Since April, a small Japanese spacecraft has been loitering in the vicinity of an abandoned upper stage from an H-2A rocket in low Earth orbit. The Active Debris Removal by Astroscale-Japan (ADRAS-J) spacecraft has, at times, approached within 50 meters of the stage, inspecting it as a precursor for a future mission that would grab the stage and remove it from orbit.
ADRAS-J comes after years of effort by Astroscale to tackle the orbital debris problem. “In 2013, I realized that we had already made the space environment unsustainable and no one had the solution for the problem,” recalled Nobu Okada, chief executive of Astroscale, about his decision to found the company.
It is also a symbol of the advances that Japan’s commercial space ventures have made after many years of effort. Companies like Astroscale and lunar lander developer ispace, whose roots also date back more than a decade, are achieving key technical and financial milestones that include launching spacecraft and going public.
More companies are following in areas ranging from small launch vehicles to synthetic aperture radar (SAR) imaging satellites. That interest attracted a record crowd to Spacetide, an annual commercial space conference in Tokyo in July where Okada and others spoke.
The Japanese government is taking notice. It is preparing to put billions of dollars into the Japanese space industry to support work on key technologies. That is intended to foster the development of emerging space companies in the country, helping them advance and to be more competitive with those in the United States, Europe and elsewhere, even as those companies try to determine how much they should emphasize the Japanese market versus other parts of the world.
Space strategic fund
In March, Japan’s cabinet approved a new Space Strategic Fund that will spend one trillion yen ($6.5 billion) over 10 years on Japan’s space industry through targeted investments in more than 20 areas. The Japanese space agency JAXA is administering the fund and started issuing requests for proposals for those technology topics in July.
“In order to ensure Japan’s independence in space activities, we will promote technological development that continues to strengthen Japan’s technological superiority, ensuring supply chain autonomy,” said Jun Kazeki, director-general of the National Space Policy Secretariat within the Japanese government’s Cabinet Office, during a panel at Spacetide.
Startups are among those eligible to compete for funding, he said, along with universities. The goal of the fund, he said, is to create “a virtuous cycle of business expansion for private companies” analogous to the support that American companies get from NASA and Defense Department contracts and grants.
“In the U.S., there are NASA and DARPA with space-specific funds,” said Shinichi Nakasuka, a professor of aeronautics and astronautics at the University of Tokyo, during another conference panel. “For the first time, we have a specific fund available for space R&D.”
Since the effort is just starting, both companies and JAXA are uncertain how well the fund will work. Yasuo Ishii, senior vice president of JAXA, said the agency has assigned 450 people to administer the fund, including researchers and other experts. “We used to be an R&D institution and now we’re a funder,” he said.
He said JAXA will closely monitor progress on the initial awards made through the fund. “If some don’t go well, we may terminate them.”
Commercial space stations
One focus area for the Space Strategic Fund involves commercial space stations. Among the topics that JAXA will solicit proposals on include cargo transportation systems, life science experiment systems and space station modules.
Ishii said that emphasis is driven by a desire to play a role in commercial space stations that will replace the International Space Station. That work is being led by American companies, leading other Western ISS partners — Canada, Europe and Japan — to decide how to participate in ways that don’t involve simply handing over money to those American operators.
“We are discussing how we will join NASA’s Commercial LEO Destination program,” he said. “Our responsibility is not clear yet, but, of course, commitment at the government level is essential to commercial operations.”
Even before JAXA said the fund would support commercial space station technologies, some larger Japanese companies were thinking about roles they would play in those stations. In April, Mitsubishi joined the Starlab Space joint venture led by Voyager Space along with Airbus Defence and Space and, more recently, MDA Space.
“For JAXA, having to deal with a non-Japanese company is uncomfortable,” said Jeffrey Manber, president of international and space stations at Voyager Space, at Spacetide. “JAXA will work with Mitsubishi, not with us.”
The key role for Mitsubishi in Starlab is “commercial capture,” said Kohei Okamura, director of business development for Starlab Space who came to the joint venture from Mitsubishi. That means lining up commercial customers for the station. “The government is not enough.”
He agreed with others, though, about the potential of the new Space Strategic Fund. “I strongly believe this opportunity is really beneficial for Japan,” he said. Starlab’s interest, he said, is to develop technologies based on the demand it sees from potential station customers. “Without thinking about the demand, it’s difficult to think about viable, sustainable technology development.”
