On the Frontier: The SpaceTech Market in 2021

Original Article by SpaceTech Analytics

Introduction

Over the past several decades, the SpaceTech industry has experienced exponential growth, beginning with the invention of space flight and expanding to cover more and more emerging industrial spheres. That said, the 21st century has drastically changed and improved this business area, with several industrial giants emerging to cover the private sector of space exploration, manufacturing, research, tourism, etc. With the space industry’s growth, there is a growing opportunity for profitable investments, both for financial gain and humanitarian benefit. In this article, we will explore the ecosystem of the SpaceTech industry as of late 2021, the financial state of the market, and the investment opportunities that it brings.

In order to conduct this analysis, SpaceTech Analytics has developed its own methodology that includes three key categories: Core, Verge, and Space-Applied. This approach allows us to analyze not only hardware companies that are directly developing solutions for the space industry — “Core Companies”, but also the separate category of “Verge Space Companies”, which represents those businesses that are only partly involved in SpaceTech but have a significant potential in the market to become full-fledged Core Companies. For multiple layers of companies that have not yet entered the space industry but are already using those technologies or solutions that are closely related to the SpaceTech sector, SpaceTech Analytics has created the “Space-Applied Businesses” category.

For a closer look at the methodology we’ve used for our analysis, you may refer to this report, produced by SpaceTech Analytics. In addition, the methodology will be further described in our next articles.

Industry Statistics

As of the third quarter of 2021, more than 12,000 companies would qualify as belonging to the SpaceTech sector, with more than 5000 investors being involved in the market; more than 200 R&D hubs supporting it, and approximately 140 government agencies representing the involvement of the state in the industry.

Global SpaceTech Ecosystem 2021 Source: SpaceTech Industry Landscape Overview Q3 2021

Geographically speaking, most of the companies (more than 6500) are situated in the USA, representing more than half of the sector (56.4%). While not having as large a share as the USA, other world regions also contribute significantly to the industry. As of September 2021, the UK holds second place in the share of the world’s companies involved in SpaceTech (6.5%), with third place going to Canada (5.3%). Other major geographical hubs include China (4.7%), Germany (4.1%), and India (3.6%). The global distribution of the SpaceTech companies is illustrated in the following map:

Regional Distribution of SpaceTech Companies in 2021 Source: SpaceTech Industry Landscape Overview Q3 2021

Such geographical disparities can be attributed to the historical and economic background of the regions. The USA was one of the first countries to get involved in space exploration, and its free-market economy sparked the establishment of a significant number of space-related companies. In addition, the relative freedom of the USA attracted visionaries from around the world, strengthening the potential for the SpaceTech Industry in the country.

Investment levels per region in 2021 (in $M) Source: SpaceTech Industry Landscape Overview Q3 2021

That being said, such a distribution affects the overall investment climate of the entire industry. North America (the USA and Canada) invests the most in SpaceTech companies, at $88.3B. The other regions with significant investment include East Asia and the Pacific ($35.3B), Europe and Central Asia ($31.4B), and the Middle East and North Africa ($3.4B). The Middle East and North Africa (MENA) region is a rather interesting case, as it has only 1.4% of the world’s SpaceTech companies, yet attracts a relatively high amount of funding.

Number of companies per region in 2021 Source: SpaceTech Industry Landscape Overview Q3 2021

As can be seen in the graph opposite, North America has over 6600 companies in the market, primarily in the USA. In addition, while East Asia and the Pacific do not have as many companies as Europe and Central Asia, that region attracts significantly more investment funding. That, paired with the MENA situation, signifies a difference of approach between the East and West. Investment in Western countries is highly decentralized, while in the East it is heavily centralized. The average distribution of capital per company is a subjective factor for analysis, but it can show how concentrated the market is. That said, North America and Europe average out to $12M per company, while the figures in MENA and East Asia come to $21M and $31M respectively. Thus, the concentration of capital in one company is much more prominent in those regions.

As of 2021, the industry is showing continued growth, with more and more investment pouring into it, promising significant returns. Judging by the overall geographical distribution, it can be expected that the USA will maintain its growth and its leading position in the number of companies. But its lead in investment levels may decrease heavily, with East Asia and Europe catching up. In addition, the MENA region has great untapped potential for growth and should not be underestimated.

The other interesting thing to note about the industry is the age of the companies. Overall, the industry is relatively young, with the majority of companies have been in business for less than three decades. That can be attributed to the overall innovative and “frontier” state of most of its subsectors. As can be seen on the graph, the industry started showing spikes of growth in the 1990s. That said, the most significant spike occurred in the 2010s, with approximately 600–800 companies being founded per year. In 2020–2021, the rate dropped significantly due to the COVID-19 pandemic, but this drop should not affect the overall predicted growth of the industry going forward.

Number of companies per subsector in 2021 (space-applied not included) Source: SpaceTech Industry Landscape Overview Q3 2021

For the subsectors, the two largest (by the number of companies) in the SpaceTech industry are Satellite Communications (communication links, involving the usage of satellites) and Space Manufacturing (referring to manufacturing hardware for the space industry, including satellites, launchpads, etc.), with the latter being represented by approximately 40% of the core and verge companies. Nevertheless, the other subsectors are not far behind SatCom, with the closest being Space Observation and Space Services.

