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Ahead of this month’s TAC Talk on the new commercial space age, experts ruminate on the state of Japan’s own space startup sector.

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SpaceX Dragon cargo spacecraft docked at the International Space Station

Yuya Nakamura knew the science. He just wasn’t sure how to make the business of it work.

It was 2007, and Nakamura had progressed from his doctoral studies in aeronautics and astronautics to research in the University of Tokyo lab of Professor Shinichi Nakasuka.

They were making steady advances in ultrasmall satellites (micro, nano and pico), orbit-capable objects up to 500 kilograms in weight (as opposed to traditional satellites that often top one ton).

Such compact technology brings the cost of building and launching a satellite down to the tens of thousands of dollars from the hundreds of millions previously required.

In 2008, with Nakasuka’s help and support from a small government grant, Nakamura founded Axelspace, a miniature satellite startup. Yet despite the company’s promise of affordable satellite tech, interest among investors was as elusive as life on Mars.

“No one believed that space could be an industry for startups,” says Nakamura, 41. “It was almost impossible for us to get investors.”

The less-than-stellar response reminded Nakamura’s academic mentor of his own research breakthrough experiences in the late 1990s.

“At the time, the National Space Development Agency [the predecessor to the present-day Japan Aerospace Exploration Agency, or JAXA] was very skeptical about whether a university could develop a satellite, let alone one with such a low cost,” says Nakasuka, 61, a panelist at this month’s TAC Talk on the new commercial age of space.

It would be years before that kind of thinking would change.

With American space companies like billionaire Elon Musk’s SpaceX and Blue Origin, owned by Amazon’s Jeff Bezos, making giant leaps in the industry, it’s natural to wonder why Japan hasn’t seen its own private sector take flight. After all, this is a nation whose aerospace accomplishments includes two modules on the International Space Station, a regular roster of astronauts and dozens of homegrown satellite launches since 1970.

It’s a glaring need for not only Japan but governments the world over seeking to share the cost of expensive space programs with innovation-focused private firms. In March, JAXA was allocated a record-high ¥449 billion ($4.1 billion), a number dwarfed by NASA’s $23 billion budget, which is set to grow in 2022 to nearly $25 billion.

While the Japanese government launched a $940 million incubation fund for space startups in 2018, the country’s space business landscape is far less developed than in the United States, which saw a record $3.9 billion of investments in the industry in 2017.

There were fewer than 20 space startups in Japan when the fund started, compared with more than 120 companies investing in space projects in the US.

The comparison is one Garvey McIntosh is more than used to addressing.

“I get the question from Japanese people all the time: ‘How can we get our commercial sectors to be like the United States’?’” says McIntosh, 52, NASA’s Asia representative in Tokyo and another TAC Talk panelist. “I get this feeling people think NASA is giving money away to commercial partners. We don’t do that.” “NO ONE BELIEVED THAT SPACE COULD BE AN INDUSTRY FOR STARTUPS.” —Yuya Nakamura

Axelspace CEO Yuya Nakamura

“I GET THE QUESTION FROM JAPANESE PEOPLE ALL THE TIME: ‘HOW CAN WE GET OUR COMMERCIAL SECTORS TO BE LIKE THE UNITED STATES’?’” —Garvey McIntosh

During meetings with Asian space agencies and talks to the Japanese public, McIntosh often finds himself dispelling misconceptions that SpaceX’s current success is due solely to big NASA handouts in the past. Rather, he explains, NASA approached SpaceX as a potential provider of dependable and cost-effective solutions in space.

Even then, it took SpaceX five years of testing before its first successful unmanned spaceflight in 2008, then another 12 years before the first crewed craft (with three NASA astronauts and Japan’s Soichi Noguchi on board) docked with the International Space Station.

“[SpaceX] proved their reliability, so we kept giving them contracts to take cargo and then people to the International Space Station,” McIntosh says. “We’re looking for companies like that who can do the things we need to do and do them safely.”

The likes of Tokyo University’s Nakasuka are cognizant of the path taken by the US to develop a thriving space industry.

“Japan is very behind the US in those areas,” says Nakasuka, who has been a member of Japan’s space policy committee since 2012.

One issue, Nakasuka notes, is that many of JAXA’s private sector partnerships are with Mitsubishi Heavy Industries, Kawasaki Heavy Industries and other mega-conglomerates developing traditional space components, machinery and technologies.

