SPAC negotiates a ‘supercharger’ for growth

Rocket Lab will go public in the coming months through a SPAC merger, and CEO Peter Beck spoke to CNBC to detail the space company’s opportunities thanks to the deal’s lot of money.

“It’s like a compressor – we have all the things we need now to do what we’ve always dreamed of,” said Beck.

The company is merging with Vector Acquisition in a deal that gives Rocket Lab a company value of $ 4.1 billion, with the change expected to be completed in the second quarter.

Rocket Lab is a leader in the small launch market, with its Electron rocket carrying nearly 100 small satellites in orbit in recent years. The company has also built a spacecraft manufacturing business to offer customers a versatile platform that matches their rockets.

But now, with about $ 750 million in revenue expected to go public, Rocket Lab will build a bigger rocket called Neutron. The launch market is divided into three sections – small, medium and heavy – and Neutron will target that medium section.

In addition, Rocket Lab will build Neutron within the requirements necessary to launch a spacecraft that carries people, to be able to launch astronauts to the International Space Station.

Beck expects Rocket Lab to spend around $ 200 million to develop Neutron, adding that the rest of the company’s capital will go to expand the company’s existing lines of business and make acquisitions.

“We have a strong use for all that money,” said Beck.

Beck noted the history of successful Electron launches and the company’s relationships with several customers as the catalyst for its decision to build Neutron – although he had proclaimed in previous years that Electron was the biggest rocket his company would develop.

“Now we understand where everyone is going and we understand everyone’s business plan,” said Beck.

Rocket Lab expects that “most of all satellites launched” in the coming years will be for constellations – the space industry’s name for satellite networks with tens to thousands of spacecraft working together.

Neutron was designed to be more than twice the height of Electron and capable of carrying up to 8,000 kilograms to Earth’s low orbit. This would place it in the same capacity class as the Russian Soyuz rocket, which Beck noted was “the most prolifically launched rocket in history”.

“If you produce a vehicle of this class, you will be remiss in not ensuring that it is able to fly through human space,” said Beck.

The Rocket Lab expects Neutron to be launched for the first time in 2024, with Beck noting that the company will do extra work to “ensure it is certified for human space flights”.

Currently, the only American company that regularly flies with astronauts is SpaceX, with NASA certifying its Falcon 9 rocket for human space flights at the end of last year. These certification requirements include design elements that range from propellant tanks to redundancy strategies, noted Beck.

Given that it would be similar in capabilities to Russia’s Soyuz, Beck said Neutron would be able to lift a spacecraft with a capacity for three people – although that depends on the design of the spacecraft itself.

The Neutron booster – the bottom and most expensive part of the rocket – will also be reusable, similar to how SpaceX lands its Falcon 9 rocket boosters. Rocket Lab has been testing a method of recovering its electron boosters, which Beck said he was reporting the company’s projects for Neutron.

Neutron will be launched from the platform the company built at NASA’s Wallops flight facility in Virginia.

While the company’s rocket and spacecraft manufacturing takes place at its headquarters in Long Beach, California, Rocket Lab will look elsewhere to build a new plant for the manufacture of neutrons.

“One of the things that convinced me is the construction near the launch site,” said Beck. “Being able to build close to the launch pad, I think it will be a real key element for this vehicle.”

The neutron plant would bring hundreds of jobs. Although he did not specify which cities or regions are being considered, Beck noted that Rocket Lab is currently “running a competitive process to find out exactly where”.

Rocket Lab expects many elements of Electron to be transferred directly to Neutron, with Beck promoting a shared product line for items like avionics or electronics.

Neutron’s ultimate goal is a reusable “excellent workhorse”, Beck said.

This means developing a new vehicle structure, as he emphasized that the carbon compounds that make up Electron rockets are a challenge due to the heat it endured during the re-entry process. Rocket Lab is looking at more resistant materials, Beck said, so that Neutron boosters can be reused frequently.

Neutron’s engines are another obstacle, which Beck acknowledged is what takes the longest to develop in building a rocket.

The Rocket Lab will not use a variation of the 3D printed Rutherford engines that power the Electron rockets, as Beck said “there is no reinforcement from a Rutherford that will come remotely close” to power the Neutron.

“But it’s not like we haven’t built an engine before,” said Beck, adding that the company has “a deep knowledge of additive manufacturing for engines that will be based on the new engine program.”

Building a production line that can scale is the most “painful” part of building an orbital rocket, Beck said – an idea that SpaceX founder Elon Musk has similarly emphasized with his company’s Starship rockets.

“Elon and I unanimously agreed that the most difficult part of getting into orbit for the first time is to scale the manufacturing to do it repeatedly,” said Beck.

The Rocket Lab’s experience in building Electron and then scaling production to an almost monthly launch rate are lessons learned that Beck said will inform how the company builds Neutron and its manufacture.

Rocket Lab is one of six space ventures that have announced deals with special-purpose acquisition companies in recent months, a trend in the growing industry as companies look for capital. Beck noted that Rocket Lab was “on a very methodical path to a traditional IPO” before considering merging with a SPAC.

“What this has allowed us to do is to accelerate not only the path, but the ability to execute the projects we want,” said Beck.

He also emphasized that Rocket Lab is building a vertical space platform – developing everything in-house, from engines to spacecraft components.

That belief is reflected in the Rocket Lab’s financial forecast, with space systems expected to generate almost as much as the company’s $ 1.6 billion estimated revenue launch by 2027.

“It is a fundamental belief that if you have a launch vehicle and satellites and satellite components and are vertically integrated, your ability to do really significant things in the space applications market is unmatched,” said Beck.

Beck said the belief is “happening in real time” with SpaceX’s Starlink satellite internet project. He thinks other satellite broadband companies are finding it “difficult to compete with the launch of Starlink” because SpaceX has its own manufacturing and its own rockets.

“One of the things that we have done [at Rocket Lab] over the past decade, there has been a really methodical approach to building all the infrastructure we need within the company to get up and running on some really big things in the app market, “said Beck.

As for the difference in his company compared to other space-based SPACs, Beck said the Rocket Lab is about “proven execution”.

“We are very good at doing what we say we can do,” said Beck. “Within this industry, there are many promises and many aspirations. I have always been very careful not to talk about anything until we do or have a lot of confidence.”

Transparency around financial execution versus aspirations is “the wonderful thing about the public market,” added Beck. For investors looking to buy in the space sector, Beck said to “look at our history and make your own decision”.

“We are really excited to bring a high quality space asset to the market,” added Beck. “What you get with Rocket Lab is a proven company and a prudent management team that is proven to offer and will continue to do so.”

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