This post was co-written by Paul Klemm from Earlybird Venture Capital and me. It’s our attempt to break down why going to space is important, why we are at a turning point and why Europe is perfectly positioned to win the industry.
Going to space is the Holy Grail to geeks like us.
Overdosing on Star Wars might have something to do with it but there’s something else deeply captivating about space: endless possibilities.
Today, satellites in space help us run our everyday lives by providing connectivity, facilitating GPS tracking, enabling earth observations and supporting business processes and computing.
In a few decades, the space economy will provide direct broadband connectivity without relying on submarine communication cables, phone-phone connections via satellite to the entire world and enable us to have full guidance for autonomous vehicles on land, air, and sea.
But that’s not all.
The future of earth observation through satellites will move from wildfire prediction and civil protection to real-time global monitoring of assets and automated observation and action in various areas.
Ahead of us lies an era in which we will be able to leverage our satellites to have safe cloud-computing and encryption to gain in-depth trade insights, on-orbit computing for automated data collection and analysis (this is a pretty big deal) and real-time global monitoring of assets and automated observation and action in various areas.
It is only a matter of time until we will not only master in-orbit manufacturing and testing but also manage to build infrastructure on the Moon and Mars. Chances are that we will mine resources on moons and asteroids, Age of Empires-style.
But having Twitter wars about Mars governance regulations is in the distant future. We have to start small, and not just metaphorically small.
It may seem unimaginable but all of this can be achieved through a new generation of small-scale satellites – CubeSats.
And it may seem improbable that Europe, despite lagging for the past 50 years on space technology, is perfectly positioned to completely own this multi-billion market.
Got your attention? Great. But first let's explain what the hell are CubeSats.
Picture a Rubik's cube. Now imagine a bunch of Rubik’s cubes glued together is a freaking satellite weighing up to 10 kilograms and circling in the lower earth orbit (LEO), 160 to 1000 kilometers from earth.
That, in Seedtable terms, is a CubeSat.
For comparison, regular communication satellites can be as big as a school bus (minus the kids) and weigh up to 6 tons.
Other than being awfully cute and tiny, CubeSats have a few advantages over regular satellites–
- CubeSats are manufactured out of off-the-shelf electronic components making them cheap and easy to assemble.
- They are also manufactured at scale because we have to do more and different ones. This means aerospace can make use of economies of scale and economies of scope so the unit cost to produce a satellite will decline as the quantity and variety of satellites available on the market increases.
- They circle the earth in the LEO versus the High Earth Orbit (HEO) like most satellites. In LEO, CubeSats can orbit the earth in only 90 minutes, leading to 14 to 16 orbits per day in the polar orbit due to a balance between gravitational and escape pull during launch. The benefit of doing this is that while CubeSats fulfil the perfect conditions for land observation and communication, they are still protected from solar and cosmic radiation and experience no friction due to the absence of air.
- Most importantly, they are waaaaaay cheaper to launch because they are affordable to produce, they don’t need to go as high as a regular satellite and you can launch a bunch of them on the same rocket, distributing the cost over many units. While it can cost up to €500 million to build and launch a conventional satellite, a nanosatellite can be produced and placed in orbit for €500,000 euros.
The interesting thing is that CubeSats have a built in loop. The more we produce, the cheaper they become, triggering new use cases and increased demand for more units, pushing the cost down again and starting the loop all over again.
Smaller companies have leveraged the affordability of CubeSats to provide exhaustive surveillance and offer a comprehensive connection network with the goal fulfilling the growing demand for global communications.
There’s one thing missing.
To get stuff to space you need rockets
The only factor that could hinder the immense growth of the global CubeSat market is a lack of launch vehicles.
This is a problem because satellite launchers on the market have been and stay focused on sending satellites with heavy payloads into the lower earth orbit and have not yet adjusted themselves to the accelerating market of smaller satellites. To build the space future we outlined, someone has to build a decent network of new space launchers.
And that, my friend, is the opportunity for Europe.
The market for global space launches has been valued at $9.8 billion in 2019 and is expected to reach $32.4 billion by 2027. Earlybird calculated that the segment of light to medium weight space vehicles is priced at $6 billion this year. This growth at a CAGR of 15,7% from 2020 to 2027, presents a market opportunity which will be hard to fill by the competitors in the playing field today.
Local companies such as Munich-based Isar Aerospace are already targeting this opportunity and closing this market gap by providing satellite constellations with flexible, sustainable, and cost-effective access to space.
The german company has developed a competitive launch vehicle named Spectrum, which enables CubeSats to have flexible access to space.
(Disclaimer: Earlybird co-led Isar Aerospace’s Series A.)
With an established and functioning launch infrastructure, nothing stands in our way of taking advantage of this network of tiny spacecraft and going horizontal.
But why Europe and not Elon Musk?
In spite of Elon’s insistence to build flamethrowers, the United States is the most technologically advanced country and space technology is not the exception to the rule.
Companies like SpaceX and Blue Origin are leading the way and offering launches in American soil that are 4-5x cheaper than European standards and a lot more flexible since lead times from contract to launch are weeks (versus a couple years in Europe). Heck, the Falcon 9 is over there.
But there’s a catch – that only works for US customers.
For Europeans, it is not that straightforward. Satellites are stuck in customs for months, delaying your launch significantly while at home you could launch in a matter of days. On top, the US is pulling them apart and putting them back together during that time. A German satellite launched with a Falcon 9 is five times cheaper than doing it in Europe but Germany has to balance risk and reward – do we pay a lot more or give away or spy satellite design?
The same goes for non-European countries. Russia and China can’t work with the US, which means that US allies can’t do it either. But Europe is nice and warm, and most importantly, neutral. If you don’t want to have your satellite stripped searched then all you have left is Europe.
In a practical sense Europeans can’t go out and geopolitically everyone can come in. Europe is the Switzerland of rockets.
This has the opportunity to break the SpaceX monopoly and take on a multi-billion dollar industry. We just need to stop playing catch up.