Five years later, is now the time?
by Jeff Foust
|The real question to ask now, though, is not why things have taken so long, but rather how much longer things will take.|
If you told someone who had witnessed SpaceShipOne’s prize-winning flight in Mojave, California that day—including this author—that there wouldn’t be another such flight over the next five years, the response surely would have been something along the lines of disbelief. After all, shortly before Scaled Composites made the two flights needed to win the prize they had announced a partnership with Sir Richard Branson’s Virgin Galactic to develop a commercial version of the vehicle that would begin flying as early as 2007. Yet SpaceShipTwo, the bigger and better vehicle Scaled is building for Virgin, will be unveiled only this December, about a year after its carrier aircraft, WhiteKnightTwo, began test flights.
This long pause has led some to question the viability of this field: after all, if an aerospace company as talented as Scaled, with the deep pockets of Virgin, can’t develop a vehicle in five years, what does this say about the industry in general, given that most of the other ventures (with the notable exception of Blue Origin, backed by Amazon.com founder Jeff Bezos) are much smaller and less well capitalized?
Some people, it seems, are getting a little impatient. The Associated Press reported this weekend about Alan Walton, a “daredevil” venture capitalist who plunked down $200,000 nearly five years ago to be one of Virgin Galactic’s “Founders”, or first 100 customers. Now, he says, he plans to ask the company for his money back if there’s no “fixed launch date” by next April, when he turns 74.
The reasons why Virgin specifically, and the industry in general, are not developing their vehicles as fast as originally planned has been discussed before in some detail (see “Where’s my rocketship?”, The Space Review, July 7, 2008). A combination of business decisions (like Virgin’s decision to develop a larger vehicle than the three-seat SpaceShipOne), technological setbacks and tragedies (including the accident in July 2007 that killed three Scaled employees), and difficulties encountered by other companies in raising capital (exacerbated by last year’s financial crisis) have all conspired to slow things down.
The real question to ask now, though, is not why things have taken so long, but rather how much longer things will take. Will we see commercial suborbital human spaceflight return in one year? Two? Five? Crystal balls are notoriously fuzzy, but some factors indicate that, at five years since the X PRIZE victory, we’re more than halfway there.
|The Aabar-Virgin deal suggests that the business plans by the companies in the field are becoming sharper and more attractive to investors whose primary interest is not in opening the space frontier but getting a good return on their money.|
One is the growing technical maturity of the industry in general. There’s the progress we’ve seen from Scaled with the flight tests of WhiteKnightTwo and tests of the rocket motor that will propel SpaceShipTwo into suborbital space. Beyond that, though, we’ve seen progress by other companies outside the field—critical if this really going to be an industry. XCOR Aerospace has become a leader in the development of liquid-propellant engines and is making steady progress with its Lynx vehicle. Armadillo Aerospace has also made great strides in engine development as it works towards the development of vertical takeoff and landing vehicles. Other ventures in the suborbital field—not all of whom are pursuing human spaceflight, at least initially—also have achieved technology milestones in the last year or so.
Another development is the growing financial maturity of the field. To date suborbital ventures, like most other entrepreneurial “NewSpace” companies, have relied primarily on wealthy angel investors or their own money to fund their companies, as institutional investors have stood on the sidelines. That changed in July, though, when Virgin Galactic announced a $280-million investment in the company by Aabar, a sovereign wealth fund based in Abu Dhabi. The deal valued Virgin Galactic at about $875 million, an impressive amount for a company that has collected about $40 million in customer deposits to date.
That an institutional investor—with shorter timescales and higher expectations for a return on investment than a typical angel investor—would invest in a suborbital spaceflight company is not necessarily the “Netscape moment” than many in the industry have been anticipating for years. However, it does suggest that the business plans by the companies in the field are becoming sharper and more attractive to investors whose primary interest is not in opening the space frontier but getting a good return on their money.
Not every company is seeking the level of investment that Virgin received. At the Space Investment Summit 7 conference in Boston last week, XCOR COO Andrew Nelson said that the company had taken in $21 million since its founding 10 years ago: $7 million from angel investors and $14 million in government and commercial contracts. The company is now looking for $10 million to complete development of its Lynx suborbital vehicle, but Nelson said that money didn’t necessarily have to come from investors: it could come from sales of vehicles or engines. “A sale to an aerospace prime can replace the need for equity capital,” he said. “So we feel quite comfortable that in the next six months, we’re there.”
Another key factor is a diversification of markets. Five years ago virtually the only market people talked about in regards to suborbital vehicles was space tourism, thanks in large part to the drumbeat of interest generated by the X PRIZE. While a few companies talked about remote sensing, scientific observations, or other applications for suborbital vehicles, those ideas didn’t seem to be getting much traction from potential customers.
In the last year that has changed, particularly in the area of scientific research (see “Virgin looks beyond space tourism”, The Space Review, February 9, 2009). The Commercial Spaceflight Federation (née Personal Spaceflight Federation) has organized workshops that have brought together researchers and vehicle developers, and in August announced the formation of the Suborbital Applications Researchers Group, a scientific advisory panel chaired by Alan Stern, the former NASA associate administrator for science.
|How long will it be until it’s clear that we’ve underestimated the impact of what maybe a seminal event in the history of spaceflight?|
Stern, in an op-ed in this week’s issue of Space News, argues that what he calls the Research and Educations Missions (REM) market could become as big a user of these suborbital vehicles as space tourist missions. “After all, relatively few individuals can afford to be tourists at $200,000 per flight, and even fewer will buy more than one or two tickets,” he writes. “However, government agencies will find $200,000 price points for space access to be easily affordable, and governments are likely to make their purchases in bulk, year after year—making a far more attractive sales market than are onesie-twosie purchases by affluent tourists.”
Similarly, suborbital vehicles are finding another market niche: as the first stage of a launch system for small satellites. The growing interest in low-cost smallsats, weighing under 100 kilograms, has been attenuated somewhat by the challenges of finding cost-effective, responsive launch options. XCOR and, more recently, Virgin have shown interest in this market; as part of the Aabar deal in July the fund is providing Virgin with an additional $100 million to develop a smallsat launch capability.
These developments don’t mean that the long-awaited opening of the commercial suborbital human spaceflight industry is assured: companies still have to execute on their plans, and there are any number of things, from technical setbacks to financial difficulties to the dreaded “unknown unknowns” unforeseen by any business or observer in the field. However, they do suggest an emerging field that is starting to mature and develop a solid foundation for growth.
An aphorism known as Amara’s Law—widely (if erroneously) attributed to a number of technology and business luminaries—states that, “we tend to overestimate the short-term impact of technological change and underestimate its long-term impact.” Certainly in the heady days after SpaceShipOne soared into space to win the Ansari X PRIZE five years ago we overestimated the immediate impact of that event. The question is: how long will it be until it’s clear that we’ve underestimated the impact of what maybe a seminal event in the history of spaceflight?