New Space Economy: Analysis, Trends, and Mapping

Exploring the boom of the small satellite industry from manufacturing, launching, operating and applications.

The past two/three years I’ve been following the New Space trend from a distance, but I finally decided to take the time to do a proper deep dive. Here’s a quick summary of my findings.

The recent explosion of “Space startups” is mainly driven by the plummeting costs of the small satellite technology as well as the commoditization of launch. We are transitioning from an age where most satellites were heavy machines (weighing more than a ton) costing millions of dollars to build and launch, to an age where it costs around $100k to create and launch a single CubeSat. These falling costs are at the heart of the current small satellite rush which is happening at several layers of the New Space stack.

I created a landscape with a bit more than 45 startups in the smallsat tech space

1. Creating and building small satellites

By definition, small satellites are machines that weigh between 1kg and 500 kg. However, within this segment you have many different types of satellites. It ranges from CubeSats that are composed of several standardized 10cmX10cmX10cm cubes (hence the name CubeSat) and can weigh a couple of kilograms, to 500 kg small satellites which are miniaturized versions of standard satellites.

The major trend happening in this layer is the democratization of access to small satellite components. To sum it up, a typical small satellite is composed of a body that holds the basic components such as the power system, the operating software, the propulsion system, etc. and the payload which is composed of all the modules added specifically for the mission of the satellite. If the microsatellite is used for telecommunication purposes the payload will include communication modules such as laser or radio transmitters. If the microsatellite is used for earth observation, the payload will include high-resolution multispectral cameras to take pictures.

More and more startups are focusing on these specifics components, like Nanoavionics which sells a CubeSat body on which you can plug the payload you want. Satlantis sells high-resolution cameras for microsatellites while Exotrail and Morpheus focus on plasma thrusters.

A multi-spectral camera for micro satellites

The bottom line is that the barriers to building a microsatellite are lowering rapidly. You don’t need to develop your own hardware anymore, and building your own microsatellite increasingly looks like building a lego (you choose the components you need and put them together). In terms of costs, it obviously depends on the complexity of your machine, but prices for a simple and fully functional microsatellite start at ten of thousands of dollars.

2. Launching small satellites

Now that you have built your microsatellite, it’s time to launch it. And again, you have access to an increasing number of options.

Your first option is to turn to existing big rocket operators such as SpaceX or the Indian Space Organisation which offer “shared rides”. It basically means that whenever they launch a normal satellite, if they have space left on board, they will sell it to whoever wants to send small satellites in space. Your second option is to turn to the increasing number of pure players specialized in launching small satellites, such as Rocket Labs, which manufacture smaller rockets better suited to small satellites.

The two major trends happening in this layer are first the explosion of the number of launch startups (I read somewhere that more than one hundred companies are operating in that category, which is not sustainable, there’ll be a crash) and second, the falling cost of launch. Depending on the weight of your small satellite, launching it to space will cost you from a couple of tens of thousands of dollars to several hundreds of thousands. For instance, it costs $1M to launch 200kg of payload to space with SpaceX.

3. Operating your fleet of small satellites

After your fleet of smallsats has been sent in space, you need to operate it from the earth. This is the “Ground Operations” segment. To communicate with your satellites (send and receive data) you need to use ground stations that communicate with antennas and other telco infrastructure. Of course, it makes no sense for every satellite operator to build its own ground station infrastructure all around the world, this is why they generally pay specialized ground station operators which build and maintain this infrastructure.

Again, a lot of innovation is happening in that layer, mainly because the current ground infrastructure has been built for traditional satellites operating in GEO and for military or media (like satellite TV) applications. There’s an increasing need for bandwidth to support this growing number of small satellites communication with earth. In that perspective, a very interesting move comes from Amazon which will soon offer its own “ground station as a service” Amazon Ground Station: “Easily control satellites and ingest data with fully managed Ground Station as a Service”.

There’s also a lot of action happening on the software side, see for example StellarStation which is a “cloud-based software platform that connects satellite operators with antenna owners, solving both the problem of insufficient satellite access time and unused antenna idle time.”

A LeafSpace ground station

4. Applications

When it comes to the application layer, you currently have two main categories of use cases:

Communication: fleet of small satellites are be used to offer, for example, internet access. This is what SpaceX is planning with Starlink and OneWeb with OneWorld.
Earth Observation (or EOS for Earth Observation System): the satellites take pictures of the earth’s surface which are used by a variety of companies for military, insurance, agriculture, energy, emergency or intelligence purposes. Planet is the leading company in that space with a fleet of around 150 active satellites. But plenty of new EOS players are entering the market.

