SPACE INVESTMENT READY TO TAKE OFF
Commercial sector is at tipping point, but many firms untested
By Christian Davenport The Washington Post
Last year, when Google and Fidelity invested $1 billion in Elon
Musk’s SpaceX, one of the company’s earliest backers also wanted to get
in on the latest round of funding.
But SpaceX ever so politely asked Steve Jurvetson’s Silicon Valley
venture capital firm to kindly hold off. SpaceX, one of the hottest
enterprises in the rising commercial space industry, suddenly could
afford to turn money away.
“There’s so much interest, they can’t take it all,” Jurvetson said.
So they decided to “just bring on one new investor to make life simple.”
With some significant breakthroughs, led by billionaires such as
Musk, Amazon.com founder Jeffrey Bezos and Virgin Galactic’s Richard
Branson , the commercial space sector has started to capture the public
imagination and make space travel cool again.
Now the investment community, which typically has viewed space as
far too risky a bet, is courting the industry. High-profile
breakthroughs, such as the spectacular rocket landings that SpaceX and
Bezos’ Blue Origin recently pulled off, show that ventures aimed for the
stars are making revolutionary advancements. (Bezos also owns The
Washington Post.)
There are many milestones in the life of a space launch company:
developing rocket technology, enduring the rigors of test flights, and
launching successfully and reliably.
But getting investors to place a bet is perhaps one of the greatest
hurdles of all, considering the risks inherent in spaceflight.
The new space investors are catching up with the slow but growing
development of the commercial space sector, which NASA has been
fostering for years
With the retirement of the space shuttle in 2011, NASA has awarded
billions of dollars in contracts to commercial companies so they could
develop rockets to fly cargo
— and, eventually, astronauts — to the International Space Station.
Still, the industry is diverse, and different sectors are more
advanced, and profitable, than others.
CubeSats, the tiny satellites that can swarm around Earth beaming
back images of the planet, are already in high demand. Launching
commercial and government satellites is also big business.
But the emergence of other sectors, such as space tourism and
asteroid mining, is still in the future.
Space investors have typically been science fiction enthusiasts
looking to help create a new market and enjoy the thrill of trying to
help mold the future that they would like to see.
But that’s beginning to change, industry officials said.
“People who are purely interested in financial return are just
beginning to take a look at space,” said Joe Landon, chairman of the
Space Angels Network, a group of early stage investors.
Over the past decade, the global space industry has grown at a
steady clip, and officials think the tipping point from steady to
explosive is near. In 2014, its economy totaled $330 billion, a 9
percent jump from the previous year and up from $176 billion in 2005,
according to the Space Foundation, a nonprofit organization that seeks
to promote space endeavors across the world.
It wasn’t always that way. For years, Jurvetson, a partner at DFJ, a
Silicon Valley venture capital firm, was looking for a space company to
invest in. Launching model rockets was a hobby, and he would have loved
to have found a way to mix business with pleasure.
“It didn’t happen for 10 years,” he said. “Because in each and every
case, no matter how exciting exploring the unknown is, or the grandeur
of space tourism, none of them penciled out, economically.”
None of them until he met with Musk, who had detailed plans on how
he would upend the space industry as he had with online commerce at
Pay-Pal. Rocket technology had stayed relatively stagnant for decades,
with few new entrants into the market. Innovation, which had disrupted
virtually every industry, from cable to taxis, was somehow lacking in space.
SpaceX and others have shown that “the commercial space industry is
enormous and ripe for disruption,” Jurvetson said. “Making a hundredfold
improvement is actually a piece of cake, and making a thousandfold
improvement is feasible.”
Being able to reuse rocket boosters instead of discarding them after
each launch, as is now typically the case, was one advance. Making
launch prices transparent, as SpaceX did, was another, said Chad
Anderson, a managing director at Space Angels Network. The few launch
providers hadn’t publicized their prices, keeping the cost of getting to
orbit largely a mystery.
“As long as you can keep it opaque and convoluted, you can charge
more,” he said.
SpaceX has received billions of dollars in government contracts and
has a long backlog of launches.
But Musk’s long-term goal is to colonize Mars, an endeavor that
might test the patience of even the most visionary investor. Not wanting
the quarterly pressure from stockholders, Musk has said he won’t take
the company public until it gets to Mars.
But for all the advancements that the industry has made, many of the
companies are still untested in a realm that is unforgiving, said John
Logsdon, professor emeritus at George Washington University’s Space
Policy Institute.
“None of them are quite there yet,” he said. “They’ve made in the
past months some very significant steps toward lowering costs and doing
things in a more commercial way. But governments are still the main
customers for many of these ventures. ... Let’s not get too far ahead of
ourselves.”
For all the successes, there have also been some significant
setbacks. SpaceX and Orbital ATK (formerly Orbital Sciences), the other
company NASA hired to fly cargo to the space station, both suffered
explosions in recent years.
A Virgin Galactic test flight in 2014 crashed after the spacecraft
broke up midflight, killing a pilot.
But many investors realize that spaceflight is challenging and so
far haven’t been scared off, industry officials said.
--
*================================================ Duane Whittingham -
N9SSN (ARES/RACES, EmComm, Skywarn & Red Cross)
http://www.radiodude.info ================================================*
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