Reorganizing Rocket Scaleups
Tracking a Trend
One of my concerns about the MBA experience generally is that it’s not so clear whether my colleagues and I are really immersing ourselves in the intellectual life of the university.
So last weekend, I attended the University of Chicago’s 78th Annual Latke-Hamentash Debate. At the event, which originated at the university, a psychiatrist, a scholar of Jewish literature, and a quantitative political scientist each gave a speech in praise of one food or the other, contextualizing their arguments within the theme of the year “What’s trending now?”.
The event brought trends to the top of my mind.
A trend that I’ve noticed recently in the aerospace sector is launch services provider scaleups reorganizing.
Among significant American companies, I count at least 4 changes in control, 2 unsuccessfully attempted changes in control, and 3 CEO replacements within the past couple years. This is a solid majority of rocket companies by number of firms (though not necessarily by enterprise value).
The companies
Relativity
Relativity is a company working on heavy-lift (and formerly small-lift) launch vehicles with two unique design elements:
a methane-oxygen (methalox) propulsion system
3D printed primary structures
The firm was founded in 2015, and flew one mission of the Terran 1 rocket in 2023 before concentrating on the larger Terran R design.
In mid-March 2025, former Google CEO Eric Schmidt bought a controlling stake in the medium-lift launch provider, and also took over as CEO from cofounder Tim Ellis.
The firm’s board had previously authorized a Series F down round (in terms of price per share) in November 2023, so this is something of a turnaround situation for the startup. However, Schmidt’s investment suggests the scaleup is well-capitalized for the foreseeable future, and the firm claims a backlog of nearly $3 billion for its Terran R rocket.
Long Wall (formerly ABL Space Systems)
On November 14, 2024, ABL Space Systems President Dan Piemont made an announcement on X:
Today we’re announcing major changes to our mission at ABL. We are stepping away from the commercial launch market and focusing our efforts on missile defense.
…
His post acknowledges the six years ABL spent working on its approach to launch. Their approach was probably most differentiated in its small ground support equipment footprint. Piemot also observes change in the launch market over this time (implicitly SpaceX), and the national security environment.
The firm made a decision to pivot to this new opportunity, which really demands the same sort of hardware as he was already building.
It’s subsequently consolidated facilities, rebranded to Long Wall, and focused on the missile defense and hypersonic test markets.
Astra
Astra has had a complex corporate history, even for a space company. It has its roots all the way back in 2005, reincorporated as Astra in 2016, emerged from stealth in 2020, SPACed in July 2021 at an implied $2 billion enterprise value, and the founders took it private in March 2024 at an $11.25 million valuation.
Basically the thesis of the firm was that reliability wasn’t the be-all and end-all for rockets. The company tried to develop optimally cheap, single-use, small rockets and hit a 90% reliability rate with a high flight cadence. However, the rockets never exceeded a 50% reliability rate. The CEO’s thesis about his company’s market at IPO was wrong in a way I’ve never seen or studied before.
The company is now privately held again, and designing its next rocket.
Blue Origin
Blue Origin is a privately held space firm funded by Jeff Bezos that operates the suborbital New Shepard rocket, as well as the heavy-lift New Glenn rocket. It also makes BE-4 engines, which power the first stage of the United Launch Alliance’s Vulcan rocket.
In fall 2023, CEO Bob Smith announced his departure after a six year tenure, and was replaced by Dave Limp, the former VP of Devices & Services at Amazon. Ars Technica covered the announcement in a not-super-complimentary way. There was no change in control of the company because the financial supporter is in a good place, but the executive swap was pretty unusual.
Blue Origin has made some significant technical progress since this event. The firm’s BE-4 engines worked spectacularly during Vulcan’s first flight in early 2024. New Glenn flew for the first time in January 2025.
United Launch Alliance
The United Launch Alliance (ULA) is unique in this list, because it’s not really an entrepreneurial company. It was formed as a joint venture between Lockheed Martin and Boeing in the early 2000s when it was unclear whether or not the US launch services market had sufficient demand to see two firms succeed, and the federal government wanted to ensure that there would not be a pause in launch capabilities.
The company used to fly the Atlas and Delta families of rockets, and was a preferred vendor of launch services for government customers. However, SpaceX undercut its pricing, and the firm refocused its efforts on the Vulcan rocket, which is just heading into serial production now (it flew twice last year).
There have been rumors that the joint venture is on sale since at least late 2023, with possible acquirers including Blue Origin, Textron, and Cerberus. Part of the pitch seems to be that the ownership structure isn’t particularly conducive to high growth. The fact that the transaction hasn’t closed or been publicly cancelled suggests that there’s more to it though.
