Commercial Space Entrepreneurs Look to the East for Funding

WhiteKnightTwo and SpaceShipTwo: Made in America, financed in the Middle East. (Photo credit: Mark Greenberg)

While Europe lurches from sovereign debt crisis to debt crisis, the United States struggles with a ballooning budget deficit, and investors worldwide pull back on spending, there is one area of the world that still has a mountain of funds to spend. It’s a reality could have a major effect on the path of the nascent commercial spaceflight industry in the years ahead.

That region is the oil-rich Middle East. According to the Sovereign Wealth Fund Institute, the countries of the Gulf Cooperation Council have a combined sovereign wealth funds totalling $1.36 trillion. That total includes:

  • Abu Dhabi: $664 billion
  • Saudi Arabia: $420 billion
  • Kuwait $203 billion
  • Qatar: $65 billion
  • Dubai: $19.6 billion
  • Oman: $8.2 billion.

That’s a lot of money available for investment. And it’s increasingly being invested in space projects, including the emerging field of commercial human spaceflight. A marketing exec lays out the fund-raising potential in a press release for the upcoming Global Space & Satellite Forum (GSSF) in Abu Dhabi on May 9-11:

“Virgin Galactic and Bigelow Aerospace have already set up investment deals with UAE groups and perhaps it’s only a matter of time before we see another international space company’s development being funded from the Middle East,” said Nick Webb, Director, Streamline Marketing Group, organisers of GSSF 2011.

At the moment the cost of a return ticket to outer space for the first flights stands between $95,000 and $200,000, depending on the flight provider, but these prices will fall as capacity increases. Some experts estimate that the typical price to fly into space by 2030 will be around $25,000.

“Even if we take a conservative estimate of the market size to be around 250,000 to 300,000 people travelling into space by 2030, we’re looking at an industry worth up to $7.5bn,” added Webb.

As goes Richard Branson, so go other companies:

One US-based company that is making great strides in development is XCOR Aerospace which will be presenting an update of its commercial space flight vehicle ‘The Lynx’ and the opportunities that exist for investors to become involved.

With Lynx commercial operations starting in 2012 and production deliveries starting later the following year, XCOR, has already signed two Memorandums of Understanding (MOUs) for the ‘wet lease’ of Lynx vehicles, representing over $50m of back orders. The first two customers are Yecheon Astro Space Centre of South Korea and Netherlands-based Space Experience Curacao (SXC).

The Curacao agreement will see SXC market and XCOR operate, suborbital space tourism and scientific research flights out of Space Port Curacao in the Netherlands Antilles. Furthermore, in an exciting development, KLM Royal Dutch Airlines has signed on to co-market SXC flights and include them in their frequent flyer programme.

XCOR anticipates commercial flights in the US to start in late 2012, with production Lynx vehicles flying internationally by 2014. XCOR’s COO, Andrew Nelson said that the company continues to develop and produce safe, reliable and reusable rocket powered vehicles, propulsion systems, advanced non-flammable composites and other enabling technologies.

“We’re building the Lynx, have a robust wet lease order book and we’re making engines for other customers,” Nelson said. “We’re always delighted to talk to potential investors and partners interested to join us in our development programme.”

As with most pioneering technology a continuous stream of funding will be required and the GCC region is attractive in that respect primarily due to its relative liquidity, robust oil prices and substantial sovereign wealth funds.

It will be interesting to see how this plays out as we enter a new era in which countries no longer have to build space programs but can simply buy them. It will likely bring the most significant shift on space power since the beginning of the Space Age. It won’t be simply wealthy countries but wealthy companies, individuals and regions that will have access to space in ways never before possible. This will be a very fascinating — and for many people, unsettling — shift whose full scope and impact will not be clear for many years.