Satellite data is the “new oil”. 5 reasons why.
Couple of weeks ago, we celebrated graduation of #2nd batch from Space3ac Intermodal Transportation acceleration program. The program’s Demo Day, held in Gdańsk, was a great opportunity for me not only to witness results of startups’ work, but also to present latest information about value of satellite data driven industry and the way that is changing our lives.
In 20th century oil and gas drilling sector were the most valuable part of the global economy. Now, as we live in the digital era, the list of the biggest companies around the world is dominated by data driven technological giants like Apple, Alphabet, Microsoft or Amazon.
- Rapid growth
One of the components of the data market is the space industry, and the latter has doubled its value in last 10 years. Areas that seem to be the core of space industry — like satellite manufacturing and launching — make only 6,5% of the whole market. The most important and valuable part of this business is satellite and services sector. Satellite data based applications are now crucial for telecommunication, aviation, transportation, agriculture, meteorology, resource exploration or national security. The list is much longer and is still growing.
Source: Satellite Industry Association, The Tauri Group
2. The potential
Prospects for the development of this market in the coming years look very promising. All due to global navigation satellite system (GNSS) and European Union’s Gallileo. By 2025, the number of “Gallileo ready” devices will almost triple. This is certainly a gold mine for all developers and data analysts.
Source: GNSS Market Report 2017 — European Global Navigation Satellite Systems Agency
3. Investors’ attention
The sector’s potential has been recognised by investors. In recent years, funding from venture capital funds have become the growth engine for new space industry companies. VC funds investments have increased more than 9-fold over the last 5 years comparing to 2006–2011. Also, seed stage funding for startups picked up to $7,9 billion. On the other hand there was a significant decline in private equity investment and debt financing.
Source: Bryce Start Up Space 2017 report
Space industry has become hot topic for a lot of people who built their fortunes on the computer and internet revolution. Jeff Bezos and Elon Musk are the leaders of upstream sector and started new space race to Mars. Bill Gates supported satellite data driven company and Larry Page with Eric Schmidt bet on asteroid mining.
Source: Market Creation and the European Space Agency, Mariana Mazzucato, Douglas K.R. Robinson
4. Public support & market fit
Despite the strong interest of private investors, the sector is still mainly supported by national governments. Worldwide government expenditures for space programs amounted $62.2 bn in 2016. This is the game for big players, but even small countries seeing the potential of the market and try to develop their space industries on foundation of satellite data. Major success factor for smaller players is to utilise the strengths and specifics of their economy.
Source: Euroconsult 2017
Poland is located in the center of Europe, at the crossroads of important trade routes. As much as 1 737 040 thousand tons of cargo is transported through Polish roads and ports annually, and transport is responsible to 10% GDP, employing over 7% of workforce in Poland. Thanks to relatively low labor costs, the share of Polish companies in the European market for road haulage is close to 25%. Currently the transportation sector is facing global revolution caused by the increasing use of Intelligent Transport Systems and automatic vehicles. We need to take part in the revolution to stay competitive.
Linking the intermodal transportation industry’s thirst for innovation and potential of applications and solutions based on satellite data was an impulse to create the Space3ac acceleration program. This initiative is supported by the Polish Government, the Polish Agency for Entrepreneurship Development and the Pomeranian Special Economic Zone and quite a few VC funds with Black Pearls VC among them. Accelerator’s mission is to solve the problems of the transportation industry players by connecting them to satellite data driven startups. Until the end of 1st quarter of 2018, Space3ac will support 26 startups working for 9 industry players.
Latest evidence from the Polish ecosystem: the recruitment stage for this year’s second turn of the Space3ac accelerator has just been closed, with as much as 113 startups applying from Poland and other European countries. The number is relatively high (considering how narrow the requirements were) and shows growing awareness of startups with the space sector field.
The satellite data market is open and rapidly developing around the world. Growth of the market value, investors’ interest and increased government agencies expenditures in the sector show that satellite data can be treated as “the new oil”. Downstream space sector is a branch of industry, which is certainly not only for big ones, but also for new initiatives, developers and startups.
Startup competitions, acceleration and incubation programs:
- Copernicus Accelerator
- EO ClimLab
- ESA Business Incubation Center
- European Satellite Navigation Competition
- Galileo Hackathon
- Black Pearls VC
- EBAN Space
- Pomeranian Special Economic Zone
- Seraphim VC
- Space Angels
- SpaceTec Partners
- Space Ventures Investors
News, databases and reports: