Rocket Lab Is on Track to Major League

Rocket Lab raised capital from Bessemer Venture Partners, Khosla Ventures and K1W1 to complete the Electron launch system and begin commercial operations as early as 2016

On March 2, 2015, Rocket Lab announced completion of Series B financing round, led by Bessemer Venture Partners (BVP) with full participation from existing investors Khosla Ventures and K1W1 investment funds. In addition, Lockheed Martin committed to make a strategic investment in Rocket Lab to support the exploration of future aerospace technologies. The company will use the funding to complete the Electron launch system and plans to begin operations as a commercial launch provider as early as 2016.

Electron small-class launch vehicle, capable of sending up to 110 kg of payload into a sun-synchronous orbit for near $5 million, was officially unveiled during a dedicated VIP-event in July 2014. First of two rocket stages will be powered by 9 regeneratively cooled LOx/Kerosene Rutherford engines, producing each 13.3 kN of thrust at lift-off. The engine is considered as one the most advanced in the world, and comprises a solid technological strength for the company.

“Rutherford is the embodiment of power and efficiency, it is the key driver behind Rocket Lab’s ability to provide high-frequency, low-cost launches.” Rocket Lab website

History of the company goes back to 2007, when Peter Beck established Rocket Lab as a center for advanced space programs in Auckland, New Zealand. In 2009 it successfully launched Ātea-1 (Māori for 'space') suborbital sounding rocket – 6 m long and 60 kg vehicle designed to carry a 2 kg payload to an altitude of 120 km. Since then this startup developed and launched more than 80 rockets and worked with customers including Lockheed Martin, DARPA and Aerojet Rocketdyne.

Peter Beck, CEO of Rocket Lab
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In December 2010 Rocket Lab was awarded a US contract from the Operationally Responsive Space Office (ORS) to study low-cost space launcher to place small satellites into orbit. As it is said in the company's statement, “Rocket Lab was founded on the belief that small payloads require dedicated small launch vehicles and the flexibility not currently offered by traditional rocket systems”.

Based on this idea of SmallSats launcher, Rocket Lab was awarded New Zealand's government $25 million grant, and raised undisclosed amount of money from Khosla Ventures and K1W1 venture capital companies in Series A investment round. By now the company says it received commitments from the customers for at least 30 first launches, which is, simply multiplying, amounted to near $150 million.

Rutherford engine test fire. Credit: Rocket Lab
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Currently Rocket Lab is in process of development and tests of Electron's components, searching for a launch site (among other, Cape Canaveral is under evaluation) and, as a sequence, staff expanding. As for today, the company has near 50 employees, most of which based in Auckland office, and actively recruiting more engineers and managers (25 open positions at the website).

Rocket Lab has audacious plans to conduct 100 launches per year and it seems like investors believe Peter Beck and his business model. According to newly released research of Euroconsult titled Prospects for the Small Satellite Market, a total of 510 SmallSats are to be launched in the next five years. The market value of these future SmallSats is estimated at $7.4 billion (at 2014 prices) to develop and launch all of them.

SpaceDigest has even more promising forecast for SmallSat market. According to our 2014 Year in Spaceflight Review, a total number of CubeSats (not including satellites of 10-100 kg class), launched over the past three years, has risen from 23 in 2012 to 131 in 2014. As for 2015 and on, we expect launches of up to 200 CubeSats per year.

Interesting to note that Peter Beck has no ambitions of larger launch vehicle, or human-rated spaceflights, he believes only in SmallSat market opportunities. What may prevent him from realization of plans? Two factors seem to be important to be considered. The first one is enormous competition from developers of traditional launch vehicles (Firefly Space Systems, Mishaal Aerospace, etc.), air-launched systems (Swiss Space Systems, Generetion Orbit, Virgin Galactic, XCOR, etc.), balloon-based systems (Zero2Infinity).

Controversial as it may sound, the other factor is launch cost. Dividing $5 million launch price into 110 kg of payload, we get the ratio of $45,500 per kilogram. For example, Spaceflight Inc. charges $50k-$60k per kg for CubeSats and $35k-$40k per kg for small satellites to be launched as a secondary payload. What would you choose if you have a 100 kg satellite?

Anyway, raising at least $100 million in total (by our estimations) from venture funds, governmental and private companies, Rocket Lab is becoming a space market player with serious ambitions that are supported not only by great idea and strong belief in SmallSats, but also by achieved technological level, qualified personnel and necessary capital. And as soon as it is so, Peter Beck and his team seem to be on the right track.

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