Space Startups Are Booming | Fortune.com – Fortune

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Inside a series of nondescript buildings in the driest desert in North America, an entrepreneurial enclave is chasing the next frontier of commerce. Explosions are routine. The science is complex. Brain power and ambition are high, as is danger. This cluster of 17 young companies at the Mojave Air and Space Port, 90 miles northeast of Los Angeles, is shooting for the moonand beyond.

The startups there are building the components, engines, materials, and rockets that are dispatching a new generation of cell-phone-size satellites and more into space. These so-called NewSpace companies have sprung up around a former military base in the California desert. The remoteness of Mojave and the permissive attitude toward, say, detonation and flamesthe airports slogan: We eat explosions for breakfastmake it the ideal location for companies aiming to reach the heavens.

Mojave is the Silicon Valley of space exploration, says Mark Bnger, who follows the sector at Lux Research. Mojave isnt alone, as galactic entrepreneurship is also burgeoning in Seattle, Tucson, and Silicon Valley itself. Says Sunil Nagaraj of Bessemer Ventures: 2017 will be the year that NewSpace startups will hit their stride.

It used to be that space projects were so daunting and expensive that only governments and their massive corporate partners could take them on. Then, in the past decade or so, a cadre of billionairesthink Elon Musk, Jeff Bezos, and Richard Bransonentered the arena with what first seemed like eccentric pet projects. Today, in the wake of their successes, theres a third generation: minnows that service those private companies and leverage the growing economies of scale such that a startup without extraordinary resources can now contemplate a voyage to another planet.

Plenty of factors are making space missions cheaper and more feasible: the miniaturization of electronics, the development of stronger and lighter materials, better engineering, and new standards that make it easier to build mini-satellites and send them up as hitchhikers on a larger launch. A traditional low-earth-orbit satellite, for instance, weighs three tons, stands two-stories tall, and costs tens of millions of dollars to build. Today there are microsatellites between 22 and 220 pounds and even nanosatellites under 22 pounds. A so-called cubesat, for example, weighs around two pounds, is about the size of a fist, and costs less than $100,000 to build. Some 60 companies now sell them, allowing small governments and companies to put a tiny probe into orbit for precision agriculture, oil spill monitoring, or security systems.

Of the 115 space-related companies started in the past decade and backed by investors, 84 focus on satellites, according to the Tauri Group, which tracks space investments. Just last year, those companies launched 100 microsatellites, up from 25 in 2011. Tauri projects that 2,400 nano- and microsatellites will launch between 2017 and 2023.

Investment is starting to take off. Venture capitalists have put $8.2 billion into space companies over the past five years, according to Tauri, most of it into rockets and satellites.

Mojave has become an oasis of billionaires, scientists, vendors, and service providers. Bransons Virgin Galactic has 500 people there building and testing propulsion systems and a suborbital spaceship, according to CEO George Whitesides. Paul Allens Vulcan Aerospace is nearing completion of its massive Stratolaunch airplane. NASA officials scout Mojave for technology and commercial space partners, and rockets are launched by small companies like XCOR and Masten Space Systems, which are assembling light, reusable launch vehicles to drastically reduce the cost of spaceflight. All that activity has drawn even smaller operations, including a school for test pilots and tiny vendors that provide everything from industrial coatings to ancillary offerings like financial services and a gym.

The biggest driver has been the deep pockets and confidence of Musk, Bezos, and others, including dotcom entrepreneur Naveen Jain and hotel mogul Robert Bigelow, who have been funding startups through venture investments and contests like the Google XPrize. Musks SpaceX slashed tens of millions of dollars from rocket prices, helping land the company a $1.6 billion deal with NASA to fly 12 cargo missions to the International Space Station. Musk and Bezos are now, separately, planning missions to Mars. They were the primer to the pump for this new resurgence, says Jay Gibson, CEO of XCOR.

Moon Express, funded by Jain, plans its maiden voyage to the moon later this year, vying for the Google Lunar XPrize, a $20 million award to the first company to land a robotic spacecraft on the moon and accomplish several technical challenges. Once there, Moon Express plans to extract iron ore, water, minerals, and precious metals, as well as nitrogen, hydrogen, and more. Ultimately, Jain thinks, the moon could become a fuel depot where spacecraft can stop before continuing longer journeys. Entrepreneurs have the potential to change the trajectory of how humanity lives, he says, where the moon becomes the eighth continent and a great place to live.

Needless to say, the challenges remain immense. I sound like a curmudgeon, but people always say this will be the year, says Gary Hudson, an industry veteran and the president of the Space Studies Institute. Everything costs more and takes longer than you think, and people die if you screw up.

The difficulty hasnt curbed enthusiasm at Interorbital Systems, a 12-person operation in Mojave. Cofounders Roderick and Randa Milliron started their business two decades ago with a goal of eventually living on the moon. Interorbital sells satellite kits and says it will launch 137 satellites in 2017 and 2018 with its modular rocket, whose size can be adjusted depending on the mission. The revenue from satellite and launch sales, space-testing missions, and more should help it reach its goal of using its rocket to get to the moon this year, as part of a team competing for the Lunar XPrize.

Perhaps the ultimate evidence that space technology is catching on is that it is even filtering down to hobbyists. A hacker space called Mojave Makers allows individuals to, say, build their own 3D-printed rocket motors. Says Bessemers Nagaraj: You now have people tinkering with space just as the previous generation tinkered with computers.

A version of this article appears in the March 1, 2017 issue of Fortune with the headline "Rocket Boom in the Desert."

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Space Startups Are Booming | Fortune.com - Fortune