Foust: Economic Downturn to Effect NewSpace

Is there an economic downturn in space?
Jeff Foust
Venture Beat

“Some companies, like Virgin Galactic, SpaceX and Blue Origin (Amazon founder Jeff Bezos’ secretive launch vehicle venture) are funded primarily or exclusively by extremely wealthy founders, and are less susceptible to market forces that could dry up outside investors. For other, less fortunate NewSpace players, the downturn has come at exactly the wrong time. Lining up the ten or even hundred million dollars just got a whole lot harder. Without the money, these companies’ visions of reusable rockets, lunar rovers and the like will probably remain just that — visions — and the organizations themselves will either go into hibernation or out of business entirely.

“So far, the tone hasn’t been that alarmist. At last week’s Space Investment Summit 5 (SIS5) in Los Angeles, NewSpace firms, investors and industry analysts downplayed any immediate effects the country’s economic situation may be having on funding prospects.”

  • Actually, I’m not sure this analysis is entirely correct. Extremely wealthy founders tend to have major investments in areas other than NewSpace. Those investments are probably sinking.

    According to Michael Potter’s film Orphans of Apollo, one of the reasons that MirCorp failed is that Walt Anderson’s investments went poof when the bubble popped. Not only did Anderson lose money, a lot of his wealthy friends in the tech sector suddenly didn’t have funds to invest in commercial space. It will be interesting to see if the same thing happens here.

    As for SpaceX, not sure where they would be if not for NASA COTS funding. Maybe in the same place as Tesla Motors. Tesla is looking for money from its usual sources (Google’s Sergey Brin and Larry Page, among others). Its future also hinges on government money in the form of a low-interest Department of Energy loan (which will fund a good chunk of its sedan project) and part of $25 billion government bailout of the auto industry.

    Yes, Elon Musk has invested heavily in both SpaceX and Tesla, but neither of these companies would be where they are without government funding.