The Space Reviewin association with SpaceNews

White Knight 2
While entrepreneurial space in the minds of many conjures up efforts like Virgin Galactic, “Space 2.0” startup companies are using space technologies and services for a wide range of other terrestrial applications. (credit: J. Foust)

Space 2.0: bringing space tech down to Earth

The paradigm shift we’re beginning to see in the space industry is creating many scenarios that old-timers like me thought we’d never experience.

Engineers embrace risk. Private investors take stakes in aerospace businesses. Time horizons compress from decades to months. Space projects stop being pipe dreams and become job creation engines. We’re not used to thinking of space as shovel-ready, but these days, space projects based on existing technology are “shovels in the ground.”

We’re not used to thinking of space as shovel-ready, but these days, space projects based on existing technology are “shovels in the ground.”

Start-up companies, funded by venture capital and small business grants, are growing based on existing patents and infrastructure, like the Global Positioning System (GPS) satellite network. Those concepts came from our tax dollars already spent, spanning more than 50 years of space program and NASA innovation. The expensive and time-consuming parts have already been done.

At the Colorado School of Mines, we began the 8th Continent Project two years ago to support entrepreneurial companies that use space technology. We borrowed from the evolution of the Internet to develop a brand-new meme: Space 2.0.

Just as Web 1.0 created an information infrastructure that Web 2.0 companies opened to participation from everyone, Space 1.0 companies created the infrastructure of rockets, satellites, and space-age materials which Space 2.0 companies can capitalize on without leaving the ground.

What kinds of projects are Space 2.0 companies?

  • Every GPS company is a Space 2.0 company. Even DigitalGlobe, the imaging powerhouse that feeds Google Earth with its own constellation of satellites, started with a license to publish photos once classified for spies’ eyes only.
  • Your Temper Foam pillow came from NASA research into seats and headrests that reduce the impacts of high G-forces on astronauts.
  • Outlast Technology makes outdoor gear from phase-changing fabrics, originally designed to shield spacewalkers from intense heat and cold.
  • The ear thermometer in every hospital and pediatrician’s office uses the same infrared sensing mechanism that measures the temperature of distant stars.
  • AeroGrow makes countertop gardens that were developed for aeroponic experiments in zero gravity.
  • Photovoltaic solar collectors and thin-film solar arrays have moved from Apollo missions and the International Space Station to suburban rooftops.

In medicine, optics, materials, energy, and packaging, space technology touches ordinary people every day. Thousands more ideas wait to be commercialized. What’s more, it has already put many people to work. And not just rocket scientists, either.

Here’s the taxonomy. Space 1.0 is the industry we all grew up with: rockets to the Moon and billion-dollar government contracts. In Space 1.5, the launches are commercial and so are the payloads; the Saturn 5 and the Apollo capsule are replaced with rockets by Boeing and Lockheed Martin, carrying communications satellites built by these and other big, public companies.

“NewSpace,” the privately funded world of such visionaries as Elon Musk and Richard Branson, is probably Space 1.5.1. Branson, Musk, and Paul Allen have poured money into their projects because 1) they have it and 2) they’re committed to the dream, not because they expect ROI anytime soon.

Space 1.0 is the industry we all grew up with: rockets to the Moon and billion-dollar government contracts. In Space 1.5, the launches are commercial and so are the payloads. “NewSpace” is probably Space 1.5.1.

Companies focused on Space 1.0 and NewSpace present a poor business model for risk capital because the dollar amounts are so huge and the customer base in many cases is one: the government. “The ‘moonshot’ technologies get fewer investments,” angel investor Steve Murchie said at a panel discussion in early April. “It’s the derivative technologies that really create an investment opportunity for most VCs.”

Those derivative technologies make up our Space 2.0 community. Just as Web 2.0 took an information channel and turned it into a conversation, Space 2.0 takes the monolithic, cost-plus world of aerospace and brings it down to Earth.

