Texas Private Equity Conference 2022: Session III: Space: The Final Investing Frontier

Abstract

In this final panel at the Texas Private Equity Conference, four active investors discuss the commercial opportunities opened up by the privatization of space exploration. With the cost of launching rockets into space and putting satellites into orbit dropping sharply, unit economics are dropping quickly, much faster than even the industry expected. Reusable rockets in particular are changing the economics of space launches significantly and revolutionized the industry. And the Starship developed by Elon Musk's SpaceX will soon be operational, and is expected to reduce costs by a factor of 10. SpaceX, after just a few years in existence, is now the most valuable private company in the United States, second only to ByteDance in the rest of the world. Satellite costs have also come down dramatically. Thanks to the privatization of space exploration, shareholders of privately owned companies have supplanted national governments as the largest owners of SpaceX rockets, and will own the next International Space Station.

The consensus among the panelists is that today's New Space sector is now where the Internet was around 1995. A lot of money will also be made by the applications and services surrounding the launch sector. Uber, Google Maps, and other GPS-related services create demand for satellite services as do telecommunications that use satellite-based optical laser links instead of land-based fiber optic cable. Among the major challenges, however, space projects continue to take longer and cost more than expected. And the space entrepreneurs on this panel consistently described the time horizons of traditional venture capital as too limited. “Space junk”—orbiting spacecraft or pieces of old spacecraft that might collide with satellites—is viewed as a growing concern, but not an existential threat to the New Space Economy.