The modern space economy was built upon 60 years of technology development funded largely by the government. Today, business model innovation is putting that technology into the hands of entrepreneurs, stimulating competition, and creating a dynamic marketplace. From the launch of Sputnik in 1957 until 2009, there were two dozen privately funded commercial space companies that had raised non-governmental equity financing globally. Everything changed July 2009, when Space launched its first commercial payload-a 50kg Earth observation satellite for Malaysia- which flew into space aboard a privately developed rocket. With transparent pricing and lower launch costs, Space has increased access to the space economy for new entrants. Since 2000, the number of privately funded space companies has grown to 375 with nearly $19 billion of private capital invested into those companies (a 13.8x increase). This period, from 2009 to present, is what Space Angels refers to as the Entrepreneurial Space Age.
But, while Space began as a lone venture by an aspirational entrepreneur, the success of the company is the result of a collaborative effort with NASA. Indeed, Space operated on total funding of approximately $1 billion in its first ten years of operation, about half of which came from progress payments on government contracts. Following the company's successful first mission of their Dragon capsule to the International Space Station in 2012, Space CEO Elon Musk showed his appreciation for his government partners, stating at a press conference after the launch, “I would like to start off by saying what a tremendous honor it has been to work with NASA. And to acknowledge the fact that we could not have started SpaceX, nor could we have reached this point without the help of NASA.”
Government funding has played a role in the development of the Entrepreneurial Space Age and continues to shape its future. By supporting development and acting as a customer of SpaceX, the government has helped address a barrier to entry and increased access to the space economy through low-cost, reliable, commercial launch. This paper describes how the government continues to fuel the growth of the Entrepreneurial Space Age in established industries like Launch, while supporting new companies in emerging industries like Logistics and Interplanetary.
The purpose of this research is to better understand the relationship between the United States (U.S.) Government and these newer space companies, particularly focusing on the sources, tools, and impact of public funding. The major findings from this report include:
- The total value of U.S. public funding received by entrepreneurial space companies from 2000 through 2018 was $7.2B across 67 companies.
- Public funding has played an important role in supporting an entrepreneurial approach to space, particularly in addressing the barriers to entry, with 93% of U.S. Government funding flowing into the Launch industry.
- NASA is supporting technology development and providing early customer traction across the space economy.
- While the vast majority of public funding from U.S. Government agencies has focused on the Launch industry, NASA has also awarded funds to companies in the Biospheres, Industrials, and Interplanetary industries.
- Small Business Innovation Research (SBIR) and Small Business Technology Transfer (STTR) programs awards are the most common forms of public funding for entrepreneurial space companies that are eight years and younger, accounting for 44% of all awards. This funding acted as a source of non-dilutive, early-stage capital and has provided over $135M in public funding across 345 unique awards to 35 companies located in 27 different U.S. states between 2002 and 2018.
- Department of Defense (DOD), Department of Energy (DOE), and NASA's SBIR / STTR programs tend to support entrepreneurial space companies earlier in their life cycle. On average, the 35 companies who received SBIR/ STTR funding attracted $6 in private investmentfor every $1 of public funding. Comparatively, the complete set of 67 entrepreneurial space companies that received awards from the government averaged $1.1 of private investment for every $1 of public funding.
- NASA and the DOD have awarded, on average, 2% and 1% of their annual SBIR / STTR budget to equity-backed entrepreneurial space companies, respectively.
- There are 123 equity-financed space companies that have registered for a Data Universal Numbering System (DUNS) number but have yet to secure public funding.
As governments around the world prioritize their space capabilities, they are working with the private sector to build a sustainable space economy. By providing critical early funding for new companies in emerging industries like Logistics, the U.S. Government is supporting the growth of space infrastructure, such as Space Situational Awareness (SSA). Similarly, through programs like Commercial Lunar Payload Services (CLPS), the U.S. Government supports the development of new industries in the space economy.
This report represents an effort to establish an initial understanding of the role the U.S. Government has played in supporting an entrepreneurial approach to space. The findings in this report help illuminate the government's mission, public policy, and U.S. competitiveness in space.
This initial research was limited in its scope and, as such, there is further opportunity to expand upon the findings uncovered here. Areas for potential future research include:
- Explore different types of support not covered in this report including technology transfer, government equity investments (e.g. In-Q-Tel), strategic hiring by entrepreneurial firms, and reimbursable as well as non-reimbursable support;
- Evaluate state and local initiatives designed to attract or enable space activities;
- Analyze international programs designed to support the advancement of their national space industries.