The process led to the malfunction of components and the premature shutdown of the LauncherOne rocket's thrust, it said.
The rocket components and payload then fell back to Earth within the approved safety corridor in the Atlantic Ocean without achieving orbit.
A modified former Virgin Atlantic Boeing 747 carrying the rocket, called Cosmic Girl, took off from Cornwall on January 9 in front of 2,000 spectators, with another 75,000 people viewing online.
After reaching an altitude of 10,600km over the Atlantic, it launched a rocket containing nine small satellites towards space.
However, the rocket only achieved an altitude of 180km, rather than the required 555km, before the malfunction occurred in its second engine.
Virgin Orbit said in a statement: “The data is indicating that from the beginning of the second stage first burn, a fuel filter within the fuel feedline had been dislodged from its normal position.”
Chief executive Dan Hart said the investigation into the failure was not yet complete.
“In space launch, a failure is painful for all involved,” he said.
“Intense disappointment gets quickly channelled into the motivation to dig into the cause, to understand all contributing elements and to thereby get back to flight with a better system and a wiser team.
“Our investigation is not yet complete; the team is hard at work and we'll pursue the cause and contributors to wherever the system analysis takes us.
“However, with many clear clues from extensive data assessment now understood, we are modifying our next rocket with a more robust filter and we are looking broadly to assure that all credible contributors to mission failure are rooted out and addressed.
“With those modifications being incorporated on our factory floor, we will proceed cautiously towards the launch of our next rocket, which is well into the integration and test process.”
UK's Virgin Orbit space launch ends in failure — in pictures
Virgin Orbit was formed in 2017 with the specific purpose of building a rocket, known as LauncherOne, that could be flown to high altitudes by Cosmic Girl. LauncherOne would then deliver small satellites to orbit.
Virgin Orbit grew out of Sir Richard Branson's first space company, Virgin Galactic, which he founded in 2004.
The launch was the culmination of an eight-year programme that has been driven by Spaceport Cornwall and the government to give Britain a sovereign space capability and allow it to become a player in the international race to harness the potential of the cosmos for life on Earth.
The launch was originally planned to take place before Christmas, but was pushed into 2023 due to technical and regulatory issues.