Rocket Lab's Electron takes off from the company's launchpad in New Zealand. Rocket Lab | YouTube

The physical size of these rockets may be small but the competition in miniaturized spacecraft is growing steadily, epitomized by Rocket Lab's launch on Thursday evening of a prototype military spacecraft. Rocket Lab successfully sent the R3D2 spacecraft into orbit for the Pentagon's research division, which is called DARPA (Defense Advanced Research Projects Agency). Originally scheduled for January, the mission was delayed because DARPA needed "a little bit more time" to get ready, Rocket Lab CEO Peter Beck told CNBC in an interview before the launch. "This is just the reality of doing business in space," Beck said. Rocket Lab: Payload deployed. Precise orbital insertion by Electron's Kick Stage. Mission Success!

Lift-off of the R3D2 mission from Rocket Lab's launch pad in New Zealand. Rocket Lab | Kieran Fanning and Sam Toms

About the size of a refrigerator, the R3D2 spacecraft is a prototype intended to test a new type of unfolding antenna "to improve radio communications in small spacecraft," Rocket Lab said in a press release. Beck noted that the spacecraft is complex and "stretches the legs" of his company's Electron rocket in regards to how much mass it can send to space. This was the fourth orbital launch for Rocket Lab, which is the leader in a new market of small rocket services provided by private companies. The company's Electron rocket costs about $5.7 million a launch. After reaching orbit for the first time last year, Rocket Lab aims to significantly increase the frequency of its launches in the near future.

Even though the delay means Rocket Lab may not hit the 16 launches in 2019 that Beck previously estimated, he said the company is still "producing one [rocket] a month." Rocket Lab aims to be launching "one every to weeks" by the end of the year, Beck said. He hedged that by saying, "We'll see how we go."

The evolving market of small spacecraft and rockets

Rocket Lab, with a valuation of more than $1.2 billion, is the first of a new generation of private companies building small rockets to begin commercial operations. Richard Branson's Virgin Orbit, as well as Morgan Stanley-backed Vector and start-up Firefly Aerospace, are also developing small rockets. In total, Rocket Lab estimates there are 117 rocket companies competing in this booming market of small satellites, which now launches hundreds of spacecraft a year.

Rocket Lab's lower stage separates from the rocket as the company sends the R3D2 mission to space. Rocket Lab | YouTube