Space Angels Network Opposes Use of Surplus ICBMs to Launch Commercial Satellites

A Minotaur V rocket carrying NASA's Lunar Atmosphere and Dust Environment Explorer (LADEE) lifts off from at NASA's Wallops Flight Facility in Virginia on Friday, Sept. 6, 2013. (Credit: NASA/Chris Perry)
A Minotaur V rocket carrying NASA’s Lunar Atmosphere and Dust Environment Explorer (LADEE) lifts off from at NASA’s Wallops Flight Facility in Virginia on Friday, Sept. 6, 2013. (Credit: NASA/Chris Perry)

The Space Angels Network has sent the following letter opposing the use of surplus ICBMs for the launching of commercial satellites to the Senate Armed Services Committee.

The Honorable John McCain
Chairman, Senate Armed Services Committee
228 Russell Senate Building
Washington, DC 20510

The Honorable Jack Reed
Ranking Member, Senate Armed Services Committee
228 Russell Senate Building
Washington, DC 20510

Dear Chairman McCain and Ranking Member Reed,

Space Angels Network is the leading source of capital for early-stage space companies. With over 200 accredited investor members, we are one of the largest angel networks in the world, and we’re focused exclusively on the space industry. Therefore, we are a sub-segment of the sector, directing investment to the industry and providing critical support to commercial space ventures with the potential to grow existing markets and spur entirely new ones. Founded in 2007, our network has invested in 33 space startups to-date, including many of the most prominent entrepreneurial space companies in the sector.

We are writing today to provide our perspective, as investors in early-stage space companies, and express our strong opposition to Senator Mike Lee’s amendment to the 2017 National Defense Authorization Act that would make excess intercontinental ballistic missile (ICBM) assets available for commercial use. This proposal is counter to long-standing U.S. law and policy, which seeks to promote commercial space transportation capabilities. As business people ourselves, we understand the desire to make use of an asset that has already been paid for. However, we strongly oppose any effort to reverse this policy because we firmly believe that any benefit gained would be fleeting, while disrupting the strong positive momentum in the market, increasing uncertainty for investors, and causing irreparable long-term damage to the development of the U.S. commercial space market.

Back in 2007, when Space Angels Network was first founded, there wasn’t much entrepreneurial activity to speak of in space. So to start our network and get the attention of serious investors, we identified four successful business people who had invested in space ventures, to join as Founding Members and lend credibility to the sector. Following the success of entrepreneurial space companies like SpaceX, Blue Origin, Terra Bella, Planet Labs, and others over the past 5-7 years, investors and entrepreneurs need less convincing. Here are some facts to demonstrate this point: The number of early-stage space companies has grown from 100 to over 1,000 in just the last five years. And 2015 marked the fifth consecutive year of growth in private investment in space companies with over $800 million of angel and venture capital, up from $150 million in 2011 and totaling $2.3 billion over the period. Furthermore, approximately 70 venture capital firms invested in one or more private space ventures in 2015, up nearly four times over the number of firms that invested the year prior. And Space Angels Network membership grew from 50 accredited investor members in 2015, to over 200 today.

This exponential growth in entrepreneurial activity and investment in space is underpinned and enabled primarily by the emergence of low-cost access to space. Following the success of SpaceX, a number of new launch companies are innovating at an incredible pace, driving efficiency through standardization, and accessibility through transparency, ultimately bringing the cost down and the space sector within the reach of startups and entrepreneurs for the first time. The U.S. launch market today is stronger than ever. Like many other industries, much of that strength comes from competitiveness and diversity. New business models in launch are driving innovative new business models in satellite technology and opening up entirely new markets in space. And we’re just beginning to see the significant role that startups will play in this sector. There is considerable momentum at the moment, due to the amazing accomplishments of the past few years. As an investor, we are concerned that government intervention would increase uncertainty in this new market, and adversely affect its trajectory.