It seems pretty clear that we’re still at the “infrastructure building” phase, as a consequence, the first applications are the low-hanging fruit ones (telco & earth observation). For such new technologies, it’s hard to forecast what the killer apps will be and what kind of new use cases will emerge. I guess that people who invented the GPS couldn’t imagine that this technology would enable services such as Uber to emerge. I think we’re in a similar situation here.

read this great article for more about Earth Observation applications

5. The Startup Memo: LeafSpace

Just as a note, while doing my deep dive on the New Space Economy, what stood out to me is how crowded the different segments already seemed to be. I couldn’t find a “no brainer” early-stage company for my memo, so I decided to pick LeafSpace mainly because it’s operating in the ground operation segment which I wanted to understand better.

Ground Operation – Seed – Italy.
LeafSpace is a New Space company that provides ground stations “as a service” for small satellite operators. Once a small satellite is in space, you need ground stations on earth to retrieve and send data (for example to download pictures taken by a small satellite). LeafSpace builds and maintains a network of tiny ground stations (hardware + software) available as a service (through a SaaS and an API) to satellite operators who don’t need to build their own ground infrastructure.

Need

👍While researching for this memo, what I found interesting in terms of ground operation needs, is the increasing variety of customers and use cases:

Customers	Use Cases	Value Propositions
Researchers	Scientific mission	* Flexibility: access ground communication capacity on a mission basis and not on a recurring basis. No long term contract. * Costs: pay only what you need/consume, no fixed costs.
Satellite equipment manufacturers	Equipment testing	* Flexibility * Costs
Constellation operators	* Satellite testing * Fleet operation	* Capex to Opex: rent and scale the ground infrastructure as a service (OpEx) instead of building it in-house (CapEx).

The ground operation segment is transitioning from a very “rigid/static” approach to a more flexible one (similar to what happened to web server transitioning to the cloud approach with AWS).

Market

Market size: the overall satellite operations industry (for satellites of all sizes) is estimated at $13.7B (source).

Market structure: More than 300 companies are operating in that industry. A company like Kongsberg satellite services, which is one of the largest operators of satellite ground stations with 170 antennas at 21 locations, generated around $100M of revenue in 2018 (source).

👍Market trend 1: The small satellite segment is considered as a growth pocket for the existing ground station operators and as an opportunity for the newcomers (startups) as more capacity for space communication will be needed. It will be accomplished with the construction of an increasing number of ground stations as well as with innovation on the hardware side (electronically steered antennas and optical communications to complement existing parabolic antennas).

🤔Market trend 2: That being said most small satellite projects and constellations are still at the conception phase and the market is still rife with uncertainty. Euroconsult projects that between 2019 and 2028, more than 8,500 satellites will be launched, while 1470 were launched between 2009 and 2018 (source).

Product

LeafSpace is a young ground station operator which has built four antennas (a.k.a small stations) in four locations (Italy, Spain, Ireland, and Lithuania). They basically have two different offers:

Leaf Line: Their shared ground station network, accessible to anyone as a Service.
Leaf Key: Dedicated stations for specific customers (the antennas are not shared with other users, but are built and maintained for specific customers).

If you’re curious to see what their tiny stations look like, they have shared several short videos documenting how they set it up:

Distribution

👍In terms of distribution, LeafSpace adopted a very interesting approach by integrating its offer in the products of other players in the satellite operations value chain. For instance, they have partnered with Dorbit (a launch operator) and Solenix (mission control software) so that their users can select LeafSpace as their data communication provider directly within their product.

Competition

👎Competition is probably my major concern for this memo:

Building and maintaining a network of ground stations is capital intensive. Capital will be key to scale and existing players, like KongsBerg, as well as large new entrants such as Amazon and Lockheed Martin, have deep pockets.
There’s no obvious technology competitive advantage for startups. Existing players are already pushing offers for the small satellite segment and are also exploring new antenna design (no real disruption beyond the business model).
The flip side is that there will probably be some consolidation happening at some points and larger ground station providers will acquire these smaller startups (M&A opportunities).

Conclusion

I really enjoyed doing this deep dive because I now understand a bit better this market (I’m in no way an expert, I’m just a bit more informed). That being said, in terms of investments there is no obvious “low hanging opportunities”. Most segments seem already crowded with a lot of capital invested in a market which is still rife with uncertainty: most smallsat constellations are still at the project phase and in terms of application there’s no killer app yet