The billionaire space race[2][3][4] is the rivalry among entrepreneurs who have entered the space industry from other industries - particularly computing.[5][6] This private spaceflight race involves sending privately developed rockets and vehicles to various destinations in space, often in response to government programs or to develop the space tourism sector.[7]

Prior to his death in 2018, Paul Allen was also a major player in the billionaire space race through the aerospace division of his firm Vulcan and his financing of programs such as Scaled Composites Tier One. Allen sought to reduce the cost of launching payloads into orbit.[3][8][4]


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The groundwork for the billionaire space race and private spaceflight was arguably laid by Peter Diamandis, an American entrepreneur. In the 1980s, he founded an American national student space society, the Students for the Exploration and Development of Space (SEDS). Later, Jeff Bezos became a chapter president of SEDS. In the 1990s, Diamandis, disappointed with the state of space development, decided to spur it on and spark the suborbital space tourism market, by initiating a prize, the X Prize. This led to Paul Allen becoming involved in the competition, creating the Scaled Composites Tier One platform of SpaceShipOne and White Knight One which won the Ansari X-Prize in 2004. The technology of the winning entrant was then licensed by Richard Branson's Virgin Group as a basis to found Virgin Galactic. The base techniques of Tier One also form the basis for Stratolaunch Systems (formerly of Vulcan Aerospace).[9][7] Elon Musk's SpaceX was established in 2002, last among the three main rivals. Elon Musk has expressed excitement for a new space race.[10]

Government programs have also fuelled the billionaire space race. NASA programs such as the Commercial Crew Program (created in 2010, with grants mostly won by SpaceX and partially by Blue Origin) and the Artemis HLS program (awarded to SpaceX in 2021 and also to Blue Origin in 2023) have pushed the billionaires to compete against each other to be selected for those multi-billion dollar procurement programs. The competition has also resulted in court battles such as Blue Origin v. United States & SpaceX. Those government programs have provided critical funding for the new private space industry and its development.[11]

SpaceX and Blue Origin got into a Twitter battle about the meaning of a used rocket, landed rocket, spacerocket, at the end of 2015, when New Shepard successfully landed, after a suborbital jaunt into space. SpaceX had previously launched and landed its Grasshopper rocket multiple times without reaching space. Then SpaceX landed a Falcon 9 first stage, which had been used to launch a satellite into orbit, prompting more Twitter battles at the start of 2016, such as Bezos tweeting "welcome to the club".[6][16]

Blue Origin and Virgin Galactic are in the same market, suborbital space tourism, with the space capsule New Shepard and the spaceplane SpaceShipTwo, respectively.[23][24][2][1] The two systems made their first flights with multiple passengers within 10 days: SpaceShipTwo flew on July 11, 2021 and New Shepard followed on July 20, both carrying their billionaire founders and a few other passengers. As of July 2023, SpaceShipTwo has made three tourism flights with two pilots and four passengers each while New Shepard has made six flights with six passengers each.

The Stratolaunch rivalries are no longer part of the billionaire space race, after 2019, having been suspended at the time of Paul Allen's death.[8][25] The Stratolaunch company has since continued operations under new ownership, but does not focus on orbital space launches anymore.

Vulcan Aerospace subsidiary Stratolaunch Systems planned to air-launch satellite launcher rockets, the same profile as planned by Virgin Orbit for its LauncherOne operations. While LauncherOne was developed and launch aircraft procured (once White Knight Two, now 747 Cosmic Girl), the Scaled Composites "Roc" Model 351 is still being developed (as of 2022) and the rocket to mate to it (the company has refocused away from orbital spaceflight) has yet to be selected.[26] After the death of Paul Allen in 2018, Stratolaunch was sold off, and no longer a billionaire insurgent venture.[8]

By the mid-1950s, the U.S.-Soviet Cold War had worked its way into the fabric of everyday life in both countries, fueled by the arms race and the growing threat of nuclear weapons, wide-ranging espionage and counter-espionage between the two countries, war in Korea and a clash of words and ideas carried out in the media. These tensions would continue throughout the space race, exacerbated by such events as the construction of the Berlin Wall in 1961, the Cuban missile crisis of 1962 and the outbreak of war in Southeast Asia.

