Canadian Startup With $22.5M and No Launches Wants to Take On SpaceX

Image: Canada Rocket Company

Canada Rocket Company, a nine-month-old startup based in Etobicoke, says it will put a Canadian-built rocket into orbit by 2032 and eventually win launch business away from Elon Musk’s SpaceX. According to the Toronto Star, co-founder and CEO Hugh Kolias has already raised $22.5 million, moved into a 7,500-square-foot manufacturing facility in Etobicoke and broken ground on a 12,000-square-foot rocket engine test site in London, Ont.

Kolias, a Calgary-born Queen’s University mechanical engineering graduate, spent years in finance before building a property management software company that he sold in 2022. His co-founder, David Tenny, spent about a decade at SpaceX, and the company is now searching for a 500,000-square-foot factory where it hopes to start construction next year and eventually build its rocket. Kolias told the Toronto Star that the goal over the next five to ten years is to become a “medium-lift provider of choice,” betting on a gap in the market as SpaceX moves from Falcon 9 to Starship.

A good chunk of that $22.5 million came from taxpayers. Kolias said the company received $8.3 million from the Department of National Defence’s Launch the North competition, with the remaining $14 million coming from private investors. He was also blunt about how much the startup leans on Ottawa, telling the Toronto Star that without the federal government’s $182.6 million commitment to sovereign launch capability, “there would be no reason for launches to happen in Canada.”

That is a candid admission for a company that calls itself a SpaceX rival, since it suggests the business case starts with public money rather than paying customers. Canada has never launched a rocket into orbit from its own soil, and Canada Rocket Company has yet to fly anything, so taxpayers are effectively underwriting a long-shot bet on a vehicle that only exists on paper today.

The history of SpaceX itself is a useful reality check. Musk founded the company in 2002, and its small Falcon 1 rocket failed on each of its first three launches before finally reaching orbit on its fourth attempt in September 2008, about six years in and with the company close to running out of cash. Musk had poured roughly $100 million of his own money into the effort, and SpaceX also had help from NASA, which awarded it a $278 million Commercial Orbital Transportation Services agreement in 2006 that later grew to $396 million, followed by a $1.6 billion cargo contract for the International Space Station in December 2008.

Even with that backing, it took SpaceX until 2012 to get its Dragon capsule to the space station, until 2015 to land a Falcon 9 booster, and until 2020 to fly astronauts. Canada Rocket Company is aiming to reach orbit by 2032 on $22.5 million, a tiny fraction of what SpaceX spent just getting started, and it would arrive more than two decades after Falcon 1 to face a competitor that is already aiming to catch a Starship upper stage on Flight 15.

Politics play a role too, with Canada trying to lean less on American space companies after Prime Minister Mark Carney said Canada will move away from Starlink. Kolias told the Toronto Star that the company’s approach is to stick with proven technology and people who have done it before, but whether that and a steady flow of public money can produce a rocket that actually competes with SpaceX is another matter.

Would you put tax dollars behind a Canadian rocket?