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Thoughts on Planet's acquisition of Sinergise
Acquisition of the company that brought a software mindset to building geospatial solutions by the company that brought a software mindset to building and launching satellites
Note: These are some initial thoughts following yesterday’s announcement that Planet, one of the leaders in Earth observation is acquiring Sinergise, the Slovenian geospatial IT company. I decided to jot this down in a blog post in a couple of hours, instead of writing essays on LinkedIn and threads on Twitter.
Disclaimer: Written on March 30, 2023, based on information available to the public. I have no ties to any of the companies or institutions mentioned below.
For those who need no context or an intro to Sinergise, skip to the next section!
Setting the Scene: Planet and Sinergise
Ever since they become a public company after what many would consider a successful SPAC deal, Planet (NYSE: PL) has been on an acquisition spree:
In 2021, they acquired Dutch startup Vandersat doubling down on their focus on agriculture and adjacent insurance markets;
In 2022, they acquired San Francisco-based carbon monitoring startup Salo Sciences;
And, yesterday came the announcement of Planet acquiring Slovenian geospatial IT company Sinergise, most well-known for their Earth observation (EO) data platform, Sentinel Hub.
I will hypothesise on the direction Planet is trying to take, in a bit. But, first, let’s take a quick look at Sinergise.
Sinergise - A Specialist in Solving The Most Important, Impactful, Boring Problems in EO
If you have read my stuff before, you know what I mean by “boring problems” - the ones that do not make the news, the ones that very few want to solve, and the ones, unless solved, will considerably limit the adoption of EO and the growth of the sector. Sinergise has been working on some of the most important boring problems in EO.
To learn more about Sinergise, their story, Sentinel Hub, and the outlook, I recommend listening to the podcast episode I did with the CEO, Grega Milcinski.
Note: Throughout this blog post, I will be using Sentinel Hub and Sinergise somewhat interchangeably, but Sinergise is the parent company.
Founded by “non-remote sensing professionals”, Sinergise has been around since 2008, building turnkey geospatial solutions focused on agriculture and real-estate administration systems. But, they really burst onto the scene with the Sentinel Hub platform, a data access, processing, and visualisation engine for EO data, that specifically started with data from the Sentinel satellites of the Copernicus programme, led and funded the EU (implemented by ESA). Some bullet points on the key attributes of Sinergise’s business:
Sentinel Hub: As the first of its kind, Sentinel Hub revolutionised the way the EO community accessed, processed, and visualised satellite data, especially data from the Sentinel satellites, which is the starting point for most remote sensing users. Thanks to the company’s close relationship with ESA and the European Commission, Sentinel Hub evolved simultaneously based on the requirements of the institutions and the needs of the users (a good combination for any company). Today, despite the growth of several companies in the “EO Platform” layer and the entry of big tech (AWS, Google, Microsoft), Sentinel Hub continues to bring something to the table, particularly with respect to making EO data analysis-ready.
Agriculture Solutions: While Sentinel Hub probably gets most of the attention, Sinergise also has a thriving business in the agriculture sector. Thanks to their experience in working with the sector, and the suitability of technology they were working on with Sentinel Hub for this sector, several institutional use cases were unlocked - especially wide-area monitoring of farms related to the EU’s Common Agricultural Policy. This is definitely in Planet’s area of interest, given it is a key vertical for them.
Public Funding: As Grega mentioned on the podcast, Sinergise has many commercial customers, but from its founding days to the present day, Sinergise (aka Sentinel Hub) has benefitted a lot from public money, both from grants and contracts from the European Commission and the ESA. But, it is important to note that EO, in general, is very dependent on public funding, whether it is the DoD contracts in the US or EU funding in Europe. So, there is no surprise how Sinergise has come to grow over the years.
Enabling Democratisation and Open Science: The company has a successful history of enabling open science - whether it is through open-sourcing the cloud detection algorithm, which has been instrumental for cloud masking and removing cloud shadows, and integrated into Google Earth Engine, or developing EO Browser, a (free) satellite imagery visualisation tool that allows users to play around with EO data and gain an understanding of remote sensing applications, which eventually help them decide on a course of action for adopting and using EO.
I think that should give you enough to get some context, I may have missed other details. So, feel free to let me know in the comments!
What This Acquisition Means
For Planet, For Sinergise/Sentinel Hub, For Europe, and For the EO Community
Planet has been operating in Europe for a while now, with a large team in Berlin. Even though they are a US-based company (and now a publicly traded company on NYSE), they have had some success so far in winning public contracts from ESA, the European Commission, and national governments (see here, here, here, and here). The acquisition of Dutch startup Vandersat reinforced their European plans helping them gain another base in the Netherlands.
For Planet, I think, this acquisition brings about three important things:
Entry into the European institutional market enabled by Sinergise, is an important milestone as Planet looks to scale internationally. Even though they have been a contributor to the Copernicus programme, joining hands with Sinergise will make Planet a strategic asset for Copernicus, especially for the data management and processing segment (see this contract). While whether the partnership will continue as usual is more a political question1 than anything, I imagine it is in nobody’s interest to make drastic moves - definitely not in the planet’s (the Earth!) and the people’s interests.
A foundational technology platform to build and distribute analysis-ready data enabled by everything Sinergise has worked on so far, whether it is on the Copernicus programme, their integrations of Planet, Airbus, Maxar onto Sentinel Hub, and several other bespoke EO data preprocessing solutions that they may have built in the past (see Sentinel Hub capabilities).
