DURING initial tests of their 8.1-meter tall reusable rocket, Chinese engineers from LinkSpace, a startup led by China’s youngest space entrepreneur, used a Kevlar tether to ensure its safe return. Just in case.

But when the Beijing-based company’s prototype, called NewLine Baby, successfully took off and landed last week for the second time in two months, no tether was needed.

LinkSpace, one of China’s 15-plus private rocket manufacturers, sees these short hops as the first steps towards a new business model: sending tiny, inexpensive satellites into orbit at affordable prices.

Demand for these so-called nanosatellites — which weigh less than 10 kilograms and are in some cases as small as a shoebox — is expected to explode in the next few years. And China’s rocket entrepreneurs reckon there is no better place to develop inexpensive launch vehicles than their home country.

“For suborbital clients, their focus will be on scientific research and some commercial uses. After entering orbit, the near-term focus (of clients) will certainly be on satellites,” Hu said.

In the near term, China envisions massive constellations of commercial satellites that can offer services ranging from high-speed Internet for aircraft to tracking coal shipments. Universities conducting experiments and companies looking to offer remote-sensing and communication services are among the potential domestic customers for nanosatellites.

A handful of U.S. small-rocket companies are also developing launchers ahead of the expected boom. One of the biggest, Rocket Lab, has already put 25 satellites in orbit.

No private company in China has done that yet. Since October, two — LandSpace and OneSpace — have tried but failed, illustrating the difficulties facing space startups everywhere.

The Chinese companies are approaching inexpensive launches in different ways. Some, like OneSpace, are designing cheap, disposable boosters. LinkSpace’s Hu aspires to build reusable rockets that return to Earth after delivering their payload, much like the Falcon 9 rockets of Elon Musk’s SpaceX.

“If you’re a small company and you can only build a very, very small rocket because that’s all you have money for, then your profit margins are going to be narrower,” said Macro Caceres, analyst at U.S. aerospace consultancy Teal Group.

“But if you can take that small rocket and make it reusable, and you can launch it once a week, four times a month, 50 times a year, then with more volume, your profit increases,” Caceres added.

Eventually LinkSpace hopes to charge no more than 30 million yuan (US$4.48 million) per launch, Hu said.

That is a fraction of the US$25 million to US$30 million needed for a launch on a Northrop Grumman Innovation Systems Pegasus, a commonly used small rocket. The Pegasus is launched from a high-flying aircraft and is not reusable.

LinkSpace plans to conduct suborbital launch tests using a bigger recoverable rocket in the first half of 2020, reaching altitudes of at least 100 kilometers, then an orbital launch in 2021, Hu said.

The firm is in its third round of fundraising and wants to raise up to 100 million yuan, Hu said. It had secured tens of millions of yuan in previous rounds.

After a surge in fresh funding in 2018, firms like LinkSpace are pushing out prototypes, planning more tests and even proposing operational launches this year.

Last year, equity investment in China’s space startups reached 3.57 billion yuan, a report by Beijing-based investor FutureAerospace shows, with a burst of financing in late 2018.

That accounted for about 18 percent of global space startup investments in 2018, a historic high, according to calculations based on a global estimate by Space Angels. The New York-based venture capital firm said global space startup investments totalled US$2.97 billion last year.(SD-Agencies)