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More than 50 years after the astronauts of Apollo 11 landed on the moon, a new age of space exploration is opening up. This century’s adventurers are pushing the boundaries of space exploitation far beyond what has come before — and investors are starting to take notice.
2020 and 2021 brought a new wave of space companies going public, often by way of a SPAC, or special purpose acquisition company. New products are being launched to capitalize on this growing industry, such as the ARK Space Exploration and Innovation ETF
ARKX,
which came to market in late March.
What we’re seeing now is initial interest in a sector that has an infinite growth trajectory and is only just getting started. Consider the markets and industries that you know today. While they continue to grow due to rapid innovation, new technology and an influx of data from satellites in space, they are only focused on one planet: Earth. It’s only a matter of time until their growth expands beyond our planet and into space, requiring a range of more (and new) services and an infrastructure in space to support the growth.
Simon Drake, co-founder of Space Ventures Investors, captures this thought perfectly when he says, “What sets space investing apart from other sectors is that the space industry has no boundaries; humanity will always be pushing at new frontiers.”
The business of space is in its exponential growth phase, and what unifies all current projects is the need to create complex new technologies and infrastructures to manage space missions of any size. According to a recent report by Morgan Stanley, reusable rockets, decreasing launch costs and the miniaturization of satellite technology are opening up new business opportunities. In the past ten years, $177.7 billion of equity investment has been made into 1,343 space companies. The global space industry is expected to generate revenue of $1.4 trillion or more by 2030, up from $350 billion in 2020.
Adding new value
Right now, close to 3,000 active satellites are orbiting above Earth. This number is expected to skyrocket in the coming years. By 2025, experts predict a 230% increase in satellite launches per year, with 24,000 launches currently in planning — and that figure doesn’t even include launches by Tesla TSLA CEO Elon Musk’s SpaceX, OneWeb or Kuiper. SpaceX’s Starlink, for example, has applied to fly 40,000 satellites.
These satellites have the potential to add value to industries, businesses and users via satellite data. As agriculture becomes agritech, finance becomes fintech, education becomes edtech and automobiles become autonomous driving vehicles, the continuing growth of added-value data use on Earth — most of which are coming from space — will necessitate the launch of more and more satellites. As such, the most scalable form of business on our planet today may well be operating a constellation, or group, of satellites working together as a system.
Space companies are now planning to launch large-scale constellations of thousands of satellites to provide global services or Internet of Things services to connect machines and systems together directly. Typically placed in low, complementary orbital planes and connected to ground stations, satellite constellations can provide permanent global or near-global coverage, enabling internet access to areas that have long suffered from a lack of ground infrastructure.
“The demand for data is growing at an exponential rate, while the cost of access to space and, by extension, data is falling by orders of magnitude,” notes Morgan Stanley’s equity analyst Adam Jonas. “We believe the largest opportunity will come from providing Internet access to under- and unserved parts of the world, but there also is going to be increased demand for bandwidth from autonomous cars, the Internet of Things, artificial intelligence, virtual reality, and video.”
Building the infrastructure
For the space economy to exploit its full potential, it will require a solid infrastructure of orbital transportation services. This will go beyond fundamental launch and deployment services and expand into areas like in-orbit services. For example, my company D-Orbit provides advanced AI-powered services in orbit after having delivered transported satellites timely and efficiently into their operating destination. D-Orbit will also involve fleets of dedicated vehicles with robotic arms that closely inspect satellites, extend their lives by repairing, refueling and sometimes repositioning them, and salvage the pieces of exhausted satellites to reuse and recycle them for other satellites.
Debris removal will also become increasingly important in the age of mega-constellations, when hundreds or even thousands of satellites will be formation-flying in low orbits. Any failing satellites that drift away uncontrolled might threaten the entire constellation, so dedicated space-servicing vehicles will be essential.
Another growth area will be Earth observation, which is able to provide precise data on the displacement of buildings, bridges and highways. Companies that have access to small satellites with synthetic aperture radar (SAR) payloads will be able to reveal, for example, that a bridge has moved three millimeters in the past year and evaluate its safety accordingly.
SPACs provide access
Given this scenario, investors are taking heed of myriad investment opportunities. SPACs are viewed favorably as a way for space companies to access the public markets. Several space companies have gone the SPAC route, including satellite imagery specialist BlackSky
SFTW,
and U.S.-New Zealand aerospace manufacturer Rocket Lab USA
VACQ,
“The SPAC phenomenon is actually very well aligned with the horizon and nature of space investing because it’s a venture capitalist mindset,” says Morgan Stanley’s Adam Jonas. He describes the SPAC approach as a “democratization of venture capital and private equity,” which is now “coinciding with a major inflection of interest in space investing across all of our clients — both institutional and retail.”
While considerable tenacity, expertise, ingenuity and upfront capital are still required to launch viable space-based businesses, today’s entrepreneurs are meeting the challenges of building a robust commercial space industry, driven by similar visions of wide-open opportunity as those that animated the first space pioneers. If the global industrial market reaches the limit sooner than later, the infinity of space suggests the space economy will keep growing.
Luca Rossettini is CEO and co-founder of D-Orbit, expert at the Space Advisory Group of the European Commission, board member of AIPAS (space SME industrial association), and corresponding member of the International Academy of Astronautics (IAA).
More: The next space race — and how to play it
Plus: The ARK Space ETF should consider owning these pure-play space stocks
