The Space Reviewin association with SpaceNews

XCOR's Xerus
Could a co-op of investors fund the development of suborbital vehicles and get rides into space as part of the deal? (credit: XCOR Aerospace/Space Adventures)

Space tourism co-op

In Brazil when inflation was high, families would join car co-ops. The car co-op would hold a lottery and buy a car for one of the families. Every month, a new family would get a car. In this way, inflation was managed and families paid monthly payments of varying amounts as prices spiraled up. They would all share the credit risk of each other and the price risk of gyrating car price inflation.

Right now, a similar situation exists for space tourism vehicles. Many firms have the technical expertise to produce a suborbital rocket that can reach Ansari X-Prize altitude. They do not necessarily have the financial backing to:

  • Get a commercial license with AST;
  • Undergo an extensive testing regime to garner credibility;
  • Face the substantial risk that demand will be sufficient to pay for the project; and
  • Live with the regulatory risk that FAA proper will take over (though this may be taken care of with the passage of HR 3752)

(Technical risk does not even make it into the list.)

So the suborbital firms may want to try an alternative strategy to raising capital. When Wit Beer needed capital a few years back, it researched how to do its own IPO. It ultimately succeeded in doing an IPO raising $1.6 million from 3,500 investors (read about it in Andy Klein’s book Wit Beer gave way to Wit Capital which merged with e*trade’s underwriter and later became Wit Soundview, then Soundview Technology, then Schwab Soundview Capital Markets. Money can be as democratic as microbrewing.

SpaceShipOne’s historic next two or three flights will be a great time to pass HR 3752, announce a new low-carb lunar exploration plan, and just bask in the glory of private industry.

How does the wit of brewing and the wit of car co-ops apply to suborbital tourism? Well, my bet is that there are plenty of people who would happily pay a discount price for a ticket to space. Suppose there are 1,000 people willing to pay $20,000 for a ticket to space. That’s $20 million. I bet there are at least a couple of firms willing to finance development of a one-passenger suborbital spaceship and make a few of them that are able to fly once a day for $20 million. Once the design and testing are complete after a year or so, then there could be a lottery to see which day, which of the investors got to fly. All the co-op members would have their turn after a year and they would also own shares in the spacecraft.

Does anyone have the wit to try this?


A few things to watch for in the next few weeks: if time runs out on SpaceX’s objection to NASA’s funding Kistler’s contract, maybe Elon Musk will just buy Kistler. It may be worth more to him than to its existing investors because he can make a bigger profit from the NASA flight data contract (five orbital flights for $227 million) than Kistler can.

Look for President Bush and Congress to ride Burt Rutan and Paul Allen’s coattails this month as history is made in the Mojave Desert. SpaceShipOne’s historic next two or three flights will be a great time to pass HR 3752, announce a new low-carb lunar exploration plan on the heels of the Congressional Budget Office estimate, and just bask in the glory of private industry.

Look for AST to get into the act by granting Mojave Airport a launch license in time for one of the big launches too. They have the dramatic timing, and the hundreds of thousands of people in Mojave at the Woodstock of Space (the day space got its mojo back?) will be irresistible to grant the license even though Burt does not technically need it because he is air launching.