Stoke Space’s $510M Round Highlights the Growing Role of Defense in the Future of Launch

Stoke Space announced a significant capital raise on Wednesday, securing $510 million in a Series D round that, on the surface, may seem like another bet on the growing commercial launch market. However, the details suggest a shift in the future industry's niche.

Led by ThTull's U.S. Innovative Technology (USIT), a fund focused on investing in technologies tied to national security, this latest funding round underscores a larger shift in the launch sector. The prevailing belief used to be that the winners in space launch would be those capturing the commercial payloads market, especially from private companies focusing on constellations, in-space manufacturing, or lunar payloads.

However, recent trends indicate a significant pivot: the focus is now firmly on defence.

The Pivot Toward Defence

Just a few years ago, space startups were pitching investors with visions of a rapidly expanding commercial market. For example, Astra projected launching hundreds of rockets per year to serve a growing small-satellite market. At the same time, Relativity Space envisioned a 3D-printing revolution to make rockets cheaper and unlock significant commercial demand. But with SpaceX already dominating the commercial launch space, successfully launching rockets cheaply and reliably, the market has become far less lucrative for smaller players.

In contrast, defence has experienced rapid growth, driven by geopolitical tensions such as Russia's war against Ukraine and by increasing competition from China in space. These developments have fueled new opportunities. Pentagon's Golden Dome initiative, a multi-billion-dollar project to create a missile defence shield over the continental U.S., has brought new tailwinds for the aerospace industry.

Other government programs, such as the Space Force's National Security Space Launch (NSSL) and the Space Development Agency's missile defence satellite constellation, offer years of lucrative, predictable contracts.

Stoke Space and National Security

Stoke Space is clearly positioning itself to benefit from this trend. In its press release, the company emphasised that the new funding would strengthen its "capability across the U.S. space industrial base", underscoring its importance to national security. New investors, such as Washington Harbour Partners LP and General Innovation Capital Partners, further solidify Stoke's position as a key player in supporting the U.S. defence sector. Stoke's recent successes also point toward this pivot. In March, it was selected as one of the launch providers for the NSSL Phase 3 Lane 1 program, giving the company a chance to compete for up to $5.6 billion in launch contracts over the next decade.

Industry-Wide Shift

Other recent developments highlight the industry-wide shift toward defence. For instance, Firefly's $855 million acquisition of SciTec was framed as a move to enhance its support for a growing number of defence missions. Similarly, RelativitSpace's new owner, Eric Schmidt, has spoken publicly about the strategic importance of space and artificial intelligence (AI), stressing the need for America to maintain dominance in these critical domains.

The Intersection of Venture Capital and Defence

The broader sentiment in the space industry aligns with EriSchmidt's remarks: America cannot afford to lose in strategic areas such as space and AI. This is where USIT, launched by Thomas Tull in 2023, becomes a key player. Focused on technologies critical to national resilience, USIT's portfolio includes investments in defence startups like Shield AI and Gecko Robotics.

StokSpace's inclusion in this portfolio highlights the growing intersection of venture capital and defence budgets in the space industry.