Lunar startup ispace raises Japan’s hopes for a giant leap

In a rented office near Tokyo Tower, engineers toil away in a clean room, developing what look like small remote-controlled buggies. In a couple of years, the contraptions could wind up more than 350,000 km away, on the moon.

The engineers’ mission is to build a rover that could be deployed in NASA’s manned lunar program, Artemis. To achieve that goal, they are building on Japan’s unique strength in remote-controlled robotics — a strength that helped the country achieve the world’s first sample-return missions to asteroids and aided investigations inside the damaged Fukushima nuclear plant.

The company behind the project is a 9-year-old startup of just 100 employees, called ispace.

Not only is ispace competing to become the first private venture to reach the moon, but some also see it as Japan’s ticket back to a lost age of innovation and imagination — at a time when the U.S. and China dominate the global startup landscape.

At first glance, 39-year-old founder Takeshi Hakamada comes across as an unlikely space race hero. He is slightly built, soft-spoken and more of a listener than a talker. He confesses to being prone to motion sickness, hates flying and even dislikes elevator rides, though after a recent visit to Washington he said he is getting used to air travel.

Hakamada, however, has a dream of galactic travel and an unwavering resolve to realize it.

Such dreams are no longer pie-in-the-sky fantasies thanks to advances in technology and declining costs of space exploration — at least relative to the astronomical sums of the past. “In the old days, 10-20 years ago, a company like ispace wouldn’t have existed,” said Carissa Christensen, CEO of Bryce Space and Technology, a U.S. space research company. “Technology has shifted the world, so that we’ve moved from those kinds of dreams into visions that companies can achieve.”

Investment in space startups has surged since 2015, with much of the money coming from U.S. venture capital firms but more recently from Japanese corporations as well, according to Bryce Space. In 2017, ispace raised 10 billion yen ($96 million) in a Series A funding round — the largest initial intake for any space venture to that point. Investors included Japan Airlines and two government-backed organizations, Innovation Network Corp. of Japan and the Development Bank of Japan.

Increasingly, space agencies like NASA are also throwing their weight behind corporate endeavors. Under NASA’s commercial lunar payload services, or CLPS, the agency will award contracts worth $2.6 billion over the next 10 years to companies like ispace that provide transport services for lunar exploration. The European Space Agency is also turning to the commercial sector for such services, as it looks to demonstrate the feasibility of producing resources on the moon.

All this creates an “exciting market for a company like ispace,” Christensen said, pointing to government agencies in search of commercial partners that can provide services and products in less time and at lower cost.

The Japan Aerospace Exploration Agency, or JAXA, has yet to take this approach. But ispace thinks it will have a chance to do business with the agency, which is planning a manned lunar mission in 2029 using a rover developed by Toyota Motor. “We believe we have the capability to undertake preparatory work for JAXA and Toyota,” Hakamada said.

Altogether, the founder foresees a multibillion-dollar market for lunar transportation and exploration services within 10 years. NASA alone will need all sorts of equipment on the lunar south pole before it sends the Artemis astronauts — possibly an all-female crew — in 2024.

“We are aiming for annual revenue of several million dollars in about 10 years’ time,” Hakamada said. He expects ispace to start turning a profit “in three to five years.”

In 2021, ispace hopes to put a lander on the moon, partly to test its ability to touch down in a specific spot. Then, in 2023, it will send up a rover. The company intends to hitch rides on rockets launched by SpaceX — the U.S. startup led by billionaire Elon Musk — to place the landers in Earth’s orbit, from where they will travel to the moon on their own.

“Our focus will be on getting to the moon early,” Hakamada said. “Rather than trying to develop everything ourselves, we’ll buy components that are available on the market,” including thrusters, tanks and valves for the lander. He said lunar missions used to cost hundreds of millions of dollars and his goal is to limit the expense to a fraction of that.

But until ispace actually wins contracts from the space agencies, backing from bigger companies will be critical for survival.

The startup has arranged sponsorship deals with the likes of JAL, which include technological and logistical support as well as undisclosed financial assistance. The national airline believes supporting entrepreneurship is good for its image and can stimulate innovation throughout its ranks.

“The realm of air travel is expanding and will eventually reach space,” said Tomohiro Nishihata, JAL’s managing executive officer. “We want to emulate the venture spirit of ispace and look toward space travel as a future business.”

Citizen Watch is another corporate sponsor. For its managing director, Norio Takeuchi, ispace offers a mix of inspiration for the future and nostalgia for a more hopeful period in Japan’s past.

