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, company’s 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.” 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 end 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. 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. Still, Letara isn’t alone in its pursuit. A number of companies are developing hybrid rocket technology, including Japan’s Interstellar Technologies, China’s Galactic Energy, South Korea’s InnoSpace, and Singapore’s Equatorial Space are advancing hybrid rocket technology. 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. Academic roots 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. “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.” Letara is targeting satellite makers and operators, launch companies and governments. It sees commercial satellites as its biggest market for in-space propulsion, while government demand for rocket systems is growing, particularly in Japan. 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. Note: Its strategic investor, Frontier Innovations, is not a Greece-based IT firm, but rather an investment fund managed by Frontier Innovations and backed by JAXA, Japan’s space agency. When you purchase through links in our articles, we may earn a small commission. This doesn’t affect our editorial independence. Kate Park is a reporter at TechCrunch, with a focus on technology, startups and venture capital in Asia. She previously was a financial journalist at Mergermarket covering M&A, private equity and venture capital. View Bio