Written by: Roger Royse, Executive Contributor
Executive Contributors at Brainz Magazine are handpicked and invited to contribute because of their knowledge and valuable insight within their area of expertise.
The space industry currently accounts for 0.5% of the global GDP and is expected to grow to $10 trillion by 2030. [1] Taken literally, space tech could include everything under the sun. When investors speak of space tech, however, they mean something closer to extraterrestrial businesses and the technology that enables them, broadly defined.
Most people might think of satellites when they think of space tech, but satellites themselves make up a small part of the sector. However, satellites require many other technologies. For example, Starlink [2] the satellite internet constellation operated by SpaceX consists of thousands of satellites such as artificial intelligence to coordinate the simultaneous operation of the satellites. Less obvious are the operations that must take place in a zero-gravity environment, such as pharmaceuticals, food production and manufacturing.
Space technology can also be broadly classified as commercial, civil, or military and a company might have an application in all three categories. For example, software for a drone might have application in a satellite or a satellite in space might gather information on the earth.
As companies do more business in space, payment solutions might also adapt. A subsector of space tech is space decentralized finance or Defi. For example, a blockchain solution could allow a peer to peer payment or other transaction to take place in space without ever touching Earth. Companies are working on solutions that hope to avoid the financial regulation and oversight of an earthbound government. Aside from payment, as companies conduct more operations outside of any jurisdiction, the code is law nature of blockchain could provide rules for commercial transactions.
Mining seems to be the most promising industry in space. Asteroid mining can be a very lucrative industry, potentially worth quadrillions of dollars. Mining operations might be done by robots or autonomous vehicles transaction with each other through smart contracts due to the long travel times. NASA will even pay companies to collect samples in space. Profitability in mining, however, maybe a long time away. Interestingly, the use case to be mined is not gold or silver, but water, since water can supply hydrogen to refuel rockets as they launch further out into the solar system. As another example, moondust might be used for feedstock for 3D printing.
A current problem is space waste. As of now, there are about 23,000 pieces of debris larger than a softball orbiting the earth travelling at thousands of miles per hour. At that speed, even a fleck of paint can cause damage in a collision. Satellites must be equipped to avoid debris.
Silicon Valley is one of the hot spots for space tech and Houston, Florida near Kennedy Space Center, Colorado, Los Angeles, Boston and Seattle and throughout the world at every level of the supply chain. Spacetech has long been a global industry.
Space tourism is not only for billionaires. Companies are talking customers to the edge of space for a cost that was millions of dollars and is currently in the hundreds of thousands of dollars. The price is expected to continue to reduce over time.
Generally, there are more startups than there is capital for this growing industry. By one measure, there are over 10,000 space tech startups, most of which are competing for venture capital. Several funds have emerged to address the demand. In addition, there have been some private equity deals and numerous special purpose acquisition companies (SPACs).
Nondilutive government grant money also figures prominently. The US Air Force has been making hundreds of millions of dollars in grants to seed-stage space tech startups. Through a program called Afwerx, [3] the Small Business Innovation Research (SBIR) program is used by the Air Force to develop and adopt commercially viable innovations as integrated program components or commercial solutions. SpaceWorks, [4] a Georgia Tech spinoff, focuses on space transportation concepts for NASA and the US Air Force. NASA and the Department of Energy also have grant programs for space technology. Foreign governments similarly provide matching funds and grant money to space companies.
Roger Royse, Executive Contributor Brainz Magazine
Roger Royse is a partner in the Palo Alto office of Haynes and Boone, LLP and practices in the areas of corporate and securities law, domestic and international tax, mergers and acquisitions, and fund formation. He works with companies ranging from newly formed tech startups to publicly traded multinationals in a variety of industries. Roger is a Fellow of the American College of Tax Counsel and former chair of several committees of the American Bar Association Sections of Business Law and Taxation. Roger has been an instructor or professor of legal, tax and business topics for the Center for International Studies (Salzburg, Austria), Golden Gate University School of Law and Stanford Continuing Studies. Roger is a nationally recognized authority on AgTech – the technology of food production ‒ and the legal considerations for companies in this industry. Roger is also the author of 10,000 Startups: Legal Strategies for Success and Dead on Arrival: How to Avoid the Legal Mistakes That Could Kill Your Startup and has been interviewed and quoted in the Wall Street Journal, Forbes, Fox Business, Chicago Tribune, Associated Press, Tax Notes, Inc. Magazine, Nikkei Asian Review, China Daily, San Francisco Chronicle, Reuters, The Recorder, 7X7, Business Insurance and Fast Company.
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