The Lost Teddy is one of the side quests you’ll get to take on in Starbound. It requires you to craft a Teddy Bear. Do note that you’ll only be able to access this side quest once you reach the outpost and visit it for the first time.
In order to craft a Teddy Bear, you’ll need access to the spinning wheel, and you’ll also need a lot of cotton. The main problem that most players run into while tackling this quest is the lack of cotton, and the difficulty in producing them. Right now, the best way to get cotton is to simply plant cotton plants whenever you can. The process might be a bit slow, but a good method you can use is to plant them on planets that get frequent rain. By doing this, you won’t have to water the plants yourself, and you can continue traveling and doing other things on your own while waiting for the produce.
Once you’ve collected enough materials to craft the Teddy Bear, you can complete the side quest and this will give you access to the Ursa Miner, the ore vendor at the outpost. The ore vendor can be pretty helpful for new Starbound players, so be sure to complete this quest when you can.