The U.S. military is more interested than ever before in stepping up investment in space startups, especially with the number of private companies building small rockets.

Last month, Virgin Group founder Sir Richard Branson met with Air Force leadership to discuss the capabilities of Branson's small rocket builder, Virgin Orbit. The meeting between Branson and Secretary Heather Wilson, the Air Force's top civilian, took place on Jan. 17, the Air Force told CNBC. Branson also met with Dr. Will Roper, the Air Force's acquisition head.

"I am very excited about small launch," Roper said on Wednesday. "I think small launch is going to be a big deal."

Typically priced between $3 million and $10 million per launch, small rockets provide a direct method of sending inexpensive payloads into orbit. Small rockets also can save customers months of time getting to orbit, which Roper said is a key advantage for the Air Force's needs.

"If you lose a satellite, put another one up at the time you need it," Roper said.

Roper described the space industry as a "ripe area" for the Air Force, especially "with companies that hope to be selling satellites to commercial providers."

Roper said he wants to approach it the way a venture capital firm or business developer would, to better understand the needs of private space companies. "If we can understand what a company needs to get from being that entrant – at 10 people with an idea and designs – to getting to that first product that they can go sell or pitch ... we've got huge money to invest in this," Roper said.

A growing number of companies, including Virgin Orbit, are looking to seize upon the small rocket market. Virgin Orbit is currently deep into testing its LauncherOne rocket, which the company plans to launch from a modified Boeing 747 jet named "Cosmic Girl." This horizontal method, rather than the more common vertical launch approach, gives Virgin Orbit more flexibility for when and where the company launches its rockets.