VC's Increasingly Opening Wallets to Space Startups
Venture capital aversion to space startups is increasingly going by the wayside, speakers said at a Friday Women in Aerospace forum. "Space and venture capital would never be in the same room five years ago," but now most of the money behind the array of new launch startups is coming from VC, Quilty Analytics President Chris Quilty said. Euroconsult U.S.A. Managing Director Sima Fishman said in the commercial launch universe, it's generally thought there will be more private investors, but also fewer but larger commercial satellite operators due to mergers and acquisitions.
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Of the 200-plus venture capitalists that invested in space companies, 43 came into it within the past year, Quilty told us later. VC money is more open to space now because of the relatively modest startup capital demands of smallsat and small launch operators, and quicker to market than the industry traditionally has been, he said. Quilty said the interest is indicative of investors searching further afield for investments.
The roughly 50 small launch companies in various stages of trying to get started are largely a response to the expected low earth orbit satellite boom both in satcom and Earth observation, and to new space startups in areas like asteroid mining and in-orbit servicing, Quilty said. Most small launch companies haven't hit major funding rounds yet, so it's not clear if they can get that funding. Small launch and smallsat startups are dependent on the other coming to fruition to survive, he said.
Just like not all the various satcom constellations that were proposed will come to fruition, not all the proposed small launch vehicles will get to launch, Fishman said. She said five to 10 small launch vehicles being available by 2022 is possibly realistic.
Cubesat company Spire hopes to have a launch monthly, and its biggest challenge is reliable access to space, Launch Manager Jenny Barna said. She said the company's launch options have been either pay for expensive U.S. launches or rideshare on Indian or Russian launches, and the lack of rideshare offerings for commercial cubesats in the U.S. is a major market problem. Barna said the problem has been the few commercial low Earth orbit launches in the U.S., coupled with a mindset that adding cubesat passengers to a payload increases risk or complications. She said that mindset issue is slowly starting to turn as cubesats increasingly are seen viable.
It's not clear what kind of profit margins small launchers might have, though for big launchers, they're "not that great," Northern Sky Research analyst Carolyn Belle said. She said reusability isn't a huge part of the business models of many small launchers, since that segments' focus is less about cutting launch costs and more about providing access to space.
Barna said she has met with roughly three dozen startup small launch companies, and the range of business plans and launch technologies "is crazy." She said Rocket Lab and Virgin Orbit look to be the most promising in the next year or so, and Vector Space Systems and Microsoft co-founder Paul Allen's Vulcan Aerospace and Stratolaunch businesses also could be viable. "Everything else is the crapshoot," she said.