Converting excess ICBM motors for commercial use would put Government in direct competition with industry, as a supplier of subsidized rocket engines. We know from history that when the government subsidizes businesses, it weakens profit-and-loss signals in the economy and undermines market-based entrepreneurship. Most of America’s technological and industrial advances have come from innovative private businesses in competitive markets. Indeed, it is likely that most of the long-term economic growth has come not from existing large corporations or governments, but from entrepreneurs creating new businesses and pioneering new industries. Therefore, it is critically important that we not undermine the strong positive momentum in the market. We must not be quick to change policy that has led to U.S. leadership in the global launch industry and is enabling a golden era in space entrepreneurship.

Ad Astra.

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  • ThomasLMatula

    I really wonder if this is just more a knee jerk reaction that one actually based on the economics of the launch industry.

    Neither the Minuteman or MX (Peacekeeper) is capable of placing a payload in orbit by themselves, both required a specially designed uppers stage. This adds to the cost.

    Historically the Minotaur I (Minuteman conversion) costs about $30 million to place 1,200 lbs in LEO, about the same as the proposed Falcon 1e that was priced at $15 million a launch, and never used because of a lack of a market. That gives a cost per pound for the Minotaur I of around $21,000, twice the $10,000 lb estimated for the Falcon 1e.

    The Minotaur IV and V (MX conversions) costed about $50 million each to launch to place about 3500 lbs into LEO and 700 lbs into a lunar trajectory. That gives an estimated cost of $14,500/ lb to LEO and $71,500/lb to the Moon. Neither is actually a bargain and its difficult to see it competing with a shared launch on a Falcon 9.

    Really, if the new generation launchers are not able to beat those numbers by a wide margin they probably are already in trouble in terms of the market they are targeted at. Also, given the experience of SpaceX it is questionable if there is enough of market in that payload range to justify developing a new dedicated launcher. In any case blocking future Minotaur launches is not going to help them.

    But what it may well do is undermine handful of firms and missions looking to launch payloads in this size range since the only real alternative at the moment is the Pegasus at $56,000/lb to LEO. Given that the Minotaurs have shown the ability to better serve this marginal market in the past I don’t see the logic of their opposition.

  • Kapitalist

    Use them to launch some kind of infrastructure which makes commercial space flight more valuable! Maybe they are too small to move any fuel tanks, considering they need to match orbits and have docking systems et c.

    Why not give them away to universities and startups to launch cubesats and test articles. ULA gives away cubesat slots to universities because they want those students involved to become the future market for them. The ICBM’s could do that for free for them.

  • Hug Doug

    Most ICBMs are not able to put anything into orbit. Without modification, at best they might be useful for sub-orbital sounding rockets.

    Modification for orbital use is expensive, as outlined by TLM below. “Giving them away” as you suggest, would be a somewhat disruptive, likely more expensive distraction from the more cost-effective small payload launchers that are being developed already.

  • ThomasLMatula

    Yes, and even if used as sounding rockets there would still be costs associated with launching them, costs that may be too expensive for most universities. Many of NASA’s current sounding rockets use old missile cores (Honest John, Hawk, etc.,) given to NASA by the military and still may cost $1-5 million to launch.

  • windbourne

    “Historically the Minotaur I (Minuteman conversion) costs about $30 million ”

    More like “priced at $30 million”, since the costs were significantly below that.

  • I propose an even simpler argument:

    1) Falcon 1/9 are the only New Space launchers that have put anything up in the last decade
    2) how often are Minotaurs REALLY gonna launch? twice a year? does that even matter?
    3) most of the other launchers are probably vaporware as it is

    therefore… GO FOR IT!

  • Christopher James Huff

    Part of what Musk is trying to do is expand the market by providing low cost access. If these ICBMs could help provide that access in such a way that they don’t just drive the developing commercial providers out of business, they might help build that market and ensure that those commercial providers have long-term business.

