America's new-space industry is suffocating -- but that's OK. Vector Space Systems is here to save it.

A few days ago, I had the opportunity to talk over the future of spaceflight with Jim Cantrell, the original rocket scientist at Elon Musk's SpaceX . Cantrell has been working in the space industry for nigh on 30 years now, and for organizations as varied as StratSpace (a business development company assisting "new-space" start-ups), CNES (France's version of NASA), NASA (our version of NASA), and SpaceX itself. He helped Elon Musk set up SpaceX in 2002, and served as SpaceX's first VP of Business Development. Today, Cantrell helms an even newer space start-up that goes by the name Vector Space Systems.

A satellite in orbit around the Earth.

Image source: Getty Images.

Introducing Vector Space Systems

With the help of some other space industry veterans, Cantrell set up Vector just a few months ago to address two increasingly irksome problems in the business of space launch: Congestion, and cost.

Currently, only a few large companies provide space launch services to commercial customers -- companies like Arianespace in Europe, or SpaceX, or Boeing (NYSE:BA) and Lockheed Martin's (NYSE:LMT) United Launch Alliance here at home. Taken all together, and even including government-sponsored launches from Roskosmos in Russia, the combined might of all these companies is only enough to launch about 30 to 40 rockets into space annually.

Worse for customers, the space on these launches is largely occupied by large companies launching large satellites, and paying $60 million, $80 million, or even $200 million (that's what Boeing and Lockheed are said to charge) for the privilege. When someone wants to launch a smaller satellite into orbit, or cannot come up with the eight-to-nine figure price of hiring a rocket, they must wait until extra space opens up on a larger satellite's launch, and hitch a ride as a "secondary payload." It can take three years or more for such secondary slots to open.

(Case in point: Remember how I told you about the ultra-micro "CubeSats" that will go up on Boeing's Space Launch System in 2018? That article ran in early 2016. The CubeSats' makers are still waiting for their ride.)

Vector Space Systems wants to solve this problem by opening up an entirely new class of space launches: Rockets built specifically to carry small nano- and microsatellites into orbit, produced in large quantities, and costing as little as $1.5 million (to as much as $2.5 million) per launch.

A solution in search of a problem

Why hasn't this been tried before? Mainly, because until recently, satellites cost too much to build, and too much to launch, to create much demand for microsatellite deliveries. Up until a couple years ago, it cost $2 million to $3 million just to buy the parts needed to build a micro-sized communications satellite. Prices have come down dramatically, though. Today, you can buy the parts needed to build a small, 50-pound satellite for as little as $25,000. (Some assembly required).

This is spurring a huge increase in demand for microsatellite launches. Last year, 175 such microsatellites hitched rides aboard rockets carrying larger satellites into orbit. By 2020, Cantrell predicts that number to triple to 500 -- or more -- and make up 75% of all satellites heading into orbit. 

Of course, even a $25,000 satellite isn't much of a bargain if it costs $60 million or more to launch it. That's where Vector Space comes in with its design  for a 36 feet tall, 1,500-pound rocket ship capable of lofting a 100-pound microsatellite into orbit 120 miles above Earth (or sending a 55-pound satellite up 240 miles).

Priced at $2.5 million for a "we need this done yesterday" launch, and as cheap as $1.5 million for customers with more flexible schedules, Vector's prices are cheaper than anyone else offers. Cheap enough to make putting a satellite in space -- or blanketing the Earth with a whole constellation of small, low-cost satellites -- economical for the new wave of space-tech start-ups beginning to emerge.

Start-ups like whom?

Cantrell mentioned a couple of such up-and-comers who might be interested in a low-cost solution for putting microsatellites into orbit. PlanetiQ is working toward putting a constellation of 18 weather-monitoring satellites in low earth orbit. If it succeeds, the company says it will generate "more than 10 times the amount of data" currently provided by orbiting weather satellites, and vastly improve the quality of weather forecasting here on Earth.

Another company, Planet Labs, already has 100 microsatellites in orbit -- and counting. Its mission is to put so many satellites up that they'll be able to produce daily images of every square foot of Earth's surface. Why? Much as we all love Google Earth, you've probably noticed that some of its images are blurry or clearly out of date. That's because at present, satellite coverage of the planet is spotty enough that some portions of the globe go as long as three months  between new imagery being generated. Planet Labs wants to knock that number down to one refresh-per-day -- everywhere.

And speaking of Google, you've probably heard that Alphabet (NASDAQ:GOOGL) invested $1 billion in SpaceX? Well, Alphabet made that investment as part of a plan to put 4,000 small communications satellites in orbit, permitting broadband Internet service to reach every location on Earth. Whether or not Alphabet and SpaceX proceed with project, this is exactly the kind of project that Vector Space can facilitate with its microsat-launching rockets.

Vector Space Systems plans to start signing up customers in the next few months and will begin launching satellites in early 2018. By 2019, the company expects to be fully operational, and launching a dozen rockets a year, ramping rapidly to 100 a year or more.

Buckle up, investors. The future is now.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.