(Bloomberg) — The intensifying competition between the U.S. and China in space and Elon Musk’s ambitious Mars program has led to a flurry of startups around the world chasing lucrative contracts, as humans race for resources that could fuel life beyond Earth.
Most read by Bloomberg
Among them is a small Japanese company looking to make its mark as early as this month with what could be a first for a commercial enterprise.
Tokyo-based ispace is scheduled to send a lunar lander at the earliest on Nov. 22, carrying multiple government and commercial payloads, including two rovers. Like Musk’s dream of a Martian colony, the startup’s big idea is to build a human settlement on the moon by 2040, but before that it wants to become the lunar version of FedEx — making money by ferrying scientific equipment and commercial goods to the moon. .
Ispace’s first venture will test not only the technical credentials it has built since its founding in 2010 but also the loyalty of its backers, one of whom is a former SoftBank Group Corp. executive. Much is riding on its success, including a possible initial public offering as soon as this financial year and a shot at a bigger slice of the industry pie that Morgan Stanley estimates will triple to $1 trillion in two decades from 2020.
“There is a huge market for services like this,” ispace founder and chief executive Takeshi Hakamada, 43, said in an interview. “If something goes wrong with this experiment, we can still use the feedback from the failure to improve the quality of the next launch.”
Banker for IPO
The company is preparing to list on the Tokyo Stock Exchange and has selected SMBC Nikko Securities Inc., Bank of America Corp., Morgan Stanley and Nomura Holdings Inc. as chief executives, said people familiar with the matter who asked not to be identified discussing confidential information. A representative for ispace declined to comment.
Ispace says it raised about $237 million in total in July, including $57 million in debt. It was valued at about ¥76 billion ($511 million) in a Series C round of financing in August last year. Led by the Incubate Fund, six other investors joined the team, including former SoftBank chief strategy officer Katsunori Sago and funds managed by Innovation Engine Inc. and SBI Investment Co.
The lunar landing mission is part of ispace’s lunar exploration program called Hakuto-R, which means white rabbit in Japanese. The startup says it can cut fuel costs by using the moon’s gravity to travel. The downside is that it will take up to five months to reach the moon, compared to the roughly three days it took the Apollo missions of the late 1960s and early 1970s.
Falcon 9 from SpaceX
ispace’s lunar lander is intended to launch on a Falcon 9 rocket built by Musk’s Space Exploration Technologies Corp., and is part of a $73 million NASA contract won by a team led by Cambridge, Massachusetts-based Draper. The contract provides for end-to-end delivery services to the far side of the Moon under the US Artemis program.
“The first private lunar landing will be a major milestone for the space industry,” said Caleb Henry, senior analyst at Quilty Analytics, an American research and consulting firm.
The Mission 1 lunar lander has been flown to Cape Canaveral, Florida for its space journey, the company said in a statement on Monday.
Ispace’s success will also be crucial to Japan’s own space program, with the moon once again at the center of geopolitical intrigue. NASA is aiming for a comeback this decade with Artemis, while China and Russia have announced plans for a joint lunar station. Last year, Japan’s lunar industry vision called for closer cooperation between the government and the private sector to remain competitive in the emerging space economy.
Sago said the company’s valuation could multiply in the coming years. “I don’t invest in startups unless they have enough potential to grow 10x or so over the long term,” he said.
Dozens of contestants
Currently, dozens of companies are developing landers and lunar vehicles, mostly through NASA’s Commercial Lunar Payload Services, or CLPS, program. One leading company in this sector, Masten Space Systems Inc., filed for bankruptcy in July. The company received a $4.5 million bankruptcy auction from Astrobotic Technology Inc., a space robotics technology maker, in August.
Failures in space programs are not uncommon, and ispace has already suffered a failure. It was one of the finalists in Google’s Lunar XPrize, a $20 million prize for the first privately funded team to land on the moon, travel 500 meters (1,640 feet) and beam high-definition video back to Earth. The competition ended without a winner, but the teams, including ispace, have continued their efforts.
“There are a million ways a space mission can go wrong and only one way to go right,” said Quilty Analytics’ Henry, noting that predicting the success of an ispace launch is difficult. “Although this is an exciting field, it is still a difficult business financially and technically.”
ispace CFO Jumpei Nozaki is well aware of the risks. In an interview, he emphasized that a successful landing is not the only goal and that the performance of each stage will be evaluated.
Hakamada said he could see the formula for success at Musk’s SpaceX, which has repeatedly carried out missions without incident. He will soon face his biggest test when he steps into the space station to witness the launch.
“I was told that your life changes after watching the launch in person,” he said. “It will be an exciting and stressful moment.
(Updates with current lander location in paragraph 11)
Most read by Bloomberg Businessweek
©2022 Bloomberg LP