Dawn Aerospace's rocket-propelled aircraft takes flight

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Image Credits: Dawn Aerospace (opens in a new window)

Dawn Aerospace’s rocket-powered aircraft soared to new heights in its latest test campaign, as the company looks to build what could be the highest-performance aircraft to take off from a runway.

The series of three flights, which were completed in late July, saw the Mk-II Aurora vehicle achieve a maximum speed of Mach 0.92 and an altitude of 50,000 feet. That is a 3x and 5x improvement, respectively, over the previous campaign. The next flight campaign, scheduled for mid-September, will attempt supersonic flight. 

Mk-II is acknowledged as a development vehicle, paving the way for a two-stage-to-orbit aircraft called Mk-III. But it’s easy to imagine the demand for a vehicle with the kind of capabilities Dawn aims to bring to Mk-IIB, as it calls the next supersonic iteration.

The company outlined some of those goals in a blog post published Tuesday: “By the end of 2025, we’re looking to climb faster than an F-15, fly higher than a MiG-25, faster than an SR-71, and, ultimately, be the first vehicle to fly above the Kármán line; 100km altitude (the generally accepted definition of ‘space’), twice in a single day. Some of these records have stood for over 50 years.” 

The company sees two main development streams, or revenue opportunities. One, using a vehicle optimized for payload capacity, caters to remote sensing, Earth observation, and atmospheric research. The second, a vehicle optimized for high-speed atmospheric flight, would be for hypersonic testing, point-to-point transportation and microgravity research. 

“We’re looking at still relatively small vehicle designs that would be optimized for each of those applications,” Dawn co-founder and CEO Stefan Powell said in a recent interview. “We’re not talking publicly about exactly which ones we’re going after, when or how or whatnot, but the Mk-IIB can do a little bit of both, and so it’s allowing us to dip our toes into the commercial side of both aspects. So we’re pretty active in market now, talking to lots of customers who would be wanting to do one or these other things.”

Dawn has raised at least $15 million in funding and has spent relatively little on the flight program so far, as such things go: just $10 million, with the overall aim of completing it for under $20 million total. The company generates some revenue from its other business line, small satellite propulsion systems, but it’s still a relatively small amount of outside capital, especially for an aerospace company at this stage of development.

It’s a far cry from the development costs of comparable spaceplanes, hypersonic aircraft, or vertical rockets. Powell credits the company’s achievement on the fact that it decided to pursue, as it puts in the blog post, “an aircraft with the performance of a rocket, not a rocket with wings.” 

Rockets have high stakes: Each flight must be performed flawlessly. Even in development stages, when anomalies occur that can lead to a rocket’s destruction, it can be hard to survive — and actually iterate — without lots of cash to fall back on. Instead, the company looked to aviation. The company’s co-founder and CFO, James Powell, had worked on aircraft, and the company looked to that industry, with its low marginal operating costs, rapid reuse and high reliability to inform its plans.  

“All of our development to date has really been about just developing this muscle of being able to learn quickly and apply this ‘it’s an aircraft with the performance of a rocket, not a rocket with wings’ mentality, because that allows just such a fundamentally better way to operate,” he said. 

“I think common knowledge is that spaceplanes have been tried with the Shuttle, and that didn’t work, and it’s a dumb idea. And if not that then, things with wings are stupid because, look at Virgin Orbit, that didn’t work. Air launch is dumb. You have to get to quite a nuanced conversation before you actually understand the difference between what we’re trying to do and the rockets with wings that have flown before us, and how the path we’re on is very much an aircraft path, but there is still a path to making it have the performance of a rocket.”

Dawn Aerospace's rocket-propelled aircraft takes flight

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Image Credits: Dawn Aerospace (opens in a new window)

Dawn Aerospace’s rocket-powered aircraft soared to new heights in its latest test campaign, as the company looks to build what could be the highest-performance aircraft to take off from a runway.

The series of three flights, which were completed in late July, saw the Mk-II Aurora vehicle achieve a maximum speed of Mach 0.92 and an altitude of 50,000 feet. That is a 3x and 5x improvement, respectively, over the previous campaign. The next flight campaign, scheduled for mid-September, will attempt supersonic flight. 

