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.
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.
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.
Here are just a few examples of investment opportunities in the growing space industry:
These figures spotlight the massive investment opportunities in space that you, as an investor, can take advantage of.
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.
There have also been numerous plans by other space companies to facilitate space tourism, including:
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.
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.
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: