Closing Bell - Manifest Space: $138M Round Raise with Ursa Major CEO Joe Laurienti 12/14/23

Episode Date: December 14, 2023

Venture capital is creeping back into the space sector, with Ursa Major raising $138 million in Series D and D-1 rounds. Capital from the likes of RTX Ventures, BlackRock, Explorer 1 Fund & more will help the rocket propulsion startup to produce engines for rocket launches, hypersonic vehicles – and enable expansion into a new defense-focused market. Founder & CEO Joe Laurienti joins Morgan Brennan to discuss defense tech, the case for 3-D printed rocket engines, and more from the Reagan National Defense Forum.

Venture capital is creeping back into the space sector, with Ursa Major one of the latest recipients. The rocket propulsion startup, which has been featured on this podcast previously, recently announced it had raised $138 million in Series D and D1 funding rounds. Investors include Explorer One Fund and Eclipse, RTX Ventures, funds and accounts managed by BlackRock, and others. The capital will help IHRSA to produce the engines it has been developing for rocket launches and hypersonic vehicles. But it will also enable the startup's expansion into a new defense-focused market. This is really about scale for us. So we, really since our last capital raise, we started deploying engines. We started mass-producing engines for space and hypersonics.

But getting those into the field, getting those flying. I think last time I spoke with you was with Zach Krever from Stratolaunch. So really getting our engines deployed and flying was a big focus of the capital raise. And then we kind of unveiled this tactical munitions and solid rocket motors effort that we have pushing forward. Founder and CEO Joe Lorienti says Ursa Major will 3D print solid rocket motor cases, addressing a market in which few competitors operate and supply chain issues have plagued production, even as demand skyrockets. The strategy places Ursa Major more squarely in the defense tech category, a category investors have become increasingly keen to fund,

even as private capital has dwindled amid a tougher macroeconomic environment. I'm Morgan Brennan, and this is Manifest Space. I can't believe it's been a year since we were sitting here having a conversation at this event. It feels like a few weeks. It does. If that. Well, you've had a very busy year. Yes. You just announced a capital raise. Congratulations. Thank you. Walk me through it. It was a hard-fought one. It's not an easy time to go out and raise capital for kind of a growth-phase company, meaning you've shown product market fit, you've shown revenue, but you need a

lot of capital to go scale. So we were lucky that kind of our three big segments are really important today. Space, hypersonics, tactical munitions, those are all kind of in the forefront of our customer base and our partner base. We're here at the Reagan National Defense Forum. A lot of our kind of partner base is here. So we were lucky that when we went out to do this capital raise, we were able to show kind of that traction that we've made over the last year or so. Great. And what does this capital enable you to do? This is really about scale for us. So we really, since our last capital raise, we started deploying engines, we started mass producing engines for space and hypersonics, but getting those into the field, getting those flying. I think last time I spoke with you was with Zach Crever from Stratolaunch. So really getting our engines

deployed and flying was a big focus of the capital raise. And then we kind of unveiled this tactical munitions and solid rocket motors effort that we have pushing forward. And it's really bringing that to scale as well. And so I do want to take a step back and just, in terms of background, what Ursa Major does, what you make, and how that portfolio is now expanding. We are a propulsion company. So we started with a focus on how do we very scalably and flexibly manufacture propulsion systems. So engines for rockets, engines for missiles, solid rocket motors for missiles and munitions. And our approach was using advanced and automated manufacturing like 3D printing, we should be able to completely take a new approach. This

isn't a heritage factory with a lot of highly trained personnel and paper drawings to go assemble rockets. This is 3D printing a hypersonic engine one day and an upper stage for a space launch vehicle the next day. So how's it going? It's busy. I mean, I think I've touched on tactical munitions. What's front of mind here is this gap of solid rocket motor need for things like Javelin and HIMARS, Gimlers overseas,

but we're facing just as big of a gap here in launch. I think it was just announced yesterday on CNBC that Amazon Kuiper was buying Falcon 9 launches. That was a huge surprise to a lot of us in space. It really shows there's kind of SpaceX and nobody else in launch right now. So hopefully we can go help with that. So how quickly can you do it? And just as importantly, do you already have customers lined up?

