- [Narrator] On May 27th, SpaceX and NASA
are scheduled to launch the
first orbital human spaceflight
from US soil since the space
shuttle program ended in 2011.
- [Man] Lift off, the
final lift off of Atlantis.
The shoulders of the space shuttle,
America will continue the dream.
- And we view it as an opportunity,
but also a responsibility
for the American people
for the SpaceX team, for all of NASA.
- [Narrator] But while SpaceX
dominates the headlines,
small launch startups face an
increasingly tough trajectory,
operating along slim margins
with small cash flows.
And with funds drying up during
the coronavirus pandemic,
many small launchers could falter.
Analysts say as many as, "90%
of the 100 plus companies
"in the industry are likely to fail."
If this happens, thousands
of jobs could be lost
and plans for new technologies
and research could be delayed.
To understand how we got here,
you have to go back to 2009.
- [Man] We have lift off.
SpaceX Falcon One.
Crossing south satellite for ATSB.
- [Narrator] When SpaceX's
Falcon One took off,
becoming the first major
private space company
to successfully launch a
commercial satellite into orbit.
Investors took notice
and funneled more than $20 billion dollars
into hundreds of small space
companies over the next decade.
During the same period, demand
for small satellites grew.
Companies like OneWeb
and SpaceX's Starlink
made plans to launch
constellations of thousands
of tiny satellites that would
expand global internet access.
Other small satellites were developed
to collect navigation data
and detect forest fires from space.
Some, could eventually provide
advanced missile defense
for the military.
- So we've put some weather satellites up
a couple of years ago.
They provide weather to New Zealand.
Few minutes later they
provide weather to Australia,
and the UK, and then America.
And every 90 minutes, they're
going round the planet
providing data that influences
tens of millions of people's
every days lives and decisions.
- [Narrator] Large rocket launchers
like SpaceX's Falcon Heavy
weren't designed for small
relatively inexpensive pay loads.
For years, the only option
for small satellites
to get into space was to piggy back
on larger payload flights
where they got dropped
off in route in orbit.
For many small satellite
startups and programs,
this isn't ideal.
They're reliant on the bigger payloads
which have their own orbit paths.
And the small satellite
missions have little control
over delays and scheduling.
For some, this could
mean waiting on the shelf
for over a year which costs money.
If they can't afford to wait,
that could mean some research programs
and new technologies
never make it into orbit.
This is where small
launch vehicles come in.
Companies like Rocket Lab and Virgin Orbit
have developed lighter payload rockets
that can carry small
satellites directly into orbit.
- Small launch vehicle enables a customer
to deliver those satellites to exactly
where they wanna go and
exactly on the timeframe
that they need.
- [Narrator] Experts say these launchers
have the potential to
revolutionize the industry.
But as the pandemic continues,
much of the financing these
companies need to survive
is drying up.
Some of this funding comes
from government contracts.
In April, the Pentagon said
there'd be fewer defense contracts
for at least three months.
- Domestically, we are
seeing the greatest impacts
in the aviation supply
chain, ship building,
and small space launch.
- [Narrator] Other funding
comes from venture capital.
- Today, the vast majority
of the capital raised
by these small launch providers
has been from financial investors
with smaller pools of
money coming from grand
sort of early stage investors.
And the key challenge for
many of these companies
in a very crowded market
is to continue to draw additional
and larger up-size rounds of capital
in order to hit their
development milestones.
- [Narrator] This type of
funding has all but stopped,
and it isn't expected to flow back
into the small launch industry
for at least the next year.
Experts say there are just
too many of these companies
for all of them to succeed
in a tighter market.
- It's so blatantly obvious
that it's understandable
to have so many small launch companies
for such a small market.
The pandemic has really
pushed the dominoes
over a bit faster and
now at this point in time
it's able to occur.
- [Narrator] Many small rocket startups
also won't have access to
some of the stimulus funds.
Most companies with
more than 500 employees
are ineligible for small
business administration loans
during the pandemic.
This includes some small space startups
that are funded by larger
venture capital firms.
Some industry executives and trade groups
are asking for a change of rules,
saying the lack of access
is hurting business
and could lead to layoffs.
- Although many of the
companies in the space industry
have a favorable and exposure
to government spending
which tends to be pretty secure,
it's also true that they're depending
on raising new capital.
And the inability to capture a PPP loan
could be the difference life and death.
- [Narrator] Experts say lack of funding
could lead to consolidation of this sector
which could cost jobs, delay
research and innovation,
and favor more robust
established companies.
SpaceX is expected to continue
to dominate the industry
as it increases its own small
satellite ride share program
and drives down launch prices.
Meanwhile, the smaller players
are expected to suffer.
- There will be a massive
number of failures
of companies that never make
it across the finish line.
And that's simply due to the fact
that there's not sufficient demand
in terms of the number
of launches required.
There's not sufficient capital who fund
this many companies,
and quite honestly, there's
not enough differentiation
between the technology or the cost
that these companies can deliver.
(light music)