Mk-II is acknowledged as a development vehicle, paving the way for a two-stage-to-orbit aircraft called Mk-III. But it’s easy to imagine the demand for a vehicle with the kind of capabilities Dawn aims to bring to Mk-IIB, as it calls the next supersonic iteration.

The company outlined some of those goals in a blog post published Tuesday: “By the end of 2025, we’re looking to climb faster than an F-15, fly higher than a MiG-25, faster than an SR-71, and, ultimately, be the first vehicle to fly above the Kármán line; 100km altitude (the generally accepted definition of ‘space’), twice in a single day. Some of these records have stood for over 50 years.” 

The company sees two main development streams, or revenue opportunities. One, using a vehicle optimized for payload capacity, caters to remote sensing, Earth observation, and atmospheric research. The second, a vehicle optimized for high-speed atmospheric flight, would be for hypersonic testing, point-to-point transportation and microgravity research. 

“We’re looking at still relatively small vehicle designs that would be optimized for each of those applications,” Dawn co-founder and CEO Stefan Powell said in a recent interview. “We’re not talking publicly about exactly which ones we’re going after, when or how or whatnot, but the Mk-IIB can do a little bit of both, and so it’s allowing us to dip our toes into the commercial side of both aspects. So we’re pretty active in market now, talking to lots of customers who would be wanting to do one or these other things.”

Dawn has raised at least $15 million in funding and has spent relatively little on the flight program so far, as such things go: just $10 million, with the overall aim of completing it for under $20 million total. The company generates some revenue from its other business line, small satellite propulsion systems, but it’s still a relatively small amount of outside capital, especially for an aerospace company at this stage of development.

It’s a far cry from the development costs of comparable spaceplanes, hypersonic aircraft, or vertical rockets. Powell credits the company’s achievement on the fact that it decided to pursue, as it puts in the blog post, “an aircraft with the performance of a rocket, not a rocket with wings.” 

Rockets have high stakes: Each flight must be performed flawlessly. Even in development stages, when anomalies occur that can lead to a rocket’s destruction, it can be hard to survive — and actually iterate — without lots of cash to fall back on. Instead, the company looked to aviation. The company’s co-founder and CFO, James Powell, had worked on aircraft, and the company looked to that industry, with its low marginal operating costs, rapid reuse and high reliability to inform its plans.  

“All of our development to date has really been about just developing this muscle of being able to learn quickly and apply this ‘it’s an aircraft with the performance of a rocket, not a rocket with wings’ mentality, because that allows just such a fundamentally better way to operate,” he said. 

“I think common knowledge is that spaceplanes have been tried with the Shuttle, and that didn’t work, and it’s a dumb idea. And if not that then, things with wings are stupid because, look at Virgin Orbit, that didn’t work. Air launch is dumb. You have to get to quite a nuanced conversation before you actually understand the difference between what we’re trying to do and the rockets with wings that have flown before us, and how the path we’re on is very much an aircraft path, but there is still a path to making it have the performance of a rocket.”

India's Agnikul launches 3D-printed rocket in sub-orbital test after initial delays

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Agnikul 3D-printed rocket for suborbital launch testing

Image Credits: Agnikul

After two years of preparation and four delays over the past several months due to technical glitches, Indian space startup Agnikul has successfully launched its first sub-orbital test vehicle, powered by its unique 3D-printed rocket engines, space agency Indian Space Research Organisation said Thursday.

Called Agnibaan SOrTeD (Sub-Orbital Technology Demonstrator), the single-stage launch vehicle lifted off Thursday morning local time from the startup’s mobile launchpad at the Satish Dhawan Space Center on South India’s Sriharikota island. Data from the test flight will contribute to the development of the startup’s Agnibaan commercial orbital launch vehicle.

Agnikul initially conducted full countdown rehearsals for the launch in March and postponed the liftoff due to some minor observations. The startup also prepared the launch twice in April and once earlier this week, each time calling it off just before liftoff due technical issues surfaced during last-minute inspections. Today, Agnikul finally accomplished its long-anticipated mission after the rocket lifted off from the spindle-shaped island located on the East Coast of Andhra Pradesh and splashed down in the Bay of Bengal.

