US Funding for Space Tech Startups: $16 Billion Opportunity

The United States government is a major investor in the developing space sector, and the official responsible for managing the Air Force’s $16 billion budget is encouraging startups to engage with his office.

Will Roper, the Assistant Secretary of the Air Force for Acquisition, Technology and Logistics, oversees approximately $60 billion in funding for the Air Force—resources allocated to support new technological advancements the Air Force considers vital.

Traditionally, the Department of Defense has faced challenges in collaborating with startups, and many technology firms have been hesitant to work with the DoD. However, given that much of today’s civilian infrastructure relies on technologies like global positioning systems and satellite networks overseen by the Defense Department, attitudes toward collaboration are shifting on both sides.

“The realm of space is no longer simply a domain for communication, navigation, and exploration,” Roper stated at TechCrunch’s TC Sessions: Space 2020 event. “It is increasingly becoming a contested environment… Consequently, we are preparing for a new form of competition that may extend into space, leading to the creation of numerous new space programs.”

Roper stressed that the Air Force’s—and the government’s broader—interest extends beyond purely defensive capabilities and military objectives. As space presents growing economic opportunities, Roper envisions the Air Force as a catalyst for technological progress with benefits for the commercial sector.

“This is an exceptional period for innovation in new technologies that could benefit the military, but our goals extend beyond solely assisting the military,” Roper explained. “The traditional mindset within the Pentagon focused on technologies that would help us win the Cold War in the 20th Century, but that approach won’t be effective in the 21st Century, given the globalization and rapid acceleration of technology.”

“We aim to identify opportunities where our military objectives and funding can also stimulate commercial markets, fostering competition on a larger scale. We believe this is the role we should aspire to fulfill, serving as a key driver of innovation both nationally and with our international partners,” Roper added.

Startups have several avenues to access these federal funds. Two readily available entry points are through AFWERX and its recently launched SpaceWERX division, which is specifically dedicated to space technology.

“These organizations function much like any technology company,” Roper told the TechCrunch audience. “They are located outside of our secure facilities and are easily accessible… You don’t need to identify a specific mission; we will assist you in finding a relevant mission and the appropriate military customer—the warfighter—associated with it. This model is effective because it allows companies to concentrate on their core expertise: their technology.”

Roper estimated that the AFWERX program has brought 2,300 companies into Air Force and Space Force programs over the past three years, with the majority having no prior experience working with the military.

Within AFWERX, three programs are particularly relevant to integrating startups into the procurement process, Roper noted. The Spark program connects military personnel with private industry, the AFVentures program provides funding for innovative concepts from the private sector, and the Prime program facilitates the commercialization and certification of technologies.

Roper highlighted the recent certification granted by the Air Force to Joby Aviation for its flying cars. “This creates a new market for the military, which we hope will also stimulate a new commercial market,” Roper said.

According to Roper, the Prime program will be expanded to include space technologies in 2021.

With the increasing demand for cutting-edge technology, Roper identified numerous areas where private industry innovation is desired. These include new autonomous systems to assist in spacecraft operation, technologies for in-space refueling and maneuvering, and reusable equipment—from boosters to other components—to reduce costs.

Roper also acknowledged that the Pentagon still has significant work to do to streamline the acquisition process for technologies with both military and commercial applications.

Entrepreneurs have frequently cited the U.S. government’s restrictions on the use of technology by private industry as a major impediment to the growth of the commercial space sector.

Roper is working to address this issue. “We want to leverage our military funding, our missions, and potentially our certifications to help you succeed without altering your core product,” he stated. “If you achieve commercial success, we also succeed, as you become a valuable technology partner that we can continue to rely on for future problem-solving. We need to understand early on how our military market and associated benefits can contribute to your commercial success, and what we should avoid doing that might hinder your progress.”

Contracts awarded through AFWERX are fixed-price and progress based on companies achieving specific milestones in their product development roadmap. Orders increase incrementally as the technology demonstrates its capabilities, potentially starting with a prototype delivery, followed by experimental use, a commercial contract, and ultimately widespread adoption. “Our goal is to assess your ability to advance your technology, and if you do, we will provide further contracts and support your progress through our process,” Roper said.

Roper views this initiative as a fundamental evolution of the aerospace and defense industry.

“We have many exceptional companies today that have built stealth bombers, space planes, and other advanced systems. We still need these defense companies,” Roper said. “However, we hope to foster a new generation of companies that are primarily technology-focused—not solely defense or commercial, but simply technology companies that engage in business on both sides.”