Thoughts on the “Hype” about China’s NewSpace Launcher Startups – (Part 1/2)

Introduction

When discussing the rapid development of China’s private space sector and notably launch vehicles, many observers hint at a bubble: an unhealthy number of startups all pursuing the same scope of activities with similar technical solutions, and unsustainable growth not correlated with market demand. Is this justified? In this blogpost I offer some thoughts and engage in a comparison between Chinese and US NewSpace, discussing market size and Sino-foreign space “ecosystem decoupling”.

A Quick Reminder on China’s Private Space Sector

For those familiar with China’s private space landscape, skip to the next paragraph. Otherwise here are a few quick facts :

  • China’s private space sector dates back only to late 2014.
  • Between 2015 and 2018, our NewSpace mapping established that at least 55 startups had been founded, covering the entire space value chain.
  • During this period, 218 VC firms have invested in commercial space, according to FutureAerospace’s VC report (a quick summary here). VC companies from the tech sector are strongly represented among the top investors, bringing over their strong scaling expertise from the Chinese tech landscape.
  • In 2018 alone, investments have poured into 30+ Chinese space start-ups, raising a total of 2.1 billion RMB – approximately 310 million USD -, in 34 rounds. Among these rounds, 12 of them were above 100 million RMB (15 million USD).
  • Regarding launchers, some historical milestones have been achieved in 2019, most remarkable of all the successful orbital mission of China’s first private rocket, iSpace/Interstellar Glory’s Hyperbola-1, on July 25 2019.

Investment in Space Ventures: the USA and China Compared

Earlier this year, the Bryce Space Startup 2019 Report wrote that 80% of all investments in space startups in 2018 went to US startups, all the while noting that investments in non-US startups were on the rise and almost matching the US in terms of number of investments (but not in value). The seed and VC investments in the US, reaching 2198.8 million USD in 2018 [1], far exceed those of China: approximately 310 million USD (2.1 billion RMB) [2].

seed and VC investment between 2016 and 2018 US and world

Fig. 1 – Seed and VC investment in US & non-U.S. space start-ups (source: Bryce Space [1])

Regarding the number of investors, Bryce Space reports that over half  of all investors in space from 2000 to 2018 (389, or 54%) were from the US, compared to 39 in China. These figures are in sharp contrast with those from FutureAerospace’s recent investment report, which sets the number of investors in China at 218. Since FutureAerospace’s definition of a space venture is somewhat loose (and includes state-owned spin-offs), a good guess would be that the number of Chinese investors in space is somewhere between 50 and 200, which remains significantly lower than the USA.

If we look at the year 2018 alone, the number of investors which reported an investment in a space venture in both countries isn’t too far one from another: 95 in the US in 2018  [1], compared to 90 in China [2]. If we consider these figures together with the investment amounts mentioned above, this roughly shows that the amounts raised individually by Chinese companies are significantly lower than that of US startups, suggesting a much more early-stage space ecosystem.

Launch Vehicles

This early-stage characteristic is verified in the facts. Let’s look specifically at launch vehicles. At the time of writing, SpaceX has launched 74 Falcon 9 and 3 Falcon Heavy rockets, with more planned for the 4th quarter of 2019 [3]. Rocket Lab has accelerated its launching pace, successfully sending to orbit its eighth Electron rocket on August 19th this year, while others such as Vector Launch or Firefly Aerospace or months away from a first orbital launch.

Meanwhile Chinese private launcher startups have just managed the launch of their first orbital rocket, iSpace’s Hyperbola-1, a light solid-propulsion vehicle with a payload capacity of 260 kg (500 km SSO). Other previous attempts up to now have failed, namely Landspace’s Zhuque-1 in October 2018 and OneSpace’s OS-M1 in March 2019. All near-operational Chinese private launch vehicles so far are of small capacity (<500 kg LEO) and “only” based on solid propellant.

Yet there is no lack of determination among these Chinese startups. Among the rockets under development, many have an ambitious technological roadmap, including developing their own liquid fuel rocket engines, reusable technology (often VTVL), and experimenting more novel fuels such as methalox engines. Many players have also announced the design of medium launch vehicles once their light launcher enters service (see Fig. 2 below).

Comparing the Number of Launch Startups

Another interesting indicator is the actual number of launcher companies. On the US side, there are roughly 50 launch startups according to the SpaceFund Launch Database*, as opposed to roughly 15 launcher startups in China (according to our own mapping here).

*The SpaceFund Launch Database is a database of all launch companies worldwide. It also includes the SpaceFund Reality (SFR) rating, which “is designed to provide […] a quick guide and assessment of players old and new in the various sub-sectors of the space industry.” [4]

Now if we compare the more realistic and advanced projects on either side:

  • On the US side, we consider as “realistic and advanced” launcher companies with a SFR rating of 6/9 and above. That leaves us with 7 companies, which are: SpaceX, Blue Origin, Rocket Lab, Vector, Virgin Orbit, Relativity Space, Firefly Aerospace.
  • On the Chinese side, those with a similar level of development from our own mapping: Linkspace, Landspace, OneSpace, iSpace, Space Trek, Galactic Energy, Deep Blue Aerospace. That’s also 7 launcher companies, which have currently engaged in advanced testing of their rockets.

The take-away message here is that it’s difficult to consider the Chinese NewSpace launcher landscape as a bubble from an offer standpoint. It presents many similarities with the US industry landscape, in terms of number of projects, technical solutions, and ambition, even if the US remains the incontestable country of “firsts”. Both US and Chinese companies are backed by a very dynamic investment ecosystem. Both receive a significant amount of help from the government (for example contracts from the government in the US, or technology/infrastructure support in China). Arguably, many of China’s launcher startups present some similarities with early-stage SpaceX developing its Falcon 1 expendable rocket.

chinas launch vehicles current and future 3Fig. 2 – China’s current and future launch vehicules (payload classified on a logarithmic scale). Credit: China Aerospace Blog

Edit 19/09: a big thanks to the readers which have caught mistakes in Fig. 2. A corrected version of the infographic has been uploaded.

Be sure to stay tuned for the follow-up blogpost next week (part 2/2), focusing on the market demand for Chinese launchers.

References

[1] Start-Up Space, Update on Investment in Commercial Space Ventures, 2019, Bryce Space and Technology
[2] Who’s Investing in China’s NewSpace? FutureAerospace Provides Some Answers in Latest Report, China Aerospace Blog, August 17 2019
[3] Wikipedia Page of Falcon 9 and Falcon Heavy Launches (viewed for the purpose of this article in August 2019)
[4] SpaceFund Launch Database (viewed for the purpose of this article in August 2019)

2 thoughts on “Thoughts on the “Hype” about China’s NewSpace Launcher Startups – (Part 1/2)

  1. Interesting article, I will be curious to see the demand side in the next post.
    On the US launchers, note that Vector can be taken out for now.
    For Chinese ones (Fig.2), I would take out the OS-M2/OS-M4/OS-M vehicles, OneSpace is solely developing an OS-M2 single core version now (evolved from the failed OS-M1).
    I would also add the heavy variants ZQ-2B and ZQ-2C of LandSpace for sake of completion.
    Thanks, Jean-Philippe

    Like

    1. Thanks for your comment Jean-Philippe!
      You are absolutely correct about Vector, this blogpost was partly written before the announcement of their financial difficulties in August. I will also update Fig. 2.
      Cheers

      Like

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