Private enterprises and venture capital firms have shown great interest in this sector, including communication, launch, and even exploration itself. This interest has spurred innovation in the space technology sector, helping to drive down launch costs. Learn more about the investment opportunities in space that you, as an investor, can take advantage of.
The first Space Race began in the 1950s and ended with no clear winner between the two primary nation-state “contestants” — the United States and the Soviet Union (USSR). Or did it? While this has been a longstanding topic of contention, it's not one we will focus on here in any depth.
It’s worth noting, though, that many historians believe the race to space ended after the U.S. successfully sent Neil Armstrong and Buzz Aldrin to the Moon and back to Earth in 1969. However, others believe this only slowed the space race, as the USSR was the first to launch a space station in 1971.
It wasn’t until 1975 that space exploration became a joint venture between the U.S. and the USSR, and tensions eased between the two nations during the Apollo-Soyuz mission. This cooperation was further validated when the commanders from each side, Tom Stafford and Alexei Leonov, shook hands upon the docking of the two spacecraft.
More Countries Join the Space Race
While Stafford and Leonov's handshake may have symbolized the end of the 20th-century space race, this didn’t stop other countries from investing in space exploration.
Today, over 70 countries have space programs, illustrating the scope of the new space race. However, only a few out of those 70 have achieved significant success, with the front-runners being the U.S., Russia (the former USSR), and China.
Still, there have been a few surprises in the new space race, with some unlikely participants making remarkable strides. For instance, the United Arab Emirates (UAE) became the fifth country in the world to reach Mars and the second (after India) to enter Mars’ orbit on the first try.
Private Enterprise Enters the Race for Space
Until recently, space exploration has been primarily a government-sponsored initiative, with funding coming from public budgets. This is because space exploration has always been costly, with 2018 estimates from Bloomberg showing that NASA spends an average of $152 million per launch.
However, the past two decades have seen this trend change as private investors have joined the race for space. Private enterprises and venture capital firms have shown great interest in this sector, including communication, launch, and even exploration itself. This interest has spurred innovation in the space technology sector, helping to drive down launch costs.
Investment Opportunites in the Space Industry
Here are just a few examples of investment opportunities in the growing space industry:
- According to Space Capital, investment in the space sector grew by over 34% from the previous year to reach $12.5 billion in 2023. The largest amount raised so far in the space sector was $15.3 billion in 2021.
- Data from Funds Europe shows that in Q1 2023, private investments in space tech saw Europe surpass the U.S. for the first time. Further, Q1 2023 included the most space tech deals in a year, at 128.
- Mckinsey reports that the total annual investments in the space sector grew from $300 million to over $10 billion between 2012 and 2021.
- Morgan Stanley predicts that the global space sector will generate $1 trillion in revenue by 2040, mainly driven by investment in satellite broadband internet.
These figures spotlight the massive investment opportunities in space that you, as an investor, can take advantage of.
Space Tourism
We are willing to bet that when the space race started, few people thought it would one day lead to space tourism. But here we are, almost 70 years later, and space tourism is a new reality.
- Space tourism started in 2001 when Dennis Tito, a wealthy businessman, landed on the International Space Station (ISS) via a Russian Soyuz spacecraft, earning the title of the first space tourist. But it didn’t come cheap; Tito paid a whopping $20 million for a trip he described as “eight days of euphoria.”
- Soon after, several others traveled to space as “tourists” via Russian spaceships to the ISS between 2001 and 2009 — until Russia halted these excursions in 2010.
- Eleven years later, in 2021, the Star Trek actor William Shatner made headlines as the oldest person (aged 90) to travel to space aboard the Blue Origin space shuttle.
- In 2023, Virgin Galactic sent three passengers to the edge of space for one hour after years of postponing the trip. Since it initially announced plans to enter the tourist space travel market, Virgin Galactic has sold over 800 tickets, ranging between $250,000 and $450,000 per ticket.
There have also been numerous plans by other space companies to facilitate space tourism, including:
- SpaceX: In 2018, Elon Musk announced plans to take people on an inaugural trip around the Moon. However, the trip has since experienced delays, even after naming nine crew members for the "dearMoon" project, including artists, athletes, and a billionaire.
- Space Perspective: In a bid to make space travel more accessible, Space Perspective plans to take paying individuals to the edge of space for six hours aboard the company's Spaceship Neptune capsule starting in 2025. A ticket aboard the carbon-neutral spaceflight experience costs $125,000.
Satellite Broadband and Internet
The global demand for data continues to grow, surpassing its supply. Moreover, the cost of accessing the internet in some parts of the world can be quite high. One solution that has emerged for this challenge is satellite broadband, where communication satellites facilitate internet access at fast speeds.
One of the pioneer companies making satellite broadband possible is SpaceX’s internet company, Starlink. The company has grown tremendously since its launch in 2019, with reports indicating that it has overtwo million customers worldwide. And in 2023, Elon Musk shared that the company had reached its breakeven point, suggesting it would soon become profitable.
This, combined with Morgan Stanley’s prediction that by 2024, 70% of the space industry’s revenue will come from satellite broadband, points to the massive opportunity awaiting investors in this sector.