We do. To that point of a capital raise is tough right now. We have a lot of customers that are still requiring capital. So I think things have just moved slower than we would hope. But we are at the point where we can build about an engine a week right now. I think that surprises a lot of our partners when we show them the factory and there's kind of an assembly line of engines going out the door. But the push here is really bring multiple systems online so that it's not just SpaceX here in the U.S. anymore. So you talked about tactical munitions. I mean, this is such a key part of the supply chain that continues to be a pain point. There's really not much

competition out there in the marketplace. How much competition is though coming to the marketplace, whether it's Ursa or some of the other startups that I know I am starting to hear about in my reporting? It's really exciting actually. And our approach I think was, we had quietly been working on our solid rocket motor efforts for about two years. And the reason we were really quiet was we wanted to find our fit. So we are a company that is a team of propulsion experts and we are, our underlying capability set is really around manufacturing. So when we looked at the solid rocket motor industrial base, we saw huge innovative startup leaps

kind of on the chemistry or the propellant, the energetics side of it, but that didn't solve the problem of manufacturing. So we wanted to ensure we were tackling the piece that allowed us to partner with some of these other innovative startups and partner with, really, there are two big incumbents. Northrop Grumman, which is Heritage Orbital ATK, and now L3Harris is Heritage Aerojet Rocketdyne. So you hear a lot about this frozen middle in government, but it's kind of a frozen middle in the supply industrial base now. We have the big production-heavy providers that probably just can't be as nimble.

They can't provide new systems as quickly as DOD would like. And you have these small, innovative players that are trying to break into the production side. So hopefully we've helped fill that gap. The breaking in part, I think, is sort of key because it's like you're breaking into the supply chain, so you're dealing with contractors specifically, I'd imagine. But then are you also dealing with government directly? Absolutely, yeah. Really, the reason we got into Solid Rocket Motors was we had made great traction in our hypersonics work with Air Force,

and a few other branch partners had approached us. Actually, very presciently before the Russian invasion of Ukraine, they had approached us and said, we foresee Solid Rocket Motors becoming a problem. Would you take a look at it? And that's why we'd been kind of quietly looking at it for about two years. And what we saw was this need for kind of very flexible, scalable manufacturing. We need to avoid standing up a 40-year-old factory for a legacy system. We need the ability to build Javelin missiles one day and AMRAAMs the next. So flexible manufacturing is the name of the game.

So what does the company look like two years from now, five years from now, 10 years from now? Two years from now, we should be deploying and flying systems across space hypersonics and solid rocket motors. We were really lucky that we had that heritage on the space and hypersonic side. So breaking into solid rocket motors was really more about the product and technology and team,

making sure we had that fit in place. Five years and 10 years, we should be demonstrating that this flexible manufacturing can be deployed in other places. It shouldn't just be our factory in Colorado. We should be able to pick up this production cell and drop it here in California, drop it on the East Coast, drop it overseas with a friendly. Great. Anything else to keep in mind, either where the company is concerned or the industry at this time where there is so much focus on capability and getting it more quickly? Our big focus, it's like I said, the munition gap is this really quantifiable need right now,

where we deployed in two years in Ukraine, we deployed 10 years worth of munitions across a few different systems. But it's a propulsion gap. It's not just a munition gap. Right now, SpaceX is 80% of the US launch market for getting to space. And without them, China's launching at four times our cadence. So there's a gap for all propulsion systems right now. And we're going to scale as quickly as we can to help. One more question on that, and that is, I mean, we saw this flurry of rocket startups enter the market or attempt to enter the market. We're now seeing pretty steep correction in terms of that. Does that affect you? Absolutely. I think we don't want a flood of startups.

We don't want a flood of new entrants, but we want the right entrance in the right place. I think much like aircraft, commercial aircraft or military aircraft, there's not a one size fits all. There's not just Falcon 9 or just Starship. We do need to see other players in different sizes, different mission sets. So the new entrance that really appealed to that helped our cause quite a bit. And I think what we're going to see over the next few years is a push to focus some of those new entrants and a push to focus even newer entrants over the next few years. That does it for this episode of Manifest Space. Make sure you never miss a launch by following us wherever you get your podcasts and by watching our coverage on Closing Bell Overtime.

I'm Morgan Brennan.