Kepler raises US$16M to launch additional breadbox-sized satellites

TORONTO Kepler Communications Inc., a Canadian satellite company that provides telecom services at the Earth’s poles using breadbox-sized satellites, plans to launch more than a dozen additional nanosatellites in the next two years after securing a second round of financing.

The Toronto-based startup announced Monday it has raised US$16 million in a Series A round of financing led by Costanoa Ventures with investments from Deutsche Bahn’s Digital Ventures and IA Ventures.

The money will go toward Kepler’s ultimate goal of launching a constellation of 140 Low-Earth Orbit satellites (LEOs), smaller spacecraft that will orbit about 575 kilometres above Earth. The shorter distance enables lower latency connections than geostationary satellites, which orbit some 35,000 km from Earth.

“This is going to make a big impact,” Kepler’s chief executive Mina Mitry said in an interview last week.

So far, with seed funding of US$5 million, Kepler has one satellite in orbit. It launched in January and already provides data services to icebreakers, oil tankers, tourism companies and scientific organizations that operate at the poles, where demand for bandwidth is expected to increase as warmer temperatures lead to a rise in tourism and shipping.

Kepler offers speeds of 40 megabits per second — 10 to 40 times faster than speeds offered by satellite providers in polar regions.

“For the first time we are able to send massive files like operational data, scientific data, videos or photos,” according to a statement from Kepler customer Thomas Liebe, chief operator of Polarstern, an icebreaking vessel from F. Laeisz, one of the world’s oldest shipping companies. “These are bandwidth intensive and we have no other way to send the data if we used traditional systems,” he said.

Kepler’s seed funding covered the cost of two more satellites, the next scheduled for mid-November launch and a third in the second half of 2019. (It costs about $200,000 to launch a nanosatellite, a fraction of what it costs to launch a traditional satellite.) It also paid for two Earth stations, one in Inuvik and one in Svalbard, Norway. A third is underway in New Zealand.

The second round of funding will enable it to launch up to 15 additional spacecraft by the second quarter of 2020. Kepler also plans to double its head count to 40 employees and move into a new office in downtown Toronto.

Every incremental satellite improves service quality and network capacity, Mitry said.

Kepler is one of many companies trying to win big in the emerging LEO satellite market.

Moody’s Investors Service expects demand for satellite network capacity will increase with the rise in data traffic, but says the timing and monetization isn’t yet clear.