U.S. Government Forces Firefly Aerospace’s Owners to Sell Their Stake in the Company

Government interference in private company operations is never a good omen. Firefly Aerospace, an upstart in the private space industry, was recently forced to learn the hard way.

U.S. Government Forces Firefly Aerospace’s Owners to Sell Their Stake in the Company

Looking to scale operations significantly in 2022, Firefly hit a snag when the government took action against one of its top investors.

An Unwanted Goodbye from Polyakov

Late in December, reports confirmed that the United States government had pressured Max Polyakov - a Ukrainian businessman and one of Firefly Aerospace's top investors - to sell his stake in the company.

Polyakov is best known for founding a software empire in Ukraine. However, he was also an important member of Firefly Aerospace's governing team.

In 2017, the company was floundering and seriously flirting with bankruptcy until Noonsphere Ventures - Polyaakov's investment firm - stepped in with a significant investment. Since, Firefly Aerospace has become one of the hottest names in the private aerospace industry.

Government officials and top players in the private aerospace industry expressed concerns over his ownership of the company, specifically regarding the potential for valuable technology entering far Eastern Europe.

Diplomatic Problems Bite Firefly Aerospace

Ukraine is currently in turmoil as Russian military forces invade the country. If the Russian effort is successful, trade secrets could leak to the country, causing a diplomatic headache for the United States.

Despite best efforts of the Biden administration and other top governments, Russia's systematic invasion continues. The world power has refused to let go of Ukraine and could feasibly retake the region.

Russia's efforts in space could challenge the United States' hegemony. To curtail this effect, the government forced Polyakov to sell his stake in Firefly Aerospace.

Polyakov reportedly got a letter from the Committee on Foreign Investment in the U.S. (CIFIUS) - an arm of the U.S. government that oversees the national security impacts of foreign investments in the country. The committee pointed out that Polyakov's firm - Noonsphere Ventures - owned 50 percent of Firefly Aerospace, a dangerous amount.

Despite having invested over $200 million into the fledgling company, Polyakov is now selling his stake. He is also leaving the board and ceasing oversight of the company's daily activities.

It's unfortunate for Polyakov. The businessman was committed to Firefly, even going as far as purchasing Dragonfly Aerospace - a private space company based in South Africa. The purchase, completed in April 2021, was seen as a possible revenue stream for Firefly Aerospace.

With Polyakov selling his stake in Firefly, the company is putting several operations on hold. The company planned to launch its Alpha rocket early this year but had to pause plans to deal with the fallout of Polyakov's sale.

Reports suggest the government has also limited Firefly's operations at the Vandenberg Space Force Base in California while Polyakov finalizes the sale.

Not so Doomed After All

Despite the troubles, Firefly Aerospace remains optimistic about turning things around. In June, the company announced it had inked an agreement with SpaceX to carry the former's Blue Ghost lunar lander to the moon sometime in 2023.

Blue Ghost is a part of a NASA contract Firefly obtained back in February 2021. It aims to deliver technology demonstration payloads and instruments to space as part of NASA's Artemis program.

Worth almost $100 million, the contract makes Blue Ghost the sixth lunar lander project associated with NASA's Commercial Lunar Payload Services (CLPS) program.

Speaking on the SpaceX deal, Shea Ferring, Firefly's senior vice president of spacecraft, said they were excited to fly their lander on SpaceX's Falcon 9. She added that the deal would ensure Blue Ghost gets to the moon on Falcon 9, so it won't take much fuel to complete the lunar touchdown process.

Firefly believes Blue Ghost should deliver over 330 pounds of payload to the moon. By partnering with SpaceX, the company can reduce the lander's propulsion system requirements.

At the same time, the Alpha rocket launch isn't over yet. It might suffer some delay, but for a completely understandable reason. While the Polyakov sale will constitute a delay, the company remains on the right path.

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