K2 Space believes the future of space hardware is going to be big, really big.

The startup is building a massive spacecraft with the following assumption: launch costs will continue to fall As SpaceX's Starship and other heavy-lift vehicles come online. The Space Force appears to be backing its side of the argument, too, with K2 Space announcing Thursday that its first full satellite mission will fly some Department of Defense payloads under a $60 million contract.

This mission, called Gravitas, will not fly before February 2026. The satellite will fly on SpaceX's Transporter-16 ridesharing mission, where it will carry multiple national security payloads. The spacecraft will conduct operations in low Earth orbit (LEO) before raising its orbit to medium Earth orbit (MEO). MEO, which lies between LEO and geosynchronous orbit, "has historically been an incredibly challenging orbit to operate in," K2 Space co-founder and CEO Karan Kunjur said in an interview.

Even to get there, spacecraft operators often need to equip their satellites with powerful propulsion systems or pay a premium for a launch that will take them directly to the target orbit. Once there, the spacecraft must be capable of surviving in a high-radiation environment for the duration of the mission. But the Space Force is establishing assets at MEO, primarily for missile tracking and warning, but also to enhance the Global Positioning System (GPS) network.

“MEO offers another level of resilience,” Kunjur said. “If you're considering a multi-orbit strategy or a multi-orbit architecture, if you want flexibility, you want to have assets that are in LEO, assets that are in MEO, and assets that are in GEO. “As K2, we truly believe in this future.”

Kunjur, who founded the company with his brother Neel, described the contract as a "step change" for the business. The $60 million in funding includes a 1:1:2 mix of government funds, Small Business Innovation Research matching funds, and private funds; That means $30 million came from private backers; That's an amount that nearly rivals the startup's closed $50 million Series A. In February.

Venture investors and the Department of Defense were attracted by K2 Space's big hardware proposal — the company's Mega-class satellite has a massive 10-foot-by-3-foot payload bay — at a cost of less than $15 million per satellite, with lead-in times of less than three months. These figures represent a paradigm-shifting shift from traditional large satellite acquisition.

The Torrance, California-based startup's new satellite architecture means a significant percentage of spacecraft components are manufactured in-house. These include things like reaction wheels, flight computers, solar panels, and a 20-kilowatt electric propulsion system that would be among the most powerful capable of flying in orbit. The supply chain for these components at a cost-effective price point did not exist, so K2 Space built these production lines on its own, Kunjur said.

“The challenge is not only to design it to achieve the performance required by this mission, but also to design it to be able to mass produce it,” he said. "We'll build one and use it for Gravitas, use it for this mission, and then redesign it for mass production. No, the goal is to build it so that when the first one comes off the line, the second one is right behind it and the third one is behind it."

The company will also fly several technology demonstrators on SpaceX's upcoming Transporter-12 mission in January, for a mission duration that is expected to last no more than a few months.