Investing in Space is hot. Witness PlanetLabs with a recent transaction setting their value at $1.2 billion, OneWeb raising $500 million from a blue chip set of strategic investors, Google buying SkyBox Imaging for $500 million and investing a billion dollars in SpaceX, Spire collecting more top tier venture capital investors like Bessemer, and UrtheCast reversing into a public shell and now trading at a market capitalization in excess of $300 million. But why? Space is still hard, as we have seen with three successive failures to bring cargo to the International Space Station by U.S. and Russian vehicles. These new space markets are anything but mature and predictable. What is driving this interest?
One can certainly argue that cubesat and smallsat technologies have drastically changed the investment propositions for space, greatly reducing the cost to get into orbit and service. The sacrifice of big platform performance for more frequent or extensive coverage is even interesting to some government customers as are the lower projected costs. Any hypothetical risk reduction from disaggregation would be an added benefit, if it proves real. It is also true that access to space is becoming more affordable and available, and there are numerous new rocket and launch service projects under development. Both of these developments help close the often difficult business cases for investments in space projects. It’s easier to increase the “R” in “ROI” (return on investment) if you first slash the “I”. It is also easier to achieve a higher “R” if the number of years you have to wait to begin revenue generation is shortened. So, yes, it is becoming easier to invest in Space. But that still does not answer the question of “Why invest?”
The why ultimately has to be a belief in profitable and growing market opportunities in Space. In this case, by Space I mean Earth orbit. We are not yet at the point where there is considerable investment interest in space exploration, exploitation or settlement, but those days will come and perhaps soon. At present, however, the primary interest in Space is Earth facing, not outward looking. Industry, governments and consumers want to better utilize the “high ground” of Space to improve communications, and for enhanced sensing and measurement of our planet. For decades there has been this growing expectation that information of almost any kind (data, telephony, video, imagery) should be always available to anyone anyplace. We are still a long way from global 24×7 connectivity, but smart phone and Internet proliferation are driving the demand for bandwidth and innovative new satellite and high altitude systems are coming to fill in the gaps not economically served by wireless and fiber.
But that is only half the revolution going on. The other half has to do with global 24×7 sensing of the Earth and our environment and the tracking and interconnection of all of the assets and machines on it. It is machine-to-machine communication and machine-to-human communication. It is not enough to share and move data around a globally connected planet. We want global presence; the ability to effectively be anywhere anytime and while there to act in almost any way with anything. Ubiquity of presence is the ultimate goal and it is far more than an Internet of Things.