COMPANIES & STRATEGIES - TECHNOLOGY

Andy Bowyer interview

“The need for more data is…increasing beyond our expectations”



Andy Bowyer, seen here in an archive photo in Luxembourg, has temporarily relocated to the United States to be accessible to potential investors in Kleos Space MIKE ZENARI

Andy Bowyer, seen here in an archive photo in Luxembourg, has temporarily relocated to the United States to be accessible to potential investors in Kleos Space MIKE ZENARI

Kleos Space CEO Andy Bowyer talks about the company’s activities in the United States, new investment, satellite cluster launches, the continued importance of Luxembourg space sector and what he hopes for the future of the Earth observation industry.

Duncan Roberts: You recently temporarily relocated out to the United States from Luxembourg. What was the motive behind the move?

Andy Bowyer: As CEO I’m the most forward leaning, from a strategic perspective, in the business. So, I'm trying to be as accessible to potential investors in the US as I possibly can in addition to ensuring I can safely and easily attend and speak at conferences etc to grow the business. It was clearly a lot easier to do this a couple of years ago, but given the pandemic we decided that for a period of time I needed to be physically ‘in country;.

I’m the representative of the company, and we are a Luxembourg company. So, in the investor presentations, I’m not just representing Kleos, I’m also representing the Luxembourg ecosystem. I get a lot of questions about the way we started in Luxembourg and how it enabled us to have that springboard to where we are now. I’m very passionate about the warmth and ecosystem within Luxembourg that gave us the head start to go off and grow, but evidently most of our customers and investors are outside the country we need to fully engage with them to make the most of the opportunity we have been given,

The way that we present ourselves internally within Luxembourg government, for instance, is to all intents and purposes that we’re an inward investment story, because we are bringing external investment into the country where it’s being spent. But then we’re also an export opportunity as well, which is where the profit centre is, obviously. So, it ticks both sides of things.

In January you opened an office in Denver, which has a tradition of being an aerospace location and is now labelled Aerospace Alley. But what are the advantages of being there for Kleos?

Because we literally work around the globe--we have a variety of customers from Australia, New Zealand, obviously a lot in North America, Central America, South America...--we've got a difficult time zone issue. The objective was to get somewhere eight hours out from Luxembourg. That gives us the ability to really cover within two working time zones two thirds of the day and 90% of our customer base. It's a good parallel engineering effort to the Luxembourg one from a customer support perspective. It also doubles up, in the sense it means that people are working essentially nights for us in Luxembourg, so you end up with quite an efficient schedule.

But Denver is also the centre of a huge amount of aerospace, defence and space activity. Tens and tens of thousands of people are employed in that domain, both driven by the government bases and the activity that goes on in that, but then also by all the surrounding companies. In particular, in our area, there's a lot of radio frequency engineering capability, which is pretty rare around the world. So, there's a very strong seam of human resource that we can tap into. We have done really well in Luxembourg because there's a tremendous capability in France in this particular domain. When you're employing people that are very, very specialised, you've got to go to the people to a certain extent, and make sure that you're facilitating things. Most people working from home anyway, but it's still nice to have clusters of people.

This is about really making sure we're investing in testing facilities, and satellite operation facilities, etc.
Andy Bowyer

Andy BowyerCEO Kleos Space

But, as you’ve already indicated, Luxembourg will continue to be of importance to Kleos, and vice versa?

Yes, we have just announced that we are investing in a new bespoke facility in the newly built ParcLuxite Business Park in Kockelscheuer. We’re going to move in in November. It’s a 190m² headquarters that will be home to our testing and operations facilities as well as mission control centre, from 1 November this year. This is about really making sure we're investing in testing facilities, and satellite operation facilities, etc.

Obviously, the pandemic has hit economies around the world pretty hard. Has Luxembourg continued, in your view, to do enough for the space sector during the pandemic, or has that taken a bit of a backseat?

I think you have to contextualise it. Luxembourg is a country with limited resources or bandwidth to do things. The government isn't employing 100s people, in the Luxembourg Space Agency. The ministry of the economy is relatively tight in terms of the numbers of people that they can deploy on different projects. So, I think it's fair and right, that the prioritisation, particularly over the last 18 months, has been on making sure business as a whole is continuing and people are continuing to be employed. There are priorities which are clearly greater than this particular niche industry. And I think that is not a criticism at all. I think they've done a fantastic job supporting businesses including ours through the pandemic.

And they've created some initiatives, particularly in the space sector. Luxinnovation, alongside the Luxembourg Space Agency, have delivered a lot of good support.

The flip side is obviously space is an enabler for us, but our industry is predominantly defence & security in terms of our export. And we have continued to get support and assistance, even if people are stretched and working very hard, in a wide range of different ways.

