2016 Another record-breaking year for the entrepreneurial space industry

By Chad Anderson – January 2017

In our previous year-end post, we posited that 2015 was an epic year for the space industry, breaking records on multiple fronts including: level of investment, number of new investors, and number of new privately-funded companies. With all that tremendous growth, many wondered if it was possible to keep up the momentum. Well, we are very happy to report that 2016 did not disappoint, continuing the exponential growth in all those categories. Even with these massive increases, we still see no signs of slowing and have good reason to be incredibly bullish for 2017. Before we present this data and discuss our key targets for 2017, we’d first like to reflect on some of our favorite space industry highlights from 2016:

Industry Highlights

Rocket landings became commonplace.

In December of last year, SpaceX successfully landed a booster on the ground at Cape Canaveral after delivering a payload to orbit, marking a first in spaceflight history. The company went on to land five more boosters in 2016, which are now kept in a hangar for future reuse. While an accomplishment unto itself, this is all part of a larger plan to significantly reduce the cost of getting to space. But SpaceX wasn’t the only one landing rockets in 2016. Also in 2015, Blue Origin successfully landed a suborbital rocket and continued their incredible progress in 2016. The company made history in 2016 when they became the first to demonstrate reuse, by launching and landing again, the very same New Shepard booster that flew above the Karman line and then landed vertically at its launch site.

Credit: SpaceX Four recovered boosters in seven months sit in the LC-39A Horizontal Integration Hangar

Credit: SpaceX Four recovered boosters in seven months sit in the LC-39A Horizontal Integration Hangar

We’re going to Mars.

In September, Elon Musk unveiled SpaceX’s Interplanetary Transport System (ITS), which is designed to carry 100-200 people to Mars per flight, with the first passenger flights expected in 2024. “The architecture allows for a cost per ticket of less that $200,000,” Musk said. “We think that the cost of moving to Mars ultimately could drop below $100,000.” Also in September, Jeff Bezos announced Blue Origin’s New Glenn orbital rockets, which are designed to take humans and payloads to deep space and will feature reusable first stages. The company plans to see New Glenn fly by 2020. With the Space Launch System (SLS), currently in development by NASA and a consortium of incumbent space companies, expected to come online in 2018, this means there will be three interplanetary launch systems coming online in the next few years.

New dock for private spaceships.

The International Space Station (ISS) geared up for private spaceships in 2016 by installing a new docking bay for commercial crew vehicles. This new equipment is highly sophisticated and will allow for automatic parking of spacecraft. The new docking port has been made open source in the hopes that it will be adopted as a universal international standard. Two leading rocket companies, SpaceX and Boeing, have been awarded commercial crew contracts, and both companies are expected to begin ferrying humans to the ISS by 2018.

Credit: NASA, The new International Docking Adapter on the ISS will usher in a new age of commercial shuttle services from the U.S.

Credit: NASA, The new International Docking Adapter on the ISS will usher in a new age of commercial shuttle services from the U.S.

Application approved! In-space Manufacturing.

In December of this year, Made in Space, the world’s first space manufacturing company with 3D printers onboard the International Space Station, was approved for a $1 million line of credit from Space Florida, which accepted their space-bound equipment as collateral. “We’re preparing the way, in a sense, for an era in which more and more trade and commerce is going to be done in low Earth orbit,” said Frank DiBello, Space Florida President & CEO. Also in 2016, Made in Space began working on Archinaut, the company’s new project to build large-scale structures in space. With $20 million awarded by NASA in November 2015 through the Tipping Point Technologies public-private partnership, the company partnered with Northrop Grumman and Oceaneering Space Systems in 2016 to build the combination 3D printer and robotic arm.

 

Asteroid mining gets a boost.

