After another record year of investment, what’s going on in commercial space?

Fifty years ago, astronaut Gene Cernan etched his daughter’s initials into the surface of the moon, boarded his lunar module, and journeyed back to Earth. Today, he’s still the last person to set foot on Earth’s only natural satellite.

NASA took a major step towards returning astronauts to the lunar surface, with the successful launch and return of its Orion capsule in December, 2022. The Artemis I mission capped off a year of incredible achievements for the space agency. It also released ground-breaking images of the first galaxies that lit up our universe, captured by the James Webb Space Telescope, and demonstrated the potential to defend Earth against collisions by changing the course of an asteroid.

This landscape of “mountains” and “valleys” speckled with glittering stars is actually the edge of a nearby, young, star-forming region called NGC 3324 in the Carina Nebula. Captured in infrared light by NASA’s new James Webb Space Telescope, this image reveals for the first time previously invisible areas of star birth.
Credits: NASA, ESA, CSA, and STScI

Today, NASA is operating in a radically different environment to the one that put Gene Cernan on the moon. We are seeing private companies explore novel opportunities that once seemed too expensive or difficult to reach because a few decades ago, NASA dedicated itself to a new vision for the future of space.

Then & Now

For most of the 20th century, the agency worked with defense contractors like Lockheed Martin and Boeing and owned and operated space technologies. The Space Shuttle, International Space Station (ISS), and the James Webb Space Telescope were all built this way. 

In the 2000s, NASA reinvented its mission to pioneer the future in space exploration, scientific discovery and aeronautics research. 

NASA started to experiment with fixed-price contracting. The Commercial Orbital Transportation Services program shifted risk and more opportunities for space investment to private firms. It enabled the agency to leverage private capital to acquire its services more cheaply, and it gave private companies more freedom and responsibility to innovate. This spurred significant technological advances in manufacturing, propulsion, and reusable rockets to greatly reduce the cost of access to space for private companies. SpaceX was a beneficiary of this model. 

The agency had effectively laid the groundwork to develop a thriving low-Earth orbit ecosystem and commercial marketplace. Bhavya Lal, NASA’s associate administrator for technology, policy, and strategy, characterized this as a “tectonic shift” in the way the space agency conducts itself.

New Space Economy

The space economy now includes a dynamic ecosystem of private companies. SpaceX, Blue Origin, Virgin Galactic and others are launching their own rockets and deploying satellite constellations. Space is beginning to get so crowded with new constellations that an emerging market for space debris monitoring and removal is sized at $942 million (see: Figure 1). There are more than 100 launch companies servicing governments and more than 10,000+ global space technology companies.

Figure 1.

Now that the economics of space have changed fundamentally, you can expect to see rapid expansion for the set of use cases in play. In the 1990s, telecommunications dominated the space economy with the advent of cell phones, pagers, and the internet. We see rapidly growing markets for on-orbit research and manufacturing, telemedicine, and advanced materials. Travel to deep space will soon become faster than ever, as NASA and the Defense Advanced Research Projects Agency (DARPA) are collaborating to demonstrate a nuclear thermal rocket engine in space. Faster space travel could enable NASA to run regular crewed missions to Mars. Laser communications are expected to revolutionize and improve the flow of data to Earth. Upgrades to spaceflight computing, like those envisaged in the NASA High-Performance Spaceflight Computing (HPSC) program, should provide sufficient computing power to do machine learning in space. We also see a dynamic new ecosystem of destinations in low earth orbit (LEO). Axiom Space plans to connect its first module to the International Space Station (ISS) and become the first commercial space station in 2025. This kind of infrastructure-as-a-service provides the platform to launch a limitless range of new businesses from low earth orbit.

We see the economic and commercial development of space undergoing rapid growth over the coming decade. Morgan Stanley estimates that the value of the industry could surge from $350 billion today to more than $1 trillion by 2040.

In a recent interview with Satellite Today, Sierra Space’s CEO Tom Vice said that “Every single human being on this planet will benefit from the breakthrough innovations made possible in microgravity.” Rob Meyerson, Former President of Blue Origin added that he sees a future in which every Fortune 500 company “has a dedicated module, or a dedicated facility in Low-Earth Orbit [LEO].” 

Low earth orbit will be the domain of the next great industrial revolution.

At C5, we’re motivated by the conviction that investing in space is a commitment to building multi-generational assets that unlock transformational discoveries and enhance life on Earth.

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