Space Is Open for Business: The Industry That Can Transform Humanity

by Robert C. Jacobson

For the first time, I realized “space” was not just a mythical place in science fiction or the province of governments and rocket scientists, but a down-to-earth market that was just as real as more traditional ones.

As it turned out, a key part of NASA’s mission statement even then was “investing in America’s future … contributing to economic growth and security and developing and transferring cutting-edge technologies.”

The United States’ official interest in space goes back to John Quincy Adams. In the 1800s, he championed the beginning of the space exploration effort with a fervid passion for building astronomical observatories across the country, stemming from his belief that the vast unknown above would inspire us here on Earth and promote interest in the sciences. Within this persistent crusade, Adams made various requests to Congress for observatories, during both his presidency and later career in the House of Representatives. As a champion for science and knowledge, Adams was the leading force in establishing the US Naval Observatory in 1844—and in persuading Congress to establish the Smithsonian Institution as a scientific research and learning facility in 1846. One century later, plans to leverage space began in earnest.

NASA’S ROOTS The conception and evolution of the National Aeronautics and Space Administration (NASA) are much more profound than most realize. Created as a defense infrastructure during the Cold War, it provided the United States with accurate missile-targeting capabilities.

NASA’s 2005 budget was $16.1 billion, and a report from the Space Foundation estimated that space-related activities in that year resulted in $180 billion added to the United States economy. 8 This means that every dollar spent within NASA yielded a ten-fold return; other studies agree that NASA returns between $8 and $10 in economic growth per dollar it receives—quite a significant margin from an investment standpoint.9

Perhaps most inspiring in the expansion of the NewSpace sector is the involvement of students around the world; these young minds all believe in the future of space exploration.

In 2010, former NASA Ames scientists Will Marshall, Robbie Schingler, and Chris Boshuizen created a startup out of garage space at the co-living house in Cupertino known as Rainbow Mansion. The stucco home has attracted bright, space-friendly professionals over the near-decade that it has operated as a shared living space. The garage area, used for ongoing hardware projects, served as the first office for Cosmogia—known today as Planet. While many Earth observation efforts exist today, Planet started as a rare creature. Its founders saw the possibility of leveraging small satellites (also known as “smallsats”) for Earth observation. As Boshuizen recounted in NASA’s 2016 Spinoff publication, NASA Ames Research Center’s director of engineering, Pete Klupar, “had this shtick … where he’d pull out a Government-issued BlackBerry from his pocket and tout how a smartphone has more capabilities than many satellites, as it has a bigger computer and better sensors.” Klupar would proceed to ask the room why satellites cost so much more than a phone—before putting the phone away and continuing with his regular programming. One day, Boshuizen and Marshall interjected: “We said, ‘Pete, don’t put that back in your pocket. We’re going to make that into a satellite.’” The pair soon began leading the NASA PhoneSat project: CubeSats that leveraged cheap smartphone components to take photographs once in orbit. PhoneSats cost under $7,000 to build; the least expensive satellite that NASA had b...

Following the success of the PhoneSat tests, Marshall, Boshuizen, and fellow Ames colleague Robbie Schingler left NASA in 2010 and formed their own CubeSat company with an ambitious goal: “to image the whole world every day, making change visible, accessible, and actionable,” Schingler said.16 Planet’s imaging and data benefit sectors ranging from human rights to agriculture, environment to shipping investments.

Once Planet proved that its product would work, funding began to flow in, and the startup hired engineers before promptly moving toward its goal of rapidly imaging Earth. Planet successfully deployed Flock-1, its first commercial constellation of twenty-eight Earth-sensing CubeSats (called Doves), from the ISS in 2014. As of Q1 2020, the company has deployed over 200 Doves into orbit.

Planet’s early and continued success resulted from a strong combination of factors. First, the startup’s founders leveraged new technology—smartphone components and off-the-shelf parts—to develop an inexpensive but innovative product with robust processing capabilities. They had a tenacious business model of “release early, release often,” which attracted substantial capital investments and support; and because the technology they used continued to improve while becoming more affordable, so did their products—allowing them to compete with the established satellite magnates and cater to both existing and emerging markets. In addition, the affordability of Planet’s CubeSats reduces risk for the company and stakeholders in the event of damage or destruction; in 2014, for example, thirty-four Doves were destroyed in two separate rocket failures. Such losses would typically be catastrophic to a company, but Planet barely batted an eyelash.

