This Japanese startup wants to become the moon’s own FedEx

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(Bloomberg) – An escalating US-China space rivalry and Elon Musk’s ambitious Mars program have launched dozens of startups around the world seeking lucrative contracts, as humans race to resources that could support life beyond Earth.

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Among these, a small Japanese company is looking to get noticed this month with what could be a first for a commercial company.

Tokyo-based ispace Inc. is expected to send a lunar lander no earlier than Nov. 22, carrying several government and commercial payloads, including two rovers. Like Musk’s dream for a Mars colony, the startup’s grand vision is to build a human settlement on the moon by 2040, but before that it wants to become the lunar version of FedEx – making money by shipping scientific equipment and commercial goods to the moon.

Ispace’s first assignment will test not only the technology credentials it has built since its founding in 2010, but also the faith of its backers, one of whom is a former SoftBank Group Corp executive. Much hinges on its success, including a potential initial public offering as early as this fiscal year and a shot at a bigger slice of the industry pie that Morgan Stanley predicts will triple to $1 trillion in two decades. from 2020.

“There is a huge market for services like these,” ispace founder and CEO Takeshi Hakamada, 43, said in an interview. “If something goes wrong with this attempt, we can always use feedback from the failure to improve the quality of the next launch.”

Bankers for the IPO

The company is preparing to list on the Tokyo Stock Exchange and has selected SMBC Nikko Securities Inc., Bank of America Corp., Morgan Stanley and Nomura Holdings Inc. as lead managers, people familiar with the matter said, asking not to be identified. discuss confidential information. A representative for ispace declined to comment.

Ispace says it raised about $237 million in total in July, including $57 million in debt. It was valued at around 76 billion yen ($511 million) in a Series C equity financing in August last year. Led by Incubate Fund, the round attracted six other investors, including former SoftBank Chief Strategy Officer Katsunori Sago, and funds managed by Innovation Engine Inc. and SBI Investment Co.

The lunar lander mission is part of ispace’s lunar exploration program called Hakuto-R, which means white rabbit in Japanese. The startup says it can cut fuel costs by taking advantage of the moon’s gravity to travel. The downside is that it will take up to five months to reach the moon, compared to around three days for the Apollo missions of the late 1960s and early 1970s.

SpaceX’s Falcon 9

Scheduled to launch on a Falcon 9 rocket built by Musk’s Space Exploration Technologies Corp., ispace’s lunar lander is part of a $73 million NASA contract won by a team led by Cambridge-based Draper , Massachusetts. The deal provides end-to-end delivery services to the far side of the moon under the US Artemis program.

“The first private lunar lander will be a major milestone for the space industry,” said Caleb Henry, principal analyst at Quilty Analytics, a US-based research and consulting firm.

The Mission 1 lunar lander has been flown to Cape Canaveral, Florida for its space odyssey, the company said in a statement Monday.

Ispace’s success will also be essential for Japan’s own space program as the moon once again becomes the center of geopolitical intrigue. NASA is aiming for a return this decade with its Artemis, while China and Russia have announced plans for a joint moon base. Last year, Japan’s Lunar Industry Vision Council called for closer cooperation between the public and private sectors to stay competitive in the burgeoning space economy.

Sago said the company’s valuation has the potential to multiply over the next few years. “I don’t invest in startups unless they have enough potential to grow about 10x in the long term,” he said.

Dozen of suitors

Currently, a dozen companies are developing lunar landers and vehicles, primarily through NASA’s Commercial Lunar Payload Services, or CLPS, program. A leading company in this sector, Masten Space Systems Inc., filed for bankruptcy in July. The company received an opening bid of $4.5 million from space robotics technology developer Astrobotic Technology Inc. in August.

Debacles in space programs are not uncommon, and for its part, ispace has already experienced failure. It was one of the finalists for Google’s Lunar XPrize, a $20 million prize for the first privately funded team to land on the moon, travel 500 meters (1,640 feet) and return video high definition on Earth. The competition ended without a winner, but the teams, including ispace, persisted in their efforts.

“There are a million ways space missions can go wrong and only one way they can go right,” said Henry of Quilty Analytics, noting that it’s hard to predict whether the ispace launch will be successful. “While this is an exciting field, it remains a financially and technologically challenging undertaking.”

ispace CFO Jumpei Nozaki is well aware of the risks. In an interview, he pointed out that a successful landing is not the only goal, and the performance of each stage will be evaluated.

Hakamada said he could see the formula for success in Musk’s SpaceX, which repeatedly executed projects undeterred by setbacks. He’s about to face his greatest test soon when he enters the space center to witness the liftoff.

“I’ve been told your life changes after seeing the launch in person,” he said. “It’s going to be an exciting and edgy time.”

(Updates with current lander location in 11th paragraph.)

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