep a good reputation in the industry, carefully plan and carry out high-stakes operations. Having a bad reputation can make it challenging to get funding or new relationships.
- Be tenacious in obtaining finance: Investigate all available sources of funding, such as venture capital, public grants, and strategic alliances. Be ready to modify your company strategy as necessary and show prospective investors that you are resilient. Startups and business owners can reduce risks and improve decision-making by taking a lesson from Virgin Orbit’s blunders.