Launch: a guide to startup lift-off

Two German startups and a high-profile aerospace investor discuss commercial success, cost, payload and frequency

For a view of the challenges – and opportunities – facing anyone trying to start a private-sector launch operation in Europe, I spoke to two investors: Starburst Aerospace founder and chief executive Francois Chopard, and Paul Klemm, who looks after Earlybird Venture Capital’s interest in Munich-based ISAR Aerospace. I also listened in as Rocket Factory Augsburg, a 2018 spin-off from German space sector majors OHB and MT Aerospace, inaugurated a factory promising to herald a “Henry Ford moment” of automotive-style mass production cost efficiency.

Taken together, their views on the commercial future for small launchers flag up some critical features that may come to characterise successful operations. And, while many factors will determine the success or failure of any particular venture, they suggest European players can reasonably expect to thrive in a “new space” market which, so far, has seen US companies setting the pace.

Chopard started his career as an engineer at Airbus, did a stint in a US Air Force research lab and went on to be a partner at Oliver Wyman in Paris before founding Starburst, investing and advising from Los Angeles, San Francisco, Paris, Munich, Tel Aviv and Singapore – and now Mumbai. He was introduced to me as believing “investors are beginning to recognize the return on space travel and aviation [and] we’re at the beginning of a monumental transportation shift”, driven in part by enthusiasm for “eco-friendly, accessible, and adaptable eVTOL technology” in aviation. Starburst claims today to be scouting 3,000-plus startups per year – up from, traditionally, a “handful”.

As for space, and particularly access to orbit, Chopard flags up three Starburst investments. In the US are Launcher (HQ in California, engineering in Ukraine, 750kg to LEO, Series A fundraising underway, maiden flight target 2024, promising to fly the world’s most efficient small launcher) and space tug developer Momentus (heading for a NASDAQ listing). And, marking a new focus on India, expect more soon on a 100kg-payload project with origins in the country’s Agni ballistic missile programme; small, he says, but adds: “We are betting on India.”

Launcher's E-2 engine on a Nasa Stennis test stand; aims to be world's most efficient (Launcher)

SpaceX and Blue Origin aside, private sector flights to space are about small or ”micro” launchers. A market study carried out for a November 2018 European Space Agency workshop by MT Aerospace identified 75 concepts worldwide, with two-thirds in the US or Europe; of the total, MT reckoned then that maybe 15 could theoretically be operational by 2023 [flying today are Rocket Lab Electron and Virgin Orbit]; maybe five could be commercially successful.

STARBURST: ROCKETING DEMAND

Of small launcher prospects, Chopard’s assessment is that demand will have to grow to support so many programmes – at least for very small vehicles. He sees the main market being for satellites in the 200kg to 500-600kg range. Hence there is sense in developing launchers able to lift around 900kg to LEO; apart from size, Chopard sees launch cost and frequency as critical factors

He cites the example of Rocket Lab; Starburst’s sources put the breakeven point for a small launcher at 16 or 17 flights per year, making the southern California-headquartered company the only one that is in operation and close to profitability. But at 300kg to LEO, the Electron launcher is small, and Rocket Lab’s plan includes development of a bigger launcher. The Neutron vehicle is being billed as a “mega constellation launcher” to fly from 2024: 8,000kg to LEO, reusable first stage (SpaceX-style, via sea platform recovery), human-capable and even able to push 1,500kg to Mars or Venus. 

We’ll know in time how well Rocket Lab makes the technical and financial transition from micro to mega launcher; Chopard believes Neutron means starting from scratch rather than scaling up Electron technology. Regardless, Rocket Lab’s plan for a bigger, reusable launcher hits Chopard’s key notes: size, cost and flight frequency.

Chopard expects launch demand to grow dramatically; that demand will be “hard to size, but it will come”. Major and aspiring space countries – Japan, India, South Korea, the UAE, etc – all want their own crewed programmes, so he expects that in 10 years there could be half a dozen space stations in LEO. Those same countries will want communications constellations, so SpaceX, Amazon and OneWeb are just the start; likewise satnav. That means demand for lots of launches with lots of payload capacity.

