Starchaser is starting small -- with a sounding rocket.

Having worked on a sounding rocket, this get-started approach makes so much more sense to me than jumping right to an orbital vehicle from scratch (let alone jumping from a small LV to an EELV-class launcher without having flown, as Beal tried to do, or from a small LV to a flavor-for-every-taste portfolio of rockets -- again without having flown -- like SpaceX is trying to do).

While bits and pieces of the sounding rocket design may be transferrable to an orbital vehicle, that really isn't the importance of starting small. What starting with a sounding rocket provides is practice in the task of designing a vehicle and getting it to flight. This would be of great value to a newly-formed company, as it develops in-house technical expertise and demonstrates here-and-now capability to potential customers and investors.

Not unimportantly, it also helps the core technical team "gel" around a shared experience -- which sounds all touchy-feely, but can be of immense value to future projects. Many of the engineers I worked with on the X-33 project at Michoud I still work with on a daily basis, and it is often easier to communicate with them than with my local counterparts because we share that project as a common point of reference.

But most significantly, the experience gained by starting with a sounding rocket is cheap by comparison with creating a new orbital vehicle from scratch. Elon Musk famously says that he is putting $100 million into getting his startup off the ground, and is doing so with around 150 employees (from memory, as I can't get to his site to verify the number). He could have started off spending a year or so developing a sounding rocket for around $15 million (trust me, it can be done), with a staff of two dozen, and perhaps thereby saved himself some of the delays and teething pains that have thus far plagued Falcon I.

Of course, a sounding rocket isn't as glamorous as an orbital launch vehicle, nor does it have the revenue potential, so perhaps that explains the allure of going orbital.