The 6.2-meter-tall vehicle is made of carbon composite, which gives it a liftoff mass of 1,268 lbs; at its heart is the 3D-printed semi-cryogenic engine that Agnikul manufactured in-house, each of which provides 6.2 kN of thrust.

Agnikul co-founder and CEO Srinath Ravichandran told TechCrunch in an interview before the launch that it takes 72 to 75 hours to 3D print one of the rocket engines in raw form. The startup can produce two fully finished engines in a week, including taking them from the 3D printer, de-powdering them, and passing them through heat treatment. This is unlike the traditional process, which takes 10 to 12 weeks to create a rocket engine of a similar size.

“We stand out because of the single-piece component where there is no human intervention in the process; what comes out of the printer is of full length, without any welding or tightening or anything of that sort,” he said over a call.

Elaborating further on the single-piece part that makes Agnikul stand out in the competition, Ravichandran said the core engine, which is “where the fuel enters and exhaust leaves and everything in between, and the igniter,” is 3D printed in one shot as a single piece of hardware. The engine is then connected to the plumbing apparatus, such as fuel pipes, pressure and temperature sensors, and valves.

Though Agnikul claims its 3D-printed engine is a world first, companies including Relativity Space and Rocket Lab adopted 3D printing for their rockets much earlier. However, Ravichandran claimed all these companies have not entirely used 3D printing.

“They are still not offering what people should be offering, which is what we are offering, which is extremely flexible and configurable ways to get to space,” he asserted. “If you have a 1 or 1.5-ton capacity vehicle, which is what Relativity or any of these other companies have, that’s like forcing people to do a rideshare, forcing them to figure out, wait for people to come in together, and again, the same set of problems of not getting dropped in the last mile.”

Agnikul Agnibaan SoRTeD 3D-printed rocket launch trajectory
Agnikul’s Agnibaan SOrTeD launch trajectory Image Credits: Agnikul
Image Credits: Agnikul

Agnikul chose inconel as the material for the engine design. It remains strong at high temperatures and is 3D printable. However, since the alloy is an extremely poor heat conductor, the startup’s biggest challenge was removing the heat.

“Taking heat out involved a lot of iterations of designing the cooling channels,” Ravichandran said.

The other challenge for Agnikul was to ensure the vehicle remained completely hazard-free while being a mobile system. The startup decided not to use solid-fuel systems, which are highly explosive, and instead made the vehicle a completely liquid propulsion-based system. It also preferred to avoid using a model that requires even a remote connection to an explosive material.

“Any of the systems that require jettisoning, like if some phase separation from the pad or separation in two stages and so on, these are all pneumatic systems,” Ravichandran stated.

Agnikul has designed the vehicle to be modifiable “even in the last minute,” the co-founder said, offering a tailor-made solution to organizations looking to launch any specific small satellites.

Founded in late 2017, Agnikul initially experimented with 3D-printed components, such as igniters, cooling channels, and fuel injection points. However, it gradually pushed the boundaries and started combining different elements to avoid welding and tightening — moving away from conventional methods.

“There is no shortcut to engineering something like this. You just have to go through the regimen and keep on iterating,” Ravichandran asserted.

He said the startup went through at least 70 or 80 iterations, particularly for fuel injectors, and eventually designed an “injector plate,” combining all of them in one component. Similarly, the startup went through at least 20 iterations of its cooling chambers with different geometries.

The startup took about six to nine months to make its first set of engines from scratch and then spent almost a year making that engine actually fly, the executive said. Agnikul raised $26.7 million in funding late last year to get it to this point.

Retired scientists from the Indian Space Research Organisation and researchers from IIT Madras are helping Agnikul develop vehicles for commercial launches. Ravichandran said the startup is already in talks with over 40 potential customers, and letters of intent have been signed with some. However, an orbital launch of Agnibaan would take at least six months.

