Space Capitalists: Relativity Space
An Opinionated Non-Scientific Profile of Relativity Space
To Space Capitalists,
This is the introductory letter to a series providing brief informative overviews of the “new space” startups. The objective is to observe the market from a high level and watch the participants as they either fall out or settle into their respective niches. Today’s letter features Relativity Space from Long Beach, California.
Who are they?
Relativity Space is vertically integrated launch company that specializes in 3D printed rocket technology, more specifically, additively manufacturing 95% of their launch vehicle using 730 unique parts instead of the ~6000 unique parts of most traditional rocket manufacturers. Relativity was founded in 2015 by Tim Ellis and Jordan Noone on their intuition that additive manufacturing was the future of rocket assembly. CEO Tim Ellis was formerly a member of Blue Origin’s BE-4 rocket engine program and Co-founder & CTO Noone came from SpaceX’s SuperDraco thruster program.
What do they do?
Additive rocket manufacturing and launch. The highlights of their current operations are their Stargate 3D printers, Aeon 1 rocket engines, and Terran 1 launch vehicles. Their objective is to develop the infrastructure for quick and simple rocket assembly.
What is unique about the company?
Everything except launch. This company is the spiritual grandchild of Ford Motors which pioneered the assembly line, arguably one of the most important inventions of the 20th century. Ford’s assembly line transformed the automobile from a rich-person plaything to an every-man’s utility. Will Relativity accomplish the same with rocket manufacture? Probably not in the same way neither Boeing nor Airbus have made individual plane ownership a reality. However, these are just loose analogies for illustrative purposes. The fact is, 3D printing is such a new technology and coupled with Stargate’s proprietary machine learning augments and Relativity’s proprietary metallurgy, the potential applications are vast and far beyond just rocket assembly.
How big is the market?
If we focus on their additive assembly business, the market opportunity is very large. Although we have yet to see their Terran 1 rocket and Aeon 1 engines used beyond a test setting, Iridium Communications (NASDAQ:IRDM) has bet six of their NEXT satellites to launch with Relativity in 2023 or beyond.
Who are their competitors?
If Relativity’s 3D printed launch components pass their tests, I would assume SpaceX, Blue Origin, Boeing, Lockheed, or one of many large tech companies would investigate these concepts further. I am sure their interests are already piqued from the $185.7 million Relativity has raised as of October 2019. As for their commercial launch business, competition is fierce especially among the small to medium satellite launch providers.
Bullish or Bearish?
Very bullish on their additive manufacturing facility, Stargate, but very bearish on the launch mandates. Why am I bullish on Stargate? 3D printing until now in 2020, has either been a hobbyist or niche-manufacturing business. What could be accomplished by 3D printing was usually fitted for CNC, computer numerically controlled milling machines which have a longer more established proof-of-work in the manufacturing supply chain. What is different about Stargate? Access to funding. New space is colloquially the “next Silicon Valley” and I believe we are currently crossing the psychological threshold where investors have accepted that larger liquidity events will be in the space sector. Instead of investors trying to find the next Twitter or Facebook, as they have been for the past decade, their attention and funding (rightfully so) will be directed to finding the next SpaceX or Blue Origin of launch. I believe that Relativity will be one of the early pioneers of 3D printing and future entrepreneurs will cite their own proprietary 3D printing pitches as “the Relativity of ____” be it 3D home manufacture, 3D bridge manufacture or whatever future applications of additive manufacture emerge.
Why am I bearish on their launch business? I still have many questions regarding their recent press release about launching six “insurance satellites” for Iridium no earlier than 2023.These questions are neither rhetorical nor meant to deter belief in their launch business however, when I read that press release, I ask myself, why would Iridium use such loose language as “no sooner than 2023?” It does not inspire confidence. Secondly, there is so much that can change between 2020 and 2023, especially for a startup like Relativity. Finally, can Relativity survive such a competitive small and medium satellite launch market? Besides space communications, the current most valuable space assets with the lowest barriers to entry are small and medium satellite launches. What’s to stop SpaceX, Blue Origin, or any of the legacy launch providers like United Launch Alliance from eating that industry? These are honest questions that I would love to hear your opinions on.
That is it for now. Thank you for reading. Please follow Space Capitalists for more issues of Space Capitalist Profiles every Sunday. Until then, stay hungry and disciplined.
~ David Sauve
About Space Capitalists
Space Capitalists is a daily publication researching the latest trends, startups, and technology of the NewSpace economy. These publications are never meant to be investment advice.
About David Sauve
David is an actuary, finance specialist, researcher and investor in the emerging NewSpace economy.
