When people think about space, they often think about three things: SpaceX, deep space exploration and SES, began Bogdan Gogulan, CEO and managing partner of the Luxembourg-based private equity firm NewSpace Capital. Luxembourg satellite provider SES “revolutionised commercial space,” while “space exploration corresponds with our natural curiosity,” Gogulan said at the LPEA Insights conference on Thursday.
SpaceX has dramatically changed the space industry, he argued. “SpaceX and other commercial launch providers have brought us to the stage where--since the times of the shuttle--launch costs have gone down by over 90%.” This has led to a disproportionate multiplier effect on the space industry: the number of objects that were launched into space increased by a factor of 20.
What’s more, the space industry is expected to keep growing. “By mid-century we should get to over $3trn. And that’s five times growth of the industry,” said Gogulan.
More than just launches
“If we’re thinking about launch, the overall launch market is just $6bn. So that’s about 1.3% of the whole $450bn industry,” said Gogulan. Satellites--what SES and others are working on at the moment--take up $16bn of the market, which is bigger than the launch part, but still “marginal.”
But ground infrastructure--from antennas to networks, “everything that actually allows people to get the communication, correct observation data and connectivity on the ground”--is five times bigger than the launch sector. It makes up a disproportionately large part of the industry.
The customer is on Earth
And things have gotten much more efficient in the last decades. “Applications--this is what all of this is about. This is about applications for the clients, for the customers on Earth.”
So what are these applications?
“If we think about the applications,” said Gogulan, “they’re going to be for very traditional, plain vanilla businesses. The customer is on Earth.” Looking at those industries, their future growth is actually dependent on satellite products and services.
Gogulan went on to give a few examples. “In finance, if we think about insurance, our portfolio companies are helping insurance companies to save hundreds of millions of dollars in working capital by helping them to process claims faster.”
Agriculture is another sector with potential. Precision-farming and precision agriculture, enabled from space, could be used to grow more food efficiently, said Gogulan.
Every company is turning into a space company
Other applications include uses in software and artificial intelligence, 5G and the internet of things, cloud computing, GPS for autonomous vehicles and smartphone consumer apps. There’s a lot of potential without the inherent space risk.
More productive, efficient and sustainable
Thanks to flexible, efficient space infrastructure, businesses can use space products and services--“and that turns companies into space companies,” said Gogulan. “In the same way that 20 years ago, we were talking about, ‘Is this a tech company? Or is this a non-tech company?’ Now there isn’t such a distinction. Every company is a technology company. And in the same way, right now, every company is turning into a space company.”
Space infrastructure is helping companies and industries improve efficiency and productivity in their core activities, argued Gogulan. “And if we are to return growth into the economy, what we need to focus on is on productive investments.”
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But space isn’t just about productivity and efficiency, he said. It can also boost sustainability. The impact of space infrastructure has a lower carbon footprint than terrestrial infrastructure. “Looking at just a couple of industries across the globe, using the impact of the space industry, there is already over 4.5 gigatonnes of CO2 equivalent being removed from he atmosphere every single year.”
Gogulan had another example from one of his firm’s portfolio companies. “One of our companies, earlier this year, using earth observation analytics, helped to find a leak on a pipeline that was pumping out methane,” which has 80 times the warming power when compared to carbon dioxide.
“Space technology can bring productivity and efficiency into industry and do that in a more sustainable way,” concluded Gogulan. “And it helps us to generate returns for investors.”