NEW YORK — New
startups hoping to make their mark on the space industry still face high entry
barriers just to cover their initial costs, investors said Wednesday.
The high
cost and risks associated with new
commercial ventures, as well as the bureaucratic government hoops they have
to jump through, provide substantial barriers for nascent companies aiming for
space, experts said during the 2008 Space Business Forum here presented by the
Space Foundation, a non-profit advocacy organization.
According
to the foundation's Space Report 2008, the
space industry generated about $251 billion in revenue worldwide in 2007,
an 11 percent increase from $225 billion in 2006. About 69 percent of that 2007
revenue was the result of commercial activity, according to the report.
"If
anything, the market is a little bit hesitant," said Thomas Watts, managing
director for equity research for the investment firm Cowen & Company, LLC. While
investors might be open to established private firms going public today, new
companies may not be so lucky. "Investors are open to it, but at the same time,
I think there's a wait and see attitude to new ventures," he said.
High
operations costs remain a major barrier, investors said. That is particularly
true at the start when major investment in basic launch or spacecraft
development infrastructure is required before returns can be seen.
"There's
some parts of the business, on the operations side, where you're talking about
significant investments of capital up front," said Hugh Evans, a partner with
Veritas Capital, an investment firm, adding that there will always be interest
in affordable launch providers. "Some of the trends we find attractive are
obviously the declining costs of being able to launch satellites."
Newt
Gingrich, chairman of the Gingrich Group and a former speaker of the U.S. House
of Representatives, said the bureaucratic red tape inherent in approving space
assets for flight — particularly at NASA — is a major obstacle for newcomers to
space industry.
"We need a
fundamental, real change in how we're approaching space," Gingrich said. "We
need a change that allows Americans to participate, not just bureaucrats."
Gingrich
said the risk-adverse focus of NASA and space-oriented government offices has
stymied progress in both
commercial and government-sponsored exploration efforts.
"We have
adopted an insane model of being so risk averse that we spend so much time and
money on avoiding error that we avoid achievement," Gingrich said, noting that
if the country today tolerated risk as well as it did in the first 25 years of
aviation, "we would have a colony on Mars by now."
Gingrich
said tax-free cash prizes for
major accomplishments, like a $1 billion purse for the ability to repeatedly
launch and land a recoverable orbital spacecraft, could do wonders for spurring
private innovation. If the prizes are set to be budgeted only in the year they
are won, rather than set aside for years until a winner comes forward, then it
might be more palatable for lawmakers, he added.
"I am
passionately committed to prizes," Gingrich said. "The great power of prizes is
simple; they allow anybody anywhere who's competent to try and solve a
problem."
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