) -- Necessity is and has always been the mother of invention, and as the space community laments the Obama administration's decision to let the space shuttle program end without a replacement to put people in orbit or visit the International Space Station, the private sector has stepped up with a vengeance to fill the void.

Shuttle Enterprise arrived in New York City last Friday, traveling atop a 747 jet to its final resting place at Manhattan's Intrepid Sea, Air and Space Museum. Shuttle Discovery became part of the Smithsonian National Air and Space Museum collection in Washington, D.C. the week before that, and shuttles Endeavour and Atlantis will also be heading to retirement soon: Endeavour to the California Science Center in Los Angeles.

Entrepreneurs and investors see big money in space, though, and programs launched by the likes of

Virgin Media's


Richard Branson or


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Tesla Motors

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founder Elon Musk are on the cusp of taking over the complex business of putting satellites and rich people into orbit, and ferrying science experiments to the International Space Station.

Private ventures like the one led by Virgin's Richard Branson and Tesla Motors' Elon Musk are leading a new space race.

Virgin Galactic, as Branson's venture is known, is already

taking $20,000 deposits

for the $200,000 tickets for space tourists to pop out of the Earth's atmosphere, which it anticipates being able to fulfill early in 2013. CEO George Whitesides reported that the company had accumulated deposits of almost $60 million as of late 2011, suggesting that interest is strong among those who can afford it.

The group has logged successful flights of its launch system, a catamaran-style plane known as WhiteKnightTwo that takes the actual space vehicle known as SpaceShipTwo into the upper atmosphere for a running start at reaching the blackness of space,

both developed

by a partnership with Scaled Composites, a division of defense and aerospace giant

Northrop Grumman

(NOC) - Get Report

, maker of the B-2 stealth bomber.

When the pool of billionaire passengers trails off, or if the company isn't able to bring the cost down far enough to make space accessible to lower rungs of the 1%, Virgin even foresees a future where sub-orbital flights are used simply

for travel purposes

. Where the Concorde turned a seven-and-a-half hour flight from New York to London into a three hour affair, Virgin's suborbital flights could do it in an hour.

While there are no official plans to develop that capability yet, construction has begun on New Mexico's

Spaceport America

, which will serve as a headquarters for Virgin's launches, and neighboring Colorado has applied for permission to build its own spaceport this year to accommodate the anticipated burst of interest in boldly going where only a few hundred men and women have gone before.

And Virgin will have some competition in snatching up those dollars.

In February another private venture,

XCOR Aerospace

, raised $5 million from investors to finish developing its Lynx family of rocket-propelled planes (after securing $10 million in NASA funding for the program in 2011), which will be able to fly people into suborbital space or micro-satellites into low earth orbit. By offering tickets to space tourists for $95,000 a pop, XCOR undercuts Virgin's price by more than 50%, but the company is at least equally interested in the potential revenue from selling its planes and licensing its technology to others.

Namely the company's effort to produce reusable, non-toxic propulsion systems has gotten the attention of partners in government as well as the private sector, with


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Lockheed Martin

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buying into XCOR's rocket engine design through a partnership with the two companies' joint aerospace venture, United Launch Alliance.

But where Branson leads the effort to get rich people into space and companies like XCOR have received some support from NASA and the federal government, entrepreneur Elon Musk's SpaceX is the leader so far in the positioning for lucrative government contracts to take over the job of launching supplies and humans to the International Space Station. The company was one of three to be awarded funds and expertise through NASA's Commercial Orbital Transportation Services (COTS) initiative to promote private-sector efforts to go to space, and it has already secured contracts from NASA and foreign clients for

38 launches


The company already put a satellite into orbit using its Falcon rocket, and in 2010 SpaceX took the next small step in the manned spaceflight initiative, by launching and returning its Dragon capsule, capable of shuttling seven people or equivalent cargo to space. The company appeared to be right on schedule to blast off as planned on May 7 with its first trip using the Falcon rocket and Dragon spacecraft, but backtracked on Wednesday, saying that the launch is likely to be delayed as SpaceX works through software assurance process issues with NASA.

The demand for the human transport capability will be essential for SpaceX, as it is definitively in the lead in providing for a return to manned spaceflight, and at a considerable cost savings that will make it attractive to NASA and foreign space programs as well. American astronauts have been hitching rides on Russian Soyuz rockets since the end of the shuttle program in 2011, costing $62 million each time. With the Dragon vehicles, SpaceX projects a per-astronaut cost closer to

$20 million


With its first-in-line status for taking over several official space science duties from the government, Musk has said that he sees a likely IPO for SpaceX

next year


While it's clear that the startup community sees a big upside in space, some private companies have been launching things into space for years, providing rocket boosters, launch vehicles, satellites, and guidance systems to NASA and the private sector.

Alliant Technosystems


is one of the largest, with $4.8 billion in revenue in 2011, up every year for the past 10 years. The company spun off from defense and aerospace giant


(HON) - Get Report

in 1990 and has been providing rocket boosters and satellite parts with a good track record ever since, though its focus has decidedly shifted to the defense part of its business.

Orbital Sciences


, another established player in the space race, has generated plenty of buzz about its

its Antares rocket

, a project funded at least in part by NASA's COTS program, which along with the

2010 acquisition


General Dynamics'

(GD) - Get Report

satellite division, puts the company at the head of the game to grow its share of the communications satellite business.

Despite all the growth in the private space race though, some notable failures like Rocketplane Kistler give reason for pause. The company showed initial promise with its plan to develop a reusable launch vehicle to replace NASA's single-use rocket boosters that launched the space shuttle into orbit. The company even got NASA funding through its COTS program in 2006 to finance the project, but an inability to raise additional funds led to NASA abandoning the program in 2007, and the company declared bankruptcy in 2010.

That said, for investors with the strong financial backing needed to sustain such hi-technology ventures, there is a huge upside to investing in space.

And while space tourism and satellite launches will be affordable only to governments and extremely high-net-worth individuals for the foreseeable future, the

spinoff innovations

that come from pursuing spaceflight are undeniable.

Bigelow Aerospace

, founded in 1999 by American real estate developer Robert Bigelow, has focused its efforts on developing low-cost modular habitats for an eventual lunar colony or space stations. The company has put two of its habitats in orbit and secured exclusive contracts with NASA to develop these for a planned return to the moon.

Since these habitats are fully self-contained and cut off from the environment outside, the company will not have to wait until humans set up shop on the dark side of the moon to reap the rewards. Sanitation systems, air recycling and sustainable energy generation are just a few characteristics of a space habitat that will reap rewards back home on earth, offering the potential to license technology to players in other industries.

Other companies that focus on improving launch vehicles and rocket engines should lead to new ways to incorporate hybrid fuel sources, potentially changing the nature of air travel in general. Solar panels outfitted on space capsules may bring up the efficiency and bring down the costs of an industry that has struggled to take off here on Earth.

Space travel began in the 1960s and took decades to reach some level of normalcy. With the high price tags involved, the barriers to entry for private ventures were generally impossible to overcome, except for the biggest players. But while NASA's closing the doors of the space shuttle program meant the end of exploration for some, the reality is much brighter than that. Private space companies are betting on the future in a big way, and this time investors, not taxpayers, will drive the innovations.

-- Written by Greg Emerson in New York

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