Going to space has gotten a lot cheaper over the past few years. Once solely the domain of the nation sates, it is now possible for almost “anyone” to launch am orbital vehicle. Here is a good graphic that illustrates this well. This has extended the addressable creator space to include small academic projects and even smaller start-ups. At the same time, the electronics involved have gotten much cheaper, allowing for tiny satellites to be built at low cost.
For us, one of the most interesting aspects of this is the way that small start-ups have come up with really interesting ways to build commercial businesses using these low-cost vehicles. As much as the headlines talk about the big projects like SpaceX’s Starlink, there are a huge number of much smaller projects out there doing even more interesting work.
Many of these are attempting to go after large-scale projects – massive communications systems, or advanced photo reconnaissance projects for governments. But more intriguing are the companies looking to monetize data commercially.
There are now numerous commercial end-markets for satellite data. These range from buyers of weather data for agricultural planning, insurance forecasting and map data providers to the whole gamut of “Alt-data” vendors selling data to hedge funds about global economic activity. It easy to get sense that space start-ups are just beginning to scratch the surface of what is possible for commercializing satellites and satellite data.
One of the big problems faced by space start-ups is the disconnect between what is possible and what the market actually looks like today. Put simply, as much as there is great hope for the space, actual customer dollars available today are largely coming from very traditional buyers – the governments and aerospace companies. So one of the challenges that start-ups will have to overcome is actually building a new market. Well funded companies, like SpaceX (sortof), likely have the resources to spend heavily on marketing and create new opportunities, but smaller companies will need to hustle hard to get new customers engaged. Just like every other start-up out there.
And while the space start-ups and “cube-sats” were a hot investment theme a few years ago, much of that heat has died off. This is the normal hype cycle as it usually takes a few years for technology to match up to early expectations and pitch decks.
That being said, we believe there are many companies out there that have been grinding away and will soon be ready to launch, figuratively and literally.
In fact we believe, we are very close to seeing space start-ups move into what is the real next frontier – selling data that is valuable to consumers.
In our next piece we will explore how this is going to get funded and business models which may move that frontier.
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