The Investor’s Guide to the Galaxy: Why the Space Industry Should Be Your Next Investment
The commercialization of the space industry has opened the door for mass innovation, research and development. Modern companies are developing revolutionary technologies that will be critical for meeting the greatest challenges of the 21st century; climate change, connectivity, transportation, and more. As a result, the global space economy — valued at $424 billion in 2020 — is anticipated to reach $1 trillion by 2040.
The current democratization of space and its subsequent economic growth makes the space industry a prime opportunity for investors. Investors have always realized that the best investments are often those in disruptive industries and technologies because they have the highest potential to create a sizeable impact and result in massive gains.
However, misconceptions persist regarding investing in space. The space industry needs open-minded investors to look past these misconceptions and secure smart investments to ensure the future of the industry.
A common misconception is that space is too theoretical and “out-of-this-world.” It is, of course, in a literal sense, but when it comes to space business models, businesses in space should be understood through the same lens as those on Earth. The only variable is accessibility, but as previously discussed, launch costs — the barrier to entry — are rapidly declining. Therefore, investors should apply the same mentality that they use to invest in companies on Earth. Business models that work on Earth should work in space. Already tourism business models are being applied to space, and manufacturing could likely follow. Software as a service (SaaS) in space is evolving just as the current SaaS industry developed to keep pace with technological advancements on the ground.
Another misconception about the space industry is that futuristic technologies are still far-off, in the realm of science fiction. In reality, transformative technologies are already being developed and deployed, and entrepreneurship can bolster this innovation further. By partnering with space companies, investors can enable engineers to capitalize on modern technology to usher in an unprecedented era of economic expansion in space. Space is incorrectly portrayed to society as a niche industry when it will significantly impact the global market by nature of its worldwide reach. The advancements in space will dramatically impact civilization on Earth.
Investors should utilize their previous experience and knowledge of investing on Earth and apply it to potential investments in space. As with any expanding industry, investors should seek companies with a history of expertise and institutional knowledge. This experience is crucial to gauge whether a company has the capacity to deliver on its promise.
Along with this experience and knowledge, potential partners should display a true passion for their industry and their solutions. In a fast-paced, transformative sector, it is important to work with people dedicated to success. A balance of dreaming big but practically thinking is ideal, and both ingredients are equally necessary. The company’s culture should mirror the industry at large: optimistic yet pragmatic.
Additionally, organizations that want to harness the power of space for the benefit of humanity and the planet itself are ideal. Space has the potential to address some of the most pressing challenges society faces, and those who wish to foster a prosperous future will have the best chance of success in an industry that encompasses our entire world.
Finally, it is important to keep in mind the larger infrastructure needs of space. As the industry expands and additional space missions are conducted, there will be a parallel increase in the amount of data generated in space. That data will need to be stored, transported and processed to capitalize on its value. Increased activity in space, whether experimental or recreational, will demand computing capabilities.
The space industry is complex, but that means it attracts some of the greatest minds on Earth to solve its challenges making it an attractive industry for investors. The greater the challenge, the greater the potential payoffs because not anyone can easily achieve the desired outcome. An increasing number of people recognize those potential payoffs, as the past decade has seen tremendous growth in the space ecosystem.
The growing number of new space companies and the presence of major private companies in the space industry signals the imminent explosion of what is sure to be a dynamic industry with significant implications for Earth’s economy. Once prevalent misconceptions are dispelled, it becomes apparent that the right investment in this trailblazing field can be invaluable for investors, businesses, and society alike.
Avi Shabtai is the CEO of Ramon.Space, a leader in space-resilient computing infrastructure. With an extensive background in business and technology leadership from startups to publicly traded companies, his career spans various industries including wireless, data centers, networking, and space. Avi holds an MSc and BSc in Electrical Engineering from the Technion, Israel Institute of Technology and is an SMP graduate of the Technion Institute of Management.