Author | Eric, Editor | Zuri

Which startups have become the darlings of capital?

If you were given a ticket to board a spaceship to the universe, would you be tempted?

On September 10th, a Falcon 9 rocket launched a Dragon spacecraft from NASA's Kennedy Space Center in the United States. This time, it will carry out the "Polaris Dawn" mission: a crew of four non-professional astronauts will embark on a journey into the Van Allen radiation belts and plan to conduct the first commercial spacewalk.

These four non-professional astronauts include a billionaire entrepreneur, a retired military fighter pilot, and two SpaceX employees.

Image Source: BBC

It is worth mentioning that this is the farthest human space travel from Earth in over 50 years since NASA's Apollo program. This means that humanity is getting closer to realizing the dream of space tourism.

Apart from the novelty of space exploration, people are also fascinated by the immense business opportunities there.

Recently, a report released by McKinsey pointed out that the space economy not only affects major events like rocket launches but also increasingly impacts people's daily lives, including morning weather forecasts, home deliveries, mobile phone networks, and more.

The report also predicts that the space economy will reach $1.8 trillion by 2035, up from $630 billion in 2023, with an average annual growth rate of 9% - significantly higher than global GDP growth and affecting almost every industry on Earth. For example, industries like supply chain and transportation will increasingly rely on satellites and other space technologies.

With the vast potential of the space economy, a wave of startups has emerged, igniting an entrepreneurial boom and attracting capital influx. On this new frontier of the space economy, which startups have become the darlings of capital? And what are the obstacles?

01

Capital Darlings in the Space EconomyWhen it comes to the space economy and technology, many people immediately think of communications. This field is relatively mature, but there are still startups breaking traditions.

1. Space Communications: Astranis

Founded in 2015, San Francisco-based Astranis focuses on developing and operating small geostationary communication satellites. Currently, Astranis has launched several first-generation satellites, the "MicroGEO," which are roughly the size of a dishwasher, much smaller than traditional school bus-sized satellites.

In April this year, Astranis launched the "Omega" satellite, which is similarly compact but offers five times the bandwidth capacity. In terms of business model, Astranis sells satellite bandwidth capacity to telecom companies in countries like the US, the Philippines, and Mexico. As of April this year, Astranis' sold satellites are projected to generate $1.2 billion in revenue over their lifetime.

Astranis' business model has attracted considerable capital interest. Since its inception, Astranis has raised $750 million, with Silicon Valley early-stage venture capital firm UpHonest Capital participating in its first funding round. In July this year, Astranis announced the completion of a $200 million Series D funding round, the largest venture capital investment received by a US space company in 2024 so far.

Venture capital firms Andreessen Horowitz and BAM Elevate co-led Astranis' Series D funding round. Andreessen Horowitz's Growth Fund first invested in Astranis in 2023 and led a $200 million equity and debt financing round.

With the funding, Astranis plans to manufacture 24 satellites annually from 2025, with over 100 first-generation satellites operational in orbit by 2030. This scale is unprecedented for spacecraft operating in geostationary orbit, earning Astranis the ranking of the seventh-largest private space infrastructure company by Space Capital.

2. Space Mining: Astroforge

We often hear about space probes landing on Mars or the Moon, returning soil samples, which is precisely what asteroid mining company AstroForge does.

Founded in 2022, AstroForge raised approximately $13 million in seed funding within months and announced its goal of bringing valuable materials from small celestial bodies back to Earth. In April 2023, AstroForge completed its first asteroid mining mission.

Image Source: NextBigFuture

In August this year, Astroforge announced the completion of a $40 million Series A funding round led by Nova Threshold, bringing its total funding to $55 million.

AstroForge stated that the new funding will support its third space mission, Vestri. Specifically, the "Vestri" spacecraft will travel to an undisclosed asteroid in 2025 and land on its surface to conduct characterization analysis, including assessing the content of precious metals that can be extracted.

3. Space Power: Star CatcherOn Earth, electricity is one of humanity's essential resources, and the same holds true in space.

With a growing number of commercial satellites being launched into Earth orbit, the demand for power generation is also increasing. It is predicted that by 2030, low Earth orbit may host over 40,000 satellites, with power demand potentially reaching 840 megawatts, compared to the current demand of just tens of megawatts.

This presents an entrepreneurial opportunity for Star Catcher. In July this year, Florida-based startup Star Catcher secured $12.25 million in seed funding led by Initialized Capital and B Capital, with participation from Rogue VC.

The funds will be used to develop Star Catcher's planned power transmission satellite constellation, with the first satellite potentially launching as early as next year.

Image Source: Space

Specifically, the satellite constellation will establish a solar power station in low Earth orbit, providing electricity to other satellites in orbit. Andrew Rush, co-founder, President, and CEO of Star Catcher, stated in a press release:

'Power infrastructure is a fundamental building block of civilization and industry. Our goal is to extend this foundation to low Earth orbit and beyond through space-based grids and services.'

He believes that the ability to purchase power for spacecraft on-demand in low Earth orbit will accelerate humanity's progress towards a second golden age of space exploration.