Lined up for launches: Rocket Lab Electron (Rocket Lab)

Successful launch programmes, Chopard believes, will feature reusability: “You won't be able to be cheap if you’re not reusable”, and he reckons that 1-2t of payload will probably be enough to achieve the trade-off between launcher size and performance that allows for economic reusability. Critically, he says, low-cost manufacturing needs to be a priority; fast refuelling will also be a winner.

ISAR: CONSTELLATION LAUNCHER

One European contender to watch closely is Isar Aerospace. Munich-based and founded in 2018 by Markus Brandl, Josef Fleischmann and Daniel Metzler, at end-2020 it closed a $91m Series B fundraising led by Lakestar, with significant contributions from investors including Earlybird Venture Capital, which led the company’s $17m Series A round a year earlier. Other investors include Airbus Ventures, the VC arm of the aerospace major – which has an MOU with Isar for “for multiple satellite constellation launches”. Paul Klemm, with the investment team in Earlybird’s Munich office, makes the obvious point that competition between microlaunchers is high, and there are no Europeans operating yet. But, he tells me, two years after placing its bet on Isar, Earlybird believes that geopolitical pressures are influencing the space market, and European customers will want to fly with a European launch provider if possible.

Team Spectrum: Fleischmann, Brandl, Metzler (Isar Aerospace)

Whatever the appeal to prospective customers of a European ride to orbit, Isar is aiming for impressive cost performance – €10,000-12,000/kg of payload – and a maiden flight as early as late 2021, which would make it Europe’s first successful privately funded orbital rocket. Its two-stage Spectrum launcher is designed to orbit constellations: 1,000kg to LEO or 700kg to SSO, fairing of 1.8m or 2.5m diameter and 20-plus launches yearly. The nine-engine first stage could be reusable and the re-ignitable, one-engine second stage will put payloads directly into multiple orbits; flying with just a single stage separation event will reduce risk of failure.

Klemm stresses that a €10,000-12,000/kg cost would apply when Spectrum is fully operational, and depends on how many vehicles are produced and any reusability. He notes that no other European operators can claim to be profitable for such a low price – though cost data is scarce. The Spectrum financial equation does not yet assume reuse of the first stage, but KIemm adds that it is “still early” in the development of the business model, and if reuse proves feasible the business case will even improve further. Launch poses a particular challenge here, as it needs both the visibility of a few successful launches and also customers willing to risk their payloads on a new launcher. Given the possibility of failure, Klemm observes: “They probably won’t pay too much for the first launch!”

Spectrum is designed for multiple payloads and constellation launches (Isar Aerospace)

Some visibility of Spectrum performance may be coming soon. Klemm sees a first flight in Q4 2021 as feasible; engine testing (Sweden) and launch pad construction (Norway) are underway. The launcher itself is not the “long pole”, and he expects Isar will reach a steady state with 20+ launches per year by “2025-26”.

As for the size of the market Isar hopes to serve, Klemm refers to market research estimating the size of the opportunity to be around $30bn by 2027. Demand will be fueled by different industries and services, ranging from internet of things to autonomous driving. All will need a communications infrastructure, which will drive a big demand for launch services. And, he adds, these new use cases shouldn’t be affected by recession or recovery following covid lockdown - demand for a dramatic increase in connectivity is coming, and that infrastructure will be in space.

European contenders like Isar have the opportunity now to make innovations that allow them to launch that connectivity infrastructure at competitive prices. Klemm sees building the most efficient engines as key.

Funding for space startups has been a challenge in the EU, especially in the early stages. But as more space companies start to deliver stable revenue – not necessarily profit - the financing market should become more active, which will help startups attract the cash they need.

