SAPPORO, Japan, August 22, 2026 — Letara, a Sapporo-based startup developing hybrid propulsion systems for spacecraft, has raised $16 million (¥2.6 billion) as it works to commercialize technology developed through years of research and demonstrations. The funding comes as Japan expands support for its domestic space industry and creates more opportunities for companies seeking to compete in international aerospace and defense markets.

Headline Asia, JIC Venture Growth Investment and Incubate Fund co-led the funding round. Strategic investors included NES (Networked Energy Services) Corporation, Toyoda Gosei and Frontier Innovations, an investment fund managed by Frontier Innovations and backed by the Japan Aerospace Exploration Agency (JAXA). The new capital will help Letara move beyond technology demonstrations and pursue commercial applications for its propulsion systems.

From University Research to Commercial Applications

Letara was spun out of Hokkaido University in 2020 after co-CEOs Landon Thomas Kamps and Shota Hirai researched rocket propulsion at the university. The company initially developed hybrid thrusters for small satellites, based on the view that hybrid rockets could offer a relatively simple and safe propulsion option for commercial space applications.

Letara is now expanding that work into larger rocket systems. The company plans to serve satellite manufacturers and operators, launch companies and governments, with applications spanning space, defense and security. The expansion gives Letara a larger potential customer base while taking its technology beyond the small-satellite market in which the company began.

How Letara’s Hybrid Propulsion Works

Letara’s system separates solid fuel from the liquid oxidizer used for combustion. The company uses materials such as plastic and rubber as solid fuel and has developed a manufacturing process that mixes, shapes, and compresses those materials so they ignite reliably and burn consistently.

The company developed the system to address three longstanding challenges in hybrid propulsion: producing enough thrust, maintaining performance and controlling combustion. Letara says its technology can produce more thrust with less waste than hybrid rockets that use paraffin wax, which can be more expensive.

A Larger Opportunity in Space and Defense

Letara sees demand for higher-thrust propulsion as spacecraft become larger and missions become more ambitious. Spacecraft traveling from low Earth orbit to geostationary orbit, for example, require substantial propulsion capability to complete the journey and pass through the Van Allen radiation belts.

The company is also pursuing defense and security applications as Japan's government expands its support for the domestic aerospace sector. Letara says it has already received orders from rocket and satellite companies and the Japanese government, although it has not disclosed the value of those contracts.

Competing in a Growing Market

The global hybrid rocket propulsion market is projected to reach $2.6 billion by 2032, up from $848 million in 2024, according to the figures cited in the source material. That represents a compound annual growth rate of 15%, reflecting expectations for greater use of hybrid propulsion in space applications.

Letara is entering a competitive field that includes Interstellar Technologies in Japan, Galactic Energy in China, InnoSpace in South Korea and Equatorial Space in Singapore. Germany’s HyImpulse and Australia's Gilmour Space are also developing hybrid rocket technology, while U.S. companies are pursuing other propulsion and launch systems.

Image credit: Letara

Backing from Strategic Investors

The latest financing brings investors from several industries into Letara's growth plans. Toyoda Gosei, a Toyota Group supplier of rubber and plastic automotive components, could offer relevant industrial expertise given Letara's use of plastic and rubber in its fuel systems. NES brings experience from the energy sector, while Frontier Innovations provides an investment connection to JAXA.

The funding also gives Letara capital to develop its manufacturing capabilities. The company will need repeatable production processes, quality controls, and dependable supplies of fuel and tanks if it is to move from demonstrations to regular commercial production.

The Next Test Comes in Orbit

Letara’s next major milestone is an in-orbit firing test with an overseas partner. The company views the test as an important step toward demonstrating that its propulsion technology can operate reliably in space and move closer to commercial use.

The company is also examining whether recycled plastic could eventually serve as fuel for its hybrid propulsion systems. Letara says the idea is possible with its technology, although further testing and development would be required. With fresh funding and a wider set of target markets, Letara is now moving from university research and small-satellite thrusters toward larger propulsion systems for the commercial space and defense sectors.