India’s space sector has attracted global attention for some time. Last year, the South Asian nation became the first to land its spacecraft on the lunar south pole and introduced its space policy to boost private participation. The country, home to around 190 space tech startups, also recently updated its policy to raise limits on foreign direct investments in the space sector. Now, Indian space startups are setting the ground to take the country’s space sector to new levels by demonstrating their technologies and making them ready to generate revenues from customers worldwide.

Rocket Lab logo on building exterior

After rockets and spacecraft, Rocket Lab's next frontier could be applications

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Rocket Lab logo on building exterior

Image Credits: Rocket Lab (opens in a new window)

Rocket Lab is exploring possible applications for a satellite constellation that they would build, launch and operate in-house, similar to SpaceX’s Starlink business, as a way of generating recurring revenue, an executive said this week.

“If you look to where we ultimately want to go, in a lot of ways we want to emulate what [SpaceX] has successfully done, which is work their way towards the applications market,” Rocket Lab CFO Adam Spice said. “SpaceX has chosen the consumer broadband and other applications on Starlink for their anchor application in space. We’re evaluating a lot of different constellation application opportunities.”

“Ultimately, we view end-to-end as not just build and launch, but it’s build, launch, operate and generate a recurring revenue stream off of the end customer relationship,” he said.

Rocket Lab has already taken great strides to become a full-service space company: The company flies its small Electron rocket for commercial and defense customers; it is developing a larger Neutron rocket, similar in size and payload capacity to SpaceX’s Falcon 9, which is on track to fly for the first time at the end of this year; and it operates a booming space systems business, which includes products from full satellite buses to spacecraft components, like solar panels and reaction wheels.

Spice’s comments, made at the TD Cowen 45th Annual Aerospace & Defense Conference on February 14, show that the company is looking to vertically expand even further.

In recent months, Rocket Lab has also expanded its work with U.S. government agencies, most notably in its win of a $515 million contract to build 18 satellites for the Space Development Agency. The company leveraged its vertical integration to score that contract, and will be building all of the critical portions of the satellite bus as part of that deal. Where Rocket Lab has the greatest reliance on third-party suppliers is with the payload portion of the spacecraft, Spice said.

But the company wants to close that gap, too. Earlier this month, Rocket Lab announced it had closed a $355 million convertible note offering, and Spice said that the new funding will enable the company to “inorganically work our way into more payload capabilities.”

Rocket Lab leverages vertical integration to land $515M military satellite contract

That means more acquisitions. Rocket Lab has already executed four acquisitions to build its end-to-end capability, but Spice said unequivocally that the company is looking for more.

“Right now is a great time to be shopping because the ability to raise capital for most companies is very, very, very challenging,” he explained. “So we’re seeing some real opportunities […] We see other distressed assets that are quality technology that we can add to our portfolio.”

Rocket Lab has 'misrepresented' Neutron launch readiness, congressional memo says

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Image Credits: NASA (opens in a new window)

An internal congressional memo viewed by TechCrunch casts strong doubt on Rocket Lab’s claim that its Neutron rocket will be ready for launch in time to meet a crucial contract deadline from the Space Force.

“In light of public reporting and media pressure, Rocket Lab has escalated their campaign to misrepresent their launch readiness in an effort to gain competitive advantage over incumbents and other new entrants by on-boarding into NSSL Phase 3 Lane 1 at the first opportunity in 2024,” the memo, viewed by TechCrunch, says. “Public records and information available to staff confirm that Neutron has no credible path to launch by 12/15/2024.”

Rocket Lab declined to comment for this story.

Such memos are used to inform congressional officials on particular issues and make recommendations on proposed actions. This memo, which was written by congressional staffers and circulated on Wednesday to other offices, including those in the Senate Armed Services Committee, states that Rocket Lab has “repeatedly assured” these staffers that the company has a credible path to launch by December 15.

That is the date by which the Space Force’s Space Systems Command said launch providers must be ready to fly in order to qualify for launch contracts under a program called National Space Security Launch (NSSL) Phase 3. Those contracts will reportedly be worth multiple billions of dollars to cover launches from 2025 through 2034.

In response to industry feedback, Space Systems Command changed its procurement strategy for the next batch of national security launch contracts to accommodate newer launch providers. Under the new strategy, the contracts are split into two groups: Lane 1 is for newer rockets, while Lane 2 is for established providers that can fulfill the full range of mission requirements.

While Rocket Lab has never publicly confirmed that it has bid under Lane 1, in an earnings call on Tuesday, CEO Peter Beck suggested the company was pushing hard to complete Neutron development by the end of this year in order to meet that deadline: “We’re tracking that Lane 1 pretty closely and we spent a lot of time with the Space Force to advocate for that Lane 1,” he said. “Hence the reason why we’re pushing so hard to get the vehicle in a launch for this year, because it’s a gating on-ramp to Lane 1.”

As Beck went on to note, providers who do not meet this year’s readiness date will have another opportunity to bid on contracts the following year.

Neutron is Rocket Lab’s medium-lift vehicle and is being added as a complement to its successful small Electron rocket. Neutron will be powered by a new engine called Archimedes, and the company is aiming to start hot fire tests of that engine around March; Beck said the company will know more about how close to the timeline they are “once Archimedes breathes fire” during testing.

Uncertainties around Archimedes’ hot fire tests are “the biggest issue” in Rocket Lab’s claims, the memo argues.

Beyond the actual rocket testing, much of the timeline depends on completions to the launch pad and other infrastructure at NASA’s Wallops Flight Facility, which is being built by a state agency, Virginia Commercial Space Flight Authority. The most recent RFP issued by that agency for the launch infrastructure has an anticipated completion date of November 29, 2024 — which leaves a scant two weeks until the launch deadline. It is unclear whether any additional RFPs are forthcoming or when the RFP schedule was finalized. VCSFA did not respond to TechCrunch’s request for comment by publication time.

On the company’s earnings call, analysts also asked Beck about the RFP, and he pointed to Rocket Lab’s track record of developing launch pads in short timelines. But the congressional memo argues that the Neutron pad has significantly different “scale, propellant type, and architecture” compared to the company’s existing pads. It also highlights proprietary timelines shared by other launch providers that suggest there is much work left to be included in RFPs by the VCSFA.

The memo includes a slide from 2023 prepared by Space Systems Command that suggests the agency will begin source selection in the second quarter of the fiscal year and announce the Lane 1 awards in the middle of the third quarter, which runs from April to June.

The blades of a turbine viewed up close.

Evari turns to rocket science to solve problems with heat pumps

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The blades of a turbine viewed up close.

Image Credits: Nathan Laine/Bloomberg / Getty Images

Off a highway nestled in the woods of New Hampshire, a small group of engineers have been quietly working on advanced heat pumps inspired by rockets and satellites, of all things.

Evari emerged from stealth on Tuesday with its core technology related to rocket turbomachinery. The goal is to add dozens of miles to electric vehicles’ range while also kicking natural gas out of the home heating business.

Heat pumps use electricity to shuttle thermal energy from one place to another, and they tend to be a lot more efficient than traditional heating. In the case of home heating, they extract heat from the outside air and transport it inside to keep its occupants warm. In a refrigerator, they take heat away from the internal compartment to keep food cool. Global sales of heat pumps have been growing at a double-digit rate in recent years, but it hasn’t been enough to keep the world on track to hit net zero carbon emissions in 2050, the IEA has said.

Today, large swaths of the globe haven’t adopted air-source heat pumps because they don’t work as well when the mercury drops. Most of those places still rely on natural gas or heating oil, and convincing people to switch will require a drop-in solution that’s cheaper to run than their existing furnace or boiler and works at extreme temperatures. The basic technology that’s inside your car or your house hasn’t changed in over a century, and it still doesn’t work well at low temperatures.

“Let’s say it’s -30 degrees Fahrenheit in Minnesota, and you have a forced baseboard hot water heater,” Walker said. “No heat pump on the market can do that at any temperature, let alone really cold temperatures.”

Yet that’s exactly the kind of system Evari will eventually target. Its turbomachinery excels when there’s a large temperature differential it has to bridge. That might mean extracting heat from a cold Minnesota night to heat a home, but it also might mean dumping heat from a refrigerated container on an EV truck into a hot afternoon in Miami. Evari isn’t disclosing its target market yet, but Walker did say that it’s targeting transportation first.

