‘In Space for Space’: The Next Wave of the Space Economy Needs “Picks and Shovels”

Munich Re Ventures
7 min readJan 26, 2023

By Timur Davis and Peter Ortez

Earth planet view from ISS porthole. NASA.

Look up. Not just to admire the stars at night, but because that’s where the next investment opportunities will be. Here at Munich Re Ventures (MRV) — the venture capital arm of one of the largest and longest-term insurance providers for satellites and space launches — we have developed a unique perspective on the opportunities and challenges of the space economy.

Space is Becoming the Domain of Everyone

Prior to 2010, space was the exclusive domain of governments and associated entities. They alone could afford to build and launch exquisite, expensive spacecraft, not to mention absorb the billion-dollar costs of the occasional launchpad mishap.

In the last dozen years or so, however, space has democratized more rapidly than most people realize. Companies like SpaceX have grabbed headlines (and for good reason, as relatively low-cost launch options that have opened up space), but they’re only a fraction of the organizations embracing space as part of their business roadmap. Thanks to trends such as high-powered data processing, miniaturization, and the availability of cheap-off-the-shelf (COTS) components to build small, replicable, and lower-cost devices that can be launched regularly, the so-called ‘space economy’ has become a valid and important investment opportunity.

Reflecting this evolution, venture investment in space has soared over the past decade. Between 2012 and 2021, almost 1,700 companies globally raised $252.9 billion; in 2021 alone private investment in space companies reached a record $14.5 billion. Space has democratized to the point that NPR’s “Planet Money” sent a satellite into space five years ago.

The In-space Economy Needs Infrastructure

We believe the space economy is undergoing a tectonic shift. Earlier venture-funded space companies may have operated in space, but they did so largely for terrestrial application — ie. to benefit users back on earth. Earth observation companies like SkyBox (acquired first by Google and later by Planet) send images of Earth back to consumers on earth. Companies like O3b (acquired by SES in 2020) and Astranis aim to provide internet connectivity to unconnected parts of the world. Indeed, GPS-related information and services is now a $300 billion per year industry that supports more than $1.4 trillion in associated economic activity in the US alone, touching everything from rideshare services to agriculture. Other satellites transmit increasingly detailed images and data about weather patterns on Earth — crucial to anticipate and mitigate the effects of worsening storms under climate change.

Next, we anticipate companies will operate in space not just to serve Earth’s needs, but to serve the needs of space-based customers — “in space for space.” This expands the scope of possibilities beyond even the wildest of imaginations. Space tourism, moon bases, commercial space stations hosting ‘in space office workers’, manufacturing and mining in space — all of these Star Trek-sounding activities become potential business models in the “in space for space” economy. But these mind-bending possibilities can only be unlocked at scale if we have the necessary enabling technologies and infrastructure to support such activities — the plumbing, highways, and high-speed rail, so to speak. So, more specifically, what are these enabling technologies? For now, we see four primary areas to focus on:

  • Mission Extension — Currently, the life of a satellite is only as long as its propellant carrying capacity allows. It leaves earth with all the fuel it can hold, and then is rendered useless upon fuel depletion. But what if there were “gas stations” in space? Following this line of thinking, MRV led the seed investment round (and has participated in subsequent rounds) in Orbit Fab, a startup developing hardware and software that will enable in-space refueling.
  • Space Domain Awareness — Tens of thousands of satellites are expected to be launched into space within the next five to eight years alone, adding to the already highly-trafficked low earth orbit (LEO) ecosystem. Though in popular imagination space might seem endless, the reality of LEO is that the orbital debris problem grows by the year, and with each additional launch the likelihood of a collision grows. Indeed, thanks to a phenomenon known as Kessler Syndrome, collisions can set off a chain reaction by creating more and more debris themselves. Our investment in the seed round of Okapi:Orbits, which builds software to help satellites reduce the risk of collisions with space debris and other spacecraft in LEO, aligns with this concept.
  • Debris Removal — Dodging space debris is one (potentially costly) tack to take but removing space debris entirely will likely also be a critical component of the in-space economy. Space debris removal involves spacecraft whose mission is to collect and dispose of space debris, including both dead satellites that cannot be deorbited on their own and pieces of space junk, more generally. There are already companies popping up to fill this niche, such as Starfish Space, Clearspace, and Astroscale.
  • In-Space Servicing — If a satellite malfunctions or loses connectivity, there is currently very little (read: nothing) that can be done to salvage it, at least not without great cost. But servicing vehicles that act as “garages” to fix malfunctions mid-flight can increase the useful life of a satellite — something that has very real implications for the underwriting models, and ultimately, insurability of the ‘in space economy.’ Similarly, “space tugs” that move satellites from one orbit to another without requiring usage of the satellite’s own propulsion are good for fuel conservation and the flexibility of the space economy overall. Companies like D-Orbit, Atomos Space, and Space Machines are examples of these types of ‘in-space servicing’ offerings.

