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Vector performed a low-altitude suborbital launch of its Vector-R rocket from the proposed site of Spaceport Camden in Georgia in 2017, but had delayed its first orbital launch to at least late this year prior to its recent financial problems. (credit: Vector)

Revectoring the small launch vehicle industry

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It’s become conventional wisdom in the industry—accepted with little dispute—that there are far more small launch vehicles under development than even the most optimistic forecasts for demand can support. A shakeout is inevitable, everyone agrees, with the only questions being when it will happen and how many ventures will survive.

At the time of the conference in early August, one of the frontrunners in the small launch vehicle market appeared to be Vector.

Exactly how many small launch vehicles are under development is hard to get a grasp on, beyond “a lot.” One study, by Carlos Niederstrasser of Northrop Grumman and presented at the annual Conference on Small Satellites at Utah State University earlier this month, identified 128 small launch vehicles under development worldwide. Or, rather, 131: he noted in a talk at the conference that he had found out about three new projects during the conference itself.

That total, he notes, does include some projects that have since gone defunct, and others whose status is unknown. But the vast majority are vehicles under development, in one phase or another, seeking funding and customers while working to overcome inevitable technical challenges to successfully enter the market.

At the time of the conference in early August, one of the frontrunners in the small launch vehicle market appeared to be Vector. The company had raised about $100 million in venture capital and had 150 employees in three offices working on two small launchers, the Vector-R and larger Vector-H. Earlier in the summer, the company said it was planning a suborbital test flight of the Vector-R later in the summer ahead of a first orbital launch—although that orbital launch had already slipped by more than a year.

During the conference, the company also won a government contract. The US Air Force announced August 7 that it awarded a contract to Vector for a mission with a convoluted name: Agile Small Launch Operational Normalizer (ASLON)-45. The $3.4 million contract would cover a launch of unspecified payloads from Wallops Flight Facility in Virginia in the third quarter of 2021, part of a broader Air Force effort “to deliver affordable, innovative capabilities to the warfighter faster,” according to a press release from the service.

That made it all the more surprising two days later when everything came crashing down for Vector. The first signs of trouble that Friday was when employees reported to work, only to be told the offices were closed and they were out of a job. Rumors swirled that the company had suffered some kind of financial problem, but the company declined to comment other than to say that its founding CEO, Jim Cantrell, was no longer with the company.

It wasn’t until late that day that the company put out a brief statement with more details. “In response to a significant change in financing, Vector Launch Inc (Vector) announced today that it is undertaking a pause of operations,” it said. “A core team is evaluating options on completing the development of the company’s Vector-R small launch vehicle, while also supporting the Air Force and other government agencies on programs such as the recent ASLON-45 award.”

Vector’s apparently sudden turn of fortune raised alarms in the space industry. If a company as well-funded as Vector could run into problems so serious that it had to lay off nearly its entire workforce, what hope was there for the crop of smaller startups much earlier along in both technical development and fundraising? Was the long-awaited shakeout of the industry finally at hand?

Maybe not. What may have caused problems for Vector was not anything specific to the small launch vehicle industry—too many vehicles chasing too few customers—but rather more generic problems that could affect any company in the space industry, or any other field.

Those in the space industry familiar with what was going on at Vector (but who asked to speak anonymously) offered a picture of a company that suffered from poor management. That included heated disputes among the company’s leadership that led to high turnover among executives, those sources claimed.

“I wish Vector well and remain supportive of their efforts as they look to reboot to Vector 2.0,” Cantrell, the former CEO, wrote.

Another factor was how the company was structured. Vector was headquartered in Tucson, Arizona, which is where the company planned large-scale manufacturing of the Vector rockets. But the development work was taking place at a separate facility in Huntington Beach, California. The separation was deliberate, the company once explained, to keep manufacturing separate from (and not distracted by) engineering. United Launch Alliance, for example, is based in Colorado but builds its rockets in Alabama.

That separation, though, caused oversight problems for Vector, which sources said could explain the lack of visible progress on the Vector-R last year, after two very-low-altitude test flights in 2017. (The third office, in San Jose, California, was largely focused on a separate project called Galactic Sky to create software-defined satellites, one that did not appear to make much progress.)

Much of the blame for Vector’s problems was directed at Cantrell, who was seen as not being fully engaged with the company: a “hobbyist CEO,” as one person described him. Some of the employees laid off felt disappointed that, during the following weekend, Cantrell was tweeting not about the company’s situation and his departure but instead about auto racing.

Exactly what “significant change in financing” triggered the layoffs isn’t clear. Some have suggested that one of Vector’s VC funders, Sequoia, pulled its support, but neither Vector nor Sequoia have commented on that. Vector, in its August 9 statement, promised to provide “more information available next week,” or the week of August 12, but has been silent since that statement.

Cantrell ultimately weighed on Vector’s situation in a series of tweets August 13. “Many of you may have already heard that Vector recently laid off nearly its entire staff when a key investor withdrew support making it difficult for the company to continue on at its previously fast pace. I resigned from the Board last Friday and am pursuing new things,” he wrote. While his comments suggested his departure from the company was voluntary, others claim he was forced out.

Cantrell said he would take some time off to “catch up” with friends and family, while also devoting time to side businesses in auto racing and space consulting. “I wish Vector well and remain supportive of their efforts as they look to reboot to Vector 2.0,” he wrote. “Stay tuned as I am definitely NOT leaving the space business despite going back to racing for a while.”

In the two weeks since Vector’s setback, there haven't been signs that its problems have resulted in broader repercussions for the small launch vehicle industry. Rocket Lab, the established leader among the new generation of small launch companies, performed another successful flight of its Electron rocket last week, the company’s eighth launch overall and fourth this year.

The launch came after the company announced at the smallsat conference its plans to attempt to recover and reuse the Electron first stage. Peter Beck, Rocket Lab’s CEO, said the company has been looking at ways to recover the first stage, initially letting it splash down in the ocean but eventually performing a mid-air recovery using a helicopter with a “skyhook” to snag the booster’s parachute.

The interest in reusability, he said in an interview, was driven by the demand the company was seeing for the rocket. “At the moment we just can’t build enough rockets,” he said, noting that the company’s factory in New Zealand, opened less than a year ago, can produce about one Electron a month. “We need to get that down to one a week,” he said.

“At the moment we just can’t build enough rockets,” Rocket Lab’s Beck said of demand for his company’s Electron small launcher.

Beck said he didn’t know how many times an Electron can be reused, but even the ability to reuse the first stage just once would help the company. “Even if I only fly it once more, I essentially double production,” he said. “That’s a massive win. It’s not easy to double your production rate in a factory.”

Another small launch vehicle company, Virgin Orbit, is also closing in on its first flight. In July, the company carried out a test of its air-launch system by dropping a test article of its LauncherOne rocket from its modified Boeing 747 carrier aircraft. The company said that test was one of the final milestones before its first orbital launch attempt.

The company hasn’t given a specific launch date, but expects it to be later this year. “here’s a rocket that’s going to launch in two months,” said John Fuller, director of advanced concepts at Virgin Orbit, during a presentation at the conference.

The small launch vehicle industry is still likely headed for a shakeout some time soon. However, a single company’s problems, like those of Vector, may be unique to that company and not a sign of broader industry problems. At least, not yet.

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