Space, as an investment sector, is fueled by rapid advances in technology and growing public interest. To outline potential opportunities to capitalize space, YPO recently hosted a conversation moderated by YPO member and serial entrepreneur Christine Assouad, with YPO member, Founder and Managing Partner of Global Ventures, Noor Sweid, and Hélène Huby,Co-Founder and CEO of The Exploration Company, which builds reusable space capsules. Huby, who has also served as an executive at Airbus and ArianeGroup, both in operational and strategic roles, provided an overview of the sector, sharing her passion and insights into the fast-evolving industry.
Space sector takes off
The Space Foundation’s The Space Report 2022 estimates that the space economy was worth USD469 billion in 2021 – a 9% increase from a year earlier. And Morgan Stanley estimates that the global space industry could generate revenue of more than USD1 trillion or more in 2040. The same source estimates that satellite broadband will represent 50% of the projected growth of the global space economy by 2040.
Meanwhile, the growth of the space sector is proving a growth enabler in other sectors. According to The European Space Agency, the deployment of new space infrastructure has brought benefits to industries including meteorology, energy, telecommunications, insurance, transport, maritime, aviation and urban development.
The report adds that most of this money came from the private rather than public sector, estimating that more than USD224 billion was generated from products and services delivered by space companies.
“In the past 10 to 15 years, we have been moving from a government-driven industry into a commercial industry. This had opened up competition, reducing costs substantially and creating new possibilities,” says Huby, whose French-German startup, The Exploration Company, has recently secured Euro40 million in funding.
She continues, “It’s very exciting times, because step-by-step we are able to build spaceships that become more affordable and reusable, enabling us to explore more. As with the day we discovered the internet, it was difficult to imagine its potential. Right now, space is unleashing new capabilities, and we are discovering just the beginning of it.”
For Sweid, a seasoned global investor, the lure of the industry was partly driven by the growth opportunities, but also by a personal curiosity in this new economy. “I consider myself a tourist investor with a fascination for space.”
As the founder and managing partner of an investment company across the Middle East and Africa, Sweid was looking for investment opportunities outside of her “day job and geographical trading zone.”
“The general consensus is that you should invest in things you understand,” Sweid acknowledges. “And while I think this may be true 80% of the time, there are times when the things we don’t understand can be huge opportunities to invest in, creating that alpha in a portfolio.”
Journey to the space sector
Like with any of Sweid’s other personal and company investments, she began looking at opportunities in companies that didn’t require capital expenditures of “hundreds of millions of dollars in the future to even generate a return” because she didn’t want her investment made irrelevant by being extremely diluted.
In addition, while recognizing the high risk and long-term outlook in this sector, Sweid sought areas in which there is some form of leapfrogging in the technologies while surrounding herself with people she trusts who are more knowledgeable than she.
“For me, it always comes back to the team,” Sweid says. “Whether investing in space, in the oceans, or in basic things like ag-tech supply chain, it’s really about who is the team you are backing. … At the end of the day, do you have the conviction that they are going to build something fantastic in their field that probably you could never build?”
Sweid adds, “As the saying goes, you reach for the stars and land on the moon. I think it is the same thing when you are looking at space investing. You are learning about material science and other areas of engineering that can be applied to Earth.”
For her part, as the head of a space logistics company that aims to “democratize space exploration,” Huby is particularly interested in the mechanics of sending things into space.
“Around the Earth today, we have two stations, the Chinese and the International Space Station. In 2030, we are going to have eight stations. These stations are already funded and in production, helping prepare our lives on the moon and Mars and also for space technologies and space tourism,” she adds. “Atransportation infrastructure is being put in place, and this is actually why I decided to leave Airbus and take part in the new transportation ecosystem being set up right now.”
Investing in space benefits Earth
With space exploration becoming more accessible and less costly, there has been an exponential demand for space data imagery. “Earth observation has been taking place for the past 15 years. But with access to space becoming more affordable, observation data that was used only by the military has become widely available,” says Huby, giving the example of a company in India that, with no satellite, uses space imagery to build software to help farmers use less water.
“In agriculture, you could save 20% of water if you used data from space to optimize the way you use fertilizers and water. Affordable data is being used in various ways in other sectors like climate and finance,” she adds. “A lot is also being used for broadband connectivity for us as humans but also broadband for autonomous vehicles. Step-by-step, communication from space is probably going to form the communication architecture of the world.”
On the other hand, more research is being done to benefit Earth. “Living in spaceships in stations means facing very horrible conditions. To sustain such conditions, you need to innovate a lot and this has implications for Earth. So, we are making huge progress in things like recycling technologies,” says Huby, citing battery storage as another area with significant innovation in space.
“If you want to survive at the lunar surface, you must sustain 14 days in complete darkness at -200C, and then you have 14 days at +50C to +100C. So you need to be able to store the ‘day energy’ to power through the night. Discovering this energy storage capacity could have big ripple effects here on Earth. By investing in space, we are simply we’re investing in our future.”
Probability of success improving
When Assouad inquired about the risks involved in this sector, there was consensus that the sector has its challenges. The recent explosion of SpaceX’s next-generation Starship spacecraft’ minutes after liftoff in an uncrewed test is a testament to that. Yet for Huby, the fact that Starship lifted off is historical and an impressive success.
“If the investors follow media’s opinion, yes, this may affect investor trust in the space sector. But I hope that investors inform themselves properly and can appreciate the successful liftoff as a first step towards a successful later flight. When you do things which are super hard, it is just normal that you sometimes fail the first time.”
Quoting former U.S. President John F. Kennedy, she adds, “‘We choose to go to the moon. We don’t go to the moon because it’s easy. We do it because it’s hard.’ We are pushing the technology to its limit, and a very small mistake can trigger a lost mission, even if we had been working for the program for five or six years. Yet, for patient investors, the sector is ripe with opportunities as it is witnessing a technology turning point, similar to the 16th century with the caravels, and driven by the exponential demand for space data imagery and more affordable access to space.”
In the end, among all the panelists, perhaps the real pull for the sector lies in an intangible fascination with space. As Huby concludes, “Space speaks to our heart as humans, to our sense of beauty, to our science of mathematics and engineering, and to our sense of global community — because everybody you know on the planet can see space.”