MBIE confirms it has given another $3 million to the Alexandra-based Centre for Space Science Technology (CSST), despite the startup blowing its business plan.

The business ministry awarded the CSST $14.7m in 2016, with the money to paid out over four years.

So far, CSST has received $6.1m.

CSST was founded by former US Marine Steve Cotter, with the mission of educating New Zealand business about the usefulness of satellite imagery.


The money was handed out under the Regional Research Institute initiative set up by the then National-led government.

"A standout aspect of the proposal was that CSST will also have research hubs in Dunedin, Canterbury and Taranaki, further encouraging R&D and innovation in regional New Zealand – a key objective of the Regional Research Institute initiative," MBIE said at the time.

CSST's regional hubs would hire 40 scientists between them, according to its business plan. Alexandra locals were told the company could create up to 80 jobs.

In March, the startup - which had received $3m by that point - said it was revising its business plan.

Now, Cotter tells the Herald that under CSST's new plan, there will be no regional hub, only the Alexandra office, where 12 are now on staff. That could rise to 15 over the next year, he said.

The startup's research director, NASA alumni Dr Delwyn Moller, resigned in September just six months into her new role. Moller said she wanted to pursue more academically-orientated research.

CSST has just announced a partnership with AirBus, which it says will make the European company's satellite imagery more accessible to New Zealand organisations. It already has a similar partnership with another satellite provider, Planet (also an early customer of Rocket Lab).

While Google, NASA and others offer free satellite images, commercial operators like Airbus offer near real-time imagery, which is more useful for commercial, environmental and disaster-relief applications.


But both AirBus and Planet let people order imagery directly from their websites.

So What value does CSST add?

"CSST can aggregate demand to get better pricing for Kiwi customers. Purchasing this data through CSST, rather than directly through Airbus or Planet, helps lower technical and pricing barriers for many users," Cotter says.

His company wants to develop image-analysis technology that will help farmers measure crop density, potentially helping them to save on irrigation costs.

Will CSST get its full $14.7m, despite its scaled-down scope?

"Subject to ongoing reporting and review, CSST will continue to receive the funds it was awarded," MBIE strategic investments manager Danette Olsen says.

"There have been significant market changes that mean some of the proposed actions and methods in CSST's original business case no longer make sense. We expect CSST to be agile and responsive to changing conditions and new opportunities."

Is MBIE satisfied with CSST's narrowed business plan?

"CSST operates as an independent research institute and the funding it has received from MBIE is devolved funding - meaning how the institute best meets the obligations of its contract is at the discretion of CSST," Olsen says.

The ministry works closely with CSST "and will continue to do so throughout the term of its contract, to ensure its business plan continues to represent the agreed objectives in its original proposal, as well as those of the Regional Research Institute initiative," the MBIE manager says.

"There have been significant market changes that mean some of the proposed actions and methods in CSST's original business case no longer make sense. We expect CSST to be agile and responsive to changing conditions and new opportunities."

Cotter flew helicopters for the US Marine Corp helicopter pilot for ten years before moving into administration and developing an interest in internet infrastructure.

A role as a network deployment manager for Europe followed, plus an Energy Sciences Network Department Head role at the Lawrence Berkeley National Laboratory in California.

2011 saw a move to New Zealand, where Cotter was named chief executive of Crown-owned company Reannz (Research and Education Advanced Network New Zealand), which operates a broadband network for universities and Crown Research Institutes. He held that role until 2015.

Cotter did not immediately respond when asked to name early CSST customers.

CSST will hold a nationwide roadshow in November in a bid to drum up business from potential commercial, government and research clients.

"When government funding of $14.7 million over three years was confirmed for CSST in November 2016, the proposal was to have up to 40 full-time equivalent staff, about half of whom would be in Alexandra and the other half spread between offices in Dunedin, Lincoln and New Plymouth," Cotter says.

"The fast-paced and changing nature of the space industry required us to revisit the business case as the opportunities and technologies now are very different from what they were when the original business case was developed. This revised business and research plan was approved by MBIE in June."

The ex-Marine adds, "The original budgets were too optimistic. The revised business plan has CSST employing its own research scientists to build an in-house capability, instead of outsourcing much of that work to scientists at remote offices, as was proposed in the original business case."