K2 Space raises $250M at $3B valuation to build the largest commercial satellites ever flown

good folks over at Broadcom. Congratulations to everyone on smashing earnings and thank you to the chat for calling it out. Our next guest is from K2 Space. How you doing? Good to see you. Welcome to the show.

Um we are trying to pull up some audio. Do we have audio here? Can we play this? Oh, sorry. Thank you. Please introduce yourself and the company.

Hey guys, I'm Karan. I'm the co-founder and CEO of K2 Space.

Uh, and can I mean obviously space is in the news, but can you give us a little bit more color on uh how you fit into the orbital economy?

Yeah. Yeah. So, about three and a half years ago, I started this company with my brother Neil. Um, we wanted to build really large, really high power satellites, which at the time was a pretty big contrarian bet against the market. Everyone was kind of going smaller with their satellites.

Yeah. And so we kind of looked at it, we were like, "Hey, like actually the future, if you think about it, is all about higher power higher power, right?" And we're seeing that with things that we're probably about to talk about with the data,

data centers and everything. But uh but yeah, we're building the largest space platforms that have ever existed,

the largest space. So but but but importantly, you're not building the rockets.

That's right. Yeah, we're just doing the satellites. We're we're going to be launch vehicle agnostic. Most of our first missions are going to be on on SpaceX using SpaceX rockets, but over time we'll probably use a bunch of others as well.

And when you were building the company, did did you have a did you have a thesis around how the launch market would play out because there's I feel like maybe this came up when you were pitching VCs, but there was there's probably a risk that hey, if SpaceX becomes like a really powerful monopoly, they're going to be able to squeeze you like crazy. So, was your initial thinking or bet, hey, I I I love SpaceX. It's amazing. It's unlocking an incredible new capability. But I do think that um you know, Firefly will be doing some stuff. Rocket Lab might be doing stuff. Uh Blue Origin might be doing stuff and eventually the market will play out that I can actually carve out a business here one way or another.

I mean, 70% of our company comes from SpaceX. My my brother is an ex SpaceXer, so we're all we're all pretty big fans of SpaceX. And you know it it they've made such a massive difference in the market, right? Like when we talk about there being like launch abundance, right? It's both because they made bigger and bigger launch vehicles and they increased the frequency of those launches, right? Like they're they're blowing past 150 launches this year as if it's nothing, right? Um so so we always knew that we were going to be big users. Yeah. We always knew we were going to be big users of SpaceX rockets, but I think [clears throat] it's pretty cool to see a bunch of the other launch players coming online, right? like there's a number of new players whe whether it's like relativity whether it's Andy over at Stoke whether it's the folks over at Firefly um I think it's it's it's a really unique opportunity we have right now where hopefully 5 to 10 years from now we have a bunch of choices

yeah okay so so so biggest big satellites been the in the business of making big satellites what was the first big satellite that you thought would be valuable communications put a camera on it spy satellites Hubble telescope what do you what were you originally thinking uh before every venture capitalist said pivot to AI. [laughter] So we started with giant telescopes which is kind of bit bit of an extreme departure from uh AI but uh but yeah we wanted to build really large telescopes because everyone knows James James James James James James James James James James James James James James James James James James James James James James web right like awesome highly performant telescope

but it cost billions of dollars and took like 20 years to produce right and that's like kind of the the straw by which we take data from the rest of the solar system right and so we wanted to build many more straws and many bigger straws over time we realized like actually if we go bigger Well, now we can start to deploy a lot of power because we can host bigger solar arrays. And if we go bigger, we can build platforms that are radiation tolerant and can handle different orbits and different parts of the solar system. Um, [snorts] but it all actually stemmed from from from giant telescopes, which is the the a little known fact actually about K2.

But I mean, the the news today, $250 million at $3 billion valuation, uh, doesn't doesn't look like a science project type funding round. You got Troric, alimter, light speeded,

tro price. What does that look like? [laughter] I don't know.

I mean I typically Isn't that Wouldn't that be pretty common in a preo?

It's like a grow Yeah, these are serious investors. So So what is the shape of the business? I imagine that like you actually have serious uh serious traction and progress uh actually delivering capabilities. Uh what's the majority of the customer base product mix look like right now?

