Forbes estimates that Axiom Space’s Kam Ghaffarian is worth $1.7 billion, thanks to a series of space technology companies he has founded.
Axiom Space, a startup co-founded by billionaire Kam Ghaffarian, has an ambitious goal: to build private space stations that would allow humans to live and work off-planet at scale. But the Houston-based company has been grappling with a more earthly concern — a fight for survival.
According to internal documents, seven former employees who spoke on condition of anonymity because of confidentiality agreements, and space industry experts, the company is dealing with a severe shortage of resources, business challenges and a failure in its latest fundraising efforts. The new reality has resulted in mass layoffs and pay cuts.
Axiom’s plans
Axiom had intended to build an orbital station using the International Space Station (ISS) as a base. The plan was to build it modularly, connecting sections of the “Axiom Station” to the ISS. After its work in space was complete, it would be detached from the station to fly independently. The company planned to make money by hosting tourists and companies interested in using microgravity conditions for drug development and semiconductor manufacturing. Forbes has learned that this plan was changed due to Axiom’s slow progress on the first module and the possibility that the ISS would have to be decommissioned two years ahead of schedule.
Now, a year after raising $350 million in a round led by Saudi Arabia’s Aljazira Capital and South Korean pharmaceutical company Boryung, valuing the company at $2 billion, for a total of $500 million in funding, the startup is struggling to convince investors to put up more money to finance a smaller station with less commercial potential, according to former company employees.
The lack of new investment has compounded longstanding financial challenges that have grown along with Axiom’s payroll. At the start of this year, the company had nearly 1,000 employees. Sources familiar with the company’s operations told Forbes that co-founder and CEO Michael Suffredini, who spent 30 years at NASA, ran Axiom like a large government program rather than a startup with limited resources. His mandate to grow the team to 800 workers by the end of 2022 led to a hiring spree so disconnected from the needs of product development that new engineers often found themselves with nothing to do.
In an interview with Forbes, Ghaffarian acknowledged that Axiom faced challenges, including a difficult fundraising environment that required an “adjustment” in staffing. However, he said he expects to close new funding by the end of the year and that the future is bright. “All of my [space companies], where we’re doing things that have never been done before, don’t follow a straight path.”
The beginning
When Axiom was founded in 2016, it promised investors that the station’s first module would be in the air by 2020. With that deadline slipping away, Axiom sought to expand into two new lines of business to bring in urgently needed revenue while the station was under development.
In 2020, it began organizing passenger trips to the ISS on SpaceX rockets. The company pitched these private missions as a way to develop the ability to one day bring businesses to its own space station. And in 2022, it won $228 million in NASA funding to design spacesuits for the Artemis III lunar mission.
But the spacesuit program diverted engineers and resources from the station’s construction effort. And passenger service to the ISS turned out to be a costly distraction. “It turns out there aren’t a lot of billionaires who are willing to put their lives on hold for 18 months to train as astronauts for the ISS,” a former Axiom executive told Forbes.
Billionaire story
Forbes estimates that Ghaffarian is worth $1.7 billion, thanks to a series of space technology companies he has founded, including a government services company that he sold to KBR for $355 million; publicly traded Intuitive Machines (market cap: $770 million), which is developing lunar landers; Quantum Space, which raised a $15 million Series A in 2022 to build a refueling network for spacecraft; and Axiom, in which Ghaffarian owns a 42% stake.
He and Suffredini founded the company on the belief that technological advances and lower launch costs would allow a private space station to be built for a fraction of the price of the $150 billion ISS.
They aimed to create a replacement for the ISS for just $3 billion, partly using the old station as a base. In 2019, NASA awarded Axiom a $140 million contract to build and operate a habitable module on the ISS that would serve as the first part of its station. Axiom could draw power and life support from the ISS while it built the rest, allowing it to begin welcoming tourists and customers before the station was complete.
With fundraising slowing, Axiom’s main plan to fund the station was private spaceflights to the ISS — a 2023 presentation reviewed by Forbes predicted they would generate half of the $3 billion needed.
Account problems
Axiom has struggled to meet payroll, which reached $10 million a month in early 2023, according to an internal document, and has fallen behind on payments to suppliers, former employees said. Those suppliers include Thales Alenia Space, which is building the structure for Axiom’s first space station module, and SpaceX, which the company has paid hundreds of millions of dollars to for four passenger rocket launches to the ISS.
“The fundraising rounds were never enough to keep us ahead of the curve, and the revenue certainly wasn’t filling the gap,” the former executive told Forbes. “With each round, as soon as the money came in, you paid SpaceX, you paid Thales Alenia, you paid your bills, and then you were done.”
Ghaffarian said Axiom had agreed new payment terms with SpaceX and other suppliers. Thales Alenia spokeswoman Catherine des Arcis said: “We have a very strong and trusting relationship with Axiom Space.” SpaceX declined to comment.
