rethink everything

    Asteroid mining and interstellar getaways give opportunities in the stars

    Next year will mark the 50th anniversary of Neil Armstrong becoming the first man to walk on the moon, making history before an audience of some 530 million people. Since then, and even by those remarkable standards, space exploration has come a long way. Countless satellites and unmanned probes have been launched into orbit, NASA's Curiosity rover vehicle has been sending back images from Mars and the idea of space tourism is increasingly realistic.

    But while space exploration was once a geopolitical competition, a race to see which country could push the boundaries of discovery further, it has turned into a global team-effort.

    And one in which private investment is catching up to government investments as nations with tightening budgets struggle to fund even promising projects.

    The attractions for investors are numerous. Mining for precious metals in asteroids has attracted substantial funding, and the prospect of space tourism becoming a viable possibility has brought on a slew of backers. While some household names, such as Space X CEO Elon Musk and Virgin Galactic's Richard Branson, are synonymous with space exploration, more low-key investors in the private sector are stepping forward, drawn to the wide range of possibilities.

    Boldly going up

    The BoldyGo Institute, a non-governmental and non-profit organisation, relies on private funding and a commercial model to try and advance space discoveries, often in partnership with NASA. It recently joined the US space agency in “Project Blue," which aims to find habitable earth-size planets using a special telescope.


    In Europe, the European Space Agency (ESA), has an annual budget of about $7.04 billion but its exploration efforts are supplemented by those in the commercial sector. Amongst them are Space Applications Services, a Belgian company with a heavy role in robotics control and flight systems and Mars One Ventures, a Swiss company that aims to send humans to Mars.

    In Asia, the Japanese Aerospace Exploration Agency (JAXA) is engaged in a race to put humans on the moon before China, fueling private sector growth. Interstellar Technologies made the first private rocket launch attempt in Japan last year, an effort made more remarkable by the fact it was supported by crowdfunding.

    Overall private investment for commercial space companies totaled $3.9 billion in 2017, a record figure that underscores the shift away from government funding, according to investment firm Space Angels.

    The number of venture firms putting money into the space industry now stands at 120, another record. There were 37 launches from the commercial sector and 51 launches from governments last year, according to the company.

    The expectations for growth are high. The Bank of America expects the space industry to swell from its current $350 billion value to $2.7 trillion in 30 years.

    Investing in the unknown

    So why are investors so eager to put money in a risky area with an unknown future? Many are drawn to the possibilities of helping societies of the future. Planetary Resources and Deep Space Industries, both based on the west coast of the United States, are eyeing asteroid mining and the opportunities for excavating gold, silver, platinum and palladium amongst other materials. The government of Luxembourg has agreed a €25m cash and grants investment deal with Planetary Resources aimed at launching the first commercial asteroid prospecting mission by 2020.

    The benefits for environmental protection are also being explored. Orbiting space satellites can scan remote areas over many years and help identify negative patterns in the environment.

    Scientists can see changes in the atmosphere, land and oceans well before they would from monitoring on the ground. This digital data can be processed and used for policy-making decisions in infinite ways. Space-monitoring of changes in the polar ice caps is already helping shape global warming policies to best preserve the Earth. In Britain, satellite data is being used by Geospatial Insight to analyse the effects of floods and Swindon-based AgSpace to quantify crop quality for famers.

    Tech leads of the charge

    Unsurprisingly, the tech sector is ripe with interested investors. Some are well-known - Elon Musk, of electric car-maker Tesla, founded SpaceX, and Amazon's CEO Jeff Bezos launched Blue Origin to improve orbital flight. Richard Branson's Virgin Galactic has become one of several players aiming to launch humans into space. Planetary Resources has drawn the backing from Google co-founder Larry Page and the search giant's former chairman Eric Schmidt. Film producer James Cameron has also invested.

    Dutch entrepreneur Bas Lansdorp, founder of wind energy company Ampyx Power, launched Mars One in 2011, nearly totally self-funding the venture. His mission is to establish a human settlement on Mars with the ultimate goal of learning how the solar system originated.

    Microsoft co-founder Paul Allen founded Vulcan Aerospace in 2015 with the aim of making commercial space travel a reality. Allen also founded Stratolaunch Systems, which is on track to be the first space transport program completely funded with private investments. He also put about $25 million into Mojave Aerospace Ventures' SpaceShipOne rocket-powered, suborbital aircraft that launched in 2004.

    Outside of the tech sector, Australian former banker Adam Gilmour launched Gilmour Space Technologies to build rockets and US patent attorney and science fiction writer Arthur Dula co-founded Isle of Man-based Excalibur Almaz envisioning crewed expeditions into deep space. In Spain, aerospace engineer Jose Mariano Lopez-Urdiales founded Zero 2 Infinity toward commercializing space tourism.

    Less risk in the future?

    As the commercial sector assumes a larger role in space exploration, more opportunities should unfold, along with the hope of reducing risk and cost.

    The avenues for investment are wide. For one, the number of crowdfunding projects, such as the one launched by London-based Spacebit this year, are growing. Spacebit founder and CEO Pavlo Tanasyuk said he sees crowdfunding a way help private stakeholders and individuals become "the new space pioneers" and the "future of space exploration."

    Investors can also turn to exchanged-traded funds (ETFs) that capture a broader snapshot of the industry. Among them is iShares Global Industrials ETF (EXI), which includes companies helping to power the James Webb Space Telescope Observatory and the Orion spacecraft. And the iShares US Aerospace & Defense ETF (ITA), includes companies like United Technologies, which designs NASA's space suits.

    Whatever the route, there are a growing number of options for space investment. And as more money gets funneled in, the unknowns of space exploration can become more known.

    Important information

    This document is issued by Bank Lombard Odier & Co Ltd or an entity of the Group (hereinafter “Lombard Odier”). It is not intended for distribution, publication, or use in any jurisdiction where such distribution, publication, or use would be unlawful, nor is it aimed at any person or entity to whom it would be unlawful to address such a document. This document was not prepared by the Financial Research Department of Lombard Odier.

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