Space Angels Network was on Capitol Hill again last week to oppose an amendment to the FY 2017 National Defense Authorization Act (NDAA), which intends to overturn two decades of U.S. commercial space transportation policy limiting U.S. excess ICBM-derived launch vehicles from unfairly competing in the commercial space launch market. Due to the onerous certification process and infrastructure required to operate these assets, it is clear that the amendment benefits only one commercial space company at the expense of the rest of the U.S. commercial space companies that have invested hundreds of millions of dollars into new innovative small satellite launch vehicles.
As one of the largest angel investment networks in the world, and the most established investor in the entrepreneurial space sector - with a portfolio of 33 companies - we have written the following letter to provide our perspective with respect to Senator Mike Lee’s proposed amendment to the 2017 National Defense Authorization Act that would make excess intercontinental ballistic missile (ICBM) assets available for commercial use. Contents of the letter below:
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.