Letara: Japan's Hybrid Rocket Pioneer Poised to Challenge Global Space and Defense Markets

Japan is pouring billions of dollars into its burgeoning space industry and easing restrictions on defense exports, efforts designed to build a homegrown aerospace sector filled with domestic startups that have a global reach. Letara, a Sapporo-based startup developing hybrid propulsion systems for spacecraft, is looking to capitalize on that push. After focusing on hybrid thrusters for small satellites, the company now plans to develop large rocket systems for the space, defense, and security markets, co-CEO Shota Hirai told TechCrunch.

That expansion is being fueled by ¥2.6 billion (~$16 million) in new funding that comes as the startup tries to turn years of academic research and demonstrations into a commercial business. The round was co-led by Headline Asia, JIC Venture Growth Investment and Incubate Fund with participation from strategic investors including NES (Networked Energy Services) Corporation, an energy company; Toyoda Gosei, a Toyota Group supplier of rubber and plastic automotive components; and Frontier Innovations, an investment fund managed by Frontier Innovations and backed by the Japan Aerospace Exploration Agency (JAXA), Japan's space agency.

"With this round, we will go beyond demonstrating that thruster in space," Hirai said. "We plan to explore a much wider set of use cases across both the space domain and the defense and security domain, and to develop and propose hybrid rocket systems suited to each of them."

A Unique Propulsion Technology

At the heart of Letara's technology is a hybrid rocket design that keeps its solid fuel separate from the liquid oxidizer needed for combustion. Inexpensive, widely available materials such as plastic and rubber are used as solid fuel. The company has developed a proprietary manufacturing process that mixes, shapes, and compresses these materials to ensure they ignite reliably and burn consistently. The result is a system that can deliver more thrust with less waste than traditional hybrid rockets that often use expensive paraffin wax.

The aim is to solve three problems that have so far limited the use of hybrid propulsion: generating sufficient thrust, maintaining performance, and controlling combustion, Hirai said. Hybrid rockets offer several advantages over traditional solid or liquid propulsion systems. They are safer and simpler to operate because the fuel and oxidizer are stored separately, reducing the risk of explosion. They are also more environmentally friendly, as they produce less toxic exhaust. And they can be throttled and shut down more easily than solid rockets.

A Growing Market Opportunity

There is considerable opportunity if Letara is successful. The global hybrid rocket propulsion market is projected to expand to $2.6 billion by 2032, up from $848 million in 2024, at a CAGR of 15%, a trajectory that points to growing demand for the technology. The growth is being driven by the increasing number of satellite launches, the expansion of commercial space activities, and the rising demand for defense and security applications.

Letara sees commercial satellites as its biggest market for in-space propulsion, while government demand for rocket systems is growing, particularly in Japan. "Large spacecraft need high thrust propulsion as well, especially when they need to go from LEO (low earth orbit) to GEO (geostationary orbit) and get through the high radiation Van Allen belt quickly," said Hirai. "And of course, there is insane growing demand for launch vehicles."

A Competitive Landscape

Still, Letara isn't alone in its pursuit. Several companies are developing hybrid rocket technology, including Japan's Interstellar Technologies, China's Galactic Energy, South Korea's InnoSpace, and Singapore's Equatorial Space. German startup HyImpulse and Australian Gilmour Space are also pursuing hybrid rocket technology, while other U.S. companies are developing competing propulsion and launch systems.

The competition is intense, but Letara believes its proprietary manufacturing process and its focus on cost-effective, widely available materials give it an edge. The company also benefits from its location in Japan, where the government is actively supporting the growth of the domestic space industry.

Academic Roots and Commercial Ambitions

The idea for Letara emerged while co-CEOs Landon Thomas Kamps and Hirai were researching rocket propulsion at Hokkaido University. They believed the relative safety and simplicity of hybrid rockets could make the technology useful beyond traditional space programs, particularly as private companies expand into the industry. The company's ambitions have grown along with the market. When Letara was spun out of Hokkaido University in 2020, it was focused on developing satellite thrusters.

Since then, the global propulsion market has become more crowded as demand for launch and defense capabilities has grown. Letara is now pursuing opportunities in defense contracts and launch services, in an effort to position itself to compete not just with other Japanese startups, but with companies around the world.

Customers and Milestones

Letara is targeting satellite makers and operators, launch companies, and governments. The company says it has already won orders from rocket and satellite companies as well as the Japanese government, although it did not disclose the value of those contracts. Its next major milestone is an in-orbit firing test with an overseas partner, which Letara sees as a key step toward commercialization. It will also need to establish a repeatable manufacturing process, backed by quality controls, and a reliable supply chain for fuel and tanks that can support production at scale.

When asked whether recycled plastic could eventually be used as fuel, Letara said it was "very much a possibility" with its hybrid technology, though more testing and development would be needed.

Japan's Strategic Push

Letara's growth is being supported by Japan's broader strategic push to build a homegrown aerospace industry. The Japanese government has been easing restrictions on defense exports and pouring billions of dollars into space-related initiatives. The goal is to create a domestic ecosystem of startups that can compete globally in the rapidly expanding space and defense markets.

The participation of JAXA-backed Frontier Innovations in Letara's funding round is a sign of the government's commitment to supporting the company's growth. The strategic investors, including NES Corporation and Toyoda Gosei, bring expertise in energy and automotive manufacturing that could be valuable as Letara scales its production.

Letara's journey from academic research to commercial success is just beginning. The company faces significant challenges, including intense competition, the need to demonstrate its technology in orbit, and the challenge of scaling production. However, the market opportunity is substantial, and Letara's unique technology and strategic positioning give it a strong foundation for growth.

If Letara can successfully commercialize its hybrid rocket technology, it could become a key player in the global space and defense markets, contributing to Japan's ambition to build a homegrown aerospace industry with global reach. The next few years will be critical as the company works to turn its vision into reality.