The company, which plans to offer multi-day trips to space, has announced a deal to combine with New York-listed Social Capital Hedosophia (SCH), led by former Facebook executive Chamath Palihapitiya.
The deal has an enterprise value of 1.5 billion US dollars (£1.2 billion) and is expected to give current shareholders of SCH a 49% stake in the enlarged firm.
Once the transaction has been completed, Virgin Galactic will become the first and only publicly traded commercial human spaceflight company.
Money raised from the merger will be invested in turning Virgin Galactic’s technology into a commercial operation, following two test-flights of its spaceship the VSS Unity.
Over 600 people have already paid 80 million dollars’ worth (£64.2 million) of deposits to the company to secure their tickets on the first spaceflights.
Sir Richard said: “By embarking on this new chapter, at this advanced point in Virgin Galactic’s development, we can open space to more investors and in doing so, open space to thousands of new astronauts. We are at the dawn of a new space age, with huge potential to improve and sustain life on Earth.”
The business’s current management, led by chief executive George T Whitesides, will remain in place.
Mr Palihapitiya will become chairman of the board and has pledged to invest an additional 100 million US dollars (£80.3 million) as part of the transaction.
He said: “We are confident that VG is light years ahead of the competition. It is backed by an exciting business model and an uncompromising commitment to safety and customer satisfaction. I cannot wait to take my first trip to space and become an astronaut.”
Former Twitter executive Adam Bain will also join the board.