7-things Space: October 2021

A Brand New Format for the TerraWatch Space Newsletter

Oct 5, 2021

I am going to try something new: I have revised the format for the monthly edition of the newsletter (it used to be like this). Going forward, you will receive the newsletter in this 7-bullet format, sometime during the first week of each month. This format is inspired from Tim Ferriss’ 5-bullet Friday (one of my favourite newsletters!). I want to do this more often, but let’s start with a monthly cadence and see how it goes!

Occasionally, there might also be some long-reads (like this one) or market maps (like this one). I am going to try and do a post every mid-month - time-permitting.

I hope you like it - I am trying to make this enjoyable & valuable, for you and for me!

In each edition of the newsletter, we will be diving deep into 7 developments in the space industry from the month that passed.

Just so you know, I will be focusing on recent developments in space tech focusing on those impacting life & business on Earth - more downstream less upstream, more applications less infrastructure, more commercial less technological. In short, things that I found particularly interesting!

And without any further rambling, let’s get to 7-things space!

3 developments that are worth looking into

Towards industry consolidation? Spire and exactEarth

Spire, the satellite data provider & satellite manufacturer (currently trading as NYSE: SPIR) is acquiring exactEarth, a satellite-based Automatic Identification System (AIS) data provider specialising in the maritime industry. I think this makes sense as it not only complements Spire’s core offering in the maritime sector, but also provides an opportunity to diversify into a new segment of the market: IoT. exactEarth holds a minority stake in Myriota, the Australian satellite-IoT company. And, unsurprisingly, just days later, Myriota selected Spire to build its satellite constellation.

But the more interesting thing: will this be the start of consolidation in the Earth observation and larger downstream market? Just saying “the market is fragmented” doesn’t do the figure below any justice (and it’s only EO, not communication). AFAIK, at least 7 companies on this figure are publicly trading (or just about to): Blacksky, Spire, Planet, Satellogic, Maxar, MDA & Airbus. As well as a couple of well-funded ones - there is enough cash. So, it’s probably not a question of, if there will be M & A activity, but when. More to come in Q4, maybe?

The age of data fusion and verticalisation is here

Sticking to the figure above, another interesting development for me, was the partnership announced between Constellr (Infrared) as well as Scanworld (Hyperspectral) to go-to-market together in the agriculture sector. They want to work together on “harmonization and interoperability of data products, development of joint data products and services as well as the potential for entering into joint commercial projects” - essentially allowing further data fusion for better insights, whilst focusing on a specific vertical i.e. agriculture, in this case. Data fusion and focus on insights were also the major themes of a EO panel discussion during SatShow, apart from a much-needed emphasis on evangelising (not selling) & educating the capabilities of EO.

As companies like NearSpaceLabs and HySpecIQ continue to receive funding (from Peter Thiel, in HySpecIQ’s case) to fill the data gaps, I think it’s about time that the narrative shifts from data provision to insights provision. My personal thesis: this change can happen only through data fusion and verticalisation - two important trends in Earth observation (in addition to on-orbit data processing).

Making a case for more satellite navigation systems

Xona Space Systems, a startup working on launching a constellation of navigation satellites raised funds for its demonstration mission. It is betting on the growth of the autonomous vehicle market, which demands highly precise and strongly reliant navigation signals. No wonder that one of its investors was Toyota Ventures, along with UK-based Seraphim Space Investment Trust, given that the UK is looking for alternatives for its own navigation system, following Brexit.

Interestingly, researchers have developed a way of using Starlink satellites to pinpoint a location on Earth, similar to GPS. I am not fully sure how commercially viable this would be, but given that we are going to have tens of thousands of satellites in the Starlink constellation, I wouldn’t bet against it. Xona’s funding also comes at a timing when South Korea is investing into its satellite navigation system. Is the satellite navigation market ripe for disruption, much like the weather industry is?

2 trends in space that I wish we talk about more

Working on boring problems 😴

Boring problems are my favourite kind. I define them as “problems that not a lot of people are keen on solving, but those that need to be solved for an industry to move forward.” More specifically, I am talking about problems that companies like LeoLabs and SkyWatch are trying to solve - the former building a software platform to monitor space debris using tracking radars and the latter building a data agnostic platform to reduce search costs of accessing satellite data. You don’t usually see a number of companies working on boring problems - simply because they are not as cool as building rockets (we have too many of them) or satellites (probably a lot here too).

