Nearly two years after its radical pivot, Fidelity slashes Relativity’s valuation

For several years, an innovative, California-based launch company named Relativity Space has been the darling of investors and media.

Relativity promised to disrupt launch by taking a somewhat niche technology in the space industry at the time, 3D printing, and using it as the foundation for manufacturing rockets. The pitch worked. Relativity's chief executive Tim Ellis liked to brag that his first investor call was to Dallas Mavericks owner Mark Cuban, who cut the company's first check. Cuban invested half a million dollars.

That was just the beginning of the torrent of fundraising by Ellis, who, by November 2023, turned the privately held Relativity into a $4.5 billion company following its latest, Series F funding. This was an impressive start for the company founded by Ellis and Jordan Noone, both engineers, in 2016.

A big bet

The Series F round occurred as Relativity was amid a bold gamble that, in hindsight, may have been a poor bet. In March 2023, the company launched its Terran 1 rocket for the first—and only—time. After this flight, Ellis announced that the company was pivoting immediately to developing the much larger and more capable Terran R rocket.

"It's a big, bold bet," Ellis said in an interview. "But it's actually a really obvious decision."

With an advertised capacity of more than 1 metric ton to low-Earth orbit and a "backlog" of launch contracts valued in the hundreds of millions of dollars, according to Ellis, Terran 1 had the potential to draw significant revenue. It could also have nabbed a share of launch contracts that have since been snared by competitors such as Rocket Lab, with its smaller Electron vehicle, and Firefly, with its comparably sized Alpha rocket.