A data distribution channel, given that Sentinel Hub acts as a marketplace providing access to data from other EO data providers along with Sentinel and Planet (Airbus and Maxar via EUSI). I would suspect the other data providers would quietly disappear from the marketplace, while Planet gains access to the customers who have relied on Sentinel Hub for data acquisition, processing, and analysis.
A multidisciplinary team to enable the shift towards making EO data usable, given that Sinergise’s staff are not only remote sensing specialists but are also software engineers, solution architects, cloud developers, and more. In fact, I believe that this might be the most important highlight of the acquisition, over the other two, simply because of the years of relevant work experience in EO that Sinergise’s team will bring to Planet.
Personally, I like this move for Planet as this was not the most obvious strategic direction to take. An easy direction would have been to acquire another EO company building a new type of sensor (whether it is SAR or thermal or otherwise). But, moving down the value chain, and enabling the creation of the necessary building blocks in EO could be good for the entire sector (as long as they do not follow a lock-in sales strategy!).
For Sinergise/Sentinel Hub
Sinergise has been a success story in European Earth Observation over the last seven years, and I suspect they would want to keep growing sustainably. As far as I am aware they haven’t raised private funding, have been able to keep afloat through their ongoing contracts, and continue to build the platform and solutions over the years, which gives a hint into Grega and his team’s thought process. While this acquisition does come as a surprise to me, having interacted with Grega over the years, from the lenses of continued growth and realisable impact, this makes sense.
Therefore, for Sinergise, I think, this brings about two important things:
Opportunity to reinforce their positioning as a leader in EO data preprocessing, processing, and analysis for optical/multispectral, SAR, and potentially hyperspectral satellite imagery along with the opportunity to invest in their platform through Planet, which so far has relied on requirements and financing through public funding.
Potential to become a leader in the development of commercial analysis-ready-data, enabled by access to Planet’s multi-sensor imagery as well as the potential of exploring and exploiting synergies with Planetary Variables, which goes more down the value chain and provides usable, data products to end-users.
While this is the second such acquisition of an EO company in Europe by an American counterpart, this one must be a harder pill to swallow, given how much public funding has fuelled the growth of Sinergise. This has been rightly highlighted and analysed in social media discussions, but, I think there are two sides to the coin to this analysis.
It is bad for Europe: This is the easy answer as clearly not many in Europe would be thrilled to hear yet another successful company being bought out by a larger American one for strategic/growth reasons, which is fair. But I think this just goes to highlight the already-known and well-documented problems of lack of growth stage support and corporate investment models. Hypothetically, if Sinergise had wanted to scale and invest in their platform in order to have more impact, I doubt if they would have found suitable private investors or corporate partners who would have understood their business and given them the freedom they need to continue building their platform. While public funding kept Sinergise going, I doubt whether they could do more than what they already do. So, in short, as one Arjen Vrielink opined on Twitter, “The Copernicus program not failing, EU public investment is not failing and US corporate investment is not failing.”
It can be good for Europe: While I am fully onboard the rationale provided above and I buy that argument to an extent, from the lens of long-term growth and realisable impact, I have a feeling this could be good for Europe. Here is my argument: What Europe has been desperately lacking is growth in the downstream market i.e. the need for successful companies that make use of data from the Copernicus programme. Although there are some success stories, compared to the amount of Earth observation data generated by Sentinels, the number of companies remains low, in my opinion. And one reason for that, I think, is the lack of usable, analysis-ready EO data with a low barrier to adoption. And this is exactly, what I hope, a Planet-backed Sinergise can bring to Europe, which might in turn, grow the industry in Europe (but as I said, that’s my hope).
For the EO Community
The EO community is special. Although I have been working in EO only for the last 6 years, and I am a relative outsider to this sector, I have been surprised at how much, almost everyone who works in this sector, wants to contribute to making an impact. Naturally, this development is going to make one half of the community happy while the other half is going to be unhappy or perhaps feel uncertain about the future of Sinergise.
Given how much this small company from Slovenia has contributed to open science and prioritised impact over growth over the years, the tendency to question this acquisition and be uncertain of its strategy is quite normal. Some have started (and rightly so) questioning whether Planet will keep and maintain Sinergise’s open-source code, while others wonder if Sentinel Hub’s friendly business model will continue.
I think that it is certainly not in Planet’s interest to change any of the above as their interests are quite the same as the EO community. They would like to see an increase in the adoption of EO - in fact, their entire business case rests on making data available and usable by the EO community. They have taken and led several important steps toward that, so I do not see any reason to believe they might surprise anyone (of course, there is a chance they can). But, I would like to stick to the positive sides of this. Sinergise is too impactful as a company in EO for Planet to come in and change things dramatically.
While I have some opinions about what constitutes an ideal EO platform company (e.g. independent of any data provider, to start with), I will reserve those for my deep-dive on platforms. As an independent consultant and EO evangelist, who is solely passionate about improving the awareness and adoption of EO data, with no ties to any company or institution, I view this as a welcome development, coupled with some caution. Good companies do not resort to growth strategies that go against the wishes of their core audience, and I definitely think Planet is a good one. Expect some great things out of this!
PS. Zooming out on this, I am generally of the opinion that leading and supporting open science is a fundamental need for the growth of the EO sector. But, while open science is a necessary condition for its growth, I do not believe it is a sufficient condition. We need models that can work long-term and can guarantee financial sustainability simply because of the importance of open science to not only the social and environmental impacts of EO but also its commercial value. While public funding guarantees this and will continue to, I hope as a community we can figure out new operational models, that involve the private sector and can do so, on a level playing field.
Jed Sundwall, the Executive Director of Radiant Earth Foundation touched on this in our podcast conversation. Take a listen, if you are interested!
Until next time,