However, working on such problems are important - not only because we need to solve the debris challenge and make satellite data easily accessible but also because I believe they will lead to the creation of fundamental infrastructure for the industry, on the whole. For example, take Stripe or Shopify - you might not even have heard of them, but you probably use their technology on a daily basis in the e-commerce world. I could even make a similar case for AWS. The point being, I don’t think we talk about those fundamental problems enough. What other boring problems in space did I miss?

The future of VC funding in the space industry 💰

Two prominent space VC firms raised new funds in September - Promus Ventures, who have invested in Spire, Rocket Lab, Iceye etc. and Starbridge Capital with investments in Planet, Orbital Sidekick, Umbra, etc. Together with Founders Fund, DCVC, Lux Capital, Space Capital, Space Fund (who closed their second fund recently) and Seraphim Fund (who started publicly trading recently), Promus and Starbridge represent the most significant VC firms in the space industry.

In one way or the other, these VC firms changed the landscape of the commercial space industry, what I call NewSpace 1.0. But, we are now entering NewSpace 2.0, where more funding is flowing into space than ever before - more importantly from more funds than ever before (with many first time investors in space).

Three questions I have been pondering about the future of space VC funding:

Should we change the narrative around investing in space - as we move from an umbrella term of “space tech” to specific narratives - “space tech for climate”, “space tech for agriculture”, “space tech for exploration” etc., in order to find more diverse ideas and support them?
As space companies continue to diversify (from selling launch services to selling engines), vertically integrate (from providing insights to launching satellites) and consolidate (from market fragmentation to market leadership), how can investors engage in active portfolio management of their space companies and interact with others - enabling new partnerships and go-to-market strategies?
And, finally are EO companies better off being funded by vertical-specific SaaS investors, in order to support them with their go-to-market execution, instead of being funded by space-focused investors, who might not be well suited for vertical-specific insights?

What I have been thinking about - a lot

Communicating the value of space for Earth 🗣️

There has been a lot of talk and criticism over the billionaire space race - the recent extravagant space tourism missions from Blue Origin & Virgin Galactic and the slightly less extravagant and more civilian, Inspiration4 mission from SpaceX. All of this probably led to comments from the UN Secretary General: “people see billionaires joyriding to space while millions go hungry on earth.” This has contributed to a change in image of what the space industry represents for a majority of the general population - who live outside the space bubble.

I find it strange that people still ask questions like “why do we need to invest in space, when we have so many problems on Earth?” Clearly, we need to do a better job in communicating the impacts of space for Earth. The old narrative on the applications of space for Earth needs to change. It just lists applications of space without really saying anything - it is not intuitive. What does Earth observation even mean for an outsider? What does communication refer to? Perhaps, we can make it a tad obvious?

I have been thinking about it last month and I will probably write a longer piece on this at some point. But, essentially what I am thinking is instead of calling this category “Space Applications” and just listing the 4 applications, we could maybe classify it more explicitly for folks (as shown in the figure):

Space for Digital Transformation (connectivity and location)
Space for Industrial Transformation (applications by sector)
Space for Sustainable Transformation (all things environmental)

I am not sure if this is going to solve anything, but I will be trying out this new narrative during the World Space Week, as I prepare to give a couple of presentations, to audience who are outside the ‘space bubble’. Let me know what you think!

What I am looking forward to in October

Conferences 🤝

There are quite a few this month. Just this week, there is the GEOINT Symposium, Satellite Innovation and Space Tech Expo.

Next week is ESA’s Phi Week, my favourite EO conference, set in the ESRIN centre in Frascati, Italy (one of the most beautiful places I have ever been to). I will be attending in-person, participating in a panel and giving a talk on EO Platforms - based on a study I did for ESA earlier this year.

And, then, towards the end of this month is the International Astronautical Congress, the biggest and the most important space conference. I will be there in Dubai - meeting space folks from all around the world.

Conference season is fun, as you not only get to learn a lot and collect a ton of goodies, but also it’s the time when we get to know many developments across the industry. So, I guess I will have enough content to write about, for the next edition!

🎙️ P.S: I have resumed work on the new season of the TerraWatch Space podcast. New episodes will be released on a weekly cadence starting this Friday. Please subscribe on your favourite podcasting app and help me spread the word (5-star reviews on the App Store is the easiest way). Thanks for your support!

Thoughts, recommendations or requests? Just hit reply, or reach out on LinkedIn or Twitter. See you next time!

In case, this was forwarded to you:

Cheers,

Aravind