We see the 2020s like the 1860s. On May 10, 1869 Leland Stanford pounded in the final gold spike connecting the Central Pacific and the Union Pacific tracks, thus completing the Trans-Continental Railroad. This thoroughfare paved the way to small town developments, the movement of goods and commerce, and an opening of the frontier. Similarly, companies like SpaceX and Relativity Space are creating the new rails to space. This infrastructure, like the railroad, will enable hundreds of ancillary businesses to crop up alongside the tracks, and up and down new frontier towns.
Over the past decade, we’ve been continually tracking Space Tech not as a “Moonshot,” but as the reality of next generation infrastructure. Based on time spent in Washington, DC where legacy infrastructure has long overstayed its welcome, and early advising days at Spire Global, one of the early pioneers launching cube satellites into Low Earth Orbit (LEO), we believe space in the 2020s will be transformative.
Notably, constellations of LEO sats will begin to replace geo-synchronous satellites. This trend will be driven by the supply of rocket capacity and access into LEO making deploying constellations easier for startups, not just legacy players who can spend tens of millions of dollars to put heavier satellites into GEO. And this arrival of new players (like SpaceX StarLink) providing services like fast rural connectivity from LEO will force incumbents to compete. GEO satellite latency cannot compete with LEO speed, and so incumbents in telecom and entertainment will also move from GEO to LEO.
Consumers vote with their wallets, and for speed and quality. This shift in demand will mean legacy providers need to create LEO constellations, thus more payload demand.
In addition to legacy players moving into LEO, the physics of atmospheric density mean that startups in LEO must be highly specialized. “Your drag is your shelf life,” so satellites trade off sensors and capability with power consumption and weight.
Hyper fragmentation in remote sensing companies also drives more payload demand as each company is specialized. Remote sensing companies like our portfolio company Umbra Lab invented a new antenna to balance power and mass. Umbra will focus exclusively on synthetic aperture radar (SAR), and extremely high resolution imagery with very fast revisit times that are enabled by their patent. Other companies like Spire focus exclusively on AIS, ADS-B, and GPS-RO (maritime, flight, and weather data respectively). They consciously do not do imagery as a weight trade-off, and instead leave this to Maxar, Planet Labs, and specialists like Umbra who do nothing but imagery. Companies like Shadow Break which integrate many data feeds are next gen geospatial intelligence companies in the “Space to Cloud” sector.
These trade offs driven by physics that mean specialization and payload demand place a premium on access to the right orbital paths, and the option to launch into these orbital planes in weeks, not months or years. Payload demand already outpaces supply, especially as providers like SpaceX use much of their own payload capacity to launch StarLink, their revenue engine for inter-planetary exploration. And as many orbital paths can only be reached from launch sites like Vandenberg AFB and Cape Canaveral, the few companies like Relativity Space who can launch from these locations are in pole position. While heavy rockets like StarShip, SLS or New Glenn offer hypothetically low price-per-kg payload pricing, these are the long haul space equivalent of the Airbus 380. People want point-to-point service, which is where companies like Relativity Space, Loft Orbital, and Momentus Space come in. These mid-size rockets and LEO infrastructure services become important players in helping companies get nano and small satellites into the right orbits.
Elon Musk isn’t so dissimilar from Leland Stanford, and the evolution of infrastructure is commerce. The early 2020s are paving the way with infrastructure, but if the railroad is precedent, the next phase is real estate development next to the railroad, and commerce. With our involvement and investments in companies like Umbra Lab and Relativity Space we believe this is only the beginning of this new frontier.