Yeah. So because we went in such a different direction um we started as like just a tactical contrarian bet that two and a half years ago started to get a lot of commercial traction. So over uh the last three years we've basically gone from 5 million in TCV in 23

to 50 million in TCV in 24 to 500 million in TCB in 25 right and this is from a mix of large commercial and government customers right and I don't know I don't know that many three and a half year old companies that are [music] like half a billion in TCB right

that's insane so yeah what what take me inside one of those contracts give me an example of like uh what you're delivering

yeah so the perfect example of power is when you think about communication Right?

So if I drive up the power, right? Right. And we we weren't just like driving up the power incrementally, right? Like the typical satellites at the same price point as us were doing like one to two kilowatts of power.

Our first satellite is 20 kilowatts of power. Wow.

Our next satellite is going to be 100. And so we saw a really interesting use case to go after which is just for all the players that are looking at what SpaceX has done to the comm's market. Yeah.

And are [clears throat] thinking about how to reset their unit economics. We were like the really interesting path for them to take to be able to think about a fundamentally different cost structure just based on how much power we were deploying and at the price point.

Okay.

So commercials is the first place, government is the second. I can talk a bit about that. But those are the two big areas that we've kind of focused on as we scaled up the

company. Let's flip over to the the engineering side. uh 100 kilowatts, that's 0.1 megawatts, is that right? Um like how are you actually delivering that? Is it just big solar panels? Like what's the secret to actually scaling up power delivery in space? Do you have batteries on board? Are there other propellants or or resources for fuel? Or is it all just solar? How are you how do you actually scale up power delivery in space?

Yeah, so we basically have to reset the entire satellite. We have to go build giant solar arrays. We have to go build giant batteries. We have to build giant primary structures, these things called reaction wheels, which are these large spinning discs that help you point a satellite with large solar arrays. So like 80% of the satellite we rebuilt from scratch in this factory behind me. And

sorry, really quickly, giant solar array that could in space that could mean anything from like football fields to the size of this table. Like just ground me in like order of magnitude. How big are we talking?

Yeah. So the first uh the first satellite uh that we're building that we're launching in three months is 40 meters from wington to

wington. Wow. So like Yeah. Like halfway down a football field almost something like that. Wow. Space yacht.

Space yacht. Yeah.

Exactly. Exactly. And then the next one will be 80. So it's going to be 2x the length but obviously much more in terms of surface area.

And does that only fit the Starship fairing? Is is that Starship requirement there or or can you

Yeah, the first one the the 20 kow is made for Falcon 9. So it'll be it's made to stack 10 in a Falcon 9. It'll stack my Starship is so massive that it'll stack 50 in a Starship which is which is kind of cool.

The full one. Yeah.

Exactly. And then the next one will be made purely for

Yeah. So on the on the commercial side from uh how how are the telecom players thinking about the threat from Starlink, right? These are, you know, the big ones are multiundred billion dollar market cap companies. They have a lot of infrastructure on Earth and you know are uh from our understanding like really feeling the pressure from Starlink. But what is their kind of mental model for Starlink as a threat and I'm assuming they're paying you to try to catch up?

Exactly. Yeah. Yeah, I think Starling came in and basically took a business that um had, you know, call it you you you'd go like host like data at $50 to $100 per megabit per second and Starling came in and brought that price under 10, right? So, every single player out there had to figure out like how do I go deploy a lot more capacity and how do I do it at a low cost and deploying capacity in space is just all about how much does it cost me to deploy power, right? if I can deploy more power and I can do so at a lower cost, suddenly I have better unit economics. And so we were the we were the kind of the path to doing that, right? Which was saying we're gonna go max out power. So our satellite is as powerful as the billion dollar satellites that used to exist. Um but it's not going to cost a billion. It'll cost 15 million. You can stack 10 per Falcon 9 and that's what it takes to kind of change the game for the telco players. So a bunch of them saw that and were like, "Okay, like this this is actually something we can play around with and and use." And and really for us, it's just like the first customer, right? Like we're all about integrating like the hardware stack for space. We want to max out power today. That's for communications. Tomorrow that's going to be for compute. And then who knows as we, you know, start becoming like a space fairing civilization like what we'll do with that power later.

Dyson spear. Dyson spear.

So uh this round got done I'm assuming at a time when uh people were mocking data centers in space. There's been a little bit of a vibe shift over the last week. Uh, and I'm sure all your investors have been uh hitting you up saying AI comput

and Gavin I think you gota I think you got to take another look at this.

See this invest like the best interview. You should you should see this.

I promise this isn't a data center round. I have to tell everyone. I was like

no that's the thing. The data center would be the data center would be three on on [laughter] 15.

