SPAC is a “supercharger” for growth

Rocket Lab will be made public in the coming months through a merger of SPAC and CEO Peter Beck spoke with CNBC to break the space company’s opportunities thanks to the deal’s money pile.

“This is like a supercharger: we have all the things we need now to go and do the things we dream of,” Beck said.

The company is merging with Vector Acquisition in a deal that gives Rocket Lab a $ 4.1 billion business value, and the move is expected to end in the second quarter.

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

But now, with some $ 750 million in cash revenue expected to go public, Rocket Lab will build a larger rocket called Neutron. The launch market is divided into three sections: small, medium and heavy lift, and Neutron will target this medium section.

In addition, Rocket Lab will build Neutron within the requirements to launch a spacecraft that transports people, in order to launch astronauts on the International Space Station.

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

“We have strong uses for all this cash,” Beck said.

Beck noted Electron’s successful launch history and the company’s relationships with multiple customers as a catalyst for its decision to build Neutron, although in previous years he proclaimed that Electron was the largest rocket to be built. would develop his company.

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

Rocket Lab hopes that “most of all satellites launched” in the coming years will be for the constellations, the name of the space industry for satellite networks, with tens of thousands of spacecraft that they work together.

The neutron is designed to be more than twice as high as the electron and capable of carrying up to 8,000 kilograms to a low Earth orbit. This would place it in the same class of capabilities as the Russian Soyuz rocket, which Beck noted is “the most prolific rocket launched in history.”

“If you’re going to produce a vehicle of this class, it would be reckless not to make sure it was capable of making human space flight,” Beck said.

Rocket Lab expects Neutron to launch for the first time in 2024, and Beck noted that the company will devote additional work to “ensuring that it is certifiable for human spaceflight.”

Currently, the only American company that regularly flies astronauts is SpaceX, with NASA late last year certifying its Falcon 9 rocket for human spaceflight. These certification requirements include design elements ranging from fuel tanks to redundancy strategies, Beck noted.

Considering it would be similar to Russia’s Soyuz capabilities, Beck said the neutron would be able to lift a spacecraft containing three people, although it would depend 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 to recover its Electron boosters, which Beck went report on the company’s Neutron designs.

Neutron will launch from the platform the company has 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 neutron manufacturing plant.

“One of the things I’m selling a lot is building near the launch site,” Beck said. “Being able to build near the launch pad I think will be a key element for this vehicle.”

The neutron factory would involve hundreds of jobs. While not specifying which cities or regions were being considered, Beck noted that Rocket Lab is currently “running a competitive process to find out exactly where.”

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

Neutron’s ultimate goal is “an excellent workhorse” that can be reused, Beck said.

This means developing a new vehicle structure, as he stressed that the carbon compounds that make up Electron rockets are a challenge given the heat endured during the re-entry process. Rocket Lab is analyzing harder materials, Beck said, so that neutron enhancers can be reused frequently.

Neutron engines are another obstacle, which Beck acknowledged are the ones that take the longest to develop when building a rocket.

Rocket Lab will not use a variation of the 3D-printed Rutherford engines that power Electron rockets, as Beck said “there is no refusal of a Rutherford that will remotely approach” Neutron’s power.

“But it’s not like we haven’t manufactured any engines before,” Beck said, adding that the company has a “deep knowledge of additive manufacturing for engines that will be incorporated into 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 stressed with the Starship rockets of the your company.

“Elon and I unanimously agree that the hardest thing about getting into orbit the first time is scaling manufacturing to do it over and over again,” Beck said.

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

Rocket Lab is one of six space companies that have announced deals with special-purpose acquisition companies in recent months, a trend in the growing industry as companies seek 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 accelerate not only the path, but the ability to execute the projects we want,” Beck said.

He also stressed that the Rocket Lab is building a verticalized space platform, developing everything inside, from engines to spacecraft components.

This belief is reflected in Rocket Lab’s financial forecast, as space systems are expected to generate nearly the company’s estimated $ 1.6 billion in revenue launch amount by 2027.

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

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

“One of the things we’ve been doing [at Rocket Lab] over the last decade has been a really methodical approach to building all the infrastructure we need within the company to run some really big things in the app market, ”Beck said.

As for his company’s differentiator compared to other space SPACs, Beck said Rocket Lab is about a “proven run”.

“We’re very good at doing what we say we can do,” Beck said. “Within this industry there are a lot of promises and a lot of aspirations. What I’ve always been very careful about is that we don’t talk about anything until we do or we have very high confidence.”

Transparency around financial execution versus aspirations is “the wonder of a public market,” Beck added. For investors who want to buy the space sector, Beck said “look at our history and make your own decision.”

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

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