Above and beyond these areas, human populations living and working in space longer-term will also need in-space infrastructure, everything from food to medical care — it won’t always be economical or possible to return to Earth to fulfill those needs. And eventually space explorers may launch outposts on the moon or Mars as midway stations to support deeper-space exploration, which might unlock a whole new set of infrastructural needs for the space economy.

Both of the investments we’ve already done are aligned with our fundamental thesis of providing the “picks and shovels” to the space economy. This phrase references the 19th century California Gold Rush, when the people who reliably succeeded didn’t count on finding deposits of gold but instead supplied the fundamental infrastructure (blue jeans and equipment) to miners descending upon the West, and, more recently, has been used to describe companies like Akamai and Nominum that provided “Internet 1.0’s” general infrastructure. At this point in the space economy’s development, we can’t be sure which business model will succeed, but we can be certain that spacecraft will need to be refueled and repaired, and space-junk will need to be avoided and, eventually, removed.

Having discussed the various aspects of space that we’re excited about, it’s worth acknowledging that not all space companies are created equal. Given the speed of the space economy’s development, it’s possible the advantage will go to the first-movers. Simply getting an asset launched into space is, fundamentally, a big deal, and does create huge competitive advantages — it is a true step change function in sophistication. First movers may stumble, but just getting into space provides a huge learning advantage. There is a sizable chasm between those that have successfully launched a working prototype into space and those that have yet to do so. It’ll be a hard go of it for a new company to try and outcompete a company that has already made the space leap.

Our Space Heritage

MRV leverages the expertise and history of our parent company, with Munich Re’s space underwriting team serving as one of the leading insurers of space globally — including launch and in-orbit insurance. As the space industry rapidly evolves, the associated risks require new insurance solutions. As such, Munich Re has successfully insured commercially flown in-orbit servicing missions. The team’s deep knowledge of the ins and outs of space enables them to underwrite the risk of the many potential failures that are possible, such as a rocket blowing up on launch.

“In-orbit servicing such as active debris removal and life extension of satellites will play a key role in enabling a sustainable infrastructure in space,” shares Stephanie Deml, Head of Aviation and Space at Munich Re. “We are keen to contribute to the success of these missions by developing bespoke risk transfer solutions.”

Munich Re’s space underwriting team is a key partner for MRV, sharing their deep understanding of the complexities of space faring, including space law and technical solutions for the manifold risks encountered in space. This heritage gives MRV a deep understanding of many important, but subtle, details of the emerging space economy.

Looking at the Whole Picture

There are, indeed, risks to consider: geopolitical tensions, high costs, and uncertain, often binary outcomes. The current space boom could well be a fad. But the innovations that are already occurring in space are incredible on both a practical level (applications with immediate usage are currently being deployed) and a conceptual level (what might become possible next is a mind-expanding thought exercise).

People outside the space economy often ask us why they should care about space. We think our future as a planet and a society depends on space. Whether we develop faster and more sensitive cures for disease in microgravity environments, mine rare metals without destroying our terrestrial environment, or continue to improve telecommunications on Earth — space already matters a lot to everyone on Earth, and its importance will only grow over time.

Munich Re Ventures (MRV) is the venture capital arm of Munich Re Group, one of the world’s leading providers of reinsurance, primary insurance, and insurance-related risk solutions. With more than $1 billion in assets under management, Munich Re Ventures invests in the most innovative start-ups transforming the future of risk and risk transfer. MRV’s experienced investors are financially-driven while focused on the strategic interests of Munich Re and the broader insurance industry. MRV works closely with Munich Re Group businesses across the globe to fund and partner with the best emerging companies developing new technologies and business models — and risks — for tomorrow’s world.

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