Why Small Launch Startups are Hot for Hypersonics

11/20/2024 - Written By Caleb Henry

ABL Space Systems’ sudden pivot from space launch to missile defense is the latest example of a growing trend among small launch hopefuls for whom the market never quite materialized. The El Segundo, California, company was considered among the most promising startups in small launch, but a failed launch attempt in 2023, a rocket-destroying ground test in July 2024, and a tough capital market pushed the company to abandon space launch Nov. 14 in favor of to-be-named missile defense programs. 

Only a handful of prominent U.S. launch startups, namely Relativity Space and Stoke Space, have stayed laser-focused on the space launch market. Per the non-exhaustive chart above, ABL joins a growing list of companies that have either diversified into defense, or abandoned space entirely for defense work. Why does this keep happening? 

Most of these companies are now pursuing hypersonics, a $6-7B market, making it about the same size as the global space launch market. Since propulsion technology is dual use, it’s clear why startups are drawn to a quick way of doubling their TAM. Then there’s the harsh reality that several small launch startups bet on winning deals with megaconstellations, but those have gone almost exclusively to larger rockets. Given how overcrowded the launch startup space got in the late 2010s, the industry expected most of them to fail, and while many have or will, a larger than anticipated number will live on as part of the U.S. military industrial base.  

European launch startups so far have not exhibited the same push towards hypersonics/missile defense, as most of the market is with the U.S. military. Only Avio, which isn’t a startup but was overwhelmingly concentrated on space launch, has made such a pivot, and it did so by expanding to the U.S. market. Australian startups have also either expanded into hypersonics (Gilmour Space), or planned dual use from the beginning (Hypersonix Launch Systems). The latter of which, like Avio, tapped into the U.S. market to jumpstart its hypersonic growth story. The recent expansion of the trilateral AUKUS agreement between Australia, the U.K. and the U.S. to include hypersonic testing, may pave the way for British space startups to make similar moves.