One sector where Promus Ventures has long believed has tremendous opportunity to change the global landscape is the emerging New Space economy.
Since our launch (pun intended) in 2012, we have been privileged to invest in numerous teams across the world focused on creating and capturing significant value in all parts of the New Space value chain, in addition to our other deep-tech investments in machine learning, robotics, synthetic biology, etc.
Our New Space portfolio is wide-ranging, currently with eight announced companies tackling very different markets and products. Companies such as RocketLab, Spire, and ICEYE are developing and launching space hardware, while companies like Swift Navigation, Mapbox, TerrAvion, Enview and Cape Analytics concentrate further down the value chain, either leveraging existing space-based technologies such as GPS or creating value on top of the geospatial data stack.
Promus Ventures has been recognized as one of the leading VCs in the space sector (most recently by Bryce Space and Technology). We thought it might be helpful to entrepreneurs who are building New Space companies to get some insight into the way that we think about this important and growing industry.
Recent Evolution of the Space Industry
The Space industry has seen some fundamental structural changes in the last two decades, driven primarily by new entrants who are attempting to either disrupt more traditional Space industry incumbents or create economic value in new and emerging sectors of the Space industry.
It is helpful to consider the value chain associated with the Space industry when considering how the industry has evolved in the last twenty years. We feel the founding of Space Exploration Technologies (SpaceX) in 2002 is the milestone that is best used to understand the evolution of the Space sector. Aggressive innovation from SpaceX and others since this time has made space more accessible due to the falling price points of both access to space and also access to data/communications from space.
The Space industry was traditionally dominated by large companies, many of whom integrated aspects of the value chain shown above. Large aerospace companies dominated manufacture and launch, while services companies contracted with these suppliers to ensure access to satellite capability and access to LEO, MEO and GeoSync orbits.
Many of the long-term space industry players continue to be active participants in the emerging New Space industry, but there has been a wave of consolidation in parts of the value chain that has seen (for example) the emergence of companies like United Launch Alliance (ULA) from the combination of the launch services of Lockheed Martin Space Systems and Boeing Defense, Space and Security. Similarly, there has been a wave on consolidation in areas like services, where satellite TV operators like DirectTV (US) and BSB (UK/Europe) have merged into larger entities.
Since the emergence of SpaceX as a viable launch alternative (following its demonstration of the first private-sector funded liquid propellant rocket to reach orbit in 2008), venture capital funded activity in the Space sector has accelerated as evidenced by the chart below.
Tracking New Space at Promus Ventures
At Promus Ventures, we are currently tracking over 400 private New Space companies across the globe. Our database of New Space startups is continually growing as we meet new founders and develop relationships with them, and our tracking allows us to identify trends in various sub-sectors of the industry that we watch closely. Our dealflow metrics and analysis also allow us to understand how other areas that Promus Ventures invests in are helping New Space companies create value, and we believe the synergy and crossover between these different sectors makes us better investors.
We have used our proprietary dealflow platform to look back at the development and innovation in the overall New Space sector, and have pulled out some trends in a number of sub-sectors outlined below. We also provide some insight into adjacent/overlapping areas of technology and investment that we feel are closely related to our investments in New Space, where new products or services are being created through advances in multiple technology sectors.
Launch Services
SpaceX demonstrated the ability of private launch providers to service both government and commercial/enterprise clients, and this trend has accelerated in recent years. There are currently multiple small-satellite launch vehicles in development by startup companies, and small-satellite launcher RocketLab has already moved into commercial operation.
Access to space has long been a bottleneck for commercial space companies, and innovation from companies such as LA/NZ-based RocketLab is solving this problem. The price to launch a kilogram of payload into LEO is still high, but has declined as new companies enter the market. The use of dedicated small-satellite launchers and high-cadence launch schedules by companies like RocketLab will continue to make access to space more affordable.
