Google is close to making an investment in Elon Musk’s SpaceX, with the intent of supporting the commercial space company’s new Seattle-based satellite Internet initiative, according to a report by The Information this morning, citing people familiar with the talks.
The deal, if it happens, would create a powerful alliance between two companies aiming to spread high-speed Internet around the world.
Maybe it shouldn’t be a surprise: Google CEO Larry Page has spoken highly of Musk in the past, telling Charlie Rose last year that he would rather leave his money to the SpaceX founder than to a non-profit philanthropy. Page cited Musk’s goal of establishing a Martian colony to “back up humanity” — which is one long-term aim of the satellite Internet project.
Up to this point, Google has been placing its bets on its Project Loon initiative — testing the idea of a “network of balloons traveling on the edge of space” to connect people in rural and remote areas of the world.
Musk announced SpaceX’s satellite broadband initiative on Friday evening at a private event in Seattle, telling a crowd of 400 people that the company wants to revolutionize the satellite industry in the same way it has shaken up the commercial rocket business.
The ultimate goal, Musk says, is to use the technology and revenue from the satellite Internet initiative to fund the establishment of a city on Mars. But first the company will create a network of satellites in low-Earth orbit.
“The focus is going to be on creating a global communication system,” Musk said at the event.
He added, “This is quite an ambitious effort. In the long term, it will be like rebuilding the Internet, in space. The goal will be to have a majority of long-distance Internet traffic go over this network, and about 10 percent of local consumer and business traffic. Still, 90 percent of people’s local access will still come from fiber, but we’ll do about 10 percent business and consumer direct, and more than half of the long-distance traffic.”
The satellite Internet operation will be based in the Seattle area. Permit filings found by GeekWire last week showed that the company has established its initial office in Redmond, down the road from Microsoft.
Musk estimated that the satellite constellation, ultimately encompassing more than 4,000 satellites, will take $10 billion to $15 billion to create. But in the short run, he said, there are no plans for an IPO.
“We won’t take SpaceX public for quite a long time,” he said. “What I’ve said is, when we’re doing regular flights to Mars, that might be a good time to go public. But not before then, because the long-term goals of SpaceX are really long term.”
That helps to explain why SpaceX would be considering taking on additional private investment. In her report this morning, The Information’s Jessica Lessin notes that SpaceX “hasn’t raised a primary round of funding in several years.”
Existing investors in the company include Founders Fund, Draper Fisher Jurvetson and Valor Equity Partners. The report says Google has agreed to value SpaceX at more than $10 billion, and the new funding round, including other outside investors, is “very large.”