The evolution of smaller satellites and satellite servicing by listed companies offers the easiest entry into space commerce for investors.
At Space Ventures Investors we research many companies that offer services from satellite design, specification, manufacturing, orbit selection, launch, and day-to-day operational services. Finer parts of satellites specification include types of cameras and propulsion units. The types of satellites range from cubesats to small satellites.
Below is an overview of satellite types and purposes.
Concept: The network for the digital world is elevated into low-earth orbit.
Technology: Hardware not only has to be efficient (e.g. energy saving, light materials), but harder (e.g. extreme temperature, radiation, "space-hardened").
Opportunity: Global connectivity by satellites, base stations, software and hardware providers, will create numerous new companies.
Concept: The complexity of earth is seen in greater detail by using downstream satellite data in new ways. By applying more computing power (e.g. A.I. tools) to analyse and present this data, we have the abilitiy to forecast with greater precision.
Technological: More cheaper, diverse, sophisticated satellites and their data are available to more and more analysts who interpret and package this data for B2C, B2B, NGO, .GOV, MIL markets.
Opportunity: The evolving niche field of "Earth Observation" is multi-dimensional whereas Google Maps in 1 dimensional. Like the Map Makers in the age of discovery (e.g. explorers like Columbus and Cook) the new map makers, using downstream satellite data, will uncover new insights; resources, relationships, markets.
Satellites are a major part of today’s space commerce and investable space sector. It is an established industry and risk is factored into the business models.
In the chain from concept, to design, prototypes, testing, to manufacturing, launch, operation, management and servicing (a new space field) are numerous large and small companies and specialist expertise, built up over a half century.
Currently there are over nearly 5,000 satellites, of various sizes and vintage, operating in various orbits (low earth orbit, medium earth orbit, elliptical and geosynchronous) by civilian, commercial and military organisations.
From an investment point of view, the larger satellites (excluding NanoSatellites and CubeSats) are a stable industry, excluding accidents and disruptions from new competitors (again, excluding NanoSatellites and CubeSats).
Many companies with market capitalisations in the billions offer integrated and vital solutions that can demand a premium, particularly if the client is military and is mandated to have the best technology to back up a geo-political strategy. Data transfer, for communication and media, are typically mass-market.
Communication (including voice and media services) satellites are a vital part of the infrastructure of the digital world. The speed of instant communications may never be faster due to physical limitations, but the reliability, bandwidth, and price are subject to innovation. In a digital world where data is at the centre of many business models, and high-definition communication is the norm, there will be no retreat of consumers’ demands from the satellite industry.
One driver of growth for commercial satellites will be from global satellite internet providers, and the race to supply broadband style speeds to all parts of the world. New players moving in on the ‘global internet’ challenge are not only out to disrupt fixed-line business models, but also that of the large satellite businesses; think of 1000's of enhanced smartphones as a satellite swarm and the platform it could offer.
SpaceX and OneWeb are planning to use constellations of small satellites, in the hundreds and even thousands, in order to build a reliable higher layer of communication infrastructure over earth.
Smaller satellites, including in a constellation, or a swarm of nanosatellites (or swarm of micro satellites), can deliver a lot more value because they are the fraction of the cost of the larger established competitors. The miniaturisation of technology (and the down-stream effect on mass-market consumer items) offers another avenue of interest for space investors:
As small satellites compete with the larger, and the cost to build, launch and operation become lower, a new field will emerge, that of the private satellite owner. While this area is in its infancy, it won’t take too much effort to bring the consumer up into low earth orbit, or even further out, to probe new uses of smaller, efficient and innovatively designed satellites. It could herald the start of private space exploration.
If and when smaller satellites do eat into the market share of the established satellite industry, the next phase will be their own re-invention: The large satellite companies have their own specialist infrastructure, their talent (who by no means wish to re-train), and the means to extend their own designs to fulfil new purposes to meed new needs. There is no motivation like survival.
Investing in satellites is a theme that can only continue, other industries may have peaked (e.g. the automotive industry), yet for true growth potential satellites, the entire chain (from the designers, makers and operators) and the spirit of entrepreneurs, are poised to tackle new challenges.
At Space Venture Investors, we see satellites, large and small, as a vital and evolving part of space commerce.
For more detailed information on small satellites:
SpaceWork Small Satellite Report
The lowering of launch costs, the miniaturization of technology, and the advance in orbiting earth observation satellites and constellations, both existing and in planning, translate to an exciting time to invest in satellite imagery and related businesses.
For many, the emphasis on space technology is too look up and beyond, yet the demand for earth observation satellites is growing based on many important factors.
Market Verticals, and good reasons to Invest in Earth Observation Satellites include, but are not limited to:
Environmental Monitoring: from studying agricultural use, to soil erosion, pollution, and to watching rain forests replaced by roads and fields, or abandoned towns replaced by forests, satellites that are dedicated to environmental monitoring operations have an increasing role to play in many parts of our life. Due to the rise of more environmental space projects, there is growing acceptance of earth observation satellites for environmental applications.
Reconnaissance and Security: Whatever the phases in history, politics and commerce, there is now a 24/7 (or close enough) need for constant satellite reconnaissance capabilities. While this field seems a left-over from the Cold War, it is in fact a growing industry to meet new demand, including border security, maritime surveillance, and geopolitical monitoring. Naturally countries and their respective regions want to scale up their regional space capability and invest in space based surveillance satellites.
Consumer Driven: The investment in high-resolution earth observation satellites is also of benefit to customers like property developers and farmers. At a pure consumer level, the ability for a neighbour to see what’s on the other side of a high fence, is a revenue driver; Google Earth, the ground-breaking first provider of relatively free earth imagery proved such a success due in part to the inquisitive nature of users exploring the massive amounts of earth imagery available on their home computers, and now on smart phones.
There are very few companies that concentrate specifically on earth observation and satellite imagery, but it is a growing field. Digital Globe is a good example of an established company with an earth observation satellite business model; they like most others do supplement their images with aerial photographs.
In general, current providers rely on existing satellite constellations and a backlog of available images, supplemented by aerial images. The satellites already in orbit can obviously be sold on (via specific satellite buyers, sellers and intermediaries). Satellite fleet operators can also be invested in, but their satellite imagery business models, or data based models, may have reached a point of maturity or will be superseded by more advanced satellites.
To invest in an emerging high-technological range of satellite imagery providers requires seeding a company for a specific purpose, partnering multiple providers of complimentary technology, and optionally partnering (or merging) with a public or private company in that field.
As the cost to launch satellite imagery capable platforms is declining, there is therefore a wide range of providers, and high-resolution images of earth that can be strategically aligned to clients‘ requirements, an obvious example is secure, satellite based border surveillance, using launches from clients’ territory, including sea-launches for earth observation satellites.