What’s more, the refrigerants most heat pumps use are either potent greenhouse gases or can break down into forever chemicals, researchers have found.

Evari’s turbo-powered heat pump uses refrigerants like propane with extremely low global warming potential. It also doesn’t require oil for lubrication. That might sound like an odd thing to highlight, but it’s hard to design an oil that works well at both ends of the spectrum and plays nice with the heat pump’s refrigerant. An oil-free heat pump can work more efficiently at a broader range of temperatures, Evari’s co-founder and CEO Steve Walker told TechCrunch.

If Evari can bring its heat pump to market at a cost that’s competitive with existing options, it stands to upend a wide range of industries. Heat pumps are used not just to heat and cool homes and vehicles, but also to generate heat for industrial processes, dehumidify buildings, keep food cold in grocery stores and more.

Walker funded the early stages of development out of pocket, tapping a modest windfall he earned from the sale of a previous startup he founded that turned waste wood into fuel. As a result, Evari has sorted out much of the technical risk, Walker said. So while the company today announced a $7.5 million seed round, it’s much further along than most seed-stage companies. The round was led by Clean Energy Ventures with participation from Farvatn Venture and angels from the Clean Energy Venture Group.

The manufacturing process for Evari’s compressors will likely be costlier than existing designs, but they should be cheaper overall because they require less in the way of materials, Walker said. “Less than 5% of the copper and rare earth materials, for instance, for the same amount of cooling or heating output,” he said. The startup’s turbocompressors range in size from as small as a dime to slightly larger than a quarter. Despite spinning at hundreds of thousands of revolutions per minute, they’re nearly silent and vibration free, he added.

By trading materials costs for some additional manufacturing expenses, Evari’s material-light approach is well-positioned to insulate the company from the growing geopolitical tensions forming over critical minerals. Much of those are either mined or processed in China or flow through Chinese-owned companies, and the U.S. government has made it a priority to decouple as much of the country’s mineral supply chain as possible.

At the same time, U.S. industrial policy has begun to favor domestic manufacturing. The Biden administration announced in February that it was devoting $63 million from the Defense Production Act to boost heat pump manufacturing specifically.

For Evari, the timing couldn’t be better. It finds itself at the confluence of three sweeping trends. Now it just has to get its super-fast compressors into production in time to catch the wave of heat pump adoption.

TechCrunch Space: True Anomaly and Rocket Lab will make big moves on orbit (literally)

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Image Credits: TechCrunch

Hello and welcome back to TechCrunch Space. I hope everyone had a great time at Space Symposium! Hopefully I’ll see you there next year.

Want to reach out with a tip? Email Aria at [email protected] or send me a message on Signal at 512-937-3988. You also can send a note to the whole TechCrunch crew at [email protected]. For more secure communications, click here to contact us, which includes SecureDrop instructions and links to encrypted messaging apps.

Story of the week

The Space Force has contracted out its next “responsive space” mission, and this one is a doozy. The two awardees, Rocket Lab and startup True Anomaly, will each build and launch spacecraft that will conduct rendezvous and proximity operations on orbit.

In the Space Force’s words: “The vendors will exercise a realistic threat response scenario in an on-orbit space domain awareness demonstration called Victus Haze.”

The two companies will have to operate under intentionally tight time frames, too — the first responsive space mission from Firefly Aerospace and Millennium Space set new records in terms of launch readiness — so we’ll definitely follow this mission closely when it launches next year.

RocketLab's "As the Crow Flies" Electron rocket launch
Image Credits: Sam Toms and Simon Moffatt

Scoop of the week

Confidential financial statements from SpaceX for 2018 and 2019 capture an early glimpse at the degree to which the company is likely dependent on its Starlink business unit, and bringing the Starship rocket online, to become cash flow positive.

While the comprehensive balance sheets are five years old, they provide an intimate look inside the operations of arguably one of the most important, and secretive, private companies in the U.S.

