Virgin Orbit, the satellite launch company founded by the billionaire Sir Richard Branson, has filed for bankruptcy protection in the US after last-ditch efforts to find funding for the struggling space firm fell through.

It comes less than a week after the company announced it was cutting 85% of its workforce, leaving roughly 100 employees to run what was left of the business. The California-based firm will seek a buyer for its assets.

The satellite launch company was formed as part of space tourism business Virgin Galactic, which transported Branson into sub-orbital flight in 2021 nine days ahead of his billionaire rival, the Amazon founder Jeff Bezos. Virgin Orbit spun out on its own from Galactic in 2017, and in late 2021 rode a wave of investor enthusiasm in a merger with a cash shell that listed its shares on New York’s Nasdaq stock exchange.

Virgin Orbit used a rocket, LauncherOne, strapped under the wing of a converted Boeing 747 called Cosmic Girl – a horizontal launch method that differs from most rivals’ vertical launches. Yet it raised less than half the $500m it hoped for in the stock market listing, and a historic launch in the UK failed in January.

The company – which was founded by Branson and is 75% owned by Virgin Investments – started US Chapter 11 bankruptcy proceedings on Tuesday to protect its assets while it looks for a deep-pocketed buyer.

Its share price dropped 17% to a new record low on Tuesday, valuing the company at less than $60m (£48m), down by more than 95% from its peak above $3.5bn in January last year.

“While we have taken great efforts to address our financial position and secure additional financing, we ultimately must do what is best for the business,” the chief executive, Dan Hart, said.

“We believe the cutting-edge launch technology this team has created will have wide appeal to buyers as we continue in the process to sell the company. At this stage, we believe the Chapter 11 process represents the best path forward to identify and finalise an efficient and value-maximising sale.”

Virgin Orbit had completed previous commercial launches in the US. However, after the failure of January’s Cornish launch failure, which it blamed on an anomaly that meant the rocket could not reach the required altitude and was later lost, Virgin Orbit paused operations and put staff on furlough in early March as it tried to secure a funding lifeline and stop burning through cash.

Jim Cantrell, chief executive of Phantom Space, a startup that is aiming to launch its first rockets next year, said Virgin Orbit’s launch method locked in high costs. He said the company charged about $20m a launch, much higher than the $3m charged by Elon Musk’s SpaceX, and it relied on complex technology such as a carbon fibre body.

“It’s a beautiful thing, but it’s expensive,” said Cantrell. “The market is out there, but not at the price they’re charging.” He estimated that Virgin Orbit would have needed to make as many as 100 launches a year in order to break even as its recent rate of cash burn.

With stiff competition and the crash in the stock market valuations of unprofitable companies in recent months, investors apparently balked at pouring the tens of millions of dollars needed for Virgin Orbit to keep operating. While Branson himself stumped up more than $70m over the past four months to help keep it afloat – and $1bn in total – the company was eventually forced to announce it was cutting the bulk of its roughly 800 staff at the end of March, most of whom were let go on Monday of this week.

Virgin Investments said on Tuesday that it would provide Virgin Orbit with $31.6m to continue operating while it tries to sell off its assets. Virgin Orbit said it planned to pay its suppliers and vendors “to the fullest extent possible” and was committed to working with customers to try to find a buyer “able to continue to fulfil their needs”.

Cantrell said many other space companies were likely to come under pressure in the coming months after the earlier investment fervour.

“At the time there was a lot of money chasing this, but the dream was half-baked,” he said. “It’s a frontier industry … kind of like the automotive industry in the 1910s. There are going to be a lot of players who come and go.”