In June Luxembourg, a country with a track-record of space-bound longshots that pay off, announced that it would open a €200 million ($227 million USD) fund to entice companies focused on mining asteroids to locate there. Earlier in the year, Luxembourg announced that it would develop a legal framework for the commercial exploitation of space resources, the first such set of laws in Europe, modeled after the laws enacted by the U.S. at the end of 2015. Additionally, on September 8, OSIRIS-REx, a NASA asteroid-sampling mission lifted off from Cape Canaveral. This probe will rendezvous with an asteroid and bring a sample back to Earth for study.

Portfolio Successes (Select)

Planetary Resources, the asteroid mining company, closed a $21 million Series A round this year with follow-on investment from Space Angels Network. The company also unveiled their advanced Earth observation capability – CERES. With Luxembourg announcing a new asteroid mining fund, the country subsequently invested €25 million into Planetary Resources.

World View Enterprises, a company pioneering a new frontier at the edge of space and leading the way in the emerging stratospheric economy, closed a $15 million Series B round with investment from Space Angels Network. The funds are being used to advance the development and commercial adoption of their latest product, the stratollite. World View’s core technology stems from the system that enabled Alan Eustace to break the world record for a high altitude jump. A documentary which which chronicles the jump titled ‘14 Minutes from Earth’ was released this year. Additionally, the company has just moved into their new offices at Spaceport Tucson, which will serve as their headquarters, manufacturing, and launch facilities.

This was a big year for Astrobotic Technologies, a lunar logistics company, which closed a $2.5 million seed round led by Space Angels Network. The company landed industry veteran Sharad Bhaskaran as Mission Director and also found great success with customers – the company now has 10 payload delivery deals in place for its first mission and dozens of customer negotiations for upcoming missions. At the Berlin Air Show in June, the company announced partnerships with Airbus DS, for technical support and DHL, which will serve as the logistics provider for Astrobotic. These great new partners are in addition to existing partners NASA and Aerojet Rocketdyne.

Vector Space Systems, a micro satellite space launch company, raised $1.25 million in a seed round led by Space Angels Network. In September the company was awarded $2.5 million in NASA and DARPA contracts to continue development of an advanced prototype of the upper stage for their Vector-R launch vehicle. The acquisition of Garvey Spacecraft in July will allow the company to accelerate the development of this vehicle, which has already been demonstrated by the company’s successful sub-orbital launch in August and the successful test of the first stage in December. Additionally, the company will break ground on a new rocket factory in 2017, joining World View at Spaceport Tucson.

Industry Trends

The Space Angels Network investment database shows nearly $3 billion of non-government, private equity investment (excluding acquisitions and public offerings) in commercial space companies in 2016, bringing the total of the past five years to over $7 billion. 

Credit: Space Angels Network, total private equity investment in space companies (excluding acquisitions and public offerings)

Credit: Space Angels Network, total private equity investment in space companies (excluding acquisitions and public offerings)

Just as important as the volume of investment dollars, is the number of space companies that have received equity funding and are out executing on their business plans. There are now hundreds of these companies, 85% of which were funded since the dawn of the ‘entrepreneurial space age’, ie. after SpaceX’s first successful launch of a commercial payload in 2009. This does not count the numerous other space companies that have not raised, or have not yet raised, equity funding. Nor does it count all of the 1,000 companies, mentioned by President Obama at the White House Frontiers Conference at Carnegie Mellon this past October, that are working on private space initiatives to send astronauts to Mars. For us at Space Angels Network, it is this high number of companies above all else that shows the strength and diversity of today’s entrepreneurial space sector.

space companies

Credit: Space Angels Network, cumulative number of space companies that have received private equity investment

At Space Angels Network, we have experienced the increasing demand for space investment opportunities first-hand, as demonstrated by the significant growth in the number of our accredited investor members – doubling in size now for the third year in a row. Founded in 2007, Space Angels Network has been supporting space startups since before the dawn of the entrepreneurial space age, and we are uniquely positioned to support the continued growth of the industry.

space angels network membership

Credit: Space Angels Network, number of accredited investor members from founding

While our members do include some of the most established space investors in the sector, around half are new to the industry. To help ourselves and our investors make sense of this dynamic new market, Space Angels Network took a brand new look this year at how to segment the space economy in a way that is both mutually exclusive and collectively exhaustive. Our new framework is based on “geography”, with three geographical regions:

space economy

Credit: Space Angels Network, space market segmentation

Terrestrial: businesses that create value on Earth. This is the largest and most mature region, and it is made up of two segments, Satellites and also Launchers & Landers. These are large markets that exist now and have existed for some time.

