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Space Technology: Venture Capitalists' Final Frontier

October 23,2017 23:18

... says Dylan Taylor, founding partner of Space Angels, a speaker at the Space Foundation's recent Space Technology & Investment Forum in San Francisco. Second, the cost of launching satellites has dropped significantly. Off-the-shelf parts work in ...



The SpaceX Falcon 9 rocket launching at NASA's Kennedy Space Center in Cape Canaveral, Florida, on June 3. (Photo by Bill Ingalls/NASA via Getty Images)

The future is almost here.
By 2025, satellites the size of shoeboxes will provide high-speed internet for every single one of the world’s 7.6 billion people.
Governments and people will have hack-proof communications thanks to "quantum entanglement" – a phenomenon that renowned physicist Albert Einstein described as “spooky action at a distance.”
Rockets will be built by printers.
Those are some of the things space industry experts are predicting.
And Silicon Valley – where computer programmers, IT specialists and aerospace engineers are pushing the new frontier of space – is turning those visions into a reality.
More than 60 venture capital firms are investing in space technology, according to SpaceTec, a Munich-based consultancy. Between 2010 and 2016 they invested as much as $3 billion into companies like SpaceX, SkyBox, Spire, Planet, or OneWeb.
That sum looks set to mushroom as venture investors feverishly look to put money into the industry.
“Everyone wants something space in their portfolio they can talk about. There’s a big fear of missing out,” says Christopher Richins, CEO of RBC Signals. His company has attracted venture capital to create a network of existing satellite ground stations and then selling their excess capacity to satellite operators, much like Uber and Airbnb do with cars and houses.
Venture investors are driven by two things: First, they see a massive opportunity to make money: By 2025, the space economy will be between $5 trillion to $10 trillion or equivalent to the gross domestic product of an entire continent, says Dylan Taylor, founding partner of Space Angels, a speaker at the Space Foundation’s recent Space Technology & Investment Forum in San Francisco.
Second, the cost of launching satellites has dropped significantly. Off-the-shelf parts work in space, and gone are the days when components had to be custom-engineered at great expense, says Dan Ceperley, CEO of LeoLabs, a venture-backed startup that is designing a radar system to track space debris. “Space is becoming a normal economy. It’s no longer novel,” he says.
SpaceX and Blue Origin, the privately funded rocket ventures of Elon Musk and Jeff Bezos, were among the first to bend the cost curve.
What has accelerated that trend is the emergence over the last three years of the CubeSat, a class of satellite the size of a football or shoebox, which is relatively cheap to put into space, says Ceperley.
The involvement in the industry of Silicon Valley thinking and private money – traditionally space was the domain of government-funded research institutes – has led some to call it “NewSpace.”
Some see parallels with the investor fervor surrounding solar and biofuels companies of 2007-2009 and warn the high levels of interest in the space industry are signs of a bubble.
“I have seen people that are not veteran space investors getting into the space industry — just as 10 years ago non-energy people were investing in cleantech,” adds Shahin Farshchi, a partner at Lux Capital. “That gives me the Heebie Jeebies.”
NewSpace entrepreneurs need to accept the demands of venture investors, says John Serafini, a former venture investor at Allied Minds and now CEO of HawkEye 360.
That means ideas need to be turned into a properly functioning business that can be sold or taken public – which is when investors make their money – within five to seven years.
Serafini is practicing what he preaches: founded two years ago, HawkEye 360 plans to launch satellites next year and then either sell or go public in three to five years. HawkEye 360’s satellites will monitor the globe for wireless signals, a service it can sell to governments to track ships smuggling contraband or to fishing conglomerates to keep track of their fleets.
One thing investors worry about is the low number of exits among NewSpace companies.
Skybox Imaging, an earth imaging business Alphabet’s Google acquired in June 2014 for $500 million, is the one standout exit many people cite. Google then renamed it Terra Bella before selling it to Planet in February 2017 for undisclosed terms.
The other big exit is O3b Networks, a satellite network beaming internet to developing nations, which SES acquired in July 2016 in a deal valued at $1.43 billion.
“As it gets less risky you will start to see [more] mergers and acquisitions,” says Richins of RBC Signals.
NewSpace Companies To Watch:
Astranis is looking to launch a constellation of low-cost telecom satellites to help bring the 4 billion people online who are without internet.
BridgeSat’s technology will enable satellite operators to transmit data to the ground at speeds of up to 10Gbps, much faster than current downlink technologies.
Capella Space is cracking a major problem of today’s imaging satellites – being able to see through cloudy or nighttime conditions.
Facebook wants to partner with companies in the space industry as it looks to provide Internet connectivity for people in developing nations.
Kepler Communications is developing a constellation of CubeSats that will connect devices on earth and in orbit, effectively putting cell phone towers in space.
LeoSat Enterprises aims to launch several interlinked satellites that will blanket the Earth with an enterprise-grade data network.
Planet’s more than 200 small satellites capture images of the Earth daily.
Relativity Space has invented a new way of building rockets using 3D printing and robotics to dramatically reduce the cost of putting small satellites into orbit.
S-Fifteen is looking to commercialize its ‘quantum key distribution system’, an encryption technology that aims to let governments or people communicate without being hacked.
Mark Andress, deputy editor, writes on technology, media and telecoms from San Francisco for Mergermarket and Dealreporter. 
 

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