Pushing The Final Frontier: Private Companies In Space Exploration
This mysterious territory is now seeing more visitors, and more companies are becoming interested in this industry.
A famous quote from Star Trek goes like, “Space: the final frontier…to explore strange new worlds, to seek out new life and new civilizations, to boldly go where no man has gone before.” Space journeys are fascinating to read and interesting to watch on TV. From Neil Armstrong to Richard Branson, we can see that the exploration of this territory has attracted a lot of attention. What once was explored only by the governments, space, has now become a tourist attraction. For the people who can afford it, of course.
There was a time when space was limited only to the government agencies. After the 1957 launch of Sputnik and following Russian firsts in space, many U.S administrations invested in education and scientific research. But after defeating the U.S.S.R in space, NASA stumbled due to the absence of a clear objective. The space shuttle program saw mixed results, and after operating for three decades was ended in 2011, leaving the U.S unable to put a human back in space.
The U.S government’s relationship with space exploration also changed during this time. In 2004, a presidential commission came to this conclusion: “NASA’s role must be limited to only those areas where there is irrefutable demonstration that only government can perform the proposed activity.” But all of it changed when private companies entered the arena and are now competing with each other and against government agencies.
Growth, Revenue & Investments
The question that comes to our mind right now is why do private companies want to get into this sector anyway? Well, because of its potential for growth and revenue. According to PWC, the current global space economy is pegged at $360 billion, while the Indian space economy is valued at $7 billion. To reach its target of $50 billion, the Indian space sector needs to grow at approximately 48% CAGR over the next five years. So, there is a lot of opportunities for growth in this sector and more money to be made as well. And companies have been making a lot of money.
According to a report by BryceTech, the space sector clocked an estimated revenue of $366 billion in 2019. Also, Morgan Stanley estimates that the global space industry could generate revenue of over $1 trillion or more in 2040, up from $350 billion, currently. So, there is a lot of potential for growth as well as revenue. That explains why this sector is seeing a lot of investments.
Declining costs for launch and space hardware in general attracted new players into this market. According to Morgan Stanley’s prediction, satellite broadband may represent 50% of the estimated growth of the global space economy by 2040, and we can understand why. Since the demand for data is rising at a rapid rate, offering Internet access to unreachable parts of the world will become a huge opportunity for companies.
Before the pandemic, private funds poured large amounts of money into space companies, but that didn’t change even during the pandemic. According to a report by New York investment firm Space Angels, space companies received $5.8 billion across 198 investment rounds last year, crossing the $5.1 billion of investment in 2017. These investments made 2019 the biggest year for private space investments. A report by NY-based firm Space Capital said that space companies received a record $8.9 billion in investments in 2020, which became a new annual record.
But what about India? In 2020, the Union government opened India’s space programmes to private players. Then, in June 2020, the Union Cabinet announced the formation of an autonomous nodal agency, Indian National Space Promotion and Authorisation Centre (IN-SPACe), an extension of ISRO. This agency aims to include private players in space related activities and regulating private tech innovation in the space.
Of the $177.7 billion total equity investment that was invested in the space economy over the last decade, 3% of it was invested in India. According to YourStory Research’s analysis of disclosed deals, Indian spacetech startups have raised a total of nearly $31 million in funding until May-end in 2021. However, India isn’t seeing any of its billionaires having a big interest to conquer space, unlike the U.S tech billionaires.
The Big Billionaires’ Space Race
Recently, British businessman Richard Branson travelled to the edge of space. Branson and his crew of five completed a sub-orbital flight to 86 kilometres above mean sea level and back on his company Virgin Galactic’s VSS Unity. The total flight time was around 90 minutes. Branson was scheduled to fly later this year, but in what could be perceived as an attempt to go to space before his rival, Jeff Bezos, the former’s schedule was moved ahead.
Bezos, the founder of Amazon, is one of the prominent players in the space industry, with his own company, Blue Origin. The firm’s New Shepard rocket will be launched into space on July 20 and lift off is scheduled for 9 AM EDT. Those who will be travelling in the rocket include Jeff Bezos and his brother Mark Bezos, Oliver Daemen, the son of Joss Daemen, who is the CEO of Somerset Capital Partners BV, a Netherlands-based investment firm as well as Wally Funk, an 82-year-old American veteran pilot.
Despite being founded in 2000, Blue Origin is not what comes to mind when people hear the words — ‘space companies’. The company which pops up in our head is SpaceX. Founded by Elon Musk, SpaceX has achieved several fleets on the space travel and exploration front. SpaceX was the first company to launch a privately funded liquid-propellant rocket into orbit, Falcon, and it was the first firm to go on a private mission to the ISS. It also did the first vertical landing for an orbital rocket and the first company to send astronauts into orbit.
Space is open for everyone right now, both private companies and government agencies alike. The entry of private companies has led to a lot of competition, and we might see more players entering this sector in the future. Space Capital managing partner Chad Anderson wrote in a report saying, “In the same way that every company today is a technology company, the companies of tomorrow will all be space companies.” So, the Indian government needs to come up with more policies if it wants to catch up with other economies on the space exploration front. And let’s be prepared to see more humans being launched into space as well.