In summary, numerous companies like Astranis, Astroforge, and Star Catcher are emerging in the space economy, fueling an entrepreneurial boom.

02

Who is the Biggest Driving Force and Winner?

As startups flock to space, there is an invisible driving force: SpaceX, whose primary contribution lies in reducing launch costs.

From 2019 to 2023, the number of satellites launched annually increased by over 50%, while launch costs have decreased tenfold over the past two decades. Lower costs enable even startups with limited funding to launch more satellites or spacecraft.

SpaceX plays a pivotal role in driving down launch costs. During the Space Shuttle era, the cost of launching into space was approximately $65,000 per kilogram. SpaceX's current Transporter service, also known as a "rideshare" flight, costs $6,000 per kilogram, less than one-tenth of the previous cost. Industry analysts suggest that if SpaceX's Starship achieves stable launch capabilities, the cost could drop as low as $200 per kilogram.

Due to relatively lower launch costs, many startups choose SpaceX to launch their products.

For instance, as mentioned earlier, AstroForge utilized SpaceX's Falcon 9 rocket to launch its satellite into low Earth orbit during its first asteroid mining mission. Additionally, SpaceX plans to launch four Astranis satellites using a Falcon 9 rocket this year.

Image Source: CNN

Overall, data shows that out of the 223 global rocket launches in 2023, SpaceX accounted for 98, or approximately 45%. In terms of satellite launches, SpaceX launched 2,514 out of 2,945 globally, representing 87%. Regarding payload mass, SpaceX accounted for 1,286 out of 1,492 tons globally, or 86%.

It can be said that SpaceX, occupying a central position, is driving the development of the space economy.

Moreover, SpaceX indirectly fuels the wave of space entrepreneurship. Many of the new generation of space entrepreneurs were inspired by SpaceX and Elon Musk to start their ventures. For instance, Tim Ellis, the founder of commercial space company Relativity Space, was heavily influenced by Musk before embarking on his entrepreneurial journey.

While propelling the space economy forward, SpaceX itself has reaped the benefits of growth, with revenues consistently doubling: $1.35 billion in 2020, $2.3 billion in 2021, $4.6 billion in 2022, $8.7 billion in 2023, and an estimated $13.3 billion in 2024.

The current situation is that SpaceX, like a leader, is guiding a horde of startups towards space. However, there lies a significant challenge on this journey.

03

The Biggest Obstacle on the Path to SpaceIn reality, the space industry does not lack funding or attention; what it lacks most is talent.

First, let's discuss why talent is crucial. McKinsey researchers estimate that an aerospace company that can recruit suitable employees can seize opportunities worth approximately $330 million. Talent is the competitive advantage that differentiates space startups.

However, recruiting talent has been challenging in the space industry for over two decades.

When Elon Musk founded SpaceX in 2002, the aerospace industry was in a downturn, struggling to attract top talent. Many aspiring individuals gravitated towards the internet industry or pursued careers in finance, medicine, and law, which offered faster and more lucrative returns.

The space industry, on the other hand, requires significant investments with long return periods, attracting only the most ardent idealists.

Even today, as the space industry thrives, recruiting remains a challenge. Astranis also acknowledges the difficulty in finding manufacturing, technical, and mechanical talent. These skills take years to develop, yet finding suitable candidates remains elusive.

Image Source: AI-Generated

The Aerospace Industries Association (AIA) also acknowledges the persistent gap between labor supply and demand. Alison Lynn, AIA's Vice President of Communications, stated, 'Recruiting and retaining talent remain challenges in the aerospace and defense sectors.'

Furthermore, the aerospace industry experiences high employee turnover. In 2023, the turnover rate among AIA member companies due to reasons other than retirement reached nearly 13%, significantly higher than the US average of 3.8%.

The reasons for the difficulty in attracting and retaining talent lie in to grant authorization , engagement, and more. AIA's survey revealed that above-average turnover rates might stem from factors such as employee empowerment and involvement. Nearly 48% of surveyed employees reported lacking the tools and resources needed to work efficiently, despite significant investments in new tools and technologies.

In essence, aerospace talent aspires to greatness, but many space companies cannot provide the resources to fulfill these aspirations, leading to difficulties in attracting and retaining talent.

Addressing this issue is complex, akin to the chicken-and-egg conundrum: startups are just starting and cannot yet offer substantial resources to attract talent. Without talent, startups struggle to grow and accumulate resources.

Venture capital plays a vital role here. Renowned venture capital firms, with their resources and influence, can enhance space companies' appeal and attract more talent.

As Ge You famously said in the movie 'A World Without Thieves,' 'What is most valuable in the 21st century? Talent.' The path to the future development of the space industry will undoubtedly be paved by talented individuals.

Reference: Astranis is set to build Omega constellation after $200M Series D (TechCrunch) Intuitive Machines wins $116.9M contract for a moon mission in 2027 (TechCrunch) Astranis CEO Talks 2024's Largest US Space Funding Round (PayLoad) Interactive at the end of the article:

Do you think highly of the space economy sector?

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