Tuesday, December 14, 2010

Canadian Teachers Funding American Rockets

The proposed K-1 reusable rocket
The December 11th, 2010 Milwaukee Journal Sentinel Online article "Financial meltdown scuttles dreams of Green Bay's rocket man" tells the story of businessman George French, who almost succeeded in turning his private dream of going to space into direct competition with Space Exploration Technologies (Space-X) for a series of lucrative government contracts to supply the International Space Station (ISS).

According to the article, "French enlisted a high-tech investment bank to help raise the serious capital and secured commitments, he said, for more than $300 million, much of it from a Canadian teachers' pension fund."

Say again? An unnamed Canadian teachers pension fund investing serious money in an American space focused start-up?


Rocketplane PR image.
The article tells the story of Rocketplane, an Oklahoma based, space tourism start-up incorporated in 2001 under founder and CEO French, using his own funds and Oklahoma state law provisions allowing the company to claim and then resell state approved tax credits as a qualified space transportation provider in order to raise money.

French initially envisioned building an aircraft, rocket hybrid that would send passengers more than 330,000 feet (100 km) above the Earth. Rocketplane was an early competitor for the Ansarii X-Prize which was eventually won by the Burt Rutan designed SpaceShipOne.

But Rocketplane eventually needed to branch out.

In 2006, after failing to win the X-Prize, the company purchased Kistler Aerospace Corp., which had just gone through bankruptcy but possessed a potential design for a reusable orbital rocket, the K-1. The combined company then used the orbital rocket design as a basis for a winning bid to develop crew and cargo launch services, as part of the NASA Commercial Orbital Transportation Services (COTS) program, for the International Space Station.
Comparison between Space-X Falcon 9 and K-1

This is where the real serious trouble started.

The COTS contract shook loose some seed money, but according to the article "it was nowhere near the hundreds of millions the company needed to build and launch the K-1."

But it did include substantial amounts from the unnamed Canadian teachers pension fund.

However, according to the article, the teachers money wasn't enough and the sub-prime mortgage crisis turned Wall Street cold on raising further funds. NASA, after twice postponing a deadline for Rocketplane to show a bank balance sufficient to complete the project, canceled the contract and went with Space-X.

The various entities which made up Rocketplane slowly went bankrupt or shut down with the final component (Rocketplane Kistler) sliding into bankruptcy protection on June 15th, 2010.

The article makes no mention about whether the unnamed Canadian teachers pension fund ever got it's money back, but budding Canadian entrepreneurs should take note that sometimes, staid institutional investors just might put money in projects, even when they are just a little bit "out of this world."

Rocketplanes proposed conversion  of a business jet into a rocket ship.

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