US startup sees a big future in small rockets

A scrappy American rocket startup just set the bar in the red-hot market for companies that launch small sat...

Posted: Nov 12, 2018 6:44 AM

A scrappy American rocket startup just set the bar in the red-hot market for companies that launch small satellites.

Rocket Lab's Electron rocket launched six small satellites -- or smallsats -- into a low-Earth orbit Sunday from New Zealand. It's the second time company's rocket, which is less than 60 feet tall, has done that.

Rocket Lab's rivals have not yet pulled off an orbital launch, which means it is at the front of an increasingly crowded pack of rocket startups that want to launch smallsats for businesses and researchers.

Other prominent companies in the dedicated smallsat launch industry include Richard Branson's Virgin Orbit and SpaceX veteran Jim Cantrell's Vector.

"[My team] built a beautiful machine," Rocket Lab CEO Peter Beck told CNN Business on Sunday.

Why smallsats?

Just as cell phones have shrunk, similar technological advancements have made satellites smaller and more capable.

But rockets have not downsized, and smallsats have been forced to hitch rides with much larger payloads on powerful rockets, like SpaceX's Falcon 9 or Russia's Soyuz rocket.

Smallsat companies are often forced to wait long periods for free space aboard a rocket.

Rocket Lab and a slew of other startups aim to change that by flying smaller, less powerful rockets. The companies want to mass produce the rockets and offer far more frequent trips to space.

Sunday's Rocket Lab mission included payloads for customers like Spire Global, which collects data about ships and planes around the globe, and Fleet Space Technologies, which aims to connect remote devices to the internet.

Beck, the Rocket Lab chief, told CNN Business that Australia-based Fleet Technologies was delayed for more than a year waiting to get its payload into orbit. Fleet reached out to Rocket Lab about a month ago, and the company's satellite was able to get on board the Electron by Sunday.

"That's really what it's all about. That's how we're going to make space accessible," Beck said.

Paying for a dedicated launch vehicle, like Rocket Lab's Electron, can be more expensive for smallsat operators than hitching a ride on a larger rocket.

But Beck said many in the industry are willing to pay for the convenience of an Electron rocket. When the company is going at full speed, he says Electrons will be flinging satellites into space on a bi-weekly basis.

Rocket Lab's third flight is planned for next month, and its fourth is slated for January 2019. The company hopes to complete 16 launches next year.

Sizing up the competition

Rocket Lab's competition may not be too far behind.

Virgin Orbit, a firm under Branson's Virgin Group, wants to launch smallsats by early next year. Its system launches a rocket from under the wing of a Boeing 747 in midair.

Vector, the brainchild of former SpaceX executive Cantrell, is also planning an inaugural orbital flight within the next few months.

Dozens of other startups are waiting in the wings. Experts suspect there will eventually be a shakeout in the market and there's no guarantee Rocket Lab will survive.

"Going first doesn't necessarily mean you win," Steve Isakowtiz, CEO of nonprofit research group The Aerospace Corporation, told CNN Business in a recent interview. "Can they get to market? Can they sustain it through production? And do they have the customer base?"

Beck, the Rocket Lab chief, said he thinks the market is headed for a "brutal consolidation" over the next 12 to 18 months that will leave just a few companies. And he's confident Rocket Lab will be one of them, he said.

The company, which Beck says is close to turning a profit, has raised $148 million in venture capital and is building factories capable of making one rocket per week.

"Anybody that owns a rocket company and tells you it's smooth sailings from here is living in a different world," Beck said. "But we've been successful and there will be more to come. It's all about scaling now and continuing to lead."

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