The U.S. government has shifted its priorities toward supporting private space companies, minimizing its own risks and saving billions on a bet that a single administration can accomplish anything in a short amount of time.
This move beyond the old national space race with the former Soviet Union has benefited high-profile private companies like SpaceX and Blue Origin, but funding gaps and obstacles persist for smaller, earlier-stage companies looking to develop cutting-edge space technology and solve a range of space travel, sustainable food and climate challenges.
NASA, or any single agency, is limited in the support they can offer early stage companies, said Dorit Donoviel, a director of Translational Research Institute for Space Health, a research consortium that has a partnership with NASA’s Human Research Program.
“We just don’t have the funding to take it all the way to market and so we absolutely need to be partnered up with other investors who are willing to look over our shoulders,” she said at a webinar held by Boundless Impact Investing this week.
Out of the $2.6 billion NASA budget allocated for 2020, only $222 million is directed to exploration technology and science.
Programs like SBIR, Small Business Innovative Research and Business Technology Transfer are run out of NASA’s Ames Research Center in California’s Silicon Valley.
Earlier this year, NASA allocated more than $45 million to fund 363 proposals from small businesses or research organizations. Other government agencies like NIH and Department of Energy, also use these programs to allocate funds to early-stage companies.
“What that does is that it allows us to get technology to a certain level of maturity to prove them out, but there is still a big funding gap between proving (that) technology and commercializing it and bringing it to market,” said Christine Escobar, vice president and chief business officer of Space Lab Technologies, at the webinar.
“We just don’t have the funding to take it all the way to market and so we absolutely need to be partnered up with other investors who are willing to look over our shoulders.”
Founded in 2016, Space Lab Technologies is working on space agriculture technology, crop production systems, and various solutions to support “living and working in space.”
Escobar notes there are opportunities for private investors.
“What’s neat about the SBIR program, is that once you get past phases one and two, phase three is meant to commercialize that technology — the government would actually match funds from investors,” she said, encouraging investors to keep track of the phase two companies.
Phase one of the SBIR program allocated up to $125,000 in funding, while phase two companies receive $750,000, according to the program website.
The government’s so-called extension funds, or follow-on funding for phase two companies, present a good opportunity for private investors, Escobar notes.
“During this time, if a company has outside investment for further R&D, the SBIR program will match those investment funds up to a cap,” she said. In NASA’s case, the agency can match external investments up to $375,000.
Escobar said a separate funding challenge occurs when startups, in their quest for commercialization, have to repackage space technology for operation on Earth.
“Another funding gap is when you transform a new technology you developed for space (for Earth) there are some development costs, because that technology is a bit more robust and complex than it needs to be,” she said. “You need to do a little repackaging to make it more cost-effective — that’s where investors could help as well.”