    But as Hug Doug says, it’s doubtful if they can actually make such a difference, and they would consume resources that could otherwise be devoted to more sustainable business.

  • passinglurker

    I did hear from some where that orbital only needed like 1 or 2 launches a year to close its business case. Perhaps a simple rule of metering the rate at which motors are sold is all that is needed. That and reinvesting the money the government receives for the motor back into development of small launch vehicles.

  • I like the idea of a fund or some kind of other quid pro quo arrangement.

  • ThomasLMatula

    That has been about the historic launch rate. It really doesn’t seem to be a big market. Russia was doing the same with the SS18, but dropped out from what appears to be a lack of demand as well as the political issues with the Ukrainian firm it was in partnership with.

  • ThomasLMatula

    But SpaceX has abandoned the market these vehicles would serve as not being worth the effort. That is why they are no longer offering the Falcon I and never built the Falcon V, the launchers that would serve it.

    VG which seems to be complaining the loudest is building it business case on the LEO comsats being proposed. But I don’t see these launchers really being a match for that market. There costs are too high and launch rate would be too slow. Its not like they are really to fly, Orbital has to do a bit of work on them and build the additional stages needed, as well as pay the government whatever priced they worked out.

  • ThomasLMatula

    I made the corrections. Thanks for catching it.

  • windbourne

    one thing that I dislike about OATK is how high priced they are.

  • Yeah, the forces of vertical integration and consolidation that are at work around the world are pretty impressive. It’s a real shake up of the previous system. Russia has been doing it since the end of the Soviet Union, because they can’t seem to get along with the former socialist republics even when they AREN’T at war. SpaceX lead the charge here, then ULA kept it going followed by OATK. Even the Europeans and others are getting in on the game.

    I will say that of all the losers in this process, the only one to lose out more than AR is the Ukrainians. Antonov is dead and their space sector is close behind.

  • Scott

    Except OATK is asking to remove limitations on the yearly launch rate and who is allowed to launch on these rockets. Currently the Minotaurs are highly restricted which leads to some of the outrageous cost.

    But I think a lot of the reason we are seeing OATK pushing this now is the threat of SpaceX offering launch prices at a little more than $10 million over the Minotaur IV and these new small satellite launchers are pushing in on their market share. OATK seems to be trying to fly as many of these before their market share dries up.

    And don’t forget in the early 90’s Orbital Sciences heavily opposed the government allowing Lockheed to use retired ICBM’s because it threatened their emerging Pegasus launch market. Interesting how the tides have turned….

  • Scott

    “”Giving them away” as you suggest, would be a somewhat disruptive,”

    Not to mention it would be a government support monopoly and that’s not something our gov’t is supposed to be doing.

  • Scott

    “That is why they are no longer offering the Falcon I and never built the Falcon V, the launchers that would serve it.”

    The expense of SpaceX maintaining the Falcon 1 production line while trying to simultaneously develop and operate the Falcon 1 would have driven them out of business. SpaceX’s long term goal was and has always been developing a transportation infrastructure to establish a colony on Mars. The Falcon 1 and Falcon 5 were means to progressively develop larger and larger rockets with a paying customer base, starting with small sats and moving to larger and larger satellites. When COTS came along it gave SpaceX an opportunity to focus it’s development work on their larger F9 which is the first that could feasibly test their reusability technologies.

    In the end the F1, F5 and F9 were all a means to an end and a larger and larger launch system. It’s unfortunate that we lost the F1 but in the long run it was better for SpaceX’s long term goals to move to the F9. But we are fortunate that there are multiple companies that are pursuing dedicated low cost, small satellite launch capabilities

  • Jeff2Space

    If they do successfully lobby to use surplus missile stages for non-government launches, this will kill any chance for start-ups in the small launcher market to get funding. This will, unfortunately, solidify their position in the market allowing them to maintain their high prices, maximizing profits.

