Small sat launchers are a hot topic among tech investors at the moment, and for good reason. With the fast pace of technological innovation in the satellite space, the need for rockets to launch them is growing at an astounding rate.
In this short blog post, we’ll give you a little more information on what microlaunchers are, the benefits they offer and the forecasted demand.
There’s a lot more to learn about smallsat launchers in order to make an informed investment decision. Here at PSION Partners, we have over 20 years of experience in deep-tech investing, both as an investment fund and as investment advisors. Please don’t hesitate to contact us if you’d like to learn more!
What are microlaunchers?
Microlaunchers are small rockets designed to launch satellites into Low Earth Orbit (LEO) around the earth.
Also called small satellite launchers or small-lift launch vehicles, these rockets offer a range of benefits when compared to traditional methods for launching satellites into space, which have mainly consisted of ride-sharing on larger rockets until recently.
Small-lift launch vehicles can carry loads of up to 2,000kg which is substantially less than medium-lift and heavy-lift launch vehicles. Although this may seem like a disadvantage, the costs incurred to build and launch a small sat launcher are significantly less, making them a cost-effective alternative for certain use cases.
The different types of satellite launchers
There are a variety of methods that are used to launch small satellites into Low Earth Orbit (LEO). Usually, either large rockets or small rockets are used. Large rockets can be a good option for launching a large number of small satellites reasonably inexpensively, but they offer limited flexibility in orbit altitude and launch scheduling. Small rockets give you more flexibility, but they can be slightly more expensive when launching a large number of satellites.
The below image provides an overview of the different small sat launch methods currently used.
There are different means of launching smallsats in to orbit. Primary options are likely to be rideshare on a larger rocket or dedicated smallsat microlaunchers like Skyrora.
In Frost & Sullivan’s October 2019 “Small satellite launch services market, half-yearly update, H1 2019, forecast to 2033” they predict Dedicated launch to dominate the launch market.
Microlaunchers’ position in the launch ecosystem
84% of the satellite launch market is concentrated on satellites that weigh less than 316kg (e.g. Skyrora payload capacity to SSO – Sun Synchronous Orbit).
The small satellite space launch services (<1,000kg) market was $4.3 billion in 2018 (Source: Allied Market Research, (AMR) October 2019 “Global Space Launch services market”) and is projected to reach $15.3 billion by 2026, registering a CAGR of 18% and nearly 90% of the market in revenue terms. The large satellite space launch services market was $599 million in 2018 and is anticipated to reach $1.7 billion by 2026
With this in mind, Figure 1 shows exactly where Microlaunchers fit in the overall “Vertical Launch” ecosystem.
One of the main advantages that dedicated launchers have over ridesharing is the time it takes to reach optimal orbit. Long delays can be common when ridesharing, and it’s common for the satellites to be placed in suboptimal orbit, thus requiring significant extra maneuvering.
This not only takes up a lot of time but is also a costly process. This means that, although dedicated launchers seem more expensive at first, upon closer inspection it’s often faster and less expensive.
The flexibility that microlaunchers offer is also extremely valuable, allowing companies to select orbits more precisely. This improves innovation, providing companies with more opportunities to diversify.
Even though ride sharing innovators are currently looking to improve the launch model, it is expected that dedicated launches will capture the majority of the market share.
That being said, it’s likely that both launch models will be able to coexist, serving different companies and different purposes. This article by SatelliteToday provides a great explanation about the industry and the different launch options & how they are used.
Launching a satellite as a rideshare places it in a suboptimal orbit. For example, SSTL built a satellite for Telesat which was inserted at a 500km altitude but needed to get to 1,000km for operations. It took 1,000 engine firings (propellant) and 3-4 months to get to optimal orbit.
Manoeuvring satellites results in foregone revenue and has implications on satellite lifetime extension.
Short-term, ‘Space taxis’ such as D-Orbit/Sherpa are one likely evolution of the rideshare market. However ultimately, we expect dedicated microlaunch to capture the majority of the market from rideshare.
Demand for dedicated microlaunchers is expected to grow steadily over the next ten years. Satellite launch services like those planned by Skyrora are in great demand, as launch services are currently the main bottle neck in the satellite industry. There has been a clear upward trend in the industry since 2009, as depicted in the images below, and demand is expected to grow as more enter the satellite/communication market.
Microlauncher competitive landscape
Dedicated Direct Competitors Summary
There are 75+ identified companies around the world with aspirations of entering the dedicated smallsat market. Very few currently have the technical maturity or funding required to challenge the likes of Rocket Lab and Firefly.
US Market Entrants
- 40+ identified companies
- Rocket Lab, Firefly, Virgin Orbit leading players – all focused on >150kg market
- Astra leading <150kg payload, flexible launch proposition – failed launch attempt March 2020
- Relativity Space leading new generation – 100% metal 3D printed rockets
- Defence Primes Boeing, Lockheed Martin, Orbital ATK also eyeing market. Mainly >150kg focus
Europe and RoW Market Entrants
- 35+ identified companies
- The majority lack technical maturity or funding of US competitors
- Lack of access to required risk capital funding ($50-100m) a major hindrance however this has picked up in recent months with ISAR’s continued funding from the likes of Porche. They remain reliant however on government support
- European entrants will focus primarily on European & RoW customers. Highly unlikely to challenge US entrants in key US market
Low Cost, State Sponsored
- Chinese and Indian state-sponsored companies. Low cost, focus on >150kg, no access to US markets. Chinese providers mostly off-limits to western countries.
Skyrora offering a high and market targeted payload in its class, uses eco-friendly Ecosene kerosene. Orbex has chosen a similarly eco-friendly fuel. Their closest competitor is RFA (owned by OHB) based out of Germany. Skyrora XL, Orbex (Prime) and PLD Space (Muira 5) are believed to be converging on a very similar cost / kg. ISAR Aerospace is targeting a re-usable solution which might enable it to target an especially low price/kg value. However the economical benefits of this are as yet unproven in rockets this small. The likes of Virgin Orbit (LauncherOne) and Firefly (Alpha) have aspirations to hit a lower cost / kg, but are focused on a different market segment.
Only Rocket Lab Electron rocket is operational in the sub 300kg category and is achieving a £24k / kg price range which is indicative of the price range that the other players will be able to achieve in the immediate to medium term. The majority of the other dedicated microlaunch providers are forecast to go orbital next year, however the industry has been plagued with delays in the passed.