Launching a business
Apr. 6, 2017
The space business is the Focus today. More companies are exploring the final frontier -- and that includes Japan. Private enterprises here are developing satellites and rockets. Yuko Fukushima, Sho Beppu and Aki Shibuya explain what's going on in this market.
Beppu: Yuko, space used to be a field for governments alone. So what is making it possible that the private sector can join in?
Fukushima: Changing technology, Sho. High quality electronics parts used for rockets and satellites have become smaller and cheaper. This has greatly lowered development costs. Globally, this industry is now worth more than 300 billion dollars and it's expected to keep climbing.
Japan's government has been sending up rockets for many years, but 2016 marks a turning point. There's been a change to the law in the country, and space pioneers are scrambling to make up for lost time.
Launching rockets is a task that has long been left to the government in Japan. The state-backed Japan Aerospace Exploration Agency had to be involved in any project, until recently.
The Diet passed legislation in November to open up the space industry to the private sector.
The law lets companies launch rockets if they meet government guidelines.
The legislation also places the burden on the government to cover damages if a launch fails and its operator sustains losses beyond what is covered by insurance.
InterStellar Technologies is a small startup based in northern Japan. The firm is now developing a10-meter long rocket that can launch super-small satellites.
They target businesses and Asian governments that want to launch satellites for communication or observation purposes.
The firm's engineers have gradually increased the altitudes their rockets can reach. They plan to conduct a test to send up a rocket more than 100 kilometers this year.
Takahiro Inagawa, the CEO of InterStellar Technologies, says, "The law creates an environment for the private space business to grow. We want to offer such a service as soon as possible."
The micro-satellite business is also attracting a lot of attention.
Axelspace is a startup that's leading the field worldwide. While most satellites are huge, the firm is developing one that measures less than one meter. It will weigh in at under 100 kilograms.
Axelspace's first micro-satellite was sent into space from a Russian launch pad in 2013.
The company is working on infrastructure that will enable observation of the earth from various locations. It plans to place 50 micro-satellites in orbit in 5 years' time.
Axelspace CEO Yuya Nakamura visited Newsroom Tokyo. Nakamura's firm is a leading start-up in the space business in Japan.
Fukushima: How did the business environment change for you after the law on space activity was enacted late last year?
Nakamura: Well I want to point out there was another important law, the satellite remote sensing act, which was enacted at the same time as the space activities act. And these two laws will regulate any type of private space business so as to keep order in space and avoid any unpredictable financial debt to the government. So in principal, we want looser regulations. On the other hand, if there are no such rules about space business, it can be regarded as a risk by investors. So, the existence of such laws can mean that the government officially recognizes private space business and gives the credibility and the endorsement to new space players like us. So it made us much easier to talk about the business to potential investors and clients.
Fukushima: It's easier for companies to invest in your company, the space business.
A closer look at Axelspace's micro-satellite business.
Nakamura established Axelspace in 2008.
The firm builds its micro-satellites in a clean room next to its office.
It promises customers lower costs and a faster turnaround time than what is usually expected in the industry.
Developing a large satellite normally takes 5 to 10 years and a budget of at least 90 million dollars.
Axelspace can finish a micro-satellite in a year for around a million dollars.
Here's one reason the firm can do the job for less.
Akihabara is one of the world's biggest electronics districts.
Solar panels that are used to generate electricity for micro-satellites, cameras and sensors can be bought off the shelf in stores here.
Axelspace determined that ready-made materials would be able to withstand the harsh environment their satellites will be facing in outer space.
But the company wasn't always successful.
It struggled to get orders. Prospective customers didn't see the need for a satellite.
So Nakamura started coming up with ideas on how customers could use data collected from high in the sky.
For example, he suggested a Japanese trading company involved in agriculture photograph a large plantation in California.
The images would show the stages of growth for crops in different blocks of the farmland.
This data could be used for such decisions as how much fertilizer is needed. In the future, Alexspace hopes to conduct daily observation of farms owned by the company, using the 50 satellites it plans to launch.
Axelspace CEO Yuya Nakamura continued discussing the space business with Newsroom Tokyo.
Fukushima: Your company is not just putting up satellites into space. It's also providing ideas to clients on how to use your satellites. We just saw an example of agriculture. What other possibilities are there for your satellites?
Nakamura: Okay, imagine you want to build a department store in a rapidly growing city in a remote country. So how do you know the best location for that? So you need to send some people there and search for the city for months, which could involve significant cost. So if you can use the satellite constellation, you can monitor the city every day. And we can analyze the flow of cars and building construction which can give us some insight about the location. And that would drastically reduce the cost.
Beppu: But I have a question, all businesses have risk. Actually yours too should have some. What are the biggest business risks for private space innovators like you?
Nakamura: I think the situation is gradually changing, but still some Japanese investors tend to be risk-adverse and want to compare the company with some similar other companies. And we started the company because there are no other similar companies, right? So, I think we need more professional and risk-taking investors as well ventures that are communities where we can frequently exchange information among the investors, entrepreneurs, and supporters.
Shibuya: So going forward, how do you plan to expand your business? Are you thinking of partnering with other companies?
Nakamura: Okay, so we are launching the first 3 satellites at the end of this year. And we are talking with many potential customers about utilizing our space data so that we can start business just after the launch. And we want to complete the constellation with 50 satellites by 2022, 5 years from now. And as for the business partnership, it is crucial for our business because we are not making one specific application, we are not trying to solve one specific issue. We are constructing the platform, like infrastructure, so we need various players on that infrastructure which can develop the specific application for end users in their industry.
Fukushima: So it's a brand new platform, right. You've got to be something of a dreamer to go into the space business, what is your ultimate goal in running your company?
Nakamura: The company's slogan is "Space within your reach". We want to make space more practical and commonplace. And space, at least near earth orbit, is not a frontier anymore.
Fukushima: It looks like a place in the future to me.
Nakamura: But it's not, because the cheapest navigation service on your smartphone, the everyday weather forecast on TV and the Wi-Fi service during flight are all using space technologies. And we want to add another solution, the daily earth monitoring service by utilizing our micro-satellite technology.
Fukushima: So which means that we'll be able to monitor like real-time the movements of people and cars--it's like a moving map?
Nakamura: Yeah, exactly.