A start-up that manufactures rockets with giant 3-D printers just scored $35 million in funding
- Start-up Relativity Space's latest round of venture-capital funding brought in $35 million.
- The company says it can 3-D print 95 percent of its orbital rocket in development.
- At $10 million, Relativity's Terran 1 is priced in the middle of today's rocket market.
Start-up Relativity Space is kicking into high gear after its latest round of venture-capital funding brought in $35 million to help it manufacture the next generation of orbital rockets with one of the world's largest 3-D printers.
The Los Angeles-based newcomer will use the funds to build a second, upgraded version of its Stargate printer, hire 28 new employees by the end of the year and quadruple the company's facilities from 10,000 square feet.
The new funds bring Relativity's total venture capital raised to over $45 million since its founding in 2015.
"With the 3-D printing approach, people have seen we can produce and launch rockets with a lead time of 60 days. That's completely noncompetitive," Relativity Space CEO Tim Ellis told CNBC.
The newest venture capital round was led by Playground Global and included early investors Mark Cuban, Y Combinator Continuity and Social Capital. Cuban has been involved in every funding round since he led the seed round with half a million dollars of his own funds.
"Relativity is moving along in the development path faster than what I would expect for what they're doing: building a rocket," Dylan Taylor, another early investor in Relativity, told CNBC.
The company's founders, Ellis and Chief Technology Officer Jordan Noone, earned their rocket expertise while working at Blue Origin and SpaceX, respectively. Together they dreamed up a rocket that was more than just supplemented by 3-D-printed parts — they conceptualized Relativity's Terran 1 midsize rocket, which Ellis said is now 95 percent 3-D-printed. While today's rockets have more than 100,000 individual parts, Ellis said Terran 1 will have less than 1,000.
"That's an internal metric we're really going for: how few parts we can use to build the rocket without compromising performance," Ellis said.
At $10 million, Terran 1's price falls in the middle of the rocket market. The market is typically divided between $2 million to $5 million light vehicles — built by Rocket Lab, Vector and Virgin Orbit — and $62 million to $400 million heavy vehicles — built by SpaceX, United Launch Alliance and Blue Origin.
More than $45 million raised thus far would imply Relativity's valuation is in excess of $100 million, using traditional venture capital measurements. Rocket Lab, which recently succeeded in its first orbital launch, is valued as high as $1.2 billion, while SpaceX is worth as much as $21.5 billion.
Even with several testing milestones outstanding, a $100 million valuation makes Relativity fairly cheap in today's market. The space industry continues to receive private investment, as 2017 saw a record $3.9 billion flow into commercial space companies, according to investment firm Space Angels.
"I can't think of another space company that has raised this kind of money this quickly," Taylor said. "It all goes back to the original business plan thesis, as part of what Relativity said is its difference: designing a rocket from first principle as 3-D printed."
Coming to market in 2021
One example of Relativity's development speed is its progress in finding more parts of the rocket that can be 3-D printed. When CNBC first spoke to Ellis in January, he cited Terran 1 as being 90 percent 3-D printed. But only a few weeks later, the start-up had found another 5 percent.
"We started to look at a little more detail in three areas" of the Aeon 1 engine, which powers the rocket, Ellis said. "And we found quite a few more ways to reduce parts further."
"One of the benefits of 3-D printing is we can test, collect data, print a new version and test again in weeks instead of months," Ellis noted.
Relativity has completed 100 test firings of the Aeon 1 engine, using the E-3 facility at NASA's John C. Stennis Space Center in Mississippi. While Relativity had paid about $1 million to use the test stand, the company won an "Announcement of Collaborative Opportunity" contract, which gives Relativity $1.5 million from NASA to keep using the E-3 stand, Ellis said.
Last week, Relativity announced a 20-year leasing agreement with NASA to use the E-4 facilities at Stennis, which gives the start-up access to four robust testing chambers for larger tests. Relativity values the pro bono side of the agreement at $30 million, an astounding value for the burgeoning company.
"We only pay for maintenance and utilities for the next 20 years, which is relatively low cost," Ellis said. "E-4 was originally designed for 500,000-pound thrust engines, so it's very big, very sophisticated."
This is the first time Stennis has signed such a public-private partnership agreement, which is becoming increasingly common in NASA's strategy to foster the space industry.
"We are going to keep testing on E-3 in building up to the brand new E-4 stand," Ellis said. "The goal is to actively test on the stand in 2018 and, by early 2019, we'll do a second-stage hold-down test with more of the rocket."
Terran 1 is an expendable rocket, which goes against a push from many private rocket companies to develop reusable rockets. But Ellis explains that it's simply a matter of cost.
"Raw material and propellants are very small percentage points of the cost" of each rocket, Ellis said. "The cost really comes from the labor and effort to design, build, inspect and qualify the rocket."
Relativity is on track to launch its first Terran 1 to orbit in 2020, Ellis said, with the goal being "first commercial service by early 2021." The company so far has received intentions to launch from commercial and government entities it values at over $1 billion. These range from putting up satellites to exploratory missions, both key markets in the rapidly growing space industry.