WASHINGTON – A Spanish space startup is designing a set of rockets that it hopes will be the first reusable launch vehicles from a European company.

PLD Space, founded in 2011, closed its first investment round worth 1.2 million euros in 2013 to fund research and development in liquid propulsion. This year, both the Spanish government and the European Space Agency have linked up with the company to spur the development of reusable rockets for small-satellite missions.

In early November, PLD Space announced that ESA had selected the company to lead a project called LPSR, or Liquid Propulsion Stage Recovery, as part of the agency’s Future Launchers Preparatory Program (FLPP). The progress made within LPSR will feed directly into the development of Arion 1, a suborbital rocket for microgravity payloads weighing between 100 and 200 kilograms, and Arion 2, an orbital rocket with a baseline lift capacity of 150 kilograms to low Earth orbit.

The ESA contract builds on a $1.56 million award for Spain’s reusable technologies program, known as Tecnología Española de Propulsión Reutilizable Espacial para Lanzadores, or TEPREL.

To date, the majority of the work PLD Space has done has been focused on propulsion systems. In an interview with SpaceNews, Raúl Torres, co-founder and CEO of PLD Space, said this was intentional because of the difficulty that comes with engine development, but now the startup is evolving beyond this primary focus.

“We are growing from a propulsion company to a rocket company,” he said. “We are trying to accomplish our roadmap of having a suborbital launcher in 2018, and to have an orbital launcher in 2020.”

PLD Space’s approach to reusability involves a combination of passive and active braking to recover the rocket’s first stage for reuse. Torres said the company wants to use parachutes to slow the initial reentry, followed by a propulsive landing. This combination is necessary, he said, in order to effectively recover light-lift vehicles.

“We saw since the beginning that for very small rockets, the option of propulsive landing like SpaceX or Blue Origin maneuvers is not easy to do,” he said. “In this case, size matters.”

The suborbital Arion 1 would be the first to test out these reusability technologies. Torres said the launcher’s first flight would likely only use parachutes; propulsive landing would make its debut on the third flight. Progress with proving reusability for Arion 1 will pave the way for Arion 2, if all goes according to plan.

Torres said PLD Space, currently just 11 staff, wants to grow as a company in order to scale up to build rockets instead of essentially just engine technology.

“We are setting up two new departments: one for structures and another for avionics to make all these developments not only in propulsion,” he said.

But this will require additional capital. Torres said the company is seeking to close a new round of funding by the end of the year worth approximately 6 million euros. That money would come from a combination of public investment, private investment and access to technology, he said.

Torres said it is especially difficult to raise money for a space startup in Europe compared to in the United States, where there are many more launcher and small satellite startups. American investors still appear to be more comfortable with space-focused business plans than their European counterparts, he said.

“I think that European Commission and European Space Agency support will provide some oxygen for European space startups to raise money from Europe and also other parts of the world,” Torres explained. “But in my opinion, we see that as a very difficult topic today because of the [European] investor’s mindset.”

For this next round, PLD Space is only targeting Spanish investors. Next year Torres said the company will open a third round of investment that would be open to international sources, including U.S. investors.

PLD Space’s prospective customers are currently more diverse than its investor base. Torres said the company has received letters of interest collectively worth more than 50 million euros from customers in Europe and the U.S. Additionally, the German space agency, DLR, has tapped PLD Space to use the company’s privately-owned facility at Teruel Airport for propulsion tests later this year or early next year.

For Arion 1, PLD Space has set a price range of 5,000 to 10,000 euros per kilogram, and for Arion 2, between 35,000 and 30,000. Torres said to goal is to drive prices toward the lower end of that spectrum over time. For the first demonstration launch of each rocket, Torres said the company is letting prospective multi-launch customers fly for free, with the expectation that they will likely seek priced launches once the rockets are fully operational.

Still, the timelines for each maiden flight remain tied to available capital.

“We have some good examples of money supporting us private and public, but it is not easy to do,” said Torres. “It takes a lot of time and a huge effort to raise each euro.”