Rocket Lab joins the growing list of startup space companies that are going public through a special purpose acquisition company (SPAC) by announcing today a merger with NASDAQ listed Vector Acquisition Corporation with “implied pro forma enterprise value of $4.1 billion, representing 5.4x 2025 projected revenue of approximately $750 million.”
Another Special Purpose Acquisition Company (SPAC)
SPAC’s are publicly-traded investment vehicles with no commercial operations and which are formed strictly to raise capital through an initial public offering. They are also sometimes referred to as blank check companies.
Virgin Galactic, Momentus, Astra, and now Rocket Lab are all taking advantage of the primarily U.S. led growth of SPAC’s as their investment solution of choice.
In this case Rocket Lab is merging with Vector Acquisition Corporation (VACQ) which is owned by Vector Capital. Alex Slusky is the CEO, CIO and Founder of Vector Capital.
In a press release Slusky stated “Rocket Lab is a once-in-a-generation company that is democratizing access to space through its constant innovation, leading technology and proven execution. Peter is a true visionary who has built a world-class company with discipline and grit. Rocket Lab is ideally positioned to continue to capture market share in the rapidly expanding space launch, systems and applications markets. Vector Capital has a nearly 25-year track record of identifying and building high-growth technology businesses and we are thrilled to partner with Peter and Rocket Lab’s talented team to support the Company’s next generation platforms and capabilities. Vector is thrilled to partner with Rocket Lab as it seeks to capitalize on unprecedented commercial and government spending in the bourgeoning space economy.”
Once the merger is completed, which is expected by the end of June of this year, Vector Acquisition Corporation will change its name to Rocket Lab USA and it will be listed on NASDAQ as RKLB.
According to Vector and Rocket Lab, the resulting merger “values Rocket Lab at an implied pro forma enterprise value of $4.1 billion. Pro forma cash balance of the combined company of approximately $750 million at close.” As well they state that “Rocket Lab forecasts that it will generate positive adjusted EBITDA in 2023, positive cash flows in 2024 and more than $1 billion in revenue in 2026.”
“The transaction is expected to result in pro forma cash on the balance sheet of approximately $750 million through the contribution of existing cash estimated to be on Rocket Lab’s balance sheet prior to close, up to $320 million of cash held in Vector Acquisition Corporation’s trust account (assuming no redemptions by Vector’s public shareholders), and a concurrent approximately $470 million PIPE of common stock, priced at $10.00 per share and led by Vector Capital, BlackRock and Neuberger Berman, among other top-tier institutional investors.”
Introducing Neutron
With the news of the merger, Rocket Lab also unveiled its new medium-lift Neutron Rocket. The launch vehicle “will be a two-stage launch vehicle that stands 40 meters (131 feet) tall with a 4.5-meter (14.7 ft) diameter fairing and a lift capacity of up to 8,000 kg (8 metric tons) to low-Earth orbit, 2,000 kg to the Moon (2 metric tons), and 1,500 kg to Mars and Venus (1.5 metric tons). Neutron will feature a reusable first stage designed to land on an ocean platform, enabling a high launch cadence and decreased launch costs for customers. Initially designed for satellite payloads, Neutron will also be capable of International Space Station (ISS) resupply and human spaceflight missions.” Rocket Lab is marketing the launch vehicle as the Mega Constellation Launcher.
Pun aside, these are some lofty ambitions. The company will need to up its game to the next level to be able to fulfill its ambitions. It’s one thing to launch larger payloads to low Earth orbit, and launching payloads to Venus or Mars is likely within their capability, but sending humans into space is much more difficult and the company did not mention what type of spacecraft astronauts would use atop the Neutron rocket.
“Neutron launches will take place from Virginia’s Mid-Atlantic Regional Spaceport (MARS) located at the NASA Wallops Flight Facility. By leveraging the existing launch pad and integration infrastructure at the Mid-Atlantic Regional Spaceport, Rocket Lab eliminates the need to build a new pad, accelerating the timeline to first launch, expected in 2024.”
The Mid-Atlantic Regional Spaceport is a fine facility that is slowly growing in capability. But it is a shared facility operated by NASA’s Goddard Space Flight Center, supports NOAA, and has Department of Defense assets in and around the facility. For Rocket Lab to be successful with the Neutron rocket they’ll need an appropriate launch cadence that I’m not sure MARS can handle. They may eventually have to find another spaceport for additional Neutron rockets launches.
“Rocket Lab solved small launch with Electron. Now we’re unlocking a new category with Neutron,” said Peter Beck, Rocket Lab founder and CEO. “We’ve listened to our customers and the message is clear – biggest doesn’t always mean best when it comes to constellation deployment. Efficiently building the mega constellations of the future requires launching multiple satellites in batches to different orbital planes. It’s a requirement that all too often sees large launch vehicles fly with payloads well below their full lift capacity, which is an incredibly expensive and inefficient way to build out a satellite constellation. Neutron’s 8-ton lift capacity will make it ideally sized to deploy satellites in batches to specific orbital planes, creating a more targeted and streamlined approach to building out mega constellations.”
Rocket Lab has a Canadian connection. In May of 2020 the company announced the acquisition of Sinclair Interplanetary, makers of reaction wheels and other satellite components. The small operation with a good reputation for quality, is still based in Toronto.
Correction: An earlier version of this story stated the acquisition should be complete by the end of May 2021, it should have said end of June, 2021.