Google's $1.3B Spinoff Bets Big on Satellite Network Wars

When Google shuttered Project Loon in 2021, most observers saw it as another ambitious failure—high-altitude balloons delivering internet to remote areas sounded too good to be true. But sometimes what looks like a dead end is actually a detour. That "failed" technology just became worth $1.3 billion.

From Google's Graveyard to Unicorn Status

Aalyria, spun out from Google in 2022, has raised $100 million in a funding round led by Battery Ventures. In less than four years, the startup has achieved unicorn status with its $1.3 billion valuation—a remarkable resurrection for technology that was essentially discarded.

The secret sauce? Aalyria's Spacetime software orchestrates communications networks across land, sea, and space. When natural disasters knock out cell towers, their system can redirect satellite coverage to affected areas in seconds, not days. It's network management that adapts faster than human operators could ever manage.

Challenging SpaceX's Satellite Supremacy

The timing couldn't be better. While SpaceX's Starlink dominates headlines and government contracts, there's growing appetite for alternatives. Battery Ventures' Michael Brown puts it bluntly: "They love Starlink but want alternatives, too."

This isn't just market diversification—it's strategic necessity. When SpaceX cut off Starlink over Crimea during the early days of the Ukraine war, U.S. and European officials realized the risks of single-provider dependency. Aalyria positions itself as the solution to this "diversity problem."

The company has already secured contracts with the U.S. Air Force, NASA, the Defense Innovation Unit, and the European Space Agency. That's not just validation—it's revenue with security clearance.

The Hardware Play

Beyond software, Aalyria sells Tightbeam laser-communication systems that can transmit data over 100+ kilometers at fiber-optic speeds. Mount it on ships, planes, or aircraft, and you've got a mobile internet backbone that doesn't rely on terrestrial infrastructure.

This dual approach—software orchestration plus hardware solutions—gives Aalyria something most pure-play satellite companies lack: control over both the network and the nodes.

Defense Spending Tailwinds

The broader context matters. U.S. defense technology spending is surging, particularly as the Trump administration seeks to outpace China in space capabilities. Satellite communications isn't just about faster Netflix—it's about national security infrastructure that can't be easily disrupted.

With about 90 employees across California, D.C., Pittsburgh, and London, Aalyria plans to grow headcount by at least a third over the next year. They're recruiting from Google, Amazon, Meta, and NASA—the kind of talent poaching that signals serious ambition.