The New Space Race: Today’s Space Tech Landscape (or Spacescape)
Fifty years after the US put the first person on the moon, our fascination with space has been reborn, and we are racing, yet again, to find a way back. But this time, the focus has shifted to doing so in a financially and technically sustainable way, inspiring innovation throughout the ecosystem and creating entirely new markets in the process. Fundamental shifts in players leading innovation efforts, from public to private, and technologies and business models they are pioneering have ushered in a “new” or “second” space age.
Familiar names like SpaceX have dominated the spotlight since they launched their first successful commercial payload in 2009. But more quietly in the background, another 430+ companies we’ve been tracking have raised over $20B in financing , for everything from satellite powered IoT networks to planetary mining. It is these companies that have cemented the privatization of space and are defining the second space age. In this post, we will explore some of the key areas of innovation, trends, and challenges in space, a market that is projected to soon be worth a trillion dollars .
Space Launch Vehicles & Payload Delivery
The biggest challenges in the launch ecosystem are competitive dynamics and economics. Legacy launch players (e.g. Airbus, Boeing), for the most part, have maintained their share of launches to date, but are expected to be challenged aggressively by SpaceX, Virgin Galactic, and Blue Origin in the next few years if they execute well. The key economic question is whether expendable rockets can compete with reusable ones in the long run. Incumbents argue that refurbishment costs do not justify reusable rocketry at current launch rates, and point to the Space Shuttle as a case in point. Experts have estimated anywhere from 30 to 100+ annual rocket launches would be required for reusable rocketry to make sense.
The Satellite Miniaturization Revolution
Since 2009, $10.6 billion has been invested in over 270 satellite companies , roughly half of all investment in space. It is the largest industry segment, last reported at $129 billion (powered mainly by consumer satellite television, satellite broadband and earth observation). We separate cubesat companies from traditional satellite players, given they often serve different customers and use cases. Satellite accessories are primarily propulsion engine companies.
The key recent innovation in the satellite industry has been the miniaturization of satellites. There is an entire class of small satellites, “smallsats”, that have emerged to become the most common satellite in orbit today. The most well known, a cubesat, is a 10cm cube that weighs only 1kg and has roughly a 3 year life span. While these satellites cannot realistically support the bandwidth required to power 5G and other broadband networks, they have played a crucial role in decreasing the costs of space data. Smallsats have also sparked innovation in propulsion technologies, which help solve the “last mile” problem created by the increasing popularity of the shared payload approach. When part of a shared payload, satellites often need to rely on propulsion engines to navigate to their final orbital position from the position required by the large asset on board.
The Boom of Data & Analytics Providers
Data & analytics is one of the largest groups on our space tech landscape. Companies in this vertical have fueled a diversification in data offerings across industries, in everything from financial services to logistics. We divide this part of our landscape into pure data & analytics plays, and companies providing infrastructure to support and improve these offerings.
That said, there remain challenges for data & analytics companies around the completeness of data offerings and costs to experiment. Real-time access and constant location monitoring are unrealistic today. Most satellites will cross over a point on earth only twice a day, creating challenges for both real-time monitoring and transmission of data back to the ground. Startups usually need to launch large constellations to offer the most attractive customer solutions, but this takes time and significant investment. Costs for businesses to experiment remain high, as many data providers still require minimum orders and restrict customization of datasets. These dynamics will likely shake out as cost continues to drop and new business models emerge.
A New Platform for Satellite Services
Satellites are not just collecting and analyzing data, they’re also powering services across television, the Internet of Things, and 5G. These satellite-powered networks are complemented by infrastructure companies that are improving the process of connecting the satellite with the end customer, either at the ground station or somewhere in between.
The innovation we’ve already discussed in the commoditization of launch and mass manufacturability of satellites is a key tailwind for satellite services. It is important to recognize that satellite powered communications are not new in any way — today they power systems on ships, airplanes, and oil rigs in the middle of the ocean. However, almost all of these satellites live in the more distant geosynchronous orbit (23,000 miles above earth) and provide only a couple megabits per second of internet access. The new space age approach that SpaceX, Amazon’s Project Kuiper, and most smaller companies are taking involves launching satellites into low earth orbit (only 1,200 miles above earth) to hopefully provide faster services.
The biggest challenge in this category today is latency. For many of the use cases stirring excitement, such as powering self-driving cars, high latency can quickly take a satellite off the table. Unfortunately, speed will ultimately depend on usage — satellites are certainly providing more bandwidth, but it is not endless.
The Emergence of a New Space Economy
The New Space Economy is the bucket of our landscape that captures everything else — from space asset management to space tourism. Many large players are actively planning space tourism offerings, while there are a number of other ambitious companies focused on emerging trends like space manufacturing, space mining, space asset management, and space science.
What We’re Excited About
At Two Sigma Ventures, we invest in companies using data science and advanced engineering across a variety of verticals. For us, the innovation and progress within the space tech ecosystem is one area that fits squarely in this mandate. We are excited to chat with more companies in the space industry, particularly those that are leveraging satellite data in innovative ways, creating new infrastructure to support current and future technology in space, and of course creating completely new industries within the space economy. If you’re working on building a space tech company, or have been spending time in the ecosystem, make sure to drop me a note.
The views expressed herein are solely the views of the author(s), are as of the date they were originally posted, and are not necessarily the views of Two Sigma Ventures, LP or any of its affiliates. They are not intended to provide, and should not be relied upon for, investment advice.
