Government of Japan Launches $940M Fund to Back Space Start-Ups

By T-mercury via Wikimedia Commons

During an event in Tokyo on Tuesday, the government of Japan said that they are giving away $940 million to back space start-ups in a new effort to improve the industry.

The said funds will be made available via loans and investments over the course of the next five years, as part of an initiative that is led by the government to double the more than $11 billion space industry of Japan. With less than 20 Japanese space start-ups that are currently operating, many perceive this as a critical solution to helping new companies cover expenses such as research or applying for patents.

In a statement, the CEO and founder of lunar exploration start-up ispace, Takeshi Hakamada, stated: “We believe this will be remembered as a turning point for our burgeoning industry.”

Ispace has received support from the government in the past, including funds from a recent $90.2 million round of funding that included Japan Airlines and Suzuki Motor. Ispace was founded seven years ago. The company is stepping past the Google-backed Lunar XPRIZE competition to fund two exploration missions to the moon, with the first one set to be launched by the end of next year and the second by the end of 2020.

The government of Japan is setting up an agency that aims to manage the funds and connect the start-ups with local talent from organisations including the rocket-building arm of Mitsubishi Heavy Industries and the Japan Aerospace Exploration Agency. Initially, start-ups will be fit to receive approximately $100,000 worth of aid to help present their concepts to potential investors. More mature companies and promising ventures will be able to have access to the rest of the $940 million fund to additional development.

Japan also declared that it is considering new laws and policies that would enable businesses to own plots of land that are developed on the moon, in a similar manner to the laws that were passed by Luxembourg and the United States. So far, Luxembourg and the US are the only two countries in the world to have passed these kinds of laws that give corporations ownership of materials that are mined in space. However, the ownership will occur only after the material have been extracted. That legal framework has observed the small European country draw in dozens of space companies, with some other 70 space companies trying to establish in Luxembourg, according to Etienne Schneider, the Deputy Prime Minister.

While ispace is currently based in Japan, the company also has subsidiary offices that are located in California and Luxembourg. Having a legal framework of ownership will be crucial to the success of a start-up once exploratory missions start collecting information and materials.

Hakamada stated: “We’re going to bring scientific instruments to the moon, and then sell the right to use our data to space agencies and other institutions, as well as provide transportation services, for profit.”

The announcement of Japan comes after a record year for commercial space companies in the United States, which received over $3.9 billion worth of private investment in 2017. Venture capital is both pouring into the sector and looking for success: More than 120 companies made investments in space during the previous year, surpassing a peak of 89 in 2015. The past eight years have seen approximately $25 billion in exits, as public offerings and acquisitions take the venture capital investments from start-ups to the next level.