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CONTEC, CEO, Seonghee Lee
On November 9, CONTEC became the first JCCEI-invested company to successfully IPO. This is an achievement achieved by installing a private space ground station in Jeju since the establishment of CONTEC in 2015 and operating space ground stations built around the world, including in the United States, Malaysia, Australia, and Finland. Let's hear the story of CONTEC, which will expand its influence in the global aerospace industry beyond Jeju and Korea.
Q. First of all, congratulations on your IPO. This is an achievement you have achieved 8 years after founding CONTEC. What have changed since the IPO?
Even though the IPO was successful, CONTEC's goals or vision did not change. We are still pursuing new values in the space industry and working to revitalize the space industry ecosystem. Of course there are benefits. As CONTEC conducts global business, listing on KOSDAQ is a great help in building relationships with overseas companies in the global market. Reliability has been strengthened in overseas business relationships, and the company CONTEC can be promoted more easily.
Perhaps thanks to this, the French aerospace company ‘Thales’ recently contacted us through corporate social media, saying, ‘Let’s cooperate on cyber security.’ I think they believe they have the scale and capabilities to trust and cooperate with CONTEC after the IPO. After the IPO, opportunities to expect synergy effects have increased. In terms of personnel recruitment, the range of choices has expanded. It feels attractive to job applicants. You can also raise funds for business expansion through paid-in capital increase.
Q. Why did you decide to KOSDAQ IPO? I think there may have been an M&A proposal.
In fact, there have been several M&A proposals from domestic and foreign companies. At first I thought that wouldn't be that bad. That is after receiving Series B investment, and at this point in any industry, capital is needed more than anything else for a company to scale up and expand its business. There was an advantage in that it came in quickly, but in the end, I turned it down. M&A did not fit the vision of CONTEC that I was drawing. Of course, there are ways to coordinate with each other, but since most companies are unfamiliar with the space industry, we thought that would be difficult. After receiving Series C funding a year later, we had to go to the exit stage, so we chose the IPO route.
CONTEC's KOSDAQ IPO ceremony
Q. Have you been aiming for an IPO since you first founded CONTEC?
Some people may have an IPO in mind when starting a business, but I did not. As M&A proposals came in after Series B, I gradually began to think, ‘I could go all the way to an IPO.’ There was a regular IPO and a technology special IPO, but it would take a long time to proceed with a regular IPO. So, we decided on a technology special IPO. The idea was that once we did an IPO, we could then expand our business through paid-in capital increase.
Most startup CEOs would think the same way. In the early stages of starting a business, there is no time to think about an IPO. For the next few years, you have no choice but to focus on how to survive. An IPO will occur naturally after passing Death Valley to some extent and when a stable structure is established. Since you have to make an exit anyway, the moment comes when you have to choose either M&A or IPO.
Q. People say that the IPO process is quite difficult. How was Contact's IPO process? Are there any other things to watch out for?
Previously, I had no idea what I needed to prepare for an IPO and what process it took. If I were asked to do an IPO twice, I would probably say I would never do it (laughter). There is so much to prepare. You must undergo due diligence, pass a technical evaluation committee evaluation, and an interview with the CEO. In addition, the company is evaluated by the deliberation committee, where and how the company's funds were used, the reasons for changes to the articles of incorporation, and even the minutes of the board of directors' meetings. You must have all the data from the company's early stages until now, while it has been in business. If you don't pass a stage, you can't proceed to the next stage. Each step was really difficult.
If you are a startup aiming for an IPO from the beginning, you will have a picture of how to create articles of incorporation, internal control, and separation of accounting and finance from the beginning. That way it will be easier later. However, it is not possible to take care of all these things in the early stages of a startup. So, I think it would be good if organizations like JCCEI provide networking for startups preparing for IPO or conduct programs that provide detailed information on the IPO process. As a startup preparing for an IPO, you can prepare by knowing the process in advance.
Q. CONTEC is growing. Are there any overseas companies you are benchmarking?
CONTEC is following its own path. Rather than benchmarking, we are looking for various overseas examples and creating our own path for CONTEC. There are many impressive examples from overseas. In developed countries, there are national organizations specialized in the space industry. In Europe there is the European Space Agency (ESA), and in the United States there is the National Aeronautics and Space Administration (NASA). We are supporting space industry-related companies and creating a space industry ecosystem at the same time. As policies are implemented together, the relationship between companies and the government is organically connected, and talent development policies also work well together.
By looking at each country's space policy and direction, I learned what was needed for CONTEC to expand its business and further make the pie of our country's aerospace industry larger. So, I thought the first thing to do was to secure capital and excellent human resources through an IPO.
CONTEC CEO Seonghee Lee meeting with overseas officials
Q. Is the large-scale space ground station that CONTEC is recently building in Jeju part of that ecosystem?
We are currently building a tentatively named Asia Space Park in Sangdaegri, Hallim-eup, Jeju-si. Without receiving any external support, we have prepared a site of approximately 26,446㎡ and are building a building with only CONTEC funds. First of all, a total of about 12 ground station antennas will be installed here. Two of them are CONTEC antennas. Ground antennas using frequency and laser communications will be installed. The remaining 10 or so are antennas from companies in other countries, such as the United States, France, and Italy, that have signed contracts with us. We build and operate the antenna.
In addition, we plan to build a large control center to control CONTEC's ground stations around the world, like the mission control center currently in Daejeon, and also create a space digital art center and experience center.