  • passinglurker

    but wouldn’t pegasus then serve as a lesson that small launchers may be economically unviable? after all the two instances are very similar

  • Scott

    It’s possible, OATK seems to think the market is so important that the US can’t wait for these other vehicles to come along and these other companies and investors seem to think there is enough market share for 3 companies to compete with each other.

    Problem with the Pegasus was not necessarily the market but in the design. Integration time was pretty long and solids take a long time to manufacture so it was never capable of achieving a high enough launch rate to encourage and convince customers that reliable frequent access to space was possible. They only launched it an average of 1.5 times per year. So there wasn’t much incentive for customers to design their payloads to fit specifically on the Pegasus. The low launch rate scared off the rest of the would be customers after a while because the costs started going through the roof. I think the last Pegasus launch was booked at $50 million or something and it was obviously gov’t purchased.

    So the Pegasus kind of killed its own market by not having enough launches to build confidence in a customer base because the customers would have to design and build dedicated payloads to launch on the Pegasus that couldn’t really be launched on anything else unless it was launched in clusters. But with the potential for three competing providers those customers would be more likely to revisit those dedicated small sats. Just speculation but this might be a case of 3 is better than 1

  • patb2009

    The Antares 2 is a nice vehicle.

  • passinglurker

    If solids have a slow production rate then that would explain why they are gunning for the premade surplus motors over making new motors from scratch.

    But yeah I certainly hope things go better this time around no should history repeat itself.

  • ThomasLMatula

    No, if those firms have a good business model and design these surplus motors will not be a threat. If they are vulnerable to them and require government protection than they are going to fail anyway.

    Meanwhile protecting those handful of startups will cost American jobs as the payloads that could be flown now on these used motors either won’t be flown or will go to foreign launch providers. Similarly, science missions, like the
    recent LADEE, will either not be flown or will be much more expensive to fly, costing the nation the benefits of the potential scientific results, or costing taxpayers more money, on top of the money they will be paying to continue storing these motors.

    Sorry, but as a taxpayer I am on the side of American taxpayers on this one. It is better to see some use come from the motors to produce some economic value to the economy while generating near term jobs than to continue to spend taxpayer dollars to store them on the chance one of the new launcher startup will actually accomplish anything.

  • ThomasLMatula

    There have been firms pursing small satellite launch capabilities for years, but they never seem to close their business models. Unless the founder has deep pockets this will probably continue to be the case.

    Yes, it would have been nice to have kept the Falcon 1, but it just didn’t make sense. These used ICBMs are probably the best near term solution for serving this orphan launch sector.

  • savuporo

    There are completely new class of payloads now though, which might make even one of these work, business wise.
    Even during the brief operational life of F1 there weren’t many smallsats to go around. There are quite a few now

  • Jeff2Space

    I agree that start-ups need good business plans. But, they do not need government competition (directly or indirectly). The US Government choosing to dump ICBM stages on the commercial market, which can arguably only be successfully used by the company that originally made them, is policy which should be avoided, IMHO.

  • Scott

    “There have been firms pursing small satellite launch capabilities for years, but they never seem to close their business models.”

    But they have rarely approached the development with ruthless minimalism and have looked for unique out of the box ways to lower costs. Solids proved to be expensive we shall see how pressure fed engines fair in the real world.

    “These used ICBMs are probably the best near term solution for serving this orphan launch sector.”

    But there in lies the problem, it is a short term solution. In a couple years our ICBM inventory will be shot and we will still be sitting without a small sat launch capability and thus we will be in this same position we are today. The ICBM’s will work in the short term but they will suffocate these infant companies that could provide affordable small sat launch capability. Pegasus didn’t work out as planned but it provided the US with 37 successful small sat launches, if three companies can achieve the same number of launches the US will be leading the world in yearly launches of small satellites. So instead of 1 launch of an ICBM a year I would like to see a competitive market offering 3-4 launches a year. Still expensive but it is a somewhat sustainable approach, which the ICBM strategy is not