Another Japanese venture tied to a larger company is also proposing a role for the country in commercial space stations. Japan LEO Shachu, Inc., is a wholly owned subsidiary of the conglomerate Mitsui & Co. that started operation at the beginning of July. It is proposing a “Japan Module” that could be installed on commercial stations.
That module would leverage technologies developed for the HTV and new HTV-X cargo vehicles, said Yudai Yamamoto, chief executive of the new company, at Spacetide. The module would include a pressurized area for research, manufacturing and other applications, as well as an external platform for additional payloads and its own high-bandwidth communications.
He said his company, like Starlab, is focusing less on the technology than the demand. “Launch of the new vehicle is not our only goal,” he said. “It needs to be used, so most of our strategy today is to create a new market.”
The company is only starting conversations with commercial space station developers about ways to add the module to the stations. “Having a module that is complementary to them, and how we can contribute to global commercial LEO systems, is also important,” he said.
Funding and markets
Japanese companies, like those in other countries, also face challenges raising money. There have been some notable recent successes, though, like SAR company Synspective, which raised seven billion yen in a Series C round in June, not long after it signed a contract with Rocket Lab for 10 Electron launches of its satellites.
“The private investment market in Japan has been growing, but it is relatively smaller than the U.S.,” said Jumpei Nozaki, chief financial officer of ispace, in an interview at the company’s Tokyo headquarters.
However, he said Japanese banks are increasingly interested in supporting space companies through loans. “The last several years have totally changed,” he said. “Now they see the necessity and importance to support deep tech companies in Japan, so there are good signs of banks willing to support.”
That is true of ispace itself: the company announced July 12 it raised $62 million as part of a loan agreement with Sumitomo Mitsui Banking Corporation and Mizuho Bank, Ltd. The company said it would use the money to support its work on lunar landers and rovers for future missions.
That deal came more than a year after ispace went public on the Tokyo Stock Exchange, the first Japanese space startup to do so. As of late July, shares were trading at 590 yen, a new low and less than a third of the peak shortly after going public.
Nozaki acknowledged that going public was “challenging” for the company, including the regular public disclosures of its finances required. “But we are taking this in a very positive way because we do need many people to be involved. We need many supporters, including government people, investors and banks,” he said. “This lets them know about the company.”
He believed investors were willing to take the long view on the company and not demand near-term profits. However, he said we wanted to ensure that they understood that ispace was not doing missions solely as an “adventure” and will, eventually, make money. “We do have a huge, ambitious mission that we are going to make as our business and monetize.”
Since ispace has gone public, two other Japanese space companies have followed: iQPS, a SAR satellite company, and Astroscale. In the case of Astroscale, its shares soared 60% in its first day of trading June 5. Since then, though, it has given up those gains and more, falling below its initial public offering price of 850 yen to less than 670 yen by late July.
Okada, speaking at Spacetide, was not publicly deterred by that rise and fall. “This shows the global investor community sees the significance of space sustainability but also the market opportunity for on-orbit servicing,” he said.
Another question for Japanese space startups is the size of that market opportunity. Focusing on Japan alone may not be sufficient for many space companies, who need to look beyond to the broader Asia-Pacific region or even globally. That is what both Astroscale and ispace have done, establishing subsidiaries in the U.S. and Europe.
Masayasu Ishida, head of the Spacetide Foundation that runs the conference, is optimistic there is plenty of room for growth for Japanese and other Asia-Pacific space companies, citing high growth rates and a population of three billion in the Asia-Pacific region. “It’s the next driver of the global space economy,” he said in remarks opening the conference.
But ispace’s Nozaki believes startups need to look beyond Japan. “I think we tend to start by thinking about the Japanese market, but the global market is very important,” he said. “It’s really important to have a business plan and a mindset to make this into a global business.”
He was optimistic about the overall prospects of the emerging commercial space industry in Japan. “Finally, the boom is coming,” he said, citing strong interest from young professionals. “There are so many young people looking to join this industry.”
Okada noted in his address that ADRAS-J is just the latest step for his company. JAXA has selected Astroscale for a second mission to deorbit the rocket stage that the satellite is currently inspecting, and the company is working on other satellite servicing and life extension programs in Japan, the U.K. and the U.S. “Our journey,” he said, “is still at the beginning.”
This article first appeared in the August 2024 issue of SpaceNews Magazine.
