Rocket builder Vector said Friday it has raised $70 million in a round of financing, with a Morgan Stanley alternative investment fund joining Silicon Valley backers.

Vector is developing small rockets priced at less than $3 million a launch. They are designed to be capable of putting up satellites and spacecraft about the size of a microwave, which are a premium part of the rocket market. Small rockets can save customers months of time getting to orbit but come at a higher cost compared with flying as a "rideshare" on a larger rocket like the SpaceX Falcon 9 rocket.

CEO Jim Cantrell told CNBC that Vector is trying to do "essentially what Henry Ford did with the automobile assembly line," but with rockets. Vector's end goal is to be launching more than 100 times each year, with this latest round of funding intending to get its two rocket types, the Vector-R and the Vector-H, flying to orbit.

"We're looking to fly up to a dozen next year," Cantrell said. "We've got to get the Vector-R launched first but we're also hoping to have the inaugural Vector-H launch next year."

New York-based Kodem Growth Partners led the $70 million round in conjunction with the strategic opportunities business within Morgan Stanley Alternative Investment Partners. Previous investors Sequoia Capital, Lightspeed Venture Partners and Shasta Ventures also joined this round.

"What drew us to Vector was the vision Jim Cantrell and John Garvey painted for us about how space communications and the satellite industry were fundamentally changing," Lightspeed partner Alex Taussig told CNBC. "They convinced us that there was this bottleneck, and if you solve the bottleneck then you will multiply the addressable market significantly."

The strategic opportunities business is a smaller fund within Morgan Stanley, which has about $475 billion total assets under management, and is only accessible to a limited number of the investment bank's clients.

"Silicon Valley is where we got our start, but we have found that there was a huge interest in the New York money community," Cantrell said.'

Space Angels CEO Chad Anderson tweeted congratulations to Vector, saying the company has "by far the most efficient use of capital in the launch business."

@spacecapital: Congrats to the entire Vector team! @SpaceAngels is proud to have led Vector's Seed round - by far the most efficient use of capital in the launch business, with just 2.5 years from founding to orbit.

Kodem operating partner Phil Friedman also joined Vector's board of directors, intending to help prepare the company for an initial public offering. Cantrell described Friedman as "an insider in the aerospace industry," noting that Friedman has been in buy-side and sell-side roles on Wall Street for over 35 years.

"We were very impressed with management's forwarding looking view regarding how to ramp production once the development phase had ended," Friedman said in an email.

While Friedman said Kodem's investment does not have a "preconceived philosophy regarding exit," Cantrell estimated an IPO for Vector is about three years away.

"We think the new space community needs more IPOs and intend to be the ones leading that," Cantrell said. He added that he's seen anecdotal interest from the public, with retail investors asking to buy shares in Vector. Cantrell said he's hopeful an IPO is in only a few years, and he's "trying to give the public and our investors a feel for what it's like to develop a rocket company."