Stoke Space Raises $510M: The Future of Space Launch is Defense-Focused

A Significant Investment Signals a Shift in the Launch Industry

Stoke Space recently announced a substantial capital raise, a $510 million Series D round, which initially appears as another investment in the commercial launch market. However, a closer examination reveals a more profound trend.

National Security Drives Funding

The funding round was spearheaded by U.S. Innovative Technology (USIT), a fund managed by billionaire Thomas Tull, specifically focused on technologies crucial to national security. This investment highlights a significant change within the launch sector.

Previously, success in the launch industry was largely predicated on securing the majority of commercial payloads. This assumption is now being challenged.

The Evolving Demand for Launch Services

Although demand persists from commercial entities, such as private constellation developers and those exploring in-space manufacturing or lunar missions, the primary focus has demonstrably shifted towards defense applications.

Several years ago, space startups actively promoted visions of a rapidly expanding commercial market for services like weather monitoring, broadband internet, and remote-sensing satellites to investors.

Past Promises and Current Realities

For instance, Astra projected launching hundreds of rockets annually to cater to the growing small satellite market in its 2021 SPAC presentation. Relativity Space presented a concept of 3D printing rockets to reduce costs and unlock substantial commercial demand.

However, the number of available commercial payloads is finite, and SpaceX remains the sole company consistently delivering launches at both low cost and with reliable performance.

Defense Spending as a Catalyst

Conversely, defense spending is experiencing an upward trend. Geopolitical events, including the conflict in Ukraine and increasing competition with China in space, are contributing factors.

The Pentagon’s “Golden Dome” initiative, a multi-billion dollar project aimed at establishing a comprehensive missile defense system over the United States, is generating numerous lucrative opportunities within the aerospace industry.

Predictable Contracts and Industry Realignment

Furthermore, programs like the Space Force’s National Security Space Launch (NSSL) and the Space Development Agency’s missile-defense satellite constellation promise consistent, high-value contracts for years to come.

Launch startups have taken note of these developments, adjusting their messaging, attracting new investors, and refining their business models to prioritize the U.S. government as their primary customer.

Stoke Space and the National Industrial Base

Stoke Space acknowledges this shift in a press release, stating that the new funding will bolster “capability across the U.S. space industrial base.” The participation of investors like Washington Harbour Partners LP and General Innovation Capital Partners further emphasizes “Stoke’s importance to national security and the U.S. industrial base.”

Recent successes for Stoke Space exemplify this trend. The company was selected for the NSSL Phase 3 Lane 1 program in March, enabling it to compete for up to $5.6 billion in launch contracts over the next decade.

Industry-Wide Trends and Strategic Concerns

Similar patterns are evident in other recent deals. Firefly’s acquisition of SciTec for $855 million was described by CEO Jason Kim as a move to strengthen the company’s “ability to support a growing number of defense missions.”

Relativity’s new owner, Eric Schmidt, recently cautioned lawmakers that China achieving superintelligence first could fundamentally alter the global balance of power.

While Schmidt’s comments weren’t directly related to launch services, they reflect a widespread sentiment within the space industry: maintaining American leadership in critical areas like space and artificial intelligence is paramount.

USIT and the Intersection of Venture Capital and Defense

In this context, USIT’s leading role in the funding round is logical. Thomas Tull established the fund in 2023 to invest in technologies “relevant to the national interest.”

USIT’s previous investments span a range of areas related to national resilience, including defense startup Shield AI and Gecko Robotics. Stoke Space’s inclusion in this portfolio solidifies the emerging reality that space investment is now firmly positioned at the convergence of venture capital and defense spending.