Space Startup Stoke Nears $2 Billion Valuation in New Financing
The Takeaway
- Stoke Space in talks for funding that would double its valuation to nearly $2 billion
- Startup develops fully reusable rockets for cost-effective launches.
- Stoke plans first orbital rocket launch as early as next year
Stoke Space, a startup building reusable rockets that are smaller than SpaceX’s, is raising hundreds of millions of dollars in a funding round that would value it at nearly $2 billion, roughly double its last private round, two people familiar with the matter said. The new lead investor is Thomas Tull’s U.S. Innovative Technology Fund, one of the people said.
Investors consider Stoke—run by Andy Lapsa, an alum of Jeff Bezos’ rocket company, Blue Origin—a top contender among a new crop of space startups trying to crack the business of launching rockets to bring satellites to space, which SpaceX dominates. Stoke hasn’t yet launched a rocket into orbit, but plans to do so as early as next year from Cape Canaveral, Fla., Lapsa said recently.
The startup, founded in 2019 and based in Kent, Wash., is trying to reduce the costs of rocket launches by designing a rocket with engines and other parts that are fully reusable for other launches. “That’s the last big domino to knock down,” Lapsa said on a podcast in August. A Stoke spokesperson wouldn’t confirm the valuation or other details of the round.
The startup has to confront several engineering challenges to enact its vision, including creating a heat shield that will protect its Nova rocket as it reenters the Earth’s atmosphere and prevent it from burning up. The new capital, which could total as much as $500 million, should fund multiple attempts at launches, one of the people said. It would double the amount of money Stoke has raised so far, from investors including Breakthrough Energy Ventures, Glade Brook Capital Partners and Y Combinator. In January, Stoke was valued at $944 million after the investment, according to PitchBook.
Its larger contenders are also designing reusable rockets. SpaceX’s primary Falcon 9 rocket is partially reusable, with the booster that propels the rocket into space landing back on Earth for later use. SpaceX has had mixed results after 10 test launches for Starship, its rocket designed to be fully reusable that is critical to Elon Musk’s goal of colonizing Mars.
Blue Origin is also developing a reusable rocket called New Glenn. A publicly traded competitor gaining steam is Rocket Lab, which is aiming to launch a partially reusable rocket by the end of this year. Its market capitalization has nearly tripled this year to $29 billion.
Lapsa said on the podcast that he thought those companies would succeed. But, he added, “I don’t think they’re sufficient for what the commercial space economy needs and the government use case as well,” he said. “Any healthy economy needs multiple players.”
Investors have sunk billions of dollars into space-related startups, despite the setbacks or failures of some. Richard Branson’s Virgin Orbit filed for bankruptcy two years ago after the failure of a rocket launch. Privately held Sierra Space, which raised $1.4 billion from investors such as General Atlantic and Coatue Management in 2021, has faced leadership turnover and delays for its cargo-carrying space plane. And Relativity Space, backed by Fidelity Management and Mark Cuban, faced trouble raising money last year, Bloomberg reported, after its rocket failed to reach orbit after a test launch. Former Google CEO Eric Schmidt then took a controlling stake and became Relativity’s CEO and chair.