China's State-Backed Starlink Challenger Reportedly Seeks Fresh Capital

The Shanghai-based satellite company is raising fresh capital for its Qianfan network in one of several Chinese efforts to build state-controlled low orbit broadband systems Key Takeaways: SpaceSail is seeking up to 15 billion yuan to expand its Qianfan constellation, with a structure that keeps the company in state control and excludes foreign investors The company has put 200 satellites into orbit and signed overseas deals, but remains light years behind Starlink in fleet size, users and revenue Shanghai SpaceSail Technologies may be a few years – and thousands of satellites – behind Starlink, Elon Musk’s company it hopes to one day imitate.

But that hasn’t stopped the operator of a homegrown Chinese low Earth orbit satellite network from hitting up investors for cash.

SpaceSail is seeking up to 15 billion yuan ($2.2 billion) in a new funding round for its Qianfan satellite constellation, according to Chinese media reports, citing a public company disclosure.

That disclosure came the same month as the record Nasdaq listing for Musk’s SpaceX (NASDAQ: SPCX ), whose assets include the Starlink service that accounted for about 60% of the company’s $18.67 billion in revenue last year.

Starlink currently boasts about 10.3 million users and 9,600 satellites, dwarfing SpaceSail’s much smaller 200 satellites and almost no revenue.

SpaceSail’s new fundraising looks less like ordinary venture capital than a strategic state-led infrastructure financing.

The company plans to bring in up to three new investors or investor groups, with new backers getting no more than 20% of the company.

Proceeds will go mainly to constellation construction, technology development, market expansion and daily operations.

The round also excludes foreign capital, including investors indirectly backed by foreign money, according to Chinese media reports.

That ban on foreign investment helps explain Beijing’s attitude towards the company.

Satellite internet may look like a broadband business, but China increasingly treats it as future communications infrastructure.

Nearly all such telecoms infrastructure in China is currently state-owned, with private investors – both domestic and foreign – largely barred from the area.

The Ministry of Industry and Information Technology (MIIT) has said China aims to have more than 10 million satellite communication users by 2030, with direct smartphone satellite links moving toward mass use.

SpaceSail, known in Chinese as Shanghai Yuanxin Satellite, was founded in 2018 and is the company behind the G60 Qianfan constellation, also known in English as Thousand Sails.

Qianfan refers to the actual satellite network, while G60 refers to the Shanghai-linked Yangtze River Delta technology corridor branding attached to the project.

In simple terms, the plan is to put hundreds, and eventually thousands, of small satellites into low orbit to provide broadband and communications services from space.

Tied to state capital The company’s current backers show how closely it is tied to state capital.

SpaceSail’s 6.7 billion yuan ($933 million) A round financing in 2024 was led by the CDB Manufacturing Transformation and Upgrading Fund, a national industrial fund tied to China Development Bank, and Finance Ministry-backed capital.

Other investors include Shanghai Alliance Investment, the Shanghai municipal government’s investment arm, and CAS Capital, which is associated with the Chinese Academy of Sciences system.

SpaceSail is chaired by Zhang Qi, an executive with links to state capital operations of the Shanghai government.

Its CEO is Shen Hongbo, a telecom veteran who previously held senior roles at Shanghai Telecom, China Netcom and China Unicom Shanghai, all tied to two of the country’s "big three" state-owned telecom carriers.

That mix is telling.

SpaceSail needs government funding to build the network, but it also needs telecom operating experience to turn satellites into paying services.

The company has made real progress in orbit.

After a June launch, SpaceSail said it had 200 Qianfan satellites in orbit and had completed initial networking for an automatic identification system (AIS) maritime tracking system.

Its plan calls for 324 satellites by the end of 2026 to form the backbone of its initial service capability.

Its first phase consists of 648 satellites, with more than 15,000 satellites planned to make up the constellation in its final stage.

It also launched its first direct-to-phone test satellite in June.

But the company is still a tiny minnow compared with Starlink.

SpaceSail’s 200 satellites equal roughly 2% of Starlink’s reported 9,600.

The financial gap is even wider.

SpaceSail reported revenue of just 49,300 yuan, or less than $10,000, in 2023, 1.15 million yuan in 2024 and 188,700 yuan in 2025.

Its net loss was much bigger, widening to 890 million yuan last year.

It had no revenue in the first quarter of 2026.

Big market The size of the China and global markets helps explain why investors may still be interested in SpaceSail despite the big early losses.

The country’s broader commercial space market was already worth 2.3 trillion yuan ($320 billion) in 2024 and was expected to rise to 2.8 trillion yuan last year, according to Xinhua.