December 3, 2023

umbra Co-founder Gabe Dominocielo’s surname roughly translates from Latin to “king of the sky.” It’s an appropriate title for the head of a satellite imagery company, but in a recent interview with TechCrunch, he joked that his last name should be “unit economics.”

“Space is not my background,” he said. “My passion is unit economics.”

The Umbra story can be summed up as a combination of technological innovation and — you guessed it — sound unit economics. The company was founded by Dominocielo, who previously started a firm coordinating plaintiff class actions, and his longtime friend David Langan, an engineer who spent a decade working on advanced space programs for major aerospace companies.

Langan invented a very large parabolic mesh radar antenna suitable for a microsatellite form factor. Designed to transmit folded, the antenna is capable of using the full 1,200 MHz bandwidth and produces a field of view of up to 1,200 km on either side. Like other synthetic aperture radar (SAR) systems, it can see through clouds at night. But unlike every other SAR system in existence before or now, it can capture images with a resolution of up to 15 centimeters. That’s high enough to detect a soda can from space.

For Dominocello, the science is interesting, but the business case is what makes the proposal really compelling.

“You can’t just pay less and get a better product,” he said. “It has to be much better, and you have to be able to make more money. When we fly high-demand areas, we take 10 to 15 times more pictures than any startup or any traditional company, which means we are able to make 10 times more money on a unit basis.”

The two went to work.

Umbra founders Gabe Dominocielo and David Langan. Image Source: umbra

bootstrap into orbit

Since its inception in 2015, Umbra has raised more than $100 million, with its most recent Series B round closing in March. Its investors include Nimble Partners, Star Castle Ventures, Champion Hill Ventures and Starbridge Venture Capital. Its pre-money valuation is currently at $750 million, according to a person familiar with the company’s financials.

But Langan and Dominocello spent two years bootstrapping the company before raising any money, a decision that was central to the rest of Umbra’s history and one of the keys to its success.

Venture capitalists have enthusiastically embraced so-called NewSpace companies over the past decade, with private market investors pouring more than $280 billion into the industry since 2014, according to Space Capital’s latest quarterly report. Report. But venture capital doesn’t come without founders’ expectations and costs.

Those costs, Dominocello said, would be huge.

“If instead of using our own money for the first two years, we just get a million dollars or something as a pre-seed, it’s going to be pretty bad,” he said.

Thanks to an early decision to bootstrap themselves, Domino Chiello and Langan were able to retain considerable control of the company. Umbra’s board is made up of just three people: the two founders and John Burbank, founder of Passport Capital, a prominent San Francisco-based hedge fund, and an early angel investor in the company. Dominocielo added that Umbra’s headcount, currently around 125, has always been about how much money the company makes, not how much money it has raised.

Another big consequence of not accepting investor funding early was Dominocello and Langan’s decision not to provide data analysis and satellite imagery. Satellite imagery companies that choose to provide analytics choose to fight on two fronts — against other SAR satellite operators and established analytics giants like Palantir and Google — and must raise more money to build those capabilities.

The pair faced a number of very difficult technical challenges: they were told that folding the antenna would be impossible for the form factor they were designing. But once the core technology was largely in place, they started raising money, starting with a small pre-seed round in 2018.

private and public funding

Judging by the amount raised, Umbra is not ahead of its competitors. European SAR imagery startup Iceye has raised about $259 million, compared with Umbra’s $100 million, while US-based Capella Space has raised more than $251 million.

Umbra’s presence is similarly kept low-key. When the company announced earlier this year that it had captured the highest-resolution public image ever made from space, the news caused few ripples.

But Domino Chiello doesn’t see raising money or gaining media attention as accomplishments in themselves.

“I talk to founders all the time, and I always tell them, if you can do it yourself, or if you can do it through a government contract, you’re going to be much better off. Because number one, you’ll understand what the government needs and wants. You’ll be able to target that and continue to get funding without dilution.”

In fact, government contracts now account for the majority of Umbra’s revenue, about 50% of which comes from the U.S. government, which buys Umbra’s highest resolution imagery; 25% from governments of foreign allies; and last quarter mostly from large industrial commercial customers in industries such as oil and gas or insurance, as well as individual consumers, who have access to imagery resolutions up to 25 cm. The company stresses that it does not sell to China, Russia or other countries that have hostile relations with the United States.

Central to Umbra’s go-to-market strategy is its transparent pricing policy (for both government and commercial customers) and its extremely permissive open licensing agreement. Umbra also allows users to send missions directly to satellites and offers an open database, opening up a host of new use cases for SAR data.

The company publishes prices early for the same reason it doesn’t provide analytics: In their opinion, why compete with your customers? Instead, Umbra’s strategy is to form partnerships with other businesses. Some of these could prove to be quite significant, such as the recent agreement with optical imagery company Maxar that will see Maxar send missions directly to the Umbra satellites and make that data available to Maxar customers.

Side-by-side view of Umbra and Maxar images. Image Source: umbra

“Building a sales pipeline is going to cost a lot of money and take a lot of time. But getting a deal with the clear No. 1 winner in optical satellite imagery allows us to grow exponentially, by orders of magnitude,” Dominocielo said.

Governments value transparency more than commercial sector clients, he added. The government’s interest in Umbra’s SAR imagery continues unabated, especially as the company has been able to demonstrate more capabilities over time. Over the past few years, Umbra has secured contracts from major government agencies, including the Air Force and the National Reconnaissance Office. Most recently, Umbra received a $4.5 million award from the Defense Advanced Research Projects Agency (DARPA), the Pentagon’s research arm. This amount may seem small compared to some of Umbra’s other wins, but it will advance SAR collection technology enormously.

Meanwhile, Umbra has been working to further improve its satellite technology. The next iteration of the spacecraft, likely to be upgraded next year, will have more power and bandwidth, Dominociello said.

“We’re not in the business of building products that government or commercial customers need right now,” he said. “That’s what they need to fight the battle of 2030 or 2040. That’s what we’re building.”