Home Stock Comment: Spatial infrastructure is the next investment frontier and SPAC is the...

Comment: Spatial infrastructure is the next investment frontier and SPAC is the launch pad


More than 50 years after the Apollo 11 astronauts landed on the moon, a new era of space exploration is opening up. The explorers of this century are pushing the boundaries of space mining far beyond what was before – and investors are starting to take notice.

The years 2020 and 2021 have brought a new wave of space companies to the public, often through SPAC, or special-purpose acquisitions. New products are being rolled out to capitalize on this burgeoning industry, such as the ARK Space Discovery and Innovation ETF
ARKX,
-0.57%
,
was launched in late March.

What we are seeing now is an initial interest in a field with an infinite growth trajectory and is only just beginning. Consider the markets and industries you know today. While they continue to evolve thanks to rapid innovation, new technologies and the flow of data from satellites in space, they are focused on only one planet: Earth. It is only a matter of time until their development extends beyond our planet and into space, requiring a host of services (and new) and infrastructure in space to support them. Growth.

Simon Drake, Co-Founder of Space venture capitalists, captured this thought perfectly when he said, “What sets space investment apart from other sectors is that the space industry has no boundaries; humanity will always push on new frontiers. ”

The space business is experiencing exponential growth, and what unites all existing projects is the need to create complex new technologies and infrastructure to manage space missions. of all sizes. According to one Recent reports by Morgan Stanley, reusable rockets, reducing the cost of launching and shrinking satellite technology are opening up new business opportunities. In the past ten years, $ 177.7 billion of equity investment has been made up of 1,343 space companies. The Global space industry is expected to generate revenue of $ 1.4 trillion or more by 2030, up from $ 350 billion in 2020.

Add new value

Right now, close to 3,000 satellites in operation is orbiting the Earth. This number is expected to skyrocket in the coming years. By 2025, experts expected to increase by 230% in satellite launches per year, with 24,000 launches are currently in the plans – and that figure doesn’t even include Tesla launches TSLA CEO Elon Musk’s SpaceX, OneWeb or Kuiper. SpaceX’s Starlink, for example, has applied to fly 40,000 satellites.

These satellites have the potential to add value to industries, businesses and users through satellite data. As agriculture becomes agriculture, finance becomes fintech, education becomes high technology and cars become autopilot vehicles, the continued development of the use of value-added data on Earth. – mostly coming from space – will require the launch of more and more satellites. Thus, the most scalable business form on our planet today could be operating a constellation or a group of satellites acting together as a system.

Space companies are planning to massively launch thousands of satellites to provide a global service or an Internet of Things service to connect machines and systems together directly. Usually placed in low, complementary orbital planes and connected to ground stations, the satellite constellations can provide permanent global or near-global coverage, allowing for inbound internet access. The areas have long suffered from a lack of ground infrastructure.

Morgan Stanley equity analyst Adam Jonas said: “The demand for data is increasing at an exponential rate, while the costs of accessing the space and expanding, data are decreasing with levels size”. “We believe that the greatest opportunity will come from providing Internet access to poor and unprotected regions of the world, but the demand for bandwidth will also increase from self-driving car, Internet of Things, artificial intelligence, virtual reality, and video. “

Build the infrastructure

In order for the space economy to exploit its full potential, it would require a solid infrastructure for orbital transport services. This will go beyond basic launch and deployment services and extend into areas like services in orbit. For example, my company D-Orbit offers advanced AI-powered services in orbit after bringing the satellites transported in a timely and efficient manner to their operating destination. The D-Orbit will also involve specialized fleets of robotic arms that closely inspect the satellites, prolonging their life by repairing, refueling and sometimes repositioning them, and shafts. salvage exhausted satellite fragments for reuse and recycle them for other satellites.

Debris removal will also become increasingly important in times of great constellations, when hundreds or even thousands of satellites will be formed flying in low orbit. Any failed satellite drifting out of control could threaten the entire constellation, so dedicated space service facilities will be essential.

Another area of ​​development will be Earth observations, which can provide accurate data on the displacement of buildings, bridges and highways. For example, companies with access to small satellites with a composite aperture radar (SAR) payload will be able to reveal that a bridge has moved three millimeters in the past year and assess its safety. it corresponds.

SPAC provides access

With this scenario, investors are paying close attention to a myriad of investment opportunities. SPAC is seen as a convenient way for space companies to access the public market. Several space companies have followed the SPAC roadmap, including BlackSky satellite imaging specialist
SOFT,
-0.69%

and United States aerospace manufacturer-New Zealand Rocket Lab United States
VACQ,
-2.34%
.

“The SPAC phenomenon really fits the horizon and nature of investing in space because it’s a venture capitalist mindset,” said Adam Jonas of Morgan Stanley. He describes the SPAC approach as “democratizing venture capital and private equity”, which now “coincides with the trend of great interest in space investment across all of our clients. – both institutional and retail ”.

While persistence, expertise, ingenuity, and substantial upfront capital are still required to launch viable space-based businesses, entrepreneurs today are meeting the challenges of building building a robust commercial space industry, driven by a similar vision of opportunity to expand as the early businesses of the space pioneers. If the global industrial market soon reaches its limit, the infinite space of space suggests that the space economy will continue to grow.

Luca Rossettini is CEO and Co-Founder of Orbital D, experts at the European Commission’s Space Advisory Group, board member AIPAS (space SME industry association), and corresponding member of the International Academy of Astronautics (IAA).

Than: The next space race – and how to play it

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