Opportunities Emerging from “New Space”

by Omkar Nikam

Across all regions, a plethora of “New Space” companies are bringing about innovative and affordable solutions to access space

Overview

The increased privatization of space activities has brought about a new generation of space companies. The most successful of these private companies have come about as a result of consistent cooperation with, and support from government agencies.

The New Space industry to now has attracted several billion USD worth of investment, with this amount expected to rise in the coming years with more support from government entities and the private sector. The plethora of technological changes that have occurred on earth over the past decades—miniaturization of components, cheaper processing power, etc.—will increasingly make their way into space, enabling new applications and new business models to emerge.

The global space industry today is worth 250 billion USD. The US, Russia, and a few European countries are the biggest stakeholders of this billion-dollar industry. Historically, investments into space have been highly scrutinized due to the inherent risk involved in such a cutting-edge industry. With advancement in a variety of technologies, the New Space industry and its associated companies promise to bring down the cost of access to space, allowing for lower-risk, faster-moving business models that will allow for iterative improvements and ultimately, a more prosperous space economy for all.

Regional New Space Landscape

United States

The American New Space model is the most successful example of strong cooperation between the government and private sector. Over the past two decades, the US government has provided strong support to startup space companies, with the most notable being SpaceX, in the form of several NASA launches awarded to the company. Even after numerous SpaceX failures, the American government helped the company to spread its wings for New Space opportunities. This kind of cooperation between public and private sector will continue to help the development of New Space companies. Silicon Valley has been a primary source for triggering the New Space activities. Well-known venture capital firms like Sequoia, Khosla Ventures, and RRE Ventures have invested in many successful American New Space companies such as Planet, Orbital Insight, and Spire. These companies have raised the bar in research and development of affordable space solutions while also helping to develop the American New Space ecosystem.

Europe

With a strong legacy of space excellence, Europe has the potential to become a center for New Space companies, however it has thus far lacked the US’s coordination between private enterprise and government, partially due to difficulties in coming to consensus between various EU countries and pan-European organizations such as the European Space Agency (ESA). With that being said, individual European countries such as Luxembourg have already started rolling out strategies not only to attract private European companies, but also well-known American New Space companies like Planet and Spire. Though European companies like iCEYE and GomSpace are partially backed by American investors, the Luxembourg government is making consistent efforts to create a sustainable New Space nexus in Europe. Apart from individual government initiatives, venture capital firms like Seraphim Capital and OHB Venture Capital are also prominent investors in European New Space segment.

Along with the individual European States, the ESA has also started taking the necessary steps by extending support to young entrepreneurs through various business competitions to help establish business in the space segment. The ESA’s Technology Transfer Program Office has created Business Incubation Centres (BIC) in different parts of Europe. These BIC’s inspire and encourage entrepreneurs to develop business ideas based on space science and technology. As the ESA’s Sentinel satellite data is freely available online, it has attracted various investors and entrepreneurs from non-space segment to participate and create innovative earth observation startups with the help of BICs. But looking at the qualitative growth rate of the startups incubated at BIC, the results are less positive, with one of the reasons being an insufficient amount of funds. The BIC generally allocates 50,000 Euros as a seed funding for a startup, which is considerably low for a space startup at the initial stage. Therefore, the ESA must create a framework where the incubated startups are able to kickstart themselves at the very initial stage through more funding.

Russia has likewise joined the New Space race, with an investment of 3 billion rubles (approx. US$50M) in Skolkovo Project for development through 2020. The Skolkovo Foundation based in Moscow is creating a strong platform for young entrepreneurs to participate and kickstart their projects in New Space. In-spite of huge efforts by Skolkovo, the Russian New Space sector has experienced a mixture of both failures and success, as companies like Dauria Aerospace failed in its first project of remote sensing nanosatellites, while companies like KosmoKurs and 3D Bioprinting Solutions are on the way to making a good mark on the industry in their respective niches.

Asia, the Middle East, and Africa

In Asia, China has ignited the flame of innovation with its heavy investment in the launch and satellite sector, and also its partial liberalization of the space industry starting in 2014. They also achieved global fame by successfully testing the world’s first quantum communication satellite. While India being second in the region after China, they still have a long way to make a mark in the space industry. Asia is at an emergent stage in New Space race, though is home to many exciting startups, such as Rocket Labs of New Zealand (and also US), an emerging New Space company to provide launch systems for small satellites. With the advancement of affordable low-cost launch service, many satellite communication startups will now have a platform to launch their future small satellites. This technological disruption will lead to reduced cost of launch which may in-turn shuffle the supply and demand curve as it pertains to access to space.

Having a look at Middle Eastern and African countries, it can be said that the international collaboration can help nations develop their own space programs. For example, Saudi Arabia has joined the space race with its first joint Moon Mission with China, while Morocco and South Africa have also achieved success in satellite operations by collaborating with ESA and NASA.

Scope for International Cooperation, and Looking to the Future

In the past few years, geopolitical events have created challenges for many industries, and space is no exception. The wave of nationalism triggered by the series of events after 2016 US elections as well as Brexit has clobbered the gateway of opportunities for many entrepreneurs around the world.

While many American companies maintain international collaboration, and while the UK is still the part of ESA in-spite of Brexit, recent geopolitical events may ultimately lead to bifurcation of the space industry into two or more distinct camps. This is to some extent not new, with, for example, the US having historically kept China from participating in the International Space Station (ISS), but this process could speed up, particularly given the increase in protectionist policies from the US and others. The current status of ISS is mainly government centric along with a small portion of private companies like SpaceX and Orbital ATK providing commercial launch and resupply module services for ISS. The commercial operations of ISS are now slowly making a transition into the private sector, so there is possibility of ISS being a potential site of opportunity for private companies in the near future, though again this may fall along nationalist lines.

Ultimately, the best way for the New Space economy to develop is through open collaboration, not only between countries, but between private companies and governments, between research institutions and for-profit organizations. The opportunities in the commercialization of space are endless, and only through increased collaboration can we make the most of this most greenfield of markets.

--------------------

Omkar Nikam is currently working as a Market Research Intern with Orbital Gateway Consulting (OGC) while completing his postgraduate studies at the International Space University in Strasbourg, France. At OGC, he is focused on New Space. Apart from his academic and professional engagements in space activities, he also participates in voluntary science outreach programs through astrophotography and stargazing activities. He can be reached at: omkar.nikam@community.isunet.edu