In some cases, Space 2.0 businesses are developing technologies for NASA and commercial use simultaneously, under the SBIR or STTR programs. Sometimes they repurpose existing patents, like the team at iShoe that took an electronic insole designed to help astronauts to readjust to gravity, and turned it into a medical device to monitor seniors at risk for falls, or a physical therapy tool to adjust the gait of stroke victims or wounded Iraq vets.

“Most investors, institutional investors, venture capital investors, or angels are looking for business opportunities that have a demonstrable probability of success,” Murchie said. That means proven technology, with an identified marketplace and a clear way to monetize it.

Conventional wisdom—space is expensive, space is inaccessible, space is a place for very big companies—has slowed the flow of risk capital to aerospace and space tech startups. But that logjam is beginning to break up, in part because the walls between engineering and business are coming down.

Paul Jerde, director of the Deming Center for Entrepreneurship at the University of Colorado Boulder’s Leeds School of Business, recalls a meeting between CU grad students and Bill Reinert of Toyota’s Advanced Technology Group. Reinert, who was one of the early developers of the Prius hybrid, told the MBA students they would be no use to Toyota unless they understood technology and told the engineers they’d be no use to Toyota unless they understood business—“and none of you are of any use to us unless you understand policy.” It was a clear invitation to step outside the box.

That’s a big step for aerospace engineers whose typical career path involves working with, or for, government agencies on decades-long, cost-plus projects. Engineers used to work in silos, but tech and business landscapes change so fast these days that there’s no time to learn a different discipline. A team approach is necessary when you’re dealing with this kind of complexity.

When we think of “shovel-ready” projects, space technology doesn’t spring to mind. Most people think of space shuttle liftoffs and communications satellites as expensive, long-term programs that require years of development and billions of dollars.

In Colorado, thanks to a forward-looking state government, world-class university resources, and the nation’s second-largest concentration of aerospace companies, the 8th Continent Project creates an entrepreneurial ecosystem: all the things small companies need to succeed, including mentoring, connections, and funding.

Last fall, we opened the 8th Continent Aerospace Business Incubator with the Boulder Innovation Center. The incubator already hosts two companies that are well along the entrepreneurial growth curve, each offering a market-ready product with real customers.

Flaik, which created a GPS device and website for skiers and snowboarders, came from Australia to Boulder to tap into Colorado’s snow-sports dominance and GPS expertise. Already in use at Steamboat and Copper Mountain, where Flaik tracks every child in ski school and day care, little red Flaik devices could soon be standard equipment for resorts, race programs, and winter gadget lovers.

Just as Web 2.0 took an information channel and turned it into a conversation, Space 2.0 takes the monolithic, cost-plus world of aerospace and brings it down to Earth.

ColdQuanta, our second tenant, produces a tabletop device that makes Bose-Einstein condensate, a new form of ultracold matter that won two University of Colorado physicists the Nobel Prize. Scientists say this technology offers as much potential as lasers did in the 1950s. ColdQuanta’s market is the scores of labs working on applications that range from navigation to manufacturing, industries for which the ColdQuanta device could cut new technology development time by more than half.

The 8th Continent Chamber of Commerce launched in February, adding a job network, funding network and, we hope, a sense of community.

We’re building a network that includes all kinds of enterprises, not just start-ups, and creates new jobs and prosperity for the entire Front Range. Large aerospace companies may benefit as they spin out projects, or as strategic investors adding niche expertise through acquisition. Raising capital has been difficult recently, so 8th Continent works with venture networks such as the Keiretsu Forum and ClearCreek Partners, whose funders always look for the next disruptive technology.

Not far from us in metro Denver, the eSpace Center for Space Entrepreneurship focuses on traditional Space 1.0 startups’ needs as they build and test devices bound for space—an important building block of what 8th Continent does. A joint venture between CU Boulder and SpaceDev Inc., eSpace offers manufacturing expertise and access to a clean room, specialized instruments and process technology.

In this way, Colorado’s two space business incubators complement one another. eSpace will help young businesses, university and even high school students create the next generation of satellites, orbiters and rocket engines. When their dreams take flight, 8th Continent will work to bring the technology and information they create “down to Earth,” creating jobs and prosperity for everyday people on this planet.