Many baby boomers reminisce about the 1960s, when the nation’s economy was soaring and anything seemed possible. Takeuchi remembers watching with his fifth-grade classmates as Neil Armstrong made his “giant leap for mankind.” It happened just before noon, Japan time, on July 21, 1969, when the students were on summer vacation. Takeuchi had just finished a morning swimming lesson at his Tokyo elementary school and had returned to his classroom to watch the historic moment on the TV.

The 1970 Osaka Expo only fueled excitement about lunar exploration. The U.S. pavilion featured a real lunar lander, a rock brought back by the Apollo 12 crew and the actual Apollo 8 spacecraft, which had been the first to circumnavigate the moon. Takeuchi traveled to Osaka and waited hours to see the exhibit.

“Everyone expected more manned missions,” he said. “Then came the oil shock and a recession. Manned missions were forgotten. Now, the dream of a manned mission has suddenly been revived by private ventures, and I’m excited as someone who lived in that period.”

The renewed excitement could help propel ispace all the way to the moon, but getting there will not be easy.

Competition is the first challenge. Numerous space ventures — mainly in the U.S. but also in Asia — are chasing business from the same limited pool of customers. Another issue is the difficulty of finding investors who are willing to wait for results.

Despite the $96 million funding round, the sponsorship deals and today’s more manageable launch expenses, Hakamada said funding is still an obstacle.

Unlike Musk, Amazon’s Jeff Bezos and Virgin’s Richard Branson, Hakamada cannot keep dipping into his own pocket to fund lofty space ambitions. He and a few other people did put up their own money to get ispace off the ground, but Hakamada nearly gave up in 2013 due to a lack of cash. The venture received a new lease on life in 2015, when it was recognized by a Google-sponsored foundation.

“Space exploration is a costly business,” Hakamada said. “We are looking at various funding options, including an initial public offering. We hope our initiative will be supported by individual investors. We want to achieve an IPO as early as possible.”

He reiterated: “This is a very tough business. It’s not for everyone.”

What has kept him going?

Hakamada’s obsession began with “Star Wars.” He was around 10 when he first watched the George Lucas movies. He was captivated by the R2-D2 robot, the Millennium Falcon spaceship and the Death Star space station. “I was interested in robots and I wanted to create something by myself,” he said.

He went on to major in space engineering at college in Japan and graduate school in the U.S., before joining a French consulting company in 2006 to learn about management. In 2009, Hakamada was invited to support a European team in a Google-sponsored private lunar landing competition. The following year, he founded a predecessor to ispace.

Through the Europeans, he met a man who would become a pivotal influence: Kazuya Yoshida, a robotics specialist and professor at Tohoku University.

Yoshida’s resume features a host of high-profile projects, including developing technology used in docking operations for the International Space Station and Japan’s mission to the asteroid Itokawa. He also created a robot to look inside the meltdown-stricken Fukushima Daiichi nuclear power plant — and designed the original ispace rover.

Like Hakamada and Takeuchi, Yoshida caught the space bug as a child. He was 8 when he watched the American astronauts land on the moon, and he dreamed about becoming an astronomer. While studying robotics in graduate school, he realized he could combine his passions.

“I wouldn’t be doing what I’m doing had I not met Yoshida,” Hakamada said. “I’d have quit if it weren’t for him.”

The rover that ispace is developing is the smallest in the world, measuring 62.5 cm long, 57 cm wide and 40 cm tall. It will weigh up to 10 kg including the payload. It needs to be small to hold down the cost of launching it on a rocket. At the same time, it must be durable, capable of traversing smooth sand or rocky terrain, and resistant to both high radiation and extreme temperatures.

Eventually, the startup wants to put dozens of rovers on the moon to survey the surface efficiently. Yoshida and Hakamada agree that launching many small, inexpensive missions is preferable to gambling on one big bang. This way, they can learn from failures.

In the long term, ispace aims to establish a lunar “fuel station” — extracting water, breaking it down into hydrogen and oxygen, and supplying the elements as fuel for ships traveling into deep space. The company envisions the moon someday being inhabited by 1,000 people and receiving 10,000 more each year as tourists, opening up an opportunity for self-sustaining commercial activity centered around agriculture, energy, tourism and more. The company has European specialists working on the fuel station idea and hopes to start the service around 2030.

This would bring humanity closer to creating a habitat on the moon and ultimately the universe depicted in “Star Wars,” which inspires Hakamada to this day.

“Star Wars never struck me as childish or unrealistic,” Hakamada said. “I believe what humans imagine tends to become reality. Science fiction often provides material to expand our thinking.”