Space is a special category of VC investment in the best of times — and the COVID-19 pandemic is not the best of times.
Still, investors focused on and familiar with space see a lot of opportunity in the market, regardless of any prevailing global economic difficulties. One big reason why is that regardless of how tight pursestrings get tied, space still represents a significant — and growing — source of government and defense spending. It’s also the source of some of the most important technological development since the advent of the internet, including the satellite-based Global Positioning System (GPS), which has revolutionized any number of businesses and industries.
That’s unlikely to be an exception in terms of the potential commercial impact of space — more like a model for future innovation, according to our respondents, who include:
- Chad Anderson, Managing Partner, Space Capital
- Ethan Batraski, Partner, Venrock
- Will Porteous, General Partner and COO, RRE Ventures
- Shahin Farshchi, Partner, Lux Capital
- Tess Hatch, Vice President, Bessemer Venture Partners
- Matt Kozlov, Managing Director, Techstars Starburst
- Rayfe Gaspar-Asaoka, Principal, Canaan Partners
- Rob Coneybeer, Managing Director and Co-Founder, Shasta Ventures
- Dylan Taylor, Chairman and CEO, Voyager Space Holdings
Chad Anderson, Space Capital
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The mass distribution of Earth Observation (EO) data has begun. Much the same way that Trimble, Magellan and Garmin distributed the GPS signal in the 1980s and ’90s and ultimately gave rise to Location-Based Services (LBS). Companies like Waterloo, Ontario-based SkyWatch are aggregating supply and making EO data easily accessible through an API, which will give rise to millions of new applications. We are just now beginning to see the first of those applications come online, focused on serving large markets like agriculture, insurance, energy and more. Once this unprecedented amount of new data gets into the hands of consumers, it will fundamentally change the way we interact with our planet. We believe the investment opportunity in this segment will be as big, if not bigger, than LBS.
With roughly a decade of exponential growth in GPS applications, this is only the beginning. Even while GPS infrastructure and distribution continues to improve, the next generation of applications are testing its technical limits, with the need for persistent coverage in dense urban areas, centimeter location accuracy for both indoor and outdoor environments, alternative solutions in GPS-denied environments, and protection against GPS spoofing attacks. Computer vision and GPS are combining to enable a new level of precise positioning and we are actively looking at these new use cases.
We are also very interested, and actively investing, in cybersecurity. Ten years ago, the number of actors in space was extremely limited, so security was clearly less of a concern. There is an old adage with regards to commercial sat comms — it’s not that their security is bad, it’s that they have no security (of course, military assets are a different story — e.g., GPS is very secure). With the sudden entrance of hundreds of new companies and dozens of new space agencies operating in space, cyber threats suddenly pose a very real risk to business continuity and government operations. Combine this with new technological advances being applied to the space domain and there is clearly a lot of catching up to do. Fortunately, companies like Singapore-based SpeQtral are leveraging quantum technologies to offer a secure, scalable solution for distributing symmetric encryption keys using satellites as trusted key exchanging nodes. We continue to look at this area.
What advice do you have for your portfolio companies in terms of new and emerging opportunities?