Japanese Rocket Startup Raises $130M After Local Struggles

A Japanese rocket company just proved that homegrown space dreams are far from dead.

Interstellar Technologies announced it raised nearly $130 million in fresh funding to build Zero, a small rocket designed to carry satellites into orbit. The Hokkaido-based startup nearly doubled its total capital with this Series F round, attracting heavyweight investors including Toyota's innovation arm, Woven by Toyota.

The timing couldn't be more significant. Japan's space industry has hit rough patches lately, with the flagship H3 rocket failing last month and smaller vehicles struggling to reach orbit. The setbacks pushed Japan's space agency to buy launches from New Zealand's Rocket Lab instead of relying on domestic options.

But Interstellar is writing a different story. The company already has eight customers from Japan, Singapore, South Korea, and the United States signed up for Zero's first flight in 2027. These early believers will fly cubesats and satellite equipment on the inaugural launch.

Zero uses methane and liquid oxygen propellants to lift up to 1,000 kilograms into low Earth orbit. The two-stage vehicle represents years of development and lessons learned from Momo, Interstellar's suborbital test rocket that flew seven times between 2017 and 2021.

The Ripple Effect spreads beyond just one company's success. Japan needs multiple players in the launch market to support its growing space ambitions and serve commercial customers. With limited domestic operators, every new entrant strengthens the country's ability to access space independently.

Investors clearly see the potential. SBI Group's general manager Hiroyuki Ono called space transportation "critical infrastructure" for the expanding global market. He praised Interstellar's "robust technological capabilities and strong execution track record" as reasons to believe the company can compete internationally.

The $130 million will fund more than just the rocket itself. Interstellar plans to scale up manufacturing facilities and develop a novel communications satellite system using formation-flying spacecraft to create phased-array antennas for direct-to-device messaging.

Chief Executive Takahiro Inagawa expressed gratitude to the diverse group of financial backers, from equity investors to Japan Finance Corporation, which provided part of the funding through debt financing. Their support signals confidence that Japan's space industry can overcome recent struggles and establish itself as a reliable player in the global launch market.

Sometimes the best response to setbacks is simply refusing to give up and building something better.