Isar is one of three German rocket start-ups to share a €1.5m development grant from ESA’s “Boost” launch development programme, announced in November 2020; the others are Rocket Factory Augsburg and HyImpulse – a spin-off from Germany’s DLR aerospace agency that is working on a three-stage, 500kg to LEO concept based around re-ignitable, ITAR-free hybrid motors.

Paul Klemm (Earlybird Venture Capital)

Meanwhile, there are many other tech sectors with similar growth potential, and all investors are looking for, say, the next fintech or B2B software. But space is interesting, he says, because it has impact “on mankind’s problems”; space can respond to crises.

RFA: €3M PER FLIGHT

Another European – indeed another Bavarian – launch startup is Rocket Factory Augsburg, a 2018 spinoff from OHB via its MT Aerospace subsidiary, with Apollo Capital Partners (founded by MT chief financial officer Hans Steininger). RFA’s founders are former MT head of sales Jörn Spurmann and Stefan Brieschenk, whose engineering pedigree includes two years as vehicle testing manager for Rocket Lab. Steininger and OHB chief exec Marco Fuchs share the CEO spot at RFA, and the chairman is none other than former ESA director general Jean-Jacques Dordain.

RFA’s vision matches the quality of the team. The goal is to deliver – starting from late 2022 – 1,350kg to a 300km polar orbit with a three-stage vehicle so efficient as to enable weekly launches at transformative prices of just €3m per flight, from an island launch site being developed by Andøya Space, about 300km inside the Arctic Circle in Norway. A “unique” orbital third stage capable of putting payloads into various orbits caps what RFA bills as a “last mile” delivery service.

All of this is to be built on an automotive-style mass production system, to be run from an Augsburg factory once used to make Osram’s innovative electronic light bulbs. Speaking at a 30 March virtual event to inaugurate the new plant, Spurmann promised “unmatched low prices…[to]...significantly reduce the cost of space transportation [so that] private providers will be able to earn money in space”. RFA’s three advantages will be precise payload positioning, “extremely cost-effective pricing” and “superior” propulsion technology: “We want to build not only the most eco-friendly micro launcher in the world but also the most cost efficient one.”

Brieschenk added that RFA would avoid the German tendency to be “a nation that loves over-engineering things”; instead, he suggested an almost Silicon Valley-style approach to development: “Rocket factory is laser-focused on delivering a minimum viable product first”, with an iterative improvement process to follow.

In February, Fuchs introduced a €25m funding round with this remark: “We do not want to leave this lucrative market to US companies. That is why we have set up the Rocket Factory with two young space enthusiasts and given the new company a major boost in the form of expertise and capital.

“We will be able to maximise the cost advantages of series production because we will be building rockets just like cars. Due to the very high demand for investment opportunities in this promising market, we are now opening up the possibility for further selected investors to participate in the growth of the Rocket Factory."

As ever, the proof will be in the proverbial pudding, but from a European perspective it is encouraging to see a company specifically addressing the challenge of matching US momentum in space. ESA director general Joseph Aschbacher, addressing the Augsburg factory opening event, said he is often asked, “Why don’t you have a SpaceX in Europe?”. The answer is complex and has much to do with the related issues of the size of the “domestic” launch market and access to funding – but, he said, he thought RFA was going in the right direction.

To that end, Brieschenk perhaps pointed to a European, certainly German, strength that could make a breakthrough. Asked how RFA can produce such a complex product with so little money, he pointed to help from OHB and MT and said: “We have basically built a network of industrialisation around our product...we don't start from scratch. A lot of the technologies we use were actually funded by ESA at some point and we basically have this unique advantage of just combining a lot of the industry strengths into this startup.

“The ultimate answer is, it's the industrialisation network that is key to our fast progress and this is why this is so attractive also for investors.”

RFA plans to launch from Andøya island, Norway – inside the Arctic Circle (RFA)

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Dan Thisdell adds: I write about European spaceflight: industry, politics, science and money. After a fruitful mid-career at Flight International, I am preparing to launch a newsletter for space industry investors: Geoconomy. Watch this space and contact me via LinkedIn - especially if your company should be profiled.