Prime Lightworks is doing something very bold for a startup – that is, the company is building a fully electric propulsion system for spacecraft. And yes, this will certainly take a lot of capital. But interestingly enough, a part of the financing strategy is to have an equity crowdfunding campaign on StartEngine. The minimum investment? It’s only $199.82 to buy Prime Lightworks stock.
The CEO and founder is Kyle Flanagan, who is a twenty-something (he currently is among the Forbes 30 Under 30 Class of 2020 in Science). In 2013, he received a B.A. in physics from Harvard and would then go to work at Elon Musk’s SpaceX for a couple years. He was an electromagnetic interference (EMI) and survivability engineer.
Flanagan got the idea for his startup when he read that NASA was evaluating microwave propulsion systems that required zero fuel. Seeing an interesting opportunity, he launched Prime Lightworks in 2015.
How It Works
While there have been remarkable advances in propulsion systems, there are still a myriad of problems and challenges. For example, when it comes to launching satellites, the fuel can cost a hefty $50,000 per kilogram. But of course, there are then the enormous amounts of waste emissions. This leads to space debris, which can pose dangers to existing satellites.
Then what will Prime Lightworks do? Well, it will leverage a solar-powered radio amplifier and microwave cavity as an alternative. This is a thruster that is based on the momentum density of the electromagnetic field.
For the most part, it’s about creating large amounts of electromagnetic radiation pressure that creates tremendous power. No doubt, all this requires complex mathematics and innovative materials (the technology is currently patent pending). After all, this is why Prime Lightworks is still working on its proof-of-concept.
Assuming the company can create a commercially viable system, it would definitely be a game changer. There simply may no longer be need for spacecraft fuel (the cost savings could be as much as 50%). There would also be longer lifespans for space vehicles, higher reliability and larger vehicle sizes.
The Market
The initial target market for Prime Lightworks is satellite propulsion. The annual spending is about $1 billion. What’s more, according to The Space Report, the spending on infrastructure and support industries for space rose by 16.1% to $119.17 billion last year. There was also a 48% increase in global commercial spacecraft missions to 251.
But given that the company’s technology is potentially disruptive, it could prove useful in other space markets. Thus, there is substantial opportunity for Prime Lightworks stock to rise in value in the coming years.
“If the technology is real and they can build a fully electric propulsion system, the potential is enormous,” said George Iakovou, founder and CEO of Vika Ventures and has invested in companies like SpaceX, Palantir Technologies (NYSE:PLTR) and Snowflake (NYSE:SNOW).
“Due to the fact that every month hundreds of new satellites are being put into orbit which all create space waste, this can start to cause issues if not correctly addressed,” he said.
There is a myriad of players in the space propulsion market. They include operators like Safran S.A., Aerojet Rocketdyne Holdings, SpaceX, IHI Corporation and Northrop Grumman (NYSE:NOC). Even Virgin Galactic (NYSE:SPCE) is a company that may make a play for the market. The company is considered to have perhaps the best space propulsion system.
“For what it’s worth, I love Prime LightWorks,” said Aaron Burnett, who is the founder of Space Ventures. “I would say that they face more problems from other small competitors than from the big players. Companies like Accion Systems and Aurora Propulsion Technologies are building similar use-case propulsion tech. The in-space propulsion subsector is likely going to experience some serious consolidation over the next five years.”
Bottom Line On Prime Lightworks Stock
The company has raised $1.8 million from angel investors and Y Combinator, which is a premier incubator. As for the crowdfunding campaign, the company has received commitments for $381,203 from 781 investors. The valuation has been set at $10.2 million.
However, as is the case with any private investing deal, there are notable risks. Besides the tough competition, there is also the execution risk. The fact is that Prime Lightworks may ultimately not be able to develop a viable system.
“Space technology is complicated and execution is fraught with many challenges,” said Dmitriy Bogdanov, CEO and founder at Exolaunch. “Exceptional teams can always succeed, but they need to be able to deliver on their promises, which generally helps attract new investment.”
So, for any investor considering this deal, there will need to be high tolerance for risk – and patience.
On the date of publication, Tom Taulli did not have (either directly or indirectly) any positions in any of the securities mentioned in this article.
Tom Taulli (@ttaulli) is an advisor/board member for startups and author of various books and online courses about technology, including Artificial Intelligence Basics, The Robotic Process Automation Handbook and Learn Python Super Fast. He is also the founder of WebIPO, which was one of the first platforms for public offerings during the 1990s.
Investing through equity and real estate crowdfunding or asset tokenization requires a high degree of risk tolerance. Despite what individual companies may promise, there’s always the chance of losing a portion, or the entirety, of your investment. These risks include:
1) Greater chance of failure
2) Risk of fraudulent activity
3) Lack of liquidity
4) Economic downturns
5) Dearth of investor education
Read more: Private Investing Risks
