Lunar Market Opportunity the Real Prize for Private Ventures

December 19, 2016
Author
Kelsey Tollefson
December 19, 2016
Author
Kelsey Tollefson
Executive Editor
John Lenker

2016 was a banner year for Moon-related space ventures. Across the Earth, governments and private entities alike are continuously announcing plans to return to our closest celestial neighbor. But with so much interest in Mars these days, why are emerging private space ventures so laser-focused on our Moon? After all, the Moon is old news—right?

While the Moon is considered familiar territory by the general public, the truth is that humankind has done very little to take advantage of all that the Moon has to offer since U.S. astronaut Eugene Cernan left man’s last, eternal footprint there in 1972. 

Thanks to recent advancements in aerospace technology and visions of a bustling space-based economy, however, startups from around the globe are trumpeting their intentions to not only revisit the Moon, but also to fully capitalize upon the market opportunity it presents. 

Image credit: Boeing

The “Moon Race” of Today Has Many Contenders

While the U.S. and Russia were the two countries competing to be first on the Moon in the 1950s and ’60s, today they are joined by countries such as China and the European Union—as well as a vast number of both established and emerging aerospace ventures. 

China, a country not long associated with space exploration, has recently become known as an international player in their own right: Their Jade Rabbit rover spent over two years on the surface of the Moon, before it stopped operating on August 3rd, 2016. What’s more, China has declared its intent to land a spacecraft on the far side of the Moon in 2018. If successful, on-surface exploration of the far side of the Moon would be a first for humankind. One of its mission objectives, a review of the enormous impact crater near the South Pole, could yield invaluable information about natural resources that could prove to be both useful and profitable. 

Image credit: Getty Images

Beyond this effort by the Chinese government, December saw the European Space Agency (ESA) make massive progress on its fund-raising efforts, which are intended to support their plans for a “Moon Village”—a venture in which even NASA has expressed interest. Their rationale for this effort? They understand that missions to Mars will need habitats that are affordable, capable, and modular, and believe that permanent settlements on the Moon would provide blueprints for settlements in further-flung parts of the galaxy.

The Moon Is an R&D Stepping-Stone to Mars

While returning to the Moon is seen as important, it’s often considered by space ventures—both emerging and established—as being simply a milestone in the effort to reach an even loftier destination: Mars. While this is absolutely true, the Moon provides many remarkable economic opportunities in its own right.

Image Credit: Bigelow Aerospace

United Launch Alliance (ULA)—a joint venture between Lockheed Martin and Boeing Corporation—is just one example. It has announced its intentions to create a thriving cislunar (the space between the Earth and the Moon) economy. The mission of their Cislunar 1,000 Vision is to have a thousand-plus people living and working in cislunar space, full time, by 2045. If all goes to plan, this settlement would be a strategic “pit-stop” for manned missions to Mars. 

According to a report prepared for NASA by NexGen Space LLC., having a refueling station on the Moon would significantly decrease costs associated with sending humans to Mars. The vision is to have jet propellant sourced from, and readily available on, the Moon’s surface. This would enable missions to travel further and less expensively than would be possible from Earth. 

According to George Sowers at ULA: 

Having a source of propellant in space benefits anybody going anywhere in space […] Once you have the propellant capability going, you make a lot of other business plans look a lot better, be they on the Moon … or other places.

The XPRIZE as a Catalyst for Commercial Space Industry

On October 4th, 2004, SpaceShipOne, a private space venture funded by Burt Rutan and Paul Allen, won the coveted Ansari XPRIZE by becoming the first private enterprise to successfully launch a reusable spacecraft into space twice within two weeks. This startling success sparked the imaginations of the masses and sent angel investors, private equity firms, and venture capital companies alike scrambling to find viable, private aerospace ventures to fund.

In similar fashion, Google has thrown down the gauntlet with its sponsorship of the Lunar XPRIZE, which aims to incentivize competition in the next leg of the space race. Announced ten years ago, this iteration of the XPRIZE has a loftier goal than its predecessor: To not only launch a privately-funded spacecraft, but also successfully land a robotic craft on the surface of the moon, travel a distance of 500 meters, and send HD images and video back to Earth. 

The logistical challenges are greater in this new competition, and the incentive is greater as well: A grand prize of $20 million dollars is up for grabs. Now, a decade after the prize was announced, the final deadline is approaching: In order to remain eligible for the competition, contenders must book their launch contracts by the end of 2016. While the prize money would be the metaphorical “cherry on top” for contenders, the real prize is the market opportunity represented by the demand for lunar transportation and logistics services. 

Astrobotic has worked to develop a long-term sustainable lunar logistics business, focused on customers, from the very beginning. As a former XPRIZE contender, Astrobotic was the only team to win all three of the competition’s Milestone Prizes, which brought the company $1.75 million in prize money. Astrobotic is now poised for further success: Their Peregrine Lander will carry customer payloads to the Moon’s surface in 2019, including the rovers of three other GLXP competitors. These initial customers, who have had an opportunity to evaluate all potential service providers, have said that Astrobotic is “years ahead of the competition.” This focus on the business model and securing customers, combined with their impressive technical progress, was one of the key factors that convinced Space Angels to invest in their venture. Astrobotic has also successfully secured a number of key partners including NASA, Airbus Defence and Space, DHL, and Aerojet Rocketdyne to bolster their effort to become the world’s first lunar payload delivery service. In short, Astrobotic is making all the right moves to position itself in order to succeed in, and drive the growth of, the emerging lunar economy.

According to a market assessment performed by Chad Anderson, lunar payload deliveries and transportation alone––servicing industries such as tourism, education, infrastructure research, etc.–– could be generating multiple billions in annual revenue by the year 2020. As Anderson notes, “successful commercial ventures will be those that leverage market principles to control costs by effectively utilizing both terrestrial and lunar resources. Doing business in space is complicated … but the potential payoff is huge.”

Private Enterprise Is Leading the Way to Our Future on the Moon

After decades of (what for all practical purposes could be viewed as) inactivity on the part of governmental entities, which clearly were the “aerospace champions” of the past, our return to the Moon is all but assured. Emboldened by competitions such as XPRIZE, led by visionary entrepreneurs, and fueled by forward-thinking angel investors including Space Angels Network members, humankind is once again poised to set foot on the Moon. The main difference is that this time, rather than racing to the Moon and back in a quest for national pride, we are going to the Moon with the long term intentions of creating a robust lunar economy and expanding humanity’s reach in the universe.

In short, the Moon could quite literally be the largest market opportunity that Earth-bound investors have ever seen. Because while the XPRIZE has proved an effective catalyst, it’s nothing compared to the returns that investors in private space ventures stand to gain during this renewed race to the Moon. In the words of the Last Man on the Moon, Gene Cernan:

As I take man's last step from the surface, back home for some time to come—but we believe not too long into the future—I'd like to just [say] what I believe history will record, [which is] that America's challenge of today has forged man's destiny of tomorrow. And, as we leave the Moon at Taurus–Littrow, we leave as we came and, God willing, as we shall return, with peace and hope for all mankind. Godspeed the crew of Apollo 17.

There’s never been a better time to get involved in commercial space. If you’re ready to start investing in private space companies, we invite you to apply for membership to Space Angels.

Bibliography

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