Yeah. So it was funny. It was in November actually. like you know Delian has very strong views on this. I was talking to him about it early November, late October when we were doing the round and uh you know they they have a strong opinion. Founders Fund is right on a lot of things. So like I don't always want to I'm not going to say I'm going to take the other side of a bet against them. But it's now it's like Founders Fund on one side, Elon on the other. I'm like I'm just going to watch and see [laughter] see how this plays out. But uh but yeah, so our round was primarily on like the the communications application. It was also on a bunch of the government um constellations that we're starting to work on. There's some really interesting things we're doing that the US government is pretty excited about. Yeah.

Um so more of what you call a conventional and like Yeah. Now we'll see what happens with the with the data

price of the brick going up.

Yeah. Yeah. I mean it's [laughter] it is exciting as as a CEO like it is somewhat your job to bring energy to what you're building and bring excitement to what you're building. And if there's an opportunity, even if it's five, 10 years off, if you're going to be a beneficiary of that trend, you do sort of have a responsibility to raise your hand and say, "Yeah, hey, it's logical that some of the value will acrew here to me if that's the case." Uh, but you probably also don't want to whiplash everyone and be like, "Actually, I've been doing this the whole time." So, yeah.

Any any predictions on just how big uh some of these commercial satellites will get over the next decade? I mean, I saw somebody on uh on the timeline earlier talking about how uh in order to recreate, you know, one gawatt of of sort of uh of uh compute capacity uh in orbit, you need something like 10,000 satellites, but eventually you could just have one, you know, data center size satellite floating out. Uh but but how how do you think about uh size versus and and just like mass of individual satellites versus uh const the more constellation approach?

Yeah, I I I'm in the school of thought of constellations, right? Like I think we're going to build really big satellites that still exist in constellations. I think compute's going to be distributed, right? Compute and communications are going to be all part of the same distributed network, right? Um so so our our bigger satellite, Giga, is going to be like the length of, you know, a football field, right? What's it called?

It's called Giga.

It's called the Giga.

Hit the gong for Giga.

Best name for a satellite I've ever heard.

It's an incredible name for a satellite.

We We are very critical of names.

Sometimes people come on and they they name their companies things that don't are not necessarily

hubris.ai.

Yeah. Hubris.ai.

Billion seed round. What's going to happen? Who knows? [laughter] Giga is a fantastic name.

Giga would be a beautiful name for a satellite. Glad you're doing it.

I'm very excited to see it in

uh anyways uh very exciting. Congrats to the whole team and uh yeah, hoping hoping we can partner at some point to put a TBPN satellite up in space.

We need one for sure.

We definitely will need one at some point.

One last question from my side. Uh take us through a little bit of a tour of what's behind you. Uh is this the only facility? How big is this facility? What's actually happening here? Are satellites getting uh built out?

This is 180,000 square foot factory, right, where uh basically you'll see the start of a a manufacturing line coming down here that's going to

You can't really see it in the view, but the clean room's over there with the satellite actually in it that's about to launch in three months, right?

Oh, wow. You you even have huge signs up. It says primary structure, side sections, final integration. Wow. Physical divides. That's amazing.

Yeah. So so so yeah, we're basically scaling up now. We're 11 months in, but a large part of this round that we're raising is to is to go scale up mass production, go from one this year to 10 next year to 30 the following year.

That's awesome.

Um, and it's really all about scale at this point, right? Like let's get the first one to work in three months and then let's do it many more times over the coming 24 months.

And also, is the company's name a nod to your initials?

Yeah. So, here's the thing. Like, uh, it's not people think it's about my initials and it's like that is the most egotistical thing in [laughter] the world. I promise you that is not the case. Uh, so you know, my brother and I started this company, which starting a company with your brother is like the coolest thing in the world to do. We're both condors, but it comes back to the Cardiff, right? Like helping humanity become a type two card civilization, K2. The whole thesis is like build bigger, right? And our our logo is a big Dyson sphere. I heard you mention that, right? So, it's like our whole thesis like let's start laying the groundwork to helping humanity become a type two cartep civilization. So, let's call the company K2.

You understand naming. I'm gonna I have to uh we we we we had a we had a company on uh called Icorus Icorus space. We were a little bit worried about

for what it's worth it cra ins insanely good teams and I really hope they'll but they're playing with playing

they're playing with fire is playing with fire they're a super cool team though I'm not

they are they are very cool they are very cool uh but there's been there's been a rash of of hilarious

that's playing on hard mode playing on hard mode