Yes, you have reiterated the fact that you don't see yourself as a being in the space sector, per se, but you are in this defence role…

That’s always an interesting one. What we traditionally call upstream space is building satellites, building and launching rockets, building moon rovers, that sort of thing. The rest of us are space enabled to a certain extent, and you could even include SES in that domain--they could call themselves all sorts of different things, TV broadcasting, communications company, whatever… It’s always been interesting to me, looking at how the numbers get used in different areas. But yes, our focus is on the customer base and the markets we service.

End of June you launched the Polar Vigilance Mission carrying a second satellite cluster. What were the challenges of conducting a launch in the midst of the covid pandemic?

No, that was very, very straightforward. I mean, compared to the first launch in India [from the Satish Dhawan Space Centre in Chennai in November 2020], which was a horrendous experience of trying to get people into India, then getting locked down, getting out on one of the last flights and then getting delayed and delayed. The second launch was smooth. I mean, you still had to apply for a special licence to travel, but the process by that point was in place. So, it's just following a process.

The more we have, the higher the value of the data
Andy Bowyer

Andy BowyerCEOKleos Space

And KSF2, the next cluster of four satellites, is due to launch in December. Where will that cluster orbit and how does that expand your capabilities when it becomes operational?

It will be on the same Sun-synchronous orbit, going over the poles. The reason you build out a constellation from single clusters is to increase your revisit rate. They take 90 minutes to orbit, so the more satellite clusters you have in that same orbit, but trailing each other, the more often you see that same place on earth. Basically, that gives us is more data to sell. And the more we have, the higher the value of the data.

You work on this subscriber model. So, what's your target audience at the moment? I mean, obviously, military, national governments, but private companies as well?

There is a lot of commercial. We roughly have about a third that is government agencies and various departments, and two thirds commercial. Very often these are analysts or integrators that are taking different datasets and delivering end solutions into what are often government applications. Truly commercial operations or applications tend to be a little bit lagging behind the government applications, because there are smaller budgets and they take longer to convert. So, we have some commercial opportunities in the pipeline, but they're probably a little bit further behind…

You said in an earlier interview this year that Kleos expects to start generating revenue in the third quarter of this year. Is that still on target?

We are making great progress working through that process. We have a big pipeline and we've got nearly 50 evaluation contracts in place with a very wide range of subscribers around the world. They are converting from free trial periods or into paid periods. And we’re working with a number of our integrated customers around the world on larger projects. We have a lot of proposals and quotes out, for next year as well.

So, it's a curve, and we're starting on our way down that road now. There’s a tremendous amount of commercial support from the marketplace. The need for more data is obviously very much there and is increasing beyond our expectations, to be honest. The hurdles are often technical--the ability to get collect into people’s hands and developing all the different subsystems and everything else that's required in order to deliver and fulfil those customer needs. We’ve proven the technology chain out. So, we’re building up the database from very low-level data into something much more capable over the next six months. It’s a journey, I guess, with the customers.

It’s also about building a strong investor base, and increasing the strength over a period of time is validation in the model
Andy Bowyer

Andy BowyerCEOKleos Space

And the announcement end of August of new investment worth A$12.6 million obviously reiterates the fact that there is this solid base to your business model.

Yes, there's a fantastic support from the investor base. And the guys brought into this round are premium names in the institutional investor market. Particularly Perennial Value Management and Thorney Investment Group are very big in the Australian institutional marketplace. Obviously, the money is important, because it keeps the CapEx model working and allows us to invest in more satellites and invest in more growth. But it’s also about building a strong investor base and increasing the strength over a period of time is validation in the model, as well as the marketplace that we generally work in.

So, how do you see your sector growing and developing over the next 10 years?

Our industry specifically is Earth observation. Using satellites to collect data about what's going on around the Earth, whether that’s weather, what we’re doing which is Radio Frequency, whether it's Automatic Identification System or Automatic Dependent Surveillance-Broadcast or taking photos in optical or in synthetic aperture radar… you know, there's lots of verticals. There is a lot of work being done in artificial intelligence and machine learning to bring all that information together.

What we’re seeing very recently is a trend much more down towards those people that are developing those tool sets to bring different datasets together to create a solution for the end user. And I think that there’s a big growth area there.

But I think when you start to look at this industry of observation, or intelligence collection, we're all very siloed in terms of suppliers, whether it’s ourselves or Spire, or Planet, or whoever. There is clearly some opportunity for consolidation. I think that would change the dynamic from relatively small companies working in verticals to being very large conglomerates. I think it’s a natural evolution for the market to bring those things together and control the full value chain.

This article originally appeared in the October edition of Delano magazine.