Axiom Space, a startup cofounded by billionaire Kam Ghaffarian, has a lofty goal: to build private space stations that allow humans to live and work off-planet en masse.

But lately the Houston-based company has been grappling with a more earthly concern — a struggle for survival. According to internal documents, seven former employees who spoke on the condition of anonymity due to nondisclosure agreements, and space industry experts, a severe cash crunch, business challenges and a cold reception to its latest fundraising efforts have hamstrung Axiom and led to extensive layoffs and pay cuts.

An artist's rendition of the space station Axiom plans to build attached to the International Space Station.

Axiom had intended to build an orbiting outpost using the International Space Station as a base. The plan was to build modularly, connecting sections of “Axiom Station” to the ISS, finishing work on them in space and finally detaching the completed station to fly free. It would make money by hosting tourists and companies looking to use microgravity conditions for things like drug development and semiconductor manufacturing. But Forbes has learned that plan has been upended by Axiom’s slow progress on the first module and the prospect that the ISS may have to be deorbited two years earlier than planned.

Now, a year after raising $350 million in a round led by Saudi Arabia's Aljazira Capital and South Korean pharma company Boryung at a valuation of $2 billion, giving it a total of $500 million in funding, the startup is struggling to convince investors to give it more money to fund a smaller, less commercially lucrative station, former employees told Forbes.

“Turns out that there's not a lot of billionaires that want to set aside their life for 18 months to go train to be an astronaut for the ISS.”

The lack of fresh capital has exacerbated long-standing financial challenges that have grown alongside Axiom’s payroll, which earlier this year was nearly 1,000 employees. Sources familiar with the company’s operations told Forbes that cofounder and CEO Michael Suffredini, who spent 30 years at NASA, ran Axiom like a big government program instead of the resource-constrained startup it really was. His mandate to staff up to 800 workers by the end of 2022 led to mass hiring so detached from product development needs that new engineers often found themselves with nothing to do, these people said.

In an interview discussing a range of issues raised by Forbes’ reporting, Ghaffarian conceded that Axiom was facing challenges, including a tough fundraising environment, that required a “right sizing” of staff. But he said he expects to close on fresh funding by the end of the year, and that the future is bright. “All my [space companies] where we are doing things that have never been done before, it is not a straight line.”

When Axiom was founded in 2016, it promised investors the first station module would be aloft in 2020. With that target receding, Axiom looked to expand into two new lines of business to bring in badly needed revenue while the station was under development. In 2020 it began lining up passenger trips to the ISS on SpaceX rockets. The company pitched these private missions as a way to develop the capability to bring business one day to its own orbital outpost. And in 2022 it won $228 million in NASA funding to design space suits for the Artemis III moon mission.

But the suits program sucked engineers and resources away from the station effort, and the passenger service to the ISS proved to be a money-hemorrhaging distraction, former employees said. “Turns out that there's not a lot of billionaires that want to set aside their life for 18 months to go train to be an astronaut for the ISS,” a former Axiom executive told Forbes.

Shown here is the white cover layer of the Axiom Extravehicular Mobility Unit spacesuit prototype. Engineers from the Italian fashion house Prada, which has invested $25 million in Axiom, are helping develop materials and design features to protect against the unique challenges of space and the lunar surface.

Axiom found itself struggling to make payroll, which hit $10 million a month in early 2023 per an internal document, and it fell behind on payments to suppliers, former employees said. Those include Thales Alenia, which is building the structure of Axiom’s first space station module, and SpaceX, which the company paid hundreds of........

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