US Military Invests in SpaceX Rivals

The US military is taking steps to mitigate the potential impact of SpaceX's planned retirement of its Falcon rocket program on national security. The Pentagon's Office of Strategic Capital has provided financial support to two commercial launch companies that compete with SpaceX in the market.

Stoke Space and Rocket Lab have each received a $150 million conditional loan commitment from the Office of Strategic Capital, with Stoke Space receiving funding on October 26 and Rocket Lab announced as a recipient on Tuesday. This marks the first significant investment by the Pentagon's Office of Strategic Capital in these companies.

The Office of Strategic Capital was established in 2022 to provide capital to companies developing vital national security technologies. In recent weeks, it has committed hundreds of millions of dollars to various companies, including those specializing in batteries, drones, and semiconductors.

This investment is part of a larger effort by the Pentagon's Office of Strategic Capital to support commercial satellite tracking company LeoLabs, which received a $150 million loan for production and deployment of radar units.

SpaceX has put a hold on accepting new commercial orders for Falcon 9 launches after 2028 as it focuses on its next-generation Starship rocket. This move is part of SpaceX's gradual transition to the more powerful and versatile Starship, which is expected to play a significant role in the company's future launch capabilities.

The Space Force will not be immediately affected by this change, however, since its contract with SpaceX allows for Falcon 9 and Falcon Heavy orders through 2029. Launches for government customers are expected to continue for several years beyond that point, with actual launches extending into 2033.

Under the terms of the Space Force's launch contract, it has guaranteed support for at least two US rocket programs capable of launching national security satellites. This policy, known as assured access to space, has been in place since the 1990s and involves direct subsidies, development funding, and premium-priced launch contracts to ensure that the government has a reliable means of accessing space.

The support provided by the Pentagon's Office of Strategic Capital is part of this broader effort to maintain assured access to space. This investment aims to bolster commercial satellite tracking companies like LeoLabs, which received a $150 million loan for production and deployment of radar technology.

The US military's reliance on a limited number of launch providers has raised concerns about supply chain vulnerabilities. The Space Force currently relies on SpaceX's Falcon family and United Launch Alliance's Vulcan rocket for its launches. However, ULA's Vulcan has experienced technical issues, forcing the Space Force to shift some national security missions to SpaceX.

To address this issue, other companies are vying for a share of the growing pie of launch contracts with the Space Force. The Space Systems Command forecasts that the military will require up to 249 medium-to-heavy-lift launches through the early 2030s from its roster of contractors. This represents a significant increase in demand compared to just two years ago.

A number of companies, including Blue Origin, Rocket Lab, Stoke Space, Relativity Space, and Impulse Space, are now eligible to compete for national security launch contracts with the Space Force. Blue Origin is notable for having flown a rocket that meets the Space Force's requirements. Meanwhile, other companies like Rocket Lab, Stoke Space, and Relativity Space are actively developing their own medium- and heavy-lift launch vehicles.

These new entrants are seeking investment to bring their projects to fruition. The Pentagon's Office of Strategic Capital has provided loans to support the development of new medium-class rockets from companies like Stoke Space and Rocket Lab. This funding aims to ensure that these companies can meet the military's needs for launches in the coming years.

Impulse Space, another company vying for launch contracts, is focused on developing in-space propulsion technology. As the demand for launch services continues to grow, it remains to be seen which of these new entrants will ultimately succeed in securing a share of the market.

A loan has been granted by the Office of Space Commerce (OSC) to Stoke Space to support the construction of a second launch pad at Cape Canaveral Space Force Station in Florida.

The new launch site is expected to be used for flights of Stoke Space's Nova Block 2 rocket, an upgraded version of its fully reusable Nova Pathfinder. The Nova Block 2 is set to debut sometime next year and represents an upgrade to the company's existing launch capabilities.

OSC's senior managing director of investments, Jordan Sebold, said that the loan would enhance the overall capacity and resilience of the commercial space industry by supporting the construction of additional launch infrastructure.

The loan will help Stoke Space expand its operations and increase the efficiency of its launches, which is expected to be a significant development in the rapidly growing commercial space sector.

Both Stoke Space's loan and another granted to Rocket Lab are subject to various financial, legal, technical, investment, due diligence, and other requirements before they can proceed.

The US military's increasing reliance on private launch providers has led to a surge in demand for launch services, causing a supply crunch that is being felt across the industry.

As a result, Rocket Lab has secured a loan from the Pentagon, with its chief financial officer describing the terms as "very attractive". This development underscores the importance of meeting the military's appetite for launch capacity. The loan will provide additional capital to scale key parts of the company's business, including the Neutron rocket program.

In response to the surge in bookings, Rocket Lab has increased the price of its Neutron rocket from $55 million to $70 million per launch. This move comes as the company reports a backlog of 117 launches on contract, including orders for both Neutron and Electron missions. The demand for launch services is at an all-time high.

Rocket Lab's founder and CEO, Peter Beck, has acknowledged that launch capacity is severely constrained, in line with predictions made by the company. This shortage highlights the need for increased investment in launch infrastructure to meet growing demand from government agencies and commercial customers alike.