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Space exploration captivates the world's entrepreneurs

Japan lagging behind, but ventures starting to bear fruit

Yuya Nakamura, founder and CEO of Axelspace

TOKYO -- Ultrarich entrepreneurs are often fascinated by space exploration. Among them are Paul Allen, co-founder of Microsoft, Richard Branson, founder of Virgin Group, and CEO Jeff Bezos.

This is especially true of Tesla CEO Elon Musk who as a child was fascinated by "Star Trek", the American science fiction television series.

Musk founded SpaceX in 2002 and brought drastic price reductions to the cost of space travel through reusable rockets and spacecraft. He is even envisioning the migration of humans to Mars.

The space business is already having ripple effects in a variety of industries, and is expected to have many more. Until now, Japan's efforts have been sponsored by the government and major industrial concerns, but the activities in the rest of the world show that there are plenty of ways for entrepreneurs to break into the business, and recently there have been a few steps in this direction.

Axelspace, which was founded in 2008 and now employs some 30 workers, has a clean room in its office in Tokyo for production of microsatellites, each weighing about 50kg. Although microsatellites cannot functionally compete with big ones, they can be developed and manufactured by a smaller number of people in a shorter period of time. They also cost a hundredth as much.

Private weather forecaster Weathernews launched an Axelspace-made satellite on July 14.

Axelspace is not a mere maker of microsatellites. It plans to launch 50 Earth-observation satellites by 2022 to gather data on such things as the number of cars on the ground, containers at ports and agricultural crops. It will provide corporate clients with services based on them. These are expected to help businesses grasp economic trends and make more accurate management decisions.

"We want many companies to utilize space data," said Yuya Nakamura, founder and CEO of Axelspace.

Planning to launch three satellites by the end of this year, Axelspace has raised a total of 1.9 billion yen ($16.9 million) from Global Brain, a Tokyo-based venture capital company, as well as major trading house Mitsui & Co. and others.

Space vision

The efforts by Axelspace point to a direction Japan should take.

The government's Space Industry Vision 2030 stresses that new businesses will be created in areas fusing space and information technologies. Setting an eye toward a fourth Industrial Revolution, Japan cannot afford to ignore space, which will become the main stage for collection and utilization of data.

Despite the recent failure of Japan's first privately launched rocket, space ventures are possible in wide-ranging areas including travel and telecommunications. The Cabinet Office and other concerns are holding a contest for ideas for space businesses.

But Japan is lagging behind global whirlwinds toward space exploration. Venture businesses that follow Musk and other trailblazers, which are collectively known as NewSpace, are reinforcing their presence in the U.S.

Space image provider Planet Labs, which has reportedly raised the equivalent of 20 billion yen, has established a huge network of satellites through the acquisition of operations from Google and other measures.

Rocket Lab, a developer of rockets by means of 3-D printing, has a facility for inexpensive launches in New Zealand.

There are some 1,000 companies referred to as NewSpace around the world, of which only 20 or so are Japanese, according to Hidetaka Aoki, partner in charge of space at Global Brain. Japan will "be left behind if the current situation continues," Aoki said.

This year marks the 60th anniversary of the then Soviet Union's successful launch of the world's first artificial Earth satellite, Sputnik, which rattled the U.S. While the space development race led by superpowers has lost momentum, moves to create space-related businesses by entrepreneurs are gathering steam. But Japan has yet to fully catch the wave.

In the first place, the spirit of venture has been weak in Japan's space business. The public sector accounts for about 90% of demand for space-related equipment and the market has hit a growth ceiling at around 300 billion yen a year. Even including satellite-based services, the market is worth 1.2 trillion yen, compared with the global market of more than 30 trillion yen, which continues to expand.

Because the use of space involves the question of security, the preparation of international rules is necessary. The development of space cannot be left to venture businesses alone without the involvement of national governments. There is a need for collaboration beyond the barriers that stand between the public and private sectors and between established and emerging players.

In the U.S., space venture businesses often reinforce operations under contract with NASA. Workers routinely move from big space-related companies to venture businesses.

In short, national commitment holds the key to space development. Japan's Diet has passed two laws to promote private companies' entry into space development. Preparations are underway for full-scale operation of a highly precise Japanese version of the Global Positioning System in the spring of 2018.

For the trend to take hold, not only venture businesses but also existing "OldSpace" players and other parties concerned need to exercise entrepreneurship.

"We will plunge into a new world," declared Naoto Matsuura, head of the New Enterprise Promotion Department at the Japan Aerospace Exploration Agency, stressing that JAXA will not lock itself in the so-called "space village" but will open its doors to outsiders, including venture businesses. As a typical example of the new step, JAXA, which used to procure satellites almost exclusively from Mitsubishi Electric and NEC, has picked Axelspace as a supplier.

Development Bank of Japan will provide 300 billion yen to the field of aerospace under its three-year loan and investment program that started in April. Financing of space businesses requires a bold risk-taking stance because past results can hardly work as the foundation of judgment.

"We will make investments and financing with a venture spirit," said Yuki Takemori, head of the newly established aerospace office at DBJ.

It is important to accumulate specific achievements based on these developments instead of letting them end as a temporary trend.

Space is not only a huge potential market but also inspires dreams and fascinates people. It should be remembered that even Musk has repeatedly failed at launching rockets and spent several years building the foundation of his space business.

National dynamism cannot be created without innovations at a time of radical changes caused by globalization and the widespread use of IT.

Competition for space exploration business will relentlessly reveal whether Japan has an entrepreneurship spirit that can work globally.

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