In its first ten years, the company received over $300 million in private investments from DFJ, Felicis Ventures, Capricorn Investment Group, Data Collective, and AME Cloud Ventures.19 Planet acquired satellite operating companies Black Bridge in 2015 and Terra Bella in 2017 (from Google, making Google an equity shareholder), as well as geospatial software company Boundless Spatial in 2018. After a 2018 funding round, Planet’s valuation was estimated to be over $1.4 billion.20 The startup now has hundreds of employees and partners in over forty countries, working in markets that include agriculture, government, defense and intelligence, emergency management, energy, and finance.

Spire Global (Spire), another small satellite constellation play, emerged in 2012 and has since been successful in fundraising as well as generating a mini ecosystem for different uses of its satellites. When founder Peter Platzer first conceived of Spire, it looked more like a space-education opportunity. Platzer pitched an earlier iteration of the company, known as NanoSatisfi, at the Space Frontier Foundation’s New Space Business Plan Competition in 2012.

When the startup did not win the competition, Platzer ended up reorienting; he quickly pivoted the opportunity as Spire Global and raised several tens of millions of dollars. To date, Spire has raised over $160 million over ten funding rounds, the last of which occurred in September 2019. Investors include the Luxembourg government, Luxembourg Future Fund, Itochu Corporation and Mitsui & Co. (two of Japan’s largest trading companies), and London-based Seraphim Capital.22 In September 2015, Spire launched four satellites aboard an Indian rocket as part of its emerging commercial weather satellite network.23 Spire has also partnered with the National Oceanic and Atmospheric Administration (NOAA) and the European Space Agency (ESA) to gather weather data that improves global forecasting. In 2018, Platzer told CNBC that he estimates this data to be worth close to $3 billion for his company over the next twenty-five years.

Orbital Insight, established in 2013 and based in Silicon Valley, is a geospatial Big Data company that uses satellites and Earth observation technologies to create custom data sets for its customers.

Because rockets often have extra room for additional payloads, “rideshare” companies provide that extra space as a useful and lower-cost launch alternative. Groups like Nanoracks, Rocket Lab, and Spaceflight have been effective intermediaries for groups looking for quick access to space.

The single greatest contribution that SpaceX has made to the launch market is that launch now has a price. Before, if you wanted to launch something into space, you couldn’t even write your business plan, because you couldn’t get a price until after you had your money—and you couldn’t get your money until after you had a price.

Ian Fichtenbaum is the senior vice president and the space and satellite specialist of the American Industrial Acquisition Corporation (AIAC), a privately held industrial investment portfolio. Through his role with AIAC, he serves as the director of Bradford Space Group, a global space company that specializes in manufacturing, propulsion systems, altitude and orbit control systems, deep space missions, and space station facilities. He previously served as vice president and associate of Near Earth LLC, where he led startup investments as well as acquisition strategies within the space and satellite markets. Fichtenbaum is an International Space University alumnus.

THE SMALLSAT REVOLUTION The satellite industry is in transformation, in large part due to the increased flurry of activity within the smallsat segment of the nearly $280 billion global satellite sector.

Research and Markets released a report titled “Prospects for the Small Satellite Market” in 2019, wherein the global market research firm projected that 7,000 smallsats will launch between 2018 and 2027. Notably, the 2019 report’s forecast for the smallsat market’s growth over the next ten years increased by 13 percent from the last report in 2018, signifying the rapid evolution of the subsector over the course of one year coupled with the “[untapped] potential of several applications and regions of the world.” The report also anticipated a rate of 580 smallsats launched per year by 2022 and an increase to 820 per year by 2027; a main driver of these increased quantities will come from satellite constellations, which Research and Markets expects to account for 82 percent of the predicted 7,000 smallsats.

United Kingdom-based growth strategy and research firm Frost and Sullivan forecasts the smallsat launch market will generate a whopping $69 billion in revenue by 2030, with new satellites, constellations, and replacement missions accounting for nearly 12,000 launches.

In 2019, Dr. Neil Jacobs of the NOAA stated, “The CubeSat industry is just now, I believe, starting to take off, and the data that they’re providing, particularly with the GPS radio occultation data, is incredibly valued.”15

Lars Krogh Alminde, cofounder and chief commercial officer of Denmark-based nanosatellite startup GomSpace, believes that in five years, “the market will be in hypergrowth—we’ll be in a more mature market with more established players and more established value creations.” The challenge is the availability of financing mechanisms that more mature markets benefit from, he said: “Banks need to be willing to issue guarantees in deals related to NewSpace technology.

