Season 7, Post 23: Rocket science
In case you missed it, our latest thematic note on space came out earlier this week. Our key contention is that space constitutes the next frontier in both defence and data. Although space is becoming an increasing military priority, crucially the digital infrastructure that is being created in the sky will be inherently dual use. The importance of space centres around big data. Space can connect the unconnected and play a crucial role in mitigating world challenges.
For every piece of thematic work, we seek to read extensively around the topic, attend conferences where relevant and interact with key stakeholders. As part of the work for this note, we were privileged recently to meet with Adam Spice, the CFO of Rocket Lab. The business is arguably the leading listed space tech business in the world (capitalised at ~$13bn). As Adam shared with us, Rocket Lab’s spacecrafts are the third most-used vehicle for satellite launches globally. Rocket Lab also achieved the impressive feat of 50 successful launches in a faster time than SpaceX (the number one launch player).
Why has Rocket Lab been successful where others have failed? Put simply, launch is the hardest capital barrier and very difficult to get right. The orchestration of a rocket programme is “insane.” It is hard for laypeople (your author included) to understand the complexity that goes into any launch. The process was described to us as “Pareto on steroids.” The final few percentage points of effort and technical advance count disproportionately when differentiating successful rocket science from failed efforts. The good news, at least, is that “with each launch you learn more.” Think of space tech as an iterative process. A continued push towards better materials at lower costs should result in improved performance.
As more satellites are launched into space, so the number of use-cases will likely grow. At present, space is becoming “weaponised.” Lest readers start to contemplate scenarios akin to Star Wars, pragmatism is becoming a driving force. Many countries are perhaps justifiably more reluctant to rely on the US for defence than in the past, and a satellite presence can, at the least, provide a form of useful surveillance against potential threats. With the industry still in its relative nascence, “no one knows what the killer app is yet.” From our perspective, increased digital access (via satellites) can help improve both education and economic prosperity. For now, as the title of our note suggests, “the race is on” for space dominance.
26 June 2025
The above does not constitute investment advice and is the sole opinion of the author at the time of publication. Past performance is no guide to future performance and the value of investments and income from them can fall as well as rise.
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Alex Gunz, Fund Manager
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