Big business is taking over the cosmos and it’s all due to a new wave of venture capital money in the space industry.
According to research company Tauri Group, over $13-billion have been in vested in space startups since the beginning too the millennium. The reason? Space Dinosaurs. At least that’s what David Cowen of Bessemer Venture Partners calls our current satellite technology.
“The entire commercial satellite industry really collapsed about 10 years ago,” Cowan said, “you had communication satellites deployed in 2006 that have been designed in 1990 and those satellites, which were meant for communications, couldn’t even compete with the internet which was delivering bits at a much cheaper rate on earth.”
Satellite companies are taking in most of that VC money— accelerating the extinction of these orbiting Pterodactyls and taking their place as galactic unicorns.
In 2015 alone, Venture Capitalist’s invested $1.8 billion in space companies; that’s twice as much as in the prior 15 years, combined. Investors are now realizing that sending things to space isn’t that expensive.
“It’s small, it’s cheap, [if] they break it’s ok,” Cowan said, “you can put up five, or ten, or a thousand of these satellites, and with this new model, you can do all kinds of things faster, cheaper, and better.”
Also propelling these investments is the fact that many startups have has successful exits. Of the 80 angel and VC-backed space companies founded since 2000, eight of those have been acquired at a total value of $2.2 billion.
“‘Skybox’ also known a ‘Terra Bella,’ when it was sold to Google, that sale was a success that venture firms noticed,” Cowan said, “and more venture firms came into the industry at that time.”
Space Tourism is a different animal, though. Most of the VC money is being funneled to the commercial launch industry like weather services, communication, and big data.
At the end of the day, investing in space is a hazardous gamble as made clear by the multiple failed missions SpaceX has had and the fatal accident seen with Virgin Galactic.
Investors are making giant leaps, but in space, ROI is still a game of patience.