Michael Sheetz, formerly of CNBC (now head of Investor Relations at Firefly) noted in February 2024 that there was a gap in pricing between the owners, which sought a target in the $4 billion range, and the consensus opinion at several banks, who projected a reasonable winning bid would be in the $2 billion range.
Payload Space, a venture-backed space news source, put out a report around the same time looking at the opportunities and risks in the transaction from Blue Origin’s perspective — and highlighted an unusual stock sale by Bezos, which could have been done with the intent to finance the purchase.
An article from June 2024 claims that the owners are considering divesting some of their space product lines in order to focus more on their core businesses in the aviation and defense markets. During the summer and fall of 2024, both Reuters and The Motley Fool suggested Sierra Space could be a potential buyer, but there’s been no news since then.
Firefly
Firefly has perhaps the most convoluted corporate history of all these companies. It was started in 2014, closed due to bankruptcy in 2017, and bought by an entity controlled by Max Polyakov (a non-US person). In 2021, Polyakov, a Ukrainian, was forced by the Committee on Foreign Investments in the United States to sell his stake in the firm for national security reasons. On February 24th 2022, he announced his intention to sell his stake in Firefly to AE Industrial Partners. This buyout fund is a sector specialist; it created Redwire Space. This change in control was unique because it seems to have been motivated by national security or political concerns more than anything else.
Firefly has a variety of products in the launch, orbital transfer, and lunar landing spaces.
Last year, AE Industrial Partners considered a sale with a target price around $1.5 billion. It was an odd announcement to see, because most buyout transactions anticipate a five year holding period, and this was half that. I suppose the fact that it doesn’t seem to have gone anywhere is broadly consistent with the unusual timing. There remains no public indication that the firm is underperforming financially.
What does it mean?
The first and perhaps most obvious issue is that these companies have struggled to become truly competitive with SpaceX. About half of these companies are building new rockets or engines that have yet to fly successfully, and half are building rockets or engines in low-rate initial production. All of them are struggling to compete with SpaceX’s dominant position in the launch market.
This is not a trend that’s going away. Ironically, this was essentially the situation twenty-some years ago that SpaceX was formed to challenge. Christian Davenport details this, as well as the early history of Blue Origin, in his book The Space Barons.
While the launch sector is struggling to compete with SpaceX, this isn’t manifesting in the same way across companies. Each firm’s situation is unique — and none seem fatal. The disparity of issues faced across the sector are on some level encouraging because they mean that whatever problems are present in sector leaders are not systemic.
The second point that’s worth making here is that there seems to be some appetite for aerospace investment in the private markets. Case Taylor tracks public space companies on his Substack, and the recent results of SPACs frankly don’t look great. So the presence of private market appetite at levels large enough to support these not-so-early-stage companies is noteworthy.
Now, none of these seem to be using similar financing techniques, which might have sent a stronger positive signal by showing there was one type of financing that was particularly excited about this space. But none of these companies were really in directly comparable positions either, so that’s not necessarily an expectation.
Lastly, I’m very interested in the valuation gap between Firefly and ULA, and SpaceX. This idea that the former were worth less than 5% of the latter last year suggests that private valuations in this space are indexing very heavily on something SpaceX has got that the others do not. I think it’s probably one of these things:
SpaceX’s satellite constellation, which may be generating positive free cash flow
SpaceX’s ability to launch people into space
SpaceX’s enormous investment into Starship, which will unlock launch services for larger payloads
SpaceX’s much higher launch cadence, which drives larger backlogs and higher revenue
The first three of these potential reasons de-commoditize SpaceX’s launch product in that it is, or will be, unique among launch services companies.
The last one suggests that the price investors are willing to pay for a firm should be largely a function of how much capacity it has for its services.
SpaceX has turned launch services into a commodity. I see these restructurings as attempts by much of the rest of the sector to react to this.
There are two launch companies that haven’t come up so far: Rocket Lab, and Stoke Space.
Rocket Lab is no longer a scaleup. It is a publicly traded company that has a differentiated offering with Electron, and is working on Neutron. It’s also working to turn itself into a prime contractor for spacecraft more generally in a way that I’m not sure SpaceX wants to pursue for itself.
Stoke Space may not be far enough along to really be a competitor yet. It likely qualifies as a scaleup on the basis of implied enterprise value, but not necessarily based on its stage of financing. It certainly isn’t a scaleup based on technical progress; it hasn’t tried to launch anything to space.
I’m watching with bated breath to see how things play out.
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