Space travel dreams get a reality check

Angel investors
"Funding is a critical issue," said Kevin Leclaire, managing director of ISDR Consulting of Reston, Va. Venture capitalists, or VCs, raise their own funds based on an investment focus that they have. If they have a communications focus, they could invest in satellite communications ventures — and they have, he said.

However, Leclaire said that certain space businesses such as passenger space travel are almost always outside the scope of VC investment focal points.

"A VC firm will get penalized if they invest in a business outside their focus if it doesn't perform well. Even if the investment does well, the VC's limited partners will usually not give the VC credit for the success because it happened outside of the VC's investment focus — a lose-lose scenario."

That leaves only a few VCs whose investment focus includes travel or space-related investments, or possibly those with regional or even "opportunistic" categories for investments that they consider, Leclaire explained in an e-mail sent to Space.com as a follow-up to Flight School. "Thus, instead of VCs, angel investors tend to be the primary recourse for early space travel companies."

Unproven market
Leclaire said that space businesses that are not already well-funded and are approaching new markets — such as public space travel — need to gradually expand their "business envelope" in much the same way as one might expand their test envelopes for a new aircraft or spacecraft.

"Most investors like to invest in proven markets. Suborbital space travel is a new, unproven market, so companies in the sector have to rely on the best surrogates for market data in the absence of actual revenues," Leclaire said. "The best of these market indicators are the deposits that have been taken by some of the prospective suborbital operators."

Additionally, Leclaire pointed out, there is market data on the paying passengers sent to the international space station by Space Adventures, as well as the zero-gravity flights and high-altitude fighter jet flights that are the domain of companies such as Zero Gravity Corp. and Incredible Adventures as well as Space Adventures.

"Ultimately though, at the end of the day, the only way to make the suborbital travel market 'real' is to have an operator begin to start sending paying passengers up, bring them back safely, and book the revenues," Leclaire concluded.

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