Reusable Rockets
Until recently, many rockets used in space missions weren’t reusable after their launch and round trip back to Earth. This one-time-only usage is extremely expensive. As a comparison, air travel would be unaffordable if the airlines had to build a new airplane every time people traveled via an airline flight. Today's space race players are trying to solve this problem by introducing reusable rockets.
Beyond the cost problem, reusable rockets also support the responsible use of materials for a sustainable future. Most reusable rockets use less rocket fuel compared to traditional rockets. Moreover, their reusability will help reduce the growing issue of space debris caused by rocket components.
While SpaceX and Blue Origin have already made significant strides in this sector, other companies are seeking to make reusable rockets, including Relativity Space. In 2023, the space company revealed plans to launch a reusable rocket, the Terran R, in 2026 after shelving its seven-year program, Terran 1.
One of the most successful startups in this sector, though, has to be RocketLab, a member of the Space Enterprise Consortium (SpEC). As of 2024, its Electron rocket is the second-most frequently launched rocket in the U.S. annually.
How to Invest in the Space Industry
You can invest in the space industry in two primary ways: buying stocks from publicly traded space companies or backing startups.
However, as with investments in most sectors, the space industry has pros and cons. To further understand these pros and cons, let's look at two extreme examples in the industry.
- SpaceX’s wild success so far points to the bright side of investing in space. While official figures are not yet public, many have speculated how much the company makes. Estimates from Tech Crunch indicate that SpaceX made a profit on revenues of about $3 billion in 2023, up from a net operating loss of $1.45 billion in 2019.
- Virgin Orbit’s downfall sheds light on the risky side of investing in space. Before its “fall from grace,” Virgin Orbit carried out four successful space missions. While this initially gave investors hope of a profitable investment, Virgin Orbit's LauncherOne mission in 2023 was its final one. Initial data after the rocket's launch pointed to a successful takeoff. However, this soon changed when the rocket experienced a fuel filter malfunction mid-takeoff at 180km above the ground, and all that expensive equipment crashed into the ocean. This didn’t sit well with the company’s investors and customers, and soon after, Virgin Orbit filed for bankruptcy.
These two examples highlight the variations you should expect when investing in the space industry. But don't let them scare you off — with the right strategy, you can diversify your investment portfolio with space investments.
At The Spaventa Group, our specialty is alternative investments and space exploration is one of the emerging industries in which our venture capital funds invest. We conduct extensive research and due diligence in these types of investments that can help thoughtfully diversify your portfolio.
Sources:
- https://www.britannica.com/story/timeline-of-the-space-race
- https://www.nasa.gov/missions/station/50-years-ago-launch-of-salyut-the-worlds-first-space-station/
- https://www.nasa.gov/apollo-soyuz-test-project/
- https://www.nasa.gov/history/45-years-ago-historic-handshake-in-space/
- https://worldpopulationreview.com/country-rankings/countries-with-space-programs
- https://www.imf.org/en/Publications/fandd/issues/2023/09/CN-reaching-for-the-red-planet
- https://www.bloomberg.com/graphics/2018-rocket-cost/
- https://www.usitc.gov/publications/332/executive_briefings/ebot_us_private_space_launch_industry_is_out_of_this_world.pdf
- https://www.spacecapital.com/space-iq
- https://www.funds-europe.com/europe-beats-us-in-space-tech-investments-2023/
- https://www.mckinsey.com/industries/aerospace-and-defense/our-insights/a-different-space-race-raising-capital-and-accelerating-growth-in-space
- https://www.morganstanley.com/ideas/investing-in-space
- https://www.cnn.com/travel/article/space-tourism-20-year-anniversary-scn/index.html
- https://www.reuters.com/article/idUSTRE6223VF/
- https://www.history.com/this-day-in-history/william-shatner-goes-to-space
- https://www.cnn.com/2023/08/10/travel/virgin-galactic-first-tourism-mission-launch-scn/index.html
- https://www.space.com/meet-dearmoon-crew-spacex-moon-mission
- https://spaceperspective.com/
- https://www.ctia.org/news/how-much-licensed-spectrum-is-needed-to-meet-future-demands-for-network-capacity
- https://worldpopulationreview.com/country-rankings/internet-cost-by-country
- https://www.starlink.com/
- https://www.satellitetoday.com/connectivity/2023/09/25/starlink-surpasses-2-million-subscribers/
- https://www.reuters.com/technology/elon-musk-says-starlink-has-achieved-breakeven-cash-flow-2023-11-02/
- https://www.morganstanley.com/ideas/investing-in-space [same as source #12]
- https://nstxl.org/reducing-the-cost-of-space-travel-with-reusable-launch-vehicles/
- https://www.relativityspace.com/terran-r
- https://www.satellitetoday.com/launch/2024/04/24/rocket-labs-electron-rocket-deploys-two-payloads-500km-apart-in-orbit/
- https://techcrunch.com/2024/04/11/internal-pre-starlink-spacex-financials-show-big-spending-on-moonshot-bets/
- https://www.space.com/42975-virgin-orbit.html
- https://spacenews.com/court-approves-plans-for-virgin-orbit-bankruptcy-sale/