Q. Asia Space Park is a cool name. What specifically will this space be used for?
Above all, because it is a place where CONTEC carries out its mission, it will be a place where ordinary people come and encounter things that are unfamiliar to them. Functions such as museums, experience centers, and theme parks are secondary. Here, you can actually see data being received from satellites passing overhead, what data comes down, and how it is processed. In that respect, it may also have the function of making people interested in the space industry. It shows how the space industry is progressing and what technologies are being applied.
There are already such organizations in Europe. A place called ‘European Space Center’ has a dormitory that can accommodate about 800 students, and students can experience and learn about the space industry for various periods of time, from a week to a month. Students pursue their dreams related to the aerospace field there.
When I got there, I made a suggestion. In the future, CONTEC will build a facility like this in Korea, so when that time comes, let's proceed with an exchange program. European students come to CONTEC, and Korean students go to the European Space Center to experience and learn more. The reason for naming it Asia Space Park is for exchanges with Europe. Full-scale construction began not long ago. I think it will probably open around the first quarter of next year.
‘International Space Summit 2023’ hosted by CONTEC
Q. In addition to the Asia Space Park, CONTEC's growth is noticeable in other areas.
First of all, the number of people and office size has increased significantly. As the number of people increased, we first needed to expand the office. As the number of employees increased to about 110, more work space was needed. Previously, the offices were dispersed in downtown Daejeon and the Korea Aerospace Research Institute, but we decided to bring them all together in one place, so we expanded the space and operated it as a three-headquarters system.
Division 1 is staffed with personnel responsible for CONTEC's management, including management support, financial accounting, marketing, and human resources. Division 2 includes departments that develop hardware, build and maintain global ground stations, and control satellites. The final 3rd division has a department in charge of pre-processing and utilizing satellite images. There are also Contec’s subsidiaries, ‘CES (Contec Earth Service)’ and ‘CSO (Contec Space Optics)’. In addition, we are preparing an additional space across from us with a total area of about 1,157㎡. First, we plan to create a chamber with an environment similar to actual outer space. This is because CSO, a CONTEC subsidiary, needs an environmental testing process to develop optical cameras mounted on microsatellites. We also plan to construct a space to assemble the antenna. Until now, we had made small antennas by purchasing parts ourselves, but we did not have a mass production system in place. So next year, we plan to mass produce ground station antennas in Texas, USA, and create a company that develops related modems and RF (radio frequency) systems. ‘Thales’ invested, and the antenna will be made there and sent to Korea, where it will be assembled in the space provided here and delivered to domestic customers. In this way, we are gradually expanding our business model under the three headquarters system.
Q. I think subsidiaries should play an important role in business expansion. Could you please introduce your subsidiaries?
First, CES (Contec Earth Service) provides satellite image sales and utilization solutions. Typically, various sensors and cameras are installed on satellites to generate data that measures greenhouse gas emissions such as carbon, carbon dioxide, and methane on Earth. Recently, carbon emissions rights have been an important issue globally. In the future, carbon emissions will be measured and reported in various fields. As interest in this field is increasing globally, we decided that business would be possible. CSO (Contec Space Optics) is a company that specializes in developing optical cameras mounted on micro-satellites. We plan to develop and supply optical cameras to be used in Very Low Earth Orbit (VLEO) ultra-small optical swarm satellites, a project being planned by CONTEC, and even secure heritage in the space environment.
CONTEC’s subsidiaries ‘CES (Contec Earth Service)’ and ‘CSO (Contec Space Optics)’
Q. I think you are trying to help many people understand the space industry. Furthermore, you seem to be playing a big role in creating the space industry ecosystem.
Since people still find the space industry difficult, we also pay a lot of attention to marketing and public relations. Only then will the number of talented people applying for related fields increase, and the entire industry will grow. What we are most proud of is the ‘International Space Summit (ISS)’ held by CONTEC. ‘ISS 2023’ was held in Jeju for the first time in June this year. Space industry experts, scholars, businesspeople, and related organizations from around the world gathered to share stories and information about various areas such as space exploration and development, observation, and communications.
The reason this was possible is because CONTEC has a wide overseas network. All budgets were prepared by Contact. This is also part of marketing. Next year, it will be held on a larger scale and will be held for 3 days and 2 nights starting on June 11 at The K Hotel in Seoul. It will be a place where you can gain knowledge that will lead the future of space development and expand your global network. We also have technical sessions, panel discussions, and networking dinner events, so please look forward to it.
CONTEC CEO Seonghee Lee interviewing JCCEI
Q. Ultimately, I am curious about what kind of space industry ecosystem CONTEC wants to create.
The space industry ecosystem is important, but the most important thing to me is that CONTEC goes well first. If CONTEC goes well, there will be younger companies that see our model and follow suit. We also need to create a good path so that the 50 or so companies in the aerospace field that already exist in Korea can grow better.
I think our country’s space companies still lack diversity. Most of it involves manufacturing satellites or launch vehicles, but there are some parts that are difficult to consider special from the space industry perspective. This makes it difficult to become a leader in the global space industry. So CONTEC must take the lead. That is to expand the diversity of our country’s space ecosystem. In doing so, we are landing European or American companies that can cooperate with CONTEC in Korea.
Furthermore, I personally plan to establish a company that incubates and invests in space startups. As a separate company from CONTEC, I think some results will be released around March or April next year. I am personally conducting this project without any capital from CONTEC. CONTEC aims to create an ecosystem for the space industry in this way. As we have achieved the achievement of being listed 8 years after our founding, I believe we will be able to have a greater impact in the future. Since the universe is infinite, the potential for CONTEC is also great. Please stay tuned to see how far CONTEC grows and expands.
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