SpaceX founder Elon Musk during a T-Mobile and SpaceX joint event on August 25, 2022 in Boca Chica Beach, Texas
Image Credits: Michael Gonzalez / Getty Images

What we’re reading

I was very interested to see this reporting from Bloomberg on Starlink’s profitability — or not. It’s a really nice complement to my scoop above: Taken together, the two stories tell a tale about the importance of Starlink as a revenue-driver for the company’s longer term, and considerably ambitious, plans to colonize Mars.

How many is too many? Starlink dishes in a line on a Celebrity Cruises ship. Image Credits: Celebrity Cruises

This week in space history

Houston, we have a problem…

This week’s space history segment is dedicated to the Apollo 13 mission, which launched on April 11 and returned to Earth on April 17. The three-person crew was destined for the moon, but those plans were swiftly put to an end when an oxygen tank in the service module ruptured two days after launch.

The prime recovery ship for the Apollo 13 mission hoists the Command Module aboard the ship. Image Credits: NASA / Getty Images

Global Founders Capital's David Sainteff

Global Founders Capital will deploy Rocket Internet’s cash instead of raising a new fund

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Global Founders Capital's David Sainteff

Image Credits: Global Founders Capital

Global Founders Capital, the Berlin-based early-stage VC firm with close ties to the German startup factory Rocket Internet, is going to become the venture arm of Rocket Internet.

The VC previously raised two $1 billion funds and, just a few years ago, its name appeared in dozens of deals per year. But then, things quietened down. Now we know why: Going forward, it’ll exclusively invest from Rocket Internet’s balance sheet.

Last year Financial Times reported that Global Founders Capital was in the middle of a big strategic shift. A couple of weeks ago the VC firm reached out to TechCrunch to confirm the pivot and discuss the reasons behind the shift.

“To be transparent, there have been quite a few changes at Global Founders Capital in recent years — in terms of the structure of the fund and the composition of the team,” Global Founders Capital Partner David Sainteff (pictured above) told us.

Sainteff said the firm decided it’s not the right time to raise another fund because it’s not a great time to invest as they do not believe there are that many good opportunities that meet the firm’s criteria and that they don’t need more capital to remain competitive against other investors for deals.

Global Founders Capital was originally structured as a traditional VC firm with several limited partners participating in funds. With its first fund, it backed then-future unicorns such as Personio, Revolut and SumUp. With its second fund, the firm invested in several companies TechCrunch has also covered, such as Pennylane, Ankorstore and Seyna.

Prior to joining Global Founders Capital, seven years ago, Sainteff worked for Rocket Internet, which was an investor in Global Founders Capital from the beginning. So there have been close ties between them since the beginning.

“Following the deployment of this second fund, we decided not to raise another fund. Instead, we’ll use Rocket Internet’s capital,” he confirmed. “We have €300 million to deploy for venture investments on the balance sheet. We don’t have any fundraising planned.”

Frankly, this is a bit odd as the firm’s past performance seems quite good. According to Sainteff, the first fund is going to generate returns between 3x and 4x. “For the second fund, it’s far too early [to say],” he continued. “But we have a few clear winners like Pennylane. We entered at the pre-seed stage and the company is worth over €1 billion.”

The new strategy means Global Founders Capital is now much smaller than it used to be, with only five partners left: Fabricio Pettena, Don Stalter, Cedric Asselman, Sainteff and of course Rocket Internet co-founder and CEO Oliver Samwer.

The new version of the firm will also only focus on early-stage investments, plus the ability for follow-on investments in later rounds (Series A, B, C, etc.).

Did Global Founders Capital choose not to raise a third fund because it didn’t get enough support from potential limited partners or because of the current tech downturn compared to 2021 (with the exception of the boom in artificial intelligence)? Probably the decision hinged on a bit of both.

“It wasn’t the best moment to raise funds with [limited partners],” Sainteff told us. “We think it was difficult to have the imperative to deploy capital.”

“It’s an easy decision to make when you have €300 million in the bank,” he added. “If other VC firms were in the same boat, they would have made the same decision. We don’t rule out the possibility to raise a fund when the conditions are right and favorable.”

For now, the pivot reverses much of the fund’s earlier expansion, when it scaled into more geographies, tech areas and funding stages and the Global Founders Capital name was attached to a bunch of deals.