U.S. rocket engine maker Ursa Major is developing a new medium to heavy-lift rocket engine to serve a growing field of potential customers, jumping into territory dominated by a handful of heavyweights, the startup's chief executive told Reuters.

Ursa Major Technologies Inc, founded in 2015 by a veteran of Elon Musk's SpaceX, expects to launch the Arroway engine in 2025 as a rival offering to those sold now by Aerojet Rocketdyne Holdings and Jeff Bezos' space company Blue Origin.

The reusable Arroway will be the third and most powerful engine offered by Ursa Major, and the company is aiming to be the low-cost option in the market, founder and CEO Joe Laurienti said.

"We should be able to do this at a far lower cost point and far, far faster" than Ursa Major did for its smaller engines, he told Reuters.

Small rocket companies have shifted focus in recent years to building bigger rockets, responding to increased demand for heavier and shared launch services and less interest in smaller, dedicated rides to space.

Arroway, fueled by methane and liquid oxygen and capable of 200,000 pounds of thrust, is in part a response to that shift, and when clustered together could also serve as a potential replacement to Russian rocket engines recently cut off from U.S. companies by trade sanction following Russia's invasion of Ukraine, Laurienti said.

Ursa Major started developing Arroway in mid-2021 and plans to conduct initial hot-fire tests on the ground next year, he said. It has several contracts to supply the engine to companies and the U.S. government, a spokeswoman said.

Ursa Major's other two, smaller engines are tailored for small launchers and hypersonic vehicles. The company, located north of Boulder, Colorado, has raised $140 million to date and closed an $85 million series C funding round led by BlackRock in December 2021.

Selling liquid-fueled, staged-combustion rocket engines like Arroway has typically been the domain of larger, more established companies like Aerojet Rocketdyne, with its AR-1 and other engines that are used by NASA. Blue Origin's BE-4 engine powers the company's New Glenn rocket and will also be used by the Boeing-Lockheed Martin joint venture United Launch Alliance's next-generation Vulcan rocket.

A low pricepoint will be key to Arroway's success as the field of rocket companies needing big engines is not large, said Laurienti, whose firm has hired engineers from SpaceX, Blue Origin and other companies.

Ursa Major's potential customers need to move fast to generate revenue, and as a cost-savings move they don't want to develop the engines themselves, said Jeff Thornburg, a longtime propulsion executive and current advisor to Ursa Major. Arroway is tailored for all those customers.

"But now (Ursa Major) has to go show that they can produce in large quantities, affordably and reliably," he said. "That's the next big challenge for them."