Rocket Crafters spearheads the use of 3D-printed combustion chambers as part of its quest for safer, better-performing hybrid engines.22 SpaceX and Rocket Lab use additive manufacturing to print nearly the entire engines for their Dragon thrusters and Electron main engines, respectively. And Relativity Space, which secured $140 million in Series C funding in October 2019, is on track to launch its entirely 3D-printed rocket by 2021—which would make it the first company to do so.

In February 2019, the United Kingdom’s Orbex Space unveiled the world’s largest 3D-printed engine. Later that same month, Brooklyn-based startup Launcher claimed to have 3D-printed an even larger engine—completed by its five-person team.24 Launcher founder Max Haot told CNBC that the ability to achieve these cutting-edge results with such a small team stems from the innovative technology itself. “With 3D printing, we’re now in a world where a startup like us can now access [advanced] liquid oxygen propulsion technologies,” Haot explained.

In 2018, Boeing invested in additive manufacturing startup Morf3D through its investment entity, HorizonX Ventures, which “focuses on identifying startups developing revolutionary concepts around the world.”28 Founded in 2015 and based on the edge of Los Angeles in El Segundo, Morf3D develops 3D-printed applications for the aerospace sector. Boeing has been a key client from the beginning, with Morf3D supplying 3D-printed parts for the aerospace giant’s satellites and helicopters—using titanium and aluminum materials that offer improved performance and are more cost-effective compared to traditionally manufactured materials.

On the other side of the country, Florida-based Harris Corporation researches ways to use 3D printing to develop parts for future spacecraft, which could save “up to $400,000 per satellite.”30 Harris is developing this project with Israel-based Nano Dimensions to reduce satellite development time.

Morgan Stanley published an article in November 2018 that illuminated how both subsectors’ costs have reduced dramatically because of reflying. Satellite launch costs have dropped from $200 million each to $60 million, and Morgan Stanley predicts that they could decrease to just $5 million per launch. The firm also expects satellite production costs could decrease by a factor of one thousand: from the current price of $500 million per satellite down to a mere $500,000.36 These massive savings will make satellite data more affordable and free up budgets to spend on new technology development, which will result in more sustainable business models across many industries.

One company is already using satellites to revolutionize data security. Cloud Constellation Corporation’s SpaceBelt Data Security as a Service is a constellation of ten satellites in LEO that provides unprecedented cybersecurity made possible by space capabilities.4 “Think of it as a Dropbox in space,” said Cliff Beek, Cloud Corporation’s president and CEO. SpaceBelt “leverages the isolation of a space-based cloud infrastructure,” operating independently of the internet and leased lines—because terrestrial networks are vulnerable to data breaches. SpaceBelt is therefore ideal for companies and governments who need to transfer sensitive and valuable data globally, “whether it’s data about a financial transaction, an environmental issue, or something ultra-sensitive for the department of defense,” Beek said. “We’re able to protect that data as it moves around the world by keeping it above-ground and then delivering it directly to the target company or device or location on Earth,” he continued. “We could be in Bahrain, we could be in Saudi—we can be in any city on the planet, and we can pull the data down without it having to go across any international network.”5 Clifford W. Beek, a global cybersecurity expert, is the president and chief executive officer of Cloud Constellation Corporation, a data security company that provides space-based cloud data storage through its patented service, SpaceBelt. He is also the cofounder of Star Asia Technologies, an information and techn...

Aerial platforms for Earth observation are also increasing in viability, particularly high-altitude pseudo-satellites (HAPS). Tucson-Based World View Enterprises, a private American near-space exploration and technology company, launched a high-altitude balloon in a successful stratospheric mission in 2017. This uncrewed, remotely controlled balloon called the “Stratollite” was able to carry a communications payload for the United States Southern Command, which believes it can use the vehicle “to help combat human and drug trafficking and maritime piracy.”

In 2017, World View cofounder (and former NASA astronaut) Mark Kelly lamented in a Space interview that there are “trillions of dollars spent within the atmosphere, hundreds of billions of dollars spent in orbit around the Earth. But in the stratosphere, basically nothing.”10 Luckily, that may be changing. Tom Olson, the director of business development for UK-based early-stage investment firm Avealto, sees HAPS as a huge opportunity, arguing that it is a “$40 billion untapped market,” and that many around the world are now viewing it as such.

