Japanese space startup Letara raises $16M to expand beyond thrusters

Japan is channeling substantial public investment into its space sector while simultaneously relaxing defense export restrictions, a dual strategy aimed at cultivating a self-sufficient aerospace industry where domestic startups can compete on the global stage. Sapporo-based Letara, a developer of hybrid propulsion systems for spacecraft, intends to ride that wave of momentum. Having previously concentrated on hybrid thrusters for small satellites, the company is now setting its sights on building large rocket systems tailored to the space, defense, and security markets, as co-CEO Shota Hirai explained in a recent interview.

That strategic shift is backed by ¥2.6 billion, roughly $16 million, in fresh capital, marking a critical transition from years of academic research and prototype demonstrations toward a viable commercial operation. Headline Asia, JIC Venture Growth Investment, and Incubate Fund co-led the round, with additional support from strategic backers such as NES Corporation, an energy firm; Toyoda Gosei, a Toyota Group supplier specializing in rubber and plastic automotive parts; and Frontier Innovations, a Greece-based IT company focused on data analytics and business intelligence.

“This funding allows us to move beyond simply proving our thruster works in space,” Hirai said. “Our goal is to broaden the range of applications across both the space sector and the defense and security arena, and to develop hybrid rocket systems that fit each distinct requirement.”

The core of Letara’s approach lies in a hybrid rocket architecture that separates solid fuel from the liquid oxidizer required for combustion. The company leverages inexpensive, readily available materials like plastic and rubber as solid fuel, and has engineered a proprietary manufacturing method that mixes, shapes, and compresses these substances to guarantee reliable ignition and consistent burn characteristics. The resulting system reportedly delivers greater thrust with less waste compared to conventional hybrid rockets that frequently depend on costly paraffin wax.

Hirai identified three longstanding obstacles that have hindered hybrid propulsion adoption: achieving adequate thrust levels, preserving stable performance over time, and maintaining precise control over the combustion process. Letara’s technology aims to address each of these challenges head-on.

The potential payoff is significant if the company succeeds. Industry projections place the global hybrid rocket propulsion market at $2.6 billion by 2032, climbing from $848 million in 2024, representing a compound annual growth rate of 15%. That upward trajectory underscores a mounting appetite for this type of technology.

Competition, however, is intensifying. Several players are actively pursuing hybrid rocket development, including Japan’s Interstellar Technologies, China’s Galactic Energy, South Korea’s InnoSpace, and Singapore’s Equatorial Space. German startup HyImpulse and Australia’s Gilmour Space are also advancing similar concepts, while various U. S. firms are working on competing propulsion and launch systems.

The company’s origins trace back to Hokkaido University, where co-CEOs Landon Thomas Kamps and Hirai were researching rocket propulsion. They recognized that the inherent safety and simplicity of hybrid rockets could extend their utility well beyond traditional government space programs, especially as private enterprises began entering the field. When Letara spun out of the university in 2020, its initial focus was squarely on satellite thrusters.

The intervening years have seen the propulsion market grow increasingly crowded, driven by surging demand for launch capabilities and defense applications. Letara has responded by pursuing opportunities in defense contracts and launch services, positioning itself to compete not only against fellow Japanese startups but also against international players.

“Large spacecraft also require high thrust propulsion, particularly when transitioning from low Earth orbit to geostationary orbit and traversing the high radiation Van Allen belt quickly,” Hirai noted. “And there is, of course, enormous and growing demand for launch vehicles.”

Letara is courting satellite manufacturers and operators, launch providers, and government agencies. The company views commercial satellites as its primary market for in-space propulsion, while government demand for rocket systems is expanding, especially within Japan. Letara reports that it has already secured orders from rocket and satellite companies, as well as the Japanese government, though it declined to disclose the contract values.

Looking ahead, the company’s next major milestone involves an in-orbit firing test conducted with an overseas partner, a step it considers essential for commercialization. Establishing a repeatable manufacturing process with robust quality controls, along with a dependable supply chain for fuel and tanks capable of supporting scaled production, will also be necessary.

When asked about the possibility of using recycled plastic as fuel, Letara indicated that such a scenario is “very much a possibility” given its hybrid technology, although further testing and development would be required before that becomes a reality.