U.S. Seeks to Oust Ukrainian Owner of Texas Rocket Startup Firefly

9 months ago - December 30, 2021
U.S. Seeks to Oust Ukrainian Owner of Texas Rocket Startup Firefly
Max Polyakov has agreed to sell a stake in the company under pressure from U.S. officials.

The U.S. government has requested that Max Polyakov, a wealthy Ukrainian tech entrepreneur, sell his stake in the rocket company Firefly Aerospace Inc., citing national security concerns.

In late November, however, Polyakov received a letter from the Committee on Foreign Investment in the U.S., or CFIUS, that called out national security worries and requested that Polyakov and his investment firm Noosphere Venture Partners sell off their roughly 50% stake in Firefly. Polyakov agreed to this demand, according to his spokespeople, while maintaining that his ownership of Firefly poses no national security threats. “Noosphere Ventures announced today that it intends to retain an investment banking firm to assist in the sale of Noosphere Ventures’ ownership interest in Firefly Aerospace,” Polyakov’s company said in a statement.

While educated as an obstetrician-gynecologist, Polyakov made his fortune through business software ventures and internet gaming, dating and marketing sites. He rescued Firefly from bankruptcy in 2017 and poured money into the company to revitalize it. In September, Firefly conducted its first rocket launch from Vandenberg Space Force Base in Southern California. The rocket didn’t reach orbit but performed well for an initial launch, and the company has been racing to fire up a second one.

The U.S. government halted Firefly’s current rocket launch operations at Vandenberg as the ownership issue with Polyakov plays out, according to two people familiar with the situation. The clashes between Polyakov and the U.S. haven’t been previously reported.

Polyakov has said he had dreamed of turning Firefly into a massive aerospace company that could benefit both the U.S. and Ukraine. During the Soviet era, Ukraine produced some of the world’s best rocket and engine technology, but much of those inventions have languished in recent years due to lack of investment. The hope was that Firefly could pair its best engineers from the U.S. and Ukraine together to make a fleet of large rockets capable of taking many satellites into orbit and later on missions to the moon. Polyakov wanted the U.S. to gain access to Ukrainian expertise, while also finding a way to boost the prospects of Ukrainian aerospace engineers, he has said.

Firefly made steady progress over the past couple of years. The company won contracts from NASA, the Defense Advanced Research Projects Agency and the U.S. Air Force for various missions. It also obtained a technology sharing agreement between Ukraine and the U.S. The company has a large rocket manufacturing and testing operation in Central Texas and had operated a subsidiary in Ukraine to help with technology development.

While Ukraine is an ally of the U.S., its ongoing conflict with Russia has increased worries about what might happen to valuable technology inside of the country. Russia has been building up forces at the Ukrainian border, heightening fears that it will invade the country.

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