Jeff Bezos argues that going into space is a crucial next step for humanity’s continued survival, and much of that survival is reliant on resources. At the 2016 Pathfinder Awards at Seattle’s Museum of Flight, Bezos noted that “If you take baseline energy usage on Earth and compound it at just 3 percent per year for less than 500 years, you have to cover the entire surface of the Earth in solar cells. That’s just not going to happen.”

Israel-based SpaceIL sent its Beresheet lunar lander to the Moon in February 2019 via a SpaceX Falcon 9 rocket. This marks the first lunar mission from the private sector, Israel’s first lunar mission, and the first organization that competed in the Google Lunar XPRIZE to have a successful launch.

The Moon has an estimated 600 million tons of frozen water at one of the poles, and if you break the Moon down to its core elements, it is composed of 40 percent oxygen.

In the short and long term, we will need space’s resources for our survival.

In 2016, Luxembourg launched its Space Resources initiative, allocating $223 million to finance companies focused on resource mining.

That year, Luxembourg’s government invested $28 million into Washington State-based Planetary Resources, as well as an undisclosed amount of funding to California-based Deep Space Industries (DSI) for prospecting missions.

Firmamentum, a division of Tethers Unlimited, Inc. (TUI), develops hardware for in-space manufacturing and has received NASA grants for its various projects. As part of its SpiderFab technologies, TUI’s Trusselator device manufactures structures after a satellite has reached orbit, which “allows these components to be significantly larger than if they had to be stowed within a rocket shroud.”

In terms of scale, SpiderFab can fabricate “multi-hundred-kilowatt solar arrays, large solar sails, and football-field sized antennas” by putting the structures together in space.

To do big things in space, we need to use in-space resources. The reason we go to space, in my view, is to save the Earth. We need to move heavy industry off-Earth; it will be way better done in space anyway; access to power is way easier in space.86 Jeff Bezos | Founder, Blue Origin

Our focus is not necessarily the six people in orbit, but the 7 billion people on Earth.5 Twyman Clements | Cofounder, President, & Chief Executive Officer, SpaceTango

Space Tango partners with SpaceX, Northrop Grumman, and Orbital ATK to deliver customer payloads, which focus on various pharmaceutical experiments enabled by the TangoLabs’ microgravity environment.

Given Space Tango’s success with its first endeavor, it is a company to watch as the private sector makes serious moves toward commercializing low Earth orbit.

Yossi Yamin, cofounder and CEO of SpacePharma, wanted to transform the way space is used for life science and pharmaceutical research. SpacePharma’s solution was to develop free-flying, miniaturized laboratories that would allow companies to place real experiments in microgravity—and its success led Fast Company to deem the startup one of the “Most Innovative Companies.”16 The startup’s smallsats facilitate a variety of testing in space via free flyers or the ISS, including tests focused on protein crystallization, fluid physics, microbiology, and 3D cell culturing, e.g., organ-on-chips and stem cell cultures.

James A. M. Muncy is the president and founder of PoliSpace, an independent space policy consultancy that he formed in early 2000. The goal of the firm is to help commercial space entrepreneurs overcome political, regulatory, and other non-technical barriers to success. He has worked with various government branches, including the US Military, NASA, NOAA, and US Congress. Muncy is a longtime advocate and activist for the space sector who frequently writes and speaks about space policy. In 1988, he founded the nonprofit space advocacy organization the Space Frontier Foundation with Rick Tumlinson and Bob Werb. He served as the Foundation’s chair of the board for six years and has also served on the board of directors for the National Space Society.

In June 2019, NASA announced that, starting in 2020, it will allow a minimum of two private astronauts per year to spend up to thirty days on the ISS to conduct “approved commercial and marketing activities.”26

NASA released an appendix to its Next Space Technologies for Exploration Partnerships (NextSTEP-2) Broad Agency Announcement, calling for commercial proposals to partner with the government agency on future ISS activities via the Node 2 docking port (also known as Harmony).

Hoyt Davidson is the founder and managing partner of Near Earth LLC, an investment firm working in the satellite, commercial space, and aerospace defense markets.

Amaresh Kollipara is the cofounder and chief executive officer of Earth2Orbit (E2O), a global satellite launch provider, and serves as chief revenue officer for Offworld, a company developing a robotic workforce.

And both United Launch Alliance and Bank of America Merrill Lynch envision a $2.7 trillion space economy by 2045.

Joerg Kreisel is the chief executive officer of JKIC, an independent space business and financial advisory firm located in Germany. JKIC focuses on space commercialization, developing global partnerships between the private space industry and investment entities, and supporting space-related businesses around the world.