“These ‘old’ space companies are getting almost 90 percent of the government’s funding for space development activities,” he says. “But the portion of space industries [that comprise these companies] is maybe 1 or 2 percent [of their overall activities]. They are not focusing on the most challenging things in space right now.”

What investment does make its way to companies like Nakamura’s Axelspace is not without conditions. In 2016, JAXA approached Nakamura to develop what would become Axelspace’s RAPIS-1, a low-cost, 200-kilo cube satellite. As development began, however, Nakamura realized that JAXA had a more traditional approach to collaboration.

“There were so many regulations,” says Nakamura, who leads a Nihonbashi-based team of 90 international engineers, data scientists and support staff. “‘You need to test this. You need to follow that rule.’ But our way of development is that we cannot avoid failure as long as we can recover from it. For JAXA, it was the first time for them to work with startups, so they had some concerns about applying our own rules to JAXA satellites.”

Smoothing over these differences was perhaps the project’s most significant accomplishment.

“I myself went to JAXA’s office so often [during the RAPIS-1 project] to convince them to accept our methodology,” he says. “Finally, one of the JAXA board members who had just come from a private company agreed with us, so they were able to become more flexible.”

That government embrace of the startup ethos may not be happening as quickly as some would like, but Member Chris Blackerby, chief operating officer of satellite servicing and space debris removal startup Astroscale, is more optimistic.

ispace CEO Takeshi Hakamada NASA’s Garvey McIntosh

“Japan, which I guess is not traditionally known to be an entrepreneurial hub, is slowly becoming an entrepreneurial hub,” says Blackerby, 48, who will also take part in this month’s panel discussion. “It’s a recognition that [the future] is not going to be the way of mega-aerospace corporations and big governments as it was for the first 50 years of the space age. It’s moving to a place where it becomes a real, true community and an ecosystem where you’ve got big and small companies—just like any other industry.”

Just as NASA has forged a relationship with SpaceX as a low-cost option for conveying supplies and astronauts to and from the International Space Station, JAXA, too, is moving in a similar direction.

In 2020, JAXA selected Astroscale as a commercial partner for the first phase of a space debris removal project expected to start in 2023. This year, the space agency contracted local startup ispace to transport a two-wheeled, baseball-sized rover to the moon in 2022. Under the agreement, ispace will also collect lunar data.

“While this is a good indicator of the current landscape in the sector, we expect commercial missions to develop further and more commercially led missions to be announced over the next [few] years,” says Takeshi Hakamada, CEO of ispace, whose more than 130 employees are based in Japan, the US and Europe.

Small steps like these, Blackerby says, is how any sustainable space industry grows. From prototypes and exploratory projects emerge lasting partnerships.

The proof is indeed out there. Axelspace has begun turning a profit by providing satellite data to both government agencies and meteorological organizations, while Astroscale, from its launch in 2013, now employs more than 250 staff in offices in Japan, Britain, the US, Israel and Singapore.

After raising $46 million in its latest round of funding earlier this year, ispace is well positioned to take advantage of the increased interest in lunar projects. The company’s lander, flying to the moon aboard a SpaceX Falcon rocket, will also deliver a rover for the United Arab Emirates during next year’s mission.

It’s shaping up to be a busy 2022 for moon missions, with India, Russia, South Korea and the US all sending craft. NASA, in particular, has plans to return astronauts to the lunar surface for the first time since 1972 by the middle of the decade. International projects like the Artemis program bode well for Japan’s burgeoning commercial space industry.

“We’re going to get beyond this mutual investment in research and development to something that is more akin to a general economic model,” Blackerby says. “That’s what we’re aiming for: by the end of this decade to see the business of space as just an everyday thing.”

Professor Shinichi Nakasuka Astroscale’s Chris Blackerby

TAC TALK: A NEW SPACE AGE  December 1  6:30–8pm  Brooklyn rooms & online  Members: ¥1,650 (online: ¥550); guests: ¥1,980 (online: ¥660)  Details online “THAT’S WHAT WE’RE AIMING FOR: BY THE END OF THIS DECADE TO SEE THE BUSINESS OF SPACE AS JUST AN EVERYDAY THING.” —Chris Blackerby