Private spaceflight started taking off in the 2010s with governments awarding contracts to private aerospace companies to help develop space technologies, as well as to provide both cargoes, and crew space transportation services. Private spaceflight companies are involved in the development of space technologies that include communication satellites, satellite television, satellite radio, satellite launch services, crew transport, and sub-orbital and orbital space tourism.
The industry is gaining traction as companies like SpaceX, Blue Origin, and Virgin Galactic (SPCE) are promising to make suborbital tourism a reality. Sir Richard Branson and Jeff Bezos recently traveled to the edge of space with their crewmates to experience weightlessness and sight Earth from their Spaceships VSS Unity and New Shephard, respectively. The private spaceflight sector is young and rapidly expanding, making it an excellent long-term investment opportunity for growth-oriented investors.
The biggest players in the Space industry and their progress
The space economy has previously been limited to government agencies. However, with high levels of private and government funding, increasing competition, and technological advances, the industry is rapidly expanding and is expected to be worth a trillion dollars by 2030. In 2020, $7.6 billion was invested in start-up space companies, with SpaceX accounting for 30% and Blue Origin accounting for 13% of total investments.
Exhibit 1: Investment in start-up space companies in 2020
Source: BryceTech
Space Exploration Technologies Corp., or Space X, is a privately funded American company founded in 2002 by Elon Musk with the goal of lowering space transportation costs. SpaceX has been delivering cargo to the International Space Station since 2012 and is the first company to successfully design a rocket that can refly – that is, be used multiple times. In May 2020, the company’s Crew Dragon spacecraft carried NASA astronauts Doug Hurley and Bob Behnken to the International Space Station, which was the first crewed mission completed by a private company in a decade, and NASA certified SpaceX’s Falcon 9 and Crew Dragon human spaceflight system after a thorough Flight Readiness Review. Upon successfully transporting astronauts to the International Space Station, SpaceX now plans to launch Inspiration4, dubbed “the world’s first all-civilian mission,” on September 15. The company has also agreed to fly Japanese billionaire Yusaku Maezawa around the moon on SpaceX’s Starship rocket in 2023.
Blue Origin, LLC is a privately funded American aerospace manufacturer and suborbital spaceflight services company founded in 2000 by Jeff Bezos, the founder of Amazon.com, Inc. (AMZN). Blue Origin launched its first crewed mission into space on July 20, 2021, aboard a New Shepard rocket that crossed the Kármán line, which serves as the de facto border between space and Earth.
Virgin Galactic is a spaceflight company founded by Sir Richard Branson in 2004 that became the first publicly traded commercial Space tourism company in 2019. The company successfully conducted its first fully crewed flight on July 11, before Blue Origin. Although the company intends to launch commercial services in 2022, the U.S. Federal Aviation Administration (FAA) announced on September 2 that it is suspending further flights of Virgin Galactic’s SpaceShipTwo while it investigates the issues related to the recent mishap during the test flight carrying CEO Richard Branson and 5 other crewmates on July 11. During its descent back to the airspace in the New Mexico desert, the test flight deviated from its path unexpectedly for 1 minute and 41 seconds. The FAA report is expected to land in late September or early October.
What does the future hold for private spaceflight companies?
The recent achievements of private space companies in the development of low-cost and sustainable space technologies, as well as their efforts to make space tourism accessible to common people, have already given birth to a new era in space tourism. However, the market is still widely dominated by government agencies, and these agencies are yet to give up their control of the space industry. That being said, several positive developments paint a very promising picture of what the future holds for private spaceflight companies.
One of the major limitations for the growth of the space economy is the sky-high costs associated with launch rockets, but private companies – especially SpaceX – is revolutionizing the industry by introducing reusable rockets, which is expected to substantially lower the overall costs associated with the space economy in the coming years. Another recent trend is to manufacture small-scale satellites with similar capabilities to that of large satellites that are in use today, which is likely to open up new doors for space companies as the telecom industry is likely to partner with space companies to take these small satellites into the space. Private space companies are drawing plans to disrupt the commercial airline industry as well, by offering to fly people around the world in a few minutes as opposed to hours taken by airlines, which could turn out to be a catalyst for the growth of this industry as well.
Despite a challenging macroeconomic environment with increased regulatory scrutiny, space companies are moving in the right direction by focusing on lucrative market opportunities and the safety of their flights. The next decade could prove to be the best 10-year period in the history of the space economy, which makes investing in this young industry a very attractive option for growth investors.
Investing in Space companies is not limited to institutional players
More often than not, institutional investors have an edge over retail and private investors when it comes to investing in young, high-growth industries. This is true for investing in space companies as well, which is evident from the fact that institutional investors have raised to pour billions of dollars into start-up space companies over the last decade.
Exhibit 2: Number of investors in start-up Space companies (2000 – 2020)
Source: BryceTech
The likes of private equity companies and venture capital investors are dominating this segment for now, but innovative solutions such as pre-IPO investing are democratizing the financial services industry by enabling individual investors to gain exposure to disruptive business sectors before they take off. Although publicly available investment opportunities in the space industry are few and far between, The Spaventa Group can help investors gain exposure to privately held space companies with its pre-IPO investment solutions.
Ready for Launch
The idea of a space economy has long existed, and with the private sector entering the market, major transformations are already taking place to bring this idea to life. Many countries now have the capability of launching rockets into space and are awarding contracts to private space companies to design low-cost and safe space technologies to take this industry forward in the coming years. Although, many of the world’s most successful space companies remain privately held and have no plans to go public anytime soon, investing in these companies is still possible with pre-IPO investment products. Contact The Spaventa Group today to learn more about investing in space and opportunities in the pre-IPO private market.