Wed 9 Apr 2008
(Source: San Jose Mercury News)
Investors should be cautious in growing field, they warn
Largely the domain of governments and big corporations, space is about to open for business.
But investors serious about making money off the planet should probably focus on ideas a little closer to earth, speakers at the Space Investment Summit held this week in San Jose told attendees.
Ideas such as space tourism, launching private rockets and even mining the moon for minerals certainly capture the imagination, the conference made clear. But because such endeavors are inherently risky, costly and challenging, investors have few opportunities to invest in them — and shouldn’t expect to see a return anytime soon if they do, said several investment experts who attended the conference.
By contrast, there are plenty of investment opportunities related to space, if not exactly focused on leaving the planet, they say. Such space-related opportunities include solar power generation, special construction materials and even Web 2.0 programs along the lines of Google Earth, which allows users to view satellite pictures of everything from the entire planet to neighborhood blocks.
“It comes down to your definition of space,” said Dr. Burton Lee, who recently co-founded Space Angels Network to pair so-called angel investors who are interested in space with entrepreneurs.
The highlight of the conference was the announcement Thursday that a team of businessmen and engineers dubbed Odyssey Moon has completed the first entry application for Google’s new Lunar X Prize. That prize, which the Web search giant announced in September, will pay $20 million to the first privately financed team that lands a robotic rover on the moon and sends back a video cast.
But the announcement — and a subsequent one by a company called Astrobotic Technologies that is also poised to compete for the Lunar X Prize — highlights the problems of investing in private space travel. Even if they win, neither team expects the prize money to come anywhere close to covering their costs.
While both have ideas about how to make money off their investments — Astrobotic Technologies, which predicted it will place a rover on the moon within two years, plans to sell advertisements to an international broadcast of its moon landing, for instance — neither is promising profits anytime soon.
Part of the thinking behind the summit was to introduce space entrepreneurs to investors, particularly Silicon Valley-based venture capitalists. During the conference, some 15 different entrepreneurs made 5-minute pitches for businesses ranging from a company that organizes corporate team-building programs with a space theme to actual rocket builders.
Despite the obstacles, money from big investors like technology multimillionaires such as Jeff Bezos, Elon Musk and Paul Allen has been flowing to the rocket builders. They’ve even attracted money from some smaller investors.
Still, such companies are likely to have a hard time convincing venture capitalists to stake their efforts. Developing rockets to go into space or companies that might provide space transportation services likely is going to require hundreds of millions of dollars.
Meanwhile, there’s no proven market yet for private rocket transportation services — or even space tourism. And such companies could face regulatory challenges — even if they are up to the technical ones.
If a pure space-based company came in seeking venture capital funding, “I don’t know if it passes the giggle test,” said Marco DeMiroz, managing director at Selby Venture Partners.