To cover the debts, Ghaffarian has pumped tens of millions of dollars into the company, she confirmed to Forbes. John Shoffner, a wealthy businessman who bought a seat on Axiom’s second private mission to the ISS, loaned $10 million. His loan came before the 2023 flight, former employees said. (“I am proud to be both an astronaut and an investor in Axiom Space,” Shoffner said in an email to Forbes.)
But that hasn’t been enough, and the startup has been quietly reducing its headcount. Ghaffarian said about 100 people have been laid off this year. Employees have been asked to take voluntary pay cuts of up to 20% over the next 12 months in exchange for company stock. Meanwhile, Axiom has seen a departure of top executives.
The market price investors have given Axiom now feels like a curse, according to one space industry executive. “They’ve reached a point where they can’t raise capital,” he said. “Kam had no choice but to step in and try to pick up the pieces.”
But rather than backing down, Ghaffarian insisted that “our plan is to expand our reach.” In Ghaffarian’s telling, Axiom will help build a thriving economy in low-Earth orbit, where its space station will be a precursor to “a space city” with hourly shuttle service. Skeptical investors will eventually be convinced of what optimists like him are creating. “People say, ‘I’ll believe it when I see it,’” Ghaffarian said. “I believe it, so I’ll see it.”
Not enough money
While the three flights so far have generated plenty of media attention, Axiom has lost money on all of them, former employees say. SpaceX’s bills have been high: According to internal documents, Axiom is expected to pay about $670 million for four Dragon 2 launches. The documents show that the startup expected to lose about $30 million on the first flight in April 2022, and that losses would taper off from there.
However, former employees claim that the losses were actually tens of millions of dollars higher because the company failed to account for the costs of the approximately 60 employees hired to operate the missions. In addition, after the first flight, NASA stipulated that one of the four seats on Dragon 2 would be filled by an experienced NASA mission commander — at Axiom’s expense.
That left the company, which had previously told customers that the price of a seat ranged from $50 million to $55 million, in a tight spot; now it was impossible to break even. “We weren’t even close,” said one former executive.
Chief Revenue Officer Tejpaul Bhatia was laser-focused on selling seats and collecting payments, but it was an endless struggle for Axiom to cover its bills. In the end, only four of the six seats available on the first two flights were sold to wealthy space tourists, at an average price of $48 million each.
For the third flight, Axiom managed to sell seats to countries without space launch programs, at a price a little over $50 million each, internal documents show. But they weren’t easy sales. “Once price was in the conversation, things tended to go quiet,” said a former employee.
Ghaffarian said the losses on the first three missions were “part of the plan from the beginning” as they represented the “acquisition cost” of building relationships with global space agencies that will result in profitable sales in the future. Axiom’s fourth mission, scheduled for 2025, “will be cash flow neutral or positive.”
What about the Axiom space station?
Amid its focus on filling astronaut missions, the company neglected to develop partnerships and customers for manufacturing and research on the space station, which could have helped convince investors about the deal. And now, Axiom is years behind schedule on construction.
Part of the problem is that the startup was forced to radically change its design because of its slow progress and the possibility that the ISS would be decommissioned early, four former employees said. Axiom had planned to dock two modules to the ISS in 2024 and 2025 — each with workspace and living quarters for four crew members — and add a research and manufacturing module in 2026. It would then attach a power and thermal module in 2027, leaving the station ready to separate from the ISS in 2028.
The first module was not completed, and Axiom now says the launch to the ISS has been pushed back to late 2026. The delay means lost revenue, as Axiom would have received part of the NASA contract if it had met the original deadlines.
The ISS is scheduled to be decommissioned in 2030 and then pushed back into Earth’s atmosphere to burn up, but Russia has already said it will not fund the station after 2028. This could result in it being decommissioned earlier than planned.
Former employees said Axiom has been struggling in recent years to design a second module that could be expedited and that would have enough power generation capabilities to create a viable free-flying station sooner. Ghaffarian said that was an option the company was “looking at very seriously” but had not yet “made an official commitment.”
Assuming Axiom can pull this off, a leaner, lower-powered station would have more limited commercial prospects, complicating the company’s appeals for new investment.
“The business model has always relied on significant power for microgravity research, semiconductor manufacturing, pharmaceutical manufacturing, and supporting life in space,” a former employee explained. “The business model has had to change… and that has made it difficult for the company to deal with its cash flow problems.”
The spacesuit program appears to be in better shape, sources told Forbes. Last year, NASA gave Axiom additional funding to adapt its design for spacewalks — work where the company may have more opportunities to make money after Collins Aerospace announced in June that it would halt development of its own spacewalking suit.
But SpaceX unveiled its own spacesuit last week during the Polaris Dawn mission, and if it proves effective, it could hurt Axiom’s chances of winning business beyond NASA.
If Ghaffarian can’t secure financing to keep Axiom competing, he may have to shrink the company further to make it financially viable. But one former executive is skeptical that Ghaffarian’s leadership will make a difference. “Kam has always been the chairman, and Suffredini is still on the board. So what change has really happened?”
