Google Announces $500 Million Purchase Of Skybox Imaging (NASDAQ:GOOGL)

Google has made an announcement detailing its agreement to purchase Skybox Imaging for the price of $500 million. Skybox, a provider of high-quality satellite images, was founded in 2009 by four Stanford business school students under the idea that launching cheaper satellites could create dramatic change in the space industry. Skybox wrote in a corporate blog post, “The time is right to join a company who can challenge us to think even bigger and bolder, and who can support us in accelerating our ambitious vision.”

The company uses off-the-shelf components to move forward with its goal of launching more satellites more cheaply. The ability of the company to launch relatively cheap satellites could help Google expand its Internet service offerings. Google is already attempting to expand online access to rural and sparsely populated locations using innovative methods like balloons and drones.

Skybox initially struggled to find financing as many prospective investors initially viewed the company skeptically. David Cowan, a partner at Bessemer, said, “No one expected this company to succeed. People in aerospace wrote it off as a Mickey Mouse attempt to do something that was impossible.” Khosla Ventures and Bessemer Venture Partners were some of the first investors in the company. During the years that the company has been in business, it has raised about $91 million.

According to Mr. Cowan, when Skybox succeeded in launching its first satellite, SkySat-1, last November, those initial impressions changed. Google’s interest in the company was likely inspired by that cheaper-is-better approach. Referring to Google co-founders Sergey Brin and Larry Page, Mr. Cowan said, “Google bought this because Sergey and Larry have ambitious designs on space. If they’re going to do something big in space, it’s going to be through small, cheap satellites.”

Skybox will initially be used to improve Google’s dominant mapping service. The first product the company focused on was high-resolution imaging. In a prepared statement, a representative from Google said, “Their satellites will help keep our maps accurate with up-to-date imagery. Over time, we also hope that Skybox’s team and technology will be able to help improve Internet access and disaster relief — areas Google has long been interested in.”