One of the most exciting aspects of the entry of private space companies into the launch sector has been the transparency around pricing which has allowed downstream space companies launching assets into orbit to understand and constrain the economic model for their business earlier. This transparency around pricing has also allowed a more accurate estimation of the funding required to get to a minimum viable product (MVP) in terms of the constellation they need to launch, and also allowed brokerage and ride-share services to emerge and broaden access to orbit.
Earth Observation
Earth observation satellites are becoming more accessible and relevant to businesses and governments due to a continuing cycle of both decreasing costs and increasing innovation and capabilities. Many of these advances around earth observation are being driven by innovation in the consumer electronics industry, especially the mobile communications/cellphone industry.
Examples of companies in this sector that are already in the Promus Ventures portfolio include SF/Luxembourg-based Spire and Helsinki-based ICEYE, both of which show the kind of disruptive technology enabled by leveraging low cost commercial off the shelf (COTS) components.
One of the really fascinating aspects of the recent evolution of the New Space industry has been how many of the entrepreneurs are developing full-stack products. Both Spire and ICEYE are fully-integrated in building their products from conception to launch.
New Space Enabling Technologies and Ecosystems
As Promus Ventures looks at these launch service and earth observation trends in New Space innovation and investment, we find it helpful to also track how innovation in other areas like sensors and robotics impacts and influences New Space entrepreneurs.
Sensors
The deployment of large constellations with multiple sensors and a greater diversity of sensor types means data customers now have access to greater spatial resolution, higher temporal/refresh cadence, and a much wider range of spectral coverage. This combination of decreased cost and increased capabilities opens up new use cases, industries, and applications for businesses.
We are also excited about the ways people rethink and reuse existing sensor technologies in new and novel ways. One example from the Promus Ventures portfolio is Swift Navigation, where the team is using GPS sensors and technology in unique ways to get hyper-accurate location data — data that will enable all kinds of exciting innovation like widespread deployment of autonomous systems and devices.
Data — AI & ML
Innovations in machine learning, AI and predictive algorithms coupled with the proliferation of sensor data, provide ever-evolving insights that help customers understand more and more about the world and their business processes. Promus Ventures’ investments such as Mapbox, Cape Analytics, Enview, Spire and TerrAvion all utilize deep AI and ML in their back-end platforms.
It is no longer just global superpowers and multinationals that have access to space and related services. Emerging countries, startups and even individual users with smartphones are now able to leverage space-based assets.
Access to this data is another key evolution in the Space sector. Looking at companies like Uber and other ride-sharing competitions is a useful exercise to understand some of the possibilities that space-based infrastructure enables. The integration of sensors such as GPS and cellular radios into widely-available consumer handsets has generated significant value in use cases that were not possible 10 years ago.
Robotics
Continuing evolution in robotics, and especially in application of robotics in the New Space sector, is another area of innovation. While still reasonably nascent, we are convinced that remote controlled or self-supervised space robots will make space-based enterprises cheaper and also make space much more accessible. This will be especially true in areas like resource extraction and space-based fabrication and construction.
Communications
The emergence of low-cost satellite options has also brought innovation in the satellite communications sector. Companies such as OneWeb are proposing large constellations focused on providing broadband communications capability. Similarly, SpaceX has announced an even larger constellation that will provide similar functionality. Other companies are also proposing launching assets to enable communications. Many of these proposals require significant capital, but early-stage investors have found ways to participate in the value creation in areas like novel high-bandwidth communications technology such as free-space optical links.
Emerging application-layer startups that leverage this ubiquitous communications capability could also develop compelling business models.
Sky’s the Limit
Promus Ventures continues to be one of the leading early-stage New Space investors, investing in game-changing companies worldwide. We not only invest in companies that are clearly New Space, but also in companies where we see unique synergies with the activity and needs in this fast-growing New Space sector.
We look forward to what’s ahead for the New Space industry, and are confident the only constant in this exciting area will be change.
Recipients of this post are not to construe it as investment, legal, or tax advice, and it is not intended to provide the basis for any evaluation of an investment in any fund. Prospective investors should consult with their own legal, investment, tax, accounting, and other advisors to determine the potential benefits, burdens, and risks associated with making an investment in any fund.
