Team Anant is a group of undergraduate students at the Birla Institute of Technology and Science, Pilani, working on the design and development of a 3U CubeSat. The proposed 3U CubeSat features a hyperspectral camera as its payload which requires stringent control maneuvers for imaging, generates a large amount of data and poses sharp constraints on the power consumption. Verification of the design is a critical step in the development of a nanosatellite. Conventional in-loop simulations use hardware test-beds as a means of simulating the space environment to verify the functional integrity of developed modules. This paper presents a novel hybrid hardware-software approach devised by the authors for testing the control algorithms that are employed on-board. The suggested method allows us to test the latency of the processor and the interfaces used, however, it does not require building actual hardware like a Helmholtz cage or an Airbed to simulate the space environment. Although the paper focuses on detumbling using B-dot, it can be generalized to the simulation of any subsystem of the satellite and can be used as a first step in functional verification including validating the performance within the time constraints posed.