Watch: Rocket Lab reveals giant, crew-capable Neutron that will be funded by its $6b Nasdaq listing

Rocket Lab founder Peter Beck has revealed details of a giant new rocket, the crew-capable Neutron, that will be funded with proceeds from his company’s multi-billion Nasdaq listing.

Rocket Lab has made its name internationally by launching some 97 micro-satellites into space over 18 launches from Mahia over the past three years on its 18m tall Electron rocket, which has a payload capacity of 150kg.

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Proceeds from the launch will be used to develop a much larger “medium-lift” rocket, dubbed the Neutron, capable of taking an 8 tonne (8000kg) payload into space.

The new 40m tall, 4.5m diameter rocket will be “tailored for mega constellations, deep space missions and human space flight”. International Space Station resupply missions are also on the agenda.

Neutron will be capable of taking an 8000kg payload to low-Earth orbit, 2000kg to the moon, and 1500kg to Mars and Venus).

Its initial use, however, will be to launch fleets of larger satellites at once, with its greater capacity allowing Rocket Lab to widen its reach to 98 per cent of satellites planned for launch through to 2029 – or a total addressable market of around US$1.4 trillion ($1.9t), vastly larger than the US$2 billion to U$3b low-earth-orbit market the Kiwi-American company plays in today.

Beck said the first Neutron launch would be in the US, in 2024, from his company’s new launchpad, housed within Nasa’s Wallops Island facility in the US state of Virginia. But later Neutron launches could be from NZ.

The new rocket will put Rocket Lab more closely in competition with Elon Musk’s privately-held Space X, which recently raised US$850 million at a US$74b private equity valuation.

But although it will dwarf its existing Electron, Rocket Lab’s medium-lift Neutron will be towered-over in turn by Space X’s 70m Falcon, which can carry 28,000kg into low-earth-orbit, or the Falcon Heavy (also 70m but fattened with extra boosters), which can handle a 64,000kg payload.

$6b US listing

Earlier today, Rocket Lab, founded by Aucklander Peter Beck, has confirmed plans for a US stock exchange listing at a market cap of US$4.1b ($5.7b) during the second quarter.

US$470m will be raised from new investors with the listing, via a special purpose acquisition company (a so-called SPAC or shell company) called Vector.

The listed company any will have a cash balance of US$750m, Rocket Lab said in a statement.

Current Rocket Lab investors will retain 82 per cent of shares after the listing.

Exact stakes haven’t been disclosed, but current investors include Beck (who also serves as CEO and chief technology officer) early investors Sir Stephen Tindall and Mark Rocket, and the investment wing of ACC, which put money in during a 2018 round US$140m raise at a US$1b private equity valuation.

On the US side, defence giant Lockheed Martin took a major stake in Rocket Lab in 2015 (the same year the company’s registration shifted from NZ to the US). It was later joined by a clutch of Silicon Valley private equity firms, including Khosla Ventures, Bessemer Venture Partners, and Data Collective.

The Australian government’s Future Fund participated in the US$140 fund and is said to today be one of Rocket Lab’s largest institutional investors – and in line for a $1b windfall with the Nasdaq listing. When Rocket Lab opened its Auckland assembly plant and Mission Control in 2018, a senior executive expressed regret that investment talks with NZ’s Super Fund had ultimately gone nowhere.

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Asked today how much of the Neutron would be developed locally, and how many jobs it could create, Beck said, “Rocket Lab obvious has a large footprint n New Zealand with the majority of all of our operations here, so a large portion of the work will be done down here.”

He underlined that his company is looking for 90 more staff, which will take its full complement to around 700 – around two-thirds of whom are based in New Zealand (the company has its corporate headquarters and its largest production facility – making its Rutherford engines – in Los Angeles – while its assembly plant and mission control are in Auckland and its Launch Complex 1 facility on the Mahia Peninsula).

And the CEO again underlined you don’t have to be a rocket scientist. His company also has open positions in areas like procurement, sales and software development.

The apprentice

Beck, who left school to become a Fisher & Paykel Appliances apprentice, founded Rocket Lab in 2006, with Mark Rocket joining him as an early backer.

A 2009 launch of the 6m tall, firework-thin Ātea-1 in 2009, off Sir Michael Fay’s private island in the Coromandel was not optimal. The miniature rocket went missing and was never found, despite local boaties being roped in for a search.

However, clever innovations in propellant and electric engine technology saw the early-stage Kiwi company – then based in a Parnell business hub run by Crown-owned Industrial Research Ltd (later part of Callaghan Innovation) – catch the eye of the US military.

That development also saw the departure of Mark Rocket, who later expressed discomfort with the company’s US military contracts. The R&D money from US Department of Defence agency Darpa (Defence Advanced Research Projects Agency) and would go on to stage launches for the US Air Force and other Defence-related agencies.

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Beck has always emphasised that his company has only launched research, not operational satellites for US government clients, and that many defence technologies – such as the internet and GPS – have been dual-use and of considerable public benefit.

This year, the company’s “Photon” satellite bus will be used to ferry a Nasa satellite into lunar orbit as part of the US space agency’s Capstone mission to return astronauts to the moon.

And Beck says a privately-funded mission will see a satellite sent to Venus in 2023 to investigate indications of phosphine in the planet’s upper atmosphere – a gas produced as a byproduct of organic life. Today, Beck said that although he will soon become the CEO of a public company, reporting to shareholders, his Venus passion project was “non-negotiable”.

Also on the agenda is the first launch from Rocket Lab’s first launch complex outside of New Zealand – hosted at Nasa’s Wallops Island facility in the US state of Virginia.

Beck says certain US government clients demanded a US launch site, but that the bulk of Rocket Lab’s launches will always be from NZ – purely because our relatively empty skies and shipping lanes made it much easier to launch rockets at high frequency. His company’s near-term goal is a launch per fortnight.

2019 financials – andfuture forecast

On February 10 this year, Rocket Lab filed its financials for its 2019 financial year (which coincided with the calendar year).

They reveal an operation that was, at the time, break-even.

The accounts show total revenue of $89.9m, up from 2018’s $46.3m.

Expenses also doubled to $93.9m from the prior year’s $47.6m.

After depreciation and other factors, Rocket Lab squeaked to a $32,000 profit.

Rocket Lab had six launches in 2019. It would go on to have seven in 2020 and, so far this year, has staged one, with a second in the offing.

In its listing statement today, the company said it projected revenue of US$750m by 2025.

The company is seen becoming ebitda positive in 2023 with significant earnings growth thereafter and projected ebitda in 2027 of US$505 million.

POSTSCRIPT: Would Beck fly into space?

Peter Beck has long maintained he has no desire to buy a ticket on Virgin Galactic.

Today, as he unveiled his own company’s crew-capable Neutron, he was again asked if he would want to leave Earth orbit?

In short, nope. “I’m in no rush to go to space, to be honest with you,” the entrepreneur said.

“I think I probably understand the risks too well.

“I’m one of those guys who sits in an aircraft and looks out a window, counting the fatigue cycles on the wing – knowing that the safety factor is 1.2 on this and 1.3 on that. So I’d not make a good passenger on a launch vehicle.”

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