In association with NJF Holdings
Investor demand in NewSpace continues to soar
Investing in space can sometimes feel like a sci-fi-esque idea from the distant future, but the space industry is booming right now – and it’s only going to get bigger.
UBS released a report last year estimating the annual space market to be worth $400 billion, with this expected to double to $805 billion by 2030. Morgan Stanley has previously put it at $1.1 trillion by 2040. Investors are clearly turning their focus beyond this planet when it comes to looking for new opportunities.
And the Covid-19 pandemic doesn’t seem to be impacting investor sentiment around so-called ‘NewSpace’ companies either. With space-focused exchange-traded funds such as the Procure Space ETF (which uses the ticker ‘UFO’) compiling and tracking a range of space companies over the past few years, investors have been able to place early bets on the industry.
It’s not just the big space companies such as Inmarsat, Lockheed Martin, Airbus and Boeing that investors are taking an interest in for the future of the space industry, though. Evolution of technology has lowered the barriers to entry into the industry in recent years, and many start-ups have emerged to fill the gaps.
A report by New York-based investment firm Space Angels revealed that over $109 billion has been invested into 822 space companies since 2004, and the first quarter of this year saw $5.4 billion invested across just 36 companies. There are NewSpace conferences happening all over the world, governments creating national space agencies and innovation efforts, and traditional space companies clamouring to stay relevant among all the entrepreneurial excitement.
Satellites: underpinning a connected world and investor enthusiasm
Many people’s perception of the future of the space industry is focused on the latest developments on space tourism (a topic never far from the headlines, whether it be the advancements of SpaceX, Virgin Galactic or Blue Origin), the possibilities of mining asteroids for precious minerals, or the potential to create habitable bases on other planets. However, driving investment in the space industry right now is the largely overlooked satellite.
Satellites provide us with connectivity – to the internet, to consumer television, to location-based information and more. They also allow us to connect with countless internet-enabled devices and provide insights and data gleaned exclusively from above. While technology continues to develop at an accelerated pace across the globe, so does the adoption of connected devices, the demand for bandwidth and the expectation for immersive, complex digital experiences in both the commercial and consumer spheres.
We are still a way off having a fully ‘connected world’ and there are many industries still switching from analogue to digital processes, together resulting in a relentless need for even more connectivity, more powerful data-processing, and greater access to new and better information and bandwidth.
This explains why, according to a MIT Technology Review study last year, by 2025 we could see 1,100 satellites launching into orbit each year, a rise from 365 in 2018. SpaceX’s Starlink internet project alone aims to fly 12,000 small, low-cost but high-speed satellites around the world by 2027, with 42,000 planned in total. Some 240 such SpaceX satellites are already in orbit, while London-based OneWeb is aiming to have 400 launched by the end of this year.
Agriculture is a good example of an industry in transition to digital, with farmers increasingly relying on satellite information and connectivity to monitor their farms, keep up-to-date on weather and better manage their crops and livestock. The relevance of satellites to urban areas is vast too. In cities, self-driving cars will need far stronger connections to ensure that communication between devices, cars and public transport systems is real-time and secure.
Part of the reason for the boom in start-ups surrounding space connectivity is because of the various different kinds of infrastructure – and therefore business opportunities – required to realise the potential of the industry. One such opportunity is in the manufacturing of satellites. It is no longer only large, expensive pieces of equipment developed by the world’s biggest aerospace companies that is being sent into space. Small, sustainable and affordable satellite devices are also now being developed at pace.
Swarm Technologies, a company within the NJF Capital portfolio, is one start-up looking to capitalise on satellite manufacturing being far less expensive and technically challenging than in previous years. From its California base, the Swarm team – co-founded by Dr Sara Spangelo and Dr Ben Longmier – aims to enable global connectivity with the world’s lowest-cost network of micro-satellites around the Earth; satellites so small that they can fit in the palm of your hand.
‘Swarm is helping people build and rapidly scale their businesses globally by making connectivity in rural and remote areas accessible in a way it’s never been before,’ said Dr Spangelo. ‘The unique economics enabled by our small satellites allow us to provide data services at a fraction of the cost of existing providers. Our mission is to provide affordable connectivity to every point on Earth at all times. Swarm will provide the lowest-cost satellite connectivity for agriculture, logistics, maritime, energy, and environmental monitoring and global development use cases across the world.’
Aside from manufacturing, there are plenty of other areas companies are looking at to take advantage of the growing demand for satellites. For example, there are the launch companies – the new, smaller outfits servicing these small satellite launches, with start-ups such as Rocket Lab and Firefly leading the way. Of course, satellites need something to hitch a ride on, and there are also companies focusing on new rocket designs, such as Skyrora, and innovative balloon launching technologies, such as Leo Aerospace, and many other far cheaper and more sustainable approaches to getting satellites from Earth to orbit. In addition, start-ups such as Nanoracks are providing what they call a ‘concierge to the stars’ for new entrants into the space market.
The NewSpace industry is exciting, fast-paced and sure to continue to attract enthusiastic investment at a global level. Although there are many investment opportunities across the space industry, the growth of satellites, which will underpin global connectivity for years to come, should certainly remain in your obit from an investment perspective.
Nicole Junkermann is an international entrepreneur and investor, and the founder of NJF Holdings, an international investment company with interests in venture capital, private equity and real estate. Through NJF’s venture capital arm (NJF Capital), Nicole oversees a broad investment portfolio across Europe and the US similar in size to a small venture capital fund, with several investments in the deep technology sector.