In 1958, the United States launched its own satellite, Explorer I, designed by the U.S. Army under the direction of rocket scientist Wernher von Braun. That same year, President Dwight D. Eisenhower signed a public order creating the National Aeronautics and Space Administration (NASA), a federal agency dedicated to space exploration.

In recent years, money has been pouring into the space sector. Take 2021, when public and private markets put $10 billion of fresh capital to work in space companies. These investments are fueling a new wave of dynamism and innovation throughout the space ecosystem, with downstream impacts on the competitive landscape that could increase challenges for some companies.

Meanwhile, a rising number of new entrants in the space sector have tapped into this significant and growing investor interest to pursue spin-offs, partnerships, and private-investment rounds. These entrants have used the wave of private and public capital to fund their product road maps and become first movers in an expanding set of commercial opportunities in space.

Over the past decade, the space sector has experienced massive growth in investment activity. Between 2012 and 2021, total annual investment grew to more than $10 billion, from $300 million. Through the first half of 2022, investment lagged behind 2021 but remained quite high by historical standards, indicating that the sector may prove resilient despite the challenges of the current market environment.

LEO ventures have attracted the most interest and funding from investors, with small-satellite-constellation ventures proliferating and increased competition in the small-satellite-launch market driving down launch costs. Investor interest has also been driven by greater awareness of the variety of promising near-term LEO use cases, including telecom and Earth observation. LEO ventures may increasingly serve as proof-of-concept precursors for higher-altitude ventures, including those at cislunar distances and beyond. With advances in enabling technologies for deep-space activities, such as launch services and in-space infrastructure, investors may look beyond LEO for the next frontier of investment opportunities. Several customer and investor signals point to cislunar space as a key growth opportunity in the next decade.

Venture capital (VC) investments in the space sector have grown substantially over the past decade as investors have come to appreciate the long-term commercial potential of the industry. The many active VC investors in the space sector include Andreessen Horowitz, Founders Fund, and Lux Capital. Much of the capital has flowed to early-stage companies, allowing space start-ups with less mature products or a longer path to profitability to fund R&D of capital-intensive products while working to capture early customer revenue.

Although VCs continued to invest in the space sector in the first half of 2022, companies faced intensifying competition for investments from top-tier VC backers. Based on our discussions with ten leading VC companies, we found that those space companies that have had recent success in attracting funding from VCs are more likely than other companies to undertake the following activities:

The abundance of private and public capital flowing into commercial space enables several key growth strategies. Space ventures can deploy capital to gain share of high-growth space segments through M&A. To boost organic growth, space players can use material capital raises to pull forward innovation and product development by several years. Additionally, capital can provide innovative space companies with the flexibility to invest in leading-edge products and IP. This can in turn unlock innovative new business models (for example, as-a-service models) to provide additional value to core government customers. Last, players can invest to strengthen key relationships with suppliers and customers.

Not all expansion or integration occurs via M&A. Many space leaders and disruptors have focused on organic growth by funding in-house tech and engineering teams to design and build next-gen products. Companies able to create their own groundbreaking products or capabilities often see less value in acquiring companies whose technologies may lag behind what they already possess than in accelerating their internal product road maps.

Space players have also deployed capital to invest in customer and supplier relationships via up-front purchases, exclusive deals, and other favorable partnerships. These agreements can provide needed up-front capital and improve the stability of early-stage suppliers. Simultaneously, they help the space companies making the investments secure advantageous deal terms and ensure sufficient capacity.

The space sector is quickly evolving, as seen by the surge in investment in recent years and the range of strategies that space players have used to secure and deploy private capital. Given the recent volatility of public markets and the well-publicized struggles of SPACs, private capital may increasingly take center stage in fueling the organic and inorganic growth of space players over the next few years. ff782bc1db

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