Many stories are told in the City of London about Sir Richard Branson, the tycoon who has stamped his Virgin brand on everything from banking to expensive gym memberships.
One tale has it that, some years ago, a group of City advisers arrived for a morning meeting at Branson’s former mansion in London’s Holland Park to discuss financing for his labyrinthine commercial empire.
Not only was the bearded mogul still in his dressing gown as he greeted the impeccably suited bankers but, to their bemusement, he evinced no interest whatever in their proposals and insisted instead on talking about rockets and space travel.
Tales like these may be the stuff of urban legend, but Branson’s fascination with the mysteries of the universe is not in doubt. To him and his peers, old-style billionaire baubles such as private jets, islands and yachts are so last century.
Branson has positioned himself as Britain’s answer to America’s extra-terrestrial uber-capitalists, Tesla boss Elon Musk and Amazon founder Jeff Bezos. For these entrepreneurs, when it comes to status symbols, nothing less than a space rocket will do.
Branson has positioned himself as Britain’s answer to America’s extra-terrestrial uber-capitalists, says Ruth Sunderland
The Virgin Orbit ‘Cosmic Girl’ launch aircraft flying in formation alongside the Red Arrows Hawk jets
Musk’s Starship was on a Texas launchpad last week, preparing for lift-off on a test flight later this month.
Blue Origin, Bezos’s space business, is planning to send an all-female crew into space next year, led by his 53-year-old girlfriend Lauren Sanchez.
But Sir Richard Branson can only look on from the sidelines after his ambitions were blasted out of the sky. Last week, his satellite launch company, Virgin Orbit, filed for bankruptcy protection in America.
This financial fallout was probably inevitable after one of his rockets, launched in January from a spaceport in Newquay, Cornwall, malfunctioned a hundred miles above the Earth.
The event, which was the first-ever orbital space launch from British soil, not only saw the rocket with nine satellites lost over the Atlantic, it also brought Virgin Orbit, which at one point had been valued at £2.4 billion, crashing to the ground.
Having built an empire encompassing airlines, trains, fitness, financial services and media, perhaps it had been a natural next step for Branson to reach for the stars.
His initial move in 2004 was to set up a space tourism business, Virgin Galactic. With tickets priced at $450,000, ‘Future Astronauts’ can sign up to this — for journeys that are yet to get off the ground.
Virgin Orbit was spun out of that business in 2017, after Branson’s boffins spotted that the technology being researched could be put to use in the satellite industry.
Richard Branson with Beth Moses and Sirisha Bandla as they float in zero gravity on board Virgin Galactic’s passenger rocket plane VSS Unity after reaching the edge of space above Spaceport America
His detractors — and he has attracted plenty since he began his career in the music business in the 1970s — will no doubt relish his humiliation over his pet project.
Some have raised fears that the downfall of Virgin Orbit also augurs badly for the UK’s nascent space industry — an increasingly important part of our economy. But the bankruptcy is primarily the result of Branson’s hyped-up business model, which lacked sufficient resilience to weather inevitable setbacks.
In the wider space and satellite industry, there remains plenty of grounds for optimism.
In fairness to Virgin Orbit, despite the mockery surrounding the abortive launch, its technology had won praise from experts. Before the Cornish debacle, the company had successfully performed several space flights, launching 33 satellites into orbit.
There is no denying, though, that the bankruptcy is a very expensive embarrassment for Branson. He is pumping in around £25 million of financing through his Virgin Investments to keep the company ticking over while it looks for a buyer to rescue it.
In all, Branson and Virgin Group have invested more than £800 million in the firm.
Virgin Orbit’s business was based on its claim to have alighted on an innovative approach: launching satellites at high altitude.
Unlike competitors who send them up from the ground, it propelled satellites from a rocket nestling under the wing of its modified Boeing 747, the Cosmic Girl (named after a song by 1990s funk band Jamiroquai). This ‘air launch’ technique, it said, made its satellite services both cheaper and more flexible.
At least, that was the theory.
In reality, the company was plagued with problems from the start. It floated on the Nasdaq high-tech stock market in New York in 2021, in the midst of a craze for high-risk businesses that were commanding stratospheric valuations. Instead of a conventional share listing, Branson used a so-called ‘Special Purpose Acquisition Company’ or Spac.
Sir Richard Branson wears a space suit costume to promote his sweepstakes in 2005
These Spacs enjoyed brief popularity a couple of years ago as a way for loss-making companies to list their shares quickly. But they were always viewed with scepticism by wiser investors and have since fallen out of favour.
At the time of the Virgin Orbit float, interest rates were at rock bottom and investors were prepared to take a punt on high-risk investments, in the hope of good returns. But as rates began to rise, the mood changed and share prices in tech and other high-risk sectors tumbled.
As for Virgin Orbit, its market value has plunged from a peak of about £2.4 billion to around £56 million today. Yet ominous signs were there from the start. The float brought in far less from investors than had been hoped, and early last year Dan Hart, Virgin Orbit’s chief executive, had already begun working with Goldman Sachs and Bank of America to try to raise more capital or sell the company.
The business made losses of nearly £120 million in the first nine months of last year. In plain terms, it was running up big bills with no certainty that it would ever have a chance to break into the black.
Experts say the company was aiming for 50 launches a year — a highly challenging target. The sums just did not stack up.
With Branson and other investors unwilling to commit fresh capital, going into Chapter 11 bankruptcy became inevitable.
Mark Boggett, the chief executive of Seraphim Capital, which invests in space companies, says: ‘The bankruptcy is specific to Virgin. There was a series of unfortunate events. They didn’t raise enough capital when they floated, then when the UK launch failed, it left them in a really difficult position.
‘They had to try to raise money off the back of a failed launch and a Spac, which was just toxic, and in a difficult economic environment. It is not reflective of what is going on in the market. Premium companies are able to raise money, no problem.’ Virgin Orbit’s failure is a blow for Cornwall — and for UK taxpayers, who provided about £9.5 million in grant funding to support the mission.
Spaceport Cornwall, where Virgin Orbit was to have been the main operator, is putting on a brave face. Its boss, Melissa Quinn, who was tearful when the Virgin launch failed in January, says the plan is to press on with other satellite operators.
Critics will see the episode as evidence of Branson’s evergreen ambition and personal vanity.
Whatever one’s views on the 72-year-old Virgin founder, who still revels in his image as a maverick, anti-establishment figure, he was right about one thing: space is a field in which Britain can excel.
But venturing into space is not just financially perilous. The worst incident for Branson was the 2014 crash of a Virgin Galactic spaceship in the Mojave Desert, California, which killed the co-pilot and left the pilot seriously injured.
The Orbit bankruptcy will inevitably raise fresh questions about the Galactic business, which lost $500 million last year.
Potential buyers, who include Texan investor Matthew Brown and possibly Musk or Bezos, will be looking to scavenge the remains of Virgin Orbit.
It is, however, unlikely to be the end of Branson’s personal space odyssey. Having flown to the edge of space in a Virgin Galactic rocket plane two years ago, he will be reluctant to abandon hopes that he can boldly go where no British billionaire has gone before.