The company Mynaric is one of the largest, if not the largest, players in the field of laser communications for aircraft, high-altitude platforms, and satellites. A successful IPO in 2017 brought the company, which aims to make the internet possible above the clouds, over 27 million euros in revenue. Analysts estimate revenues in the mid-three-digit million range by 2022.
Mynaric was founded in 2009 by former employees of the German Aerospace Center (DLR). Among those involved were Dr. Markus Knapek and Joachim Horwath (both now members of the Executive Board), who each spent many years researching the underlying technology at DLR. The concept of laser communication had already been researched at DLR, as it was clear at the time that radio alone would not be sufficient in the future. In 2009, with the support of DLR Technology Marketing, the founders finally took the step of establishing their own company to develop the technology to market maturity and commercialize it.
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The company currently has over 80 employees, and expects to increase this to 100 by the end of the year. Mynaric currently has a total output of approximately €3.2 million (as of 2017). This reflects not only sales, but also ongoing production and subsidies, and therefore provides more insight into the company's performance than sales alone. Sales total approximately €1.6 million (as of 2017).
“To date, no one in the world has been able to imitate us!”
The Munich-based company reached its first major milestone in 2011. At that time, it was able to establish a stable connection between an aircraft and the ground for the first time. This required defying adverse conditions such as long distances and high speeds.
Sven Meyer-Brunswick, Director Communications & Corporate Growth, explains:
"1 gigabit per second over a distance of 60 kilometers from an aircraft traveling at 750 kilometers per hour, vibrating heavily, cornering, etc. Many people considered it impossible to use such a precise technology as laser communication in such a harsh scenario. After all, the narrow laser beam must always be aligned with high precision between the ground station and the aircraft. By comparison, our systems achieve a level of precision that can track a coin dropped from a pocket from more than a kilometer away. The test was very successful. To date, no one in the world has been able to replicate it."
In 2013, the first major order came from the US, from a customer interested in a first commercial end-use application. This set the course for the Munich-based company. Successful test campaigns were completed in the United States the following year. It is now known that Facebook is also among the Munich-based company's customers. In 2017, the company finally decided to go public: Mynaric raised over €27.3 million in growth capital on the Frankfurt Stock Exchange. Including several additional financing rounds, the total comes to almost €40 million. Since the founders and existing shareholders did not sell any company shares during this period, the money could be invested exclusively in the company's growth.
Mynaric is used where fiber optics is not possible
But where is the Mynaric technology used?
"In general, application areas are found wherever large amounts of data need to be transmitted between aircraft or satellites, or from these platforms to the ground. Specifically, a number of international companies are working on an Internet above the clouds, for which laser communication is a key technology. Here, hundreds to thousands of aircraft, drones, high-altitude balloons, or satellites are to be networked together to provide Internet access where fiber optic cables in the ground are impractical or simply too expensive."
says the company.
This would allow even economically weaker, sparsely populated areas to access cost-effective network connectivity in the future. In rural and remote regions, in particular, there are reports of a whopping three billion people without internet access. However, Mynaric's customers naturally pursue not only social interests, but also economic ones with an industrial focus. Here, they focus on applications for ships or aircraft, for example, that require real-time transmission of machine data.
Internet connection as natural as the air we breathe
Given that Mynaric's technology appears so superior to others, the question arises as to whether it will eventually completely replace existing communications networks. The company expects that a mix of different network technologies will prevail in the long term. For example, underground fiber optic cables will continue to be used in cities in the future, as the technology allows for very high data rates. In sparsely populated areas, networks in the air or space will prevail due to their greater cost-effectiveness.
"Ultimately, the end user will no longer have to worry about which network their data is being processed over. We're talking about a future in which an internet connection from virtually anywhere in the world will be as natural as breathing air. What's more, even in a vacuum, we'll have omnipresent internet connectivity."
IPO minimizes risk
There were essentially two key motivations for the IPO in 2017: First, it was seen as a good way to raise sufficient growth capital for the company's planned growth in the coming years. Second, according to the founders, the transparency and professionalism of the IPO would also lead to a completely different perception by large corporations that are part of the company's potential customer base. Connecting 3 billion people is an ambitious and cost-intensive project, likely costing hundreds of millions or even billions of euros. The IPO minimizes the risk for potential partners.
“A gigantic strategic value is created”
The company is very positive about the future:
"The future forecasts look brilliant. We are one of the few serious, if not the A player in the international market for laser communications for aircraft, high-altitude platforms, and satellites—precisely the technology that the very large tech companies need to realize their plans. On the one hand, significant revenues are naturally possible—analysts expect us to achieve sales in the mid-three-digit million range by 2022—and on the other hand, our role as a key technology also creates enormous strategic value."
At Mynaric, it is assumed that networks in the air and in space – based on laser communication – will play a similar role in the future as the existing fiber optic network in the ground: So a enabling market, which will make an entire ecosystem of services possible. To put this into perspective: The market for fiber optic cables and corresponding equipment generates approximately 16 billion euros per year, but it also powers the entire telecommunications market, which generates approximately 1.6 trillion euros per year. Markets that will only become possible through advancing digitalization and networking are not even taken into account here.
“A gigantic ecosystem is being created here and we intend to become the shovel supplier for this gold rush,”
is the target output of Mynaric.
When the project was still in its infancy, however, many skeptics had to be convinced first. The first investors they approached considered the idea too big, too far-fetched, too "out there" in the truest sense of the word. Accordingly, expectations regarding the company's valuation differed widely. Nevertheless, Mynaric is on a very good path and has successfully overcome further hurdles, such as technical problems, staff recruitment, premises, and process management. However, the company states that the energy required for this should not be underestimated.
The product alone is not everything
Furthermore, the founders recommend that young founders, especially engineers, do not think too product- and technology-centrically:
"That's only a small part of what a company needs to be successful. We brought on board an experienced industry manager, Dr. Wolfram Peschko, early on to support us with finance, production, and general business operations. It's important to have someone early on, ideally within the founding team, who can take care of all the 'sides'."
The company is largely satisfied with its Munich location. Mynaric sees the Bavarian capital as the leading location in Germany, especially when it comes to finding well-trained specialists. Furthermore, young startups here are increasingly receiving support from numerous institutions. In Mynaric's case, the ESA BIC in Oberpfaffenhofen was a key enabler. However, there is still room to catch up, especially when it comes to venture capital:
"There's a lack of an active venture capital community that truly deserves its name. In Germany, in general, people are simply far too conservative, focusing on numbers instead of investing in potential and future market positions. We live in a world that's changing so rapidly that it's impossible to even predict what the next three years will look like. If I want to invest in the truly big market champions in 10 years, I, as a venture capitalist, have to take risks. In the US, things are different, and their success proves them right."