In-Space: businesses that have products and services that are creating value in space.  This includes in-space manufacturing, refueling and servicing, microgravity research, habitats, spacesuits. These are less mature markets but still show a lot of potential in the near term.

Planetary: businesses that are doing all of the same things as the other regions, but doing it near or on another planet or moon. They add value to a surface other than Earth’s. Cargo to the moon or Mars, in-situ agriculture, prospecting and mining resources – these add value beyond Earth’s surface.

This framework for the space economy is a reflection of how we perceive economies on Earth, based on where the value is created. We believe that looking at the space economy this way helps investors make sense of it. At Space Angels network, we invest across all three of the geographical regions, and that is reflected in the nine investments we completed in 2016:

2016 investments

Credit: Space Angels Network, portfolio investments made in 2016

Breaking down the total non-government private equity investment (excluding acquisitions and public offerings) over the past five years, we can see that the majority has gone to existing terrestrial markets: Launchers & Landers and Satellites. This is exactly what you would expect as larger investors such as venture capital, private equity, and corporates look to invest in established industries. However, hundreds of millions of dollars have gone to new In-Space and Planetary markets, primarily by angel investors like members of Space Angels Network.

space investment by segment

Credit: Space Angels Network, Total private equity investment from 2011-2016

Acquisitions.

This new entrepreneurial space industry is still young. To remind ourselves of that, a few key data points to remember are that Google Maps was first introduced to the public just 11 years ago and SpaceX’s first successful launch of Falcon 9 was just six years ago. Due to the early nature of the industry, until now, investors have had to look to rising valuations as the preeminent indicator of potential return on investment. However, as the industry continues to grow and mature, we are beginning to see more exits. A handful of notable acquisitions in 2016 totalled nearly $3 billion, bringing the total volume of exits since 2009 (the dawn of the entrepreneurial space age) to over $13 billion.

Looking Ahead

Even with this continued exponential growth, we at Space Angels Network see no signs of slowing and have good reason to be incredibly bullish for 2017. Here are some key developments that we’ll be watching in the year ahead:

SpaceX return to flight, tentatively scheduled for January 7th. This is important because there is a huge backlog in launch. SpaceX alone reportedly has a backlog of 70 launches manifested, worth $10 billion. More launches will help satisfy the growing demand to get to orbit and even one new launch system will do a lot to relieve the pressure and backlog we have at the moment. Additionally, SpaceX plans to re-fly a first stage in early 2017, which is estimated to reduce their already market-leading price. Both of these milestones are critically important for the entire space startup ecosystem.

We also look forward to new dedicated launch options for small satellites coming online in 2017, with Rocket Lab likely first to market. Vector Space Systems is expected to test their new Vector-R launch vehicle later this year and also break ground on a new manufacturing facility at Spaceport Tucson.

This all bodes well for small satellite constellations, which have yet to achieve their full potential. With new dedicated launch options, new source-agnostic data platforms, and data feeds from new AND incumbent companies, 2017 might be the year that we see satellite data living up to its disruptive promise. In the past few years we have put a number of new sensors in space, however there is still a great deal of opportunity in the satellite segment in operations and ground segments, particularly with respect to optical communications.

In 2017, we’ll also be watching closely the developments of vehicles in the In-space Biosphere segment, with Blue Origin planning to begin human test flights of their New Shepard suborbital vehicle. SpaceX has delayed their first operational flight of Dragon v2 crew vehicle, however they may test the vehicle unmanned in 2017. Virgin Galactic returned to flight in 2016 and is expected to begin powered flights of the 2nd SpaceShipTwo – VSS Unity.

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