- [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.
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