Number of companies per subsector in 2021 (space-applied not included) Source: SpaceTech Industry Landscape Overview Q3 2021

Yet, if we look at the investment data of the sectors, we can see the SatCom subsector holds a significant lead over the others in the amount of investment (~$1200M). This can be attributed to the high demand for SatCom development, and its application to adjacent sectors such as Telecommunications. Along with that, a significant amount of investment (~$800M) goes into the Space Manufacturing subsector. The next closest subsectors are AI Solutions (~$500M), Material and Product Supply (~$450M), and Spacecraft Development (~$250M). The overall state of the SpaceTech market is represented by the growth in the levels of funding received by the industry, which is apparently one of the most attractive sectors for investors at the moment.

Investment Levels by in 2021 ($M) Source: SpaceTech Industry Landscape Overview Q3 2021

State of the Market

The SpaceTech Industry has attracted a great deal of attention in recent years, so the growth of investment in it should not be surprising. Beyond that, the strong media and popular-culture presence of flamboyant billionaires like Elon Musk have attracted interest from both investors and the public. Both of these factors have sparked an interest in expanding the sector’s horizons. Since the 2010s, this has led to the explosive growth of both the industry (the number of companies roughly doubled during that decade) and its subsectors (more and more activities became involved with the SpaceTech sector). The rise of the SpaceTech market caused many new companies with apparent untapped potential to appear on investors’ radars. These companies and the capital invested in them have yielded and continue to generate increasing returns on investment. Hence, this cycle of attraction has repeated itself several times and is likely to continue to do so.

Overall, the market capitalization of the SpaceTech Industry equates to $4.7T as of the third quarter of 2021, with an expectation of continued steady growth of capitalization in this sector, reaching $10T by 2030. This is likely a conservative prediction, considering the overall development of public interest in the industry and its adjacent projects and the overall stability of its recent growth. The expected capitalization of the sector per year in the next few years can be seen in the graph below.

Expected capitalization of the SpaceTech market per year (in $T) Source: SpaceTech Industry Landscape Overview Q3 2021

This level of growth would have a dramatic effect on the world economy, like $10T would, even by the most conservative estimates, equate to 5% of global GDP. This share of GDP would drastically further increase the annual growth of the SpaceTech Industry. Additional investments would also spark the improvement and expansion of satellite technologies and advances in IT, FinTech, and other related digital technologies. The public sector would continue to grow as well, with the prospects of crewed missions continuing and the expansion of space tourism, with larger space hotels, even rotating ones.

Capitalization of the SpaceTech market (in $B) Source: SpaceTech Industry Landscape Overview Q3 2021

In 2020, the COVID-19 pandemic hit the global markets substantially, yet the SpaceTech industry has still experienced high levels of growth since then. With a fall in Feb-Apr 2021, the market’s capitalization increased in 2020–2021 by $1.2T, from $3.5T to $4.7T. Such a drastic increase, while the other industries have weakened, provides additional confirmation of the sector’s stability. As of 2021, there are 177 publicly traded companies in the SpaceTech market, the largest being Korea Aerospace Industries, IHI Corporation, AT&T Inc, and Honeywell International Inc. Overall, the growth of the entire sector can be anticipated should the leading SpaceTech companies experience growth.

Using certain indices can help us analyze the general state of the market. For SpaceTech, we use the following four such indices for the purposes of the analysis:
1. The SpaceTech Index — this includes more than 170 companies in both the IT and SpaceTech sectors
2. S&P500 — this includes 500 preference shares traded in the US
3. ROKT — a general Space Industry Index
4. ITA — a general Space Industry Index
The state of the indices can be seen in the following table.

In the 3rd quarter of 2021, the market became less volatile compared to the 2nd quarter. The negative skewness of average daily returns means that the median and mоode are greater than the mean; therefore, distribution gravitates toward greater positive returns. High kurtosis of the return distribution implies that the investor will experience occasional extreme returns (either positive or negative) — more extreme than as predicted by the normal distribution of returns.

Investment Overview

In the last few years, there has been significant growth in the major companies of the industry. More and more companies are joining in on the SpaceTech market, focusing their products on either supportive or direct involvement in this innovative sphere. Thus, we can expect the market to become ever broader, enticing more and more investors to join and help it grow. For the top players in the industry, Elon Musk’s SpaceX firmly holds first place, with $6.6B raised in 2021 and hitting the market cap of $100B, propelling it into being the largest pure space company. Second place goes to OneWeb at $4.7B, and third place to Inmarsat at $1.75B, the latter two being British SatCom companies.

Investment of top companies in the industry in 2021 (in $B) Source: SpaceTech Industry Landscape Overview Q3 2021

SpaceTech Analytics would like to present the lists below of the publicly traded companies of both core and verge groups that would qualify as the top ten in capitalization in their respective sectors. As of 2021, these businesses represent a significant share of the market and have the potential for further growth.

Top Ten Companies by Revenue (in $B). Source: SpaceTech Industry Landscape Overview Q3 2021

If we analyze the state of revenue generation, Korea Aerospace Industries (KAI) currently holds the leading position with $3.77T in revenue in 2021. KAI is a South Korean company that specializes in manufacturing multi-purpose satellites and space-launch vehicles. As suggested by the name, it also holds top positions in the South Korean aerospace sector, selling aircraft components and conducting support and maintenance services for aircraft.

Boeing Company is one of the older aerospace companies, being involved in commercial air transports, military aircraft, satellite construction, missile defense, spaceflight, and launch systems. The company operates through its commercial, defense/space, global, and capital segments.

For full information on the other companies we have analyzed, please refer to the report.
The SpaceTech Industry also possesses several significant Exchange Traded Funds (ETFs):

Procure Space seeks returns that would generally correspond to the performance of the S-Network Space Index. It also invests 80% of its assets toward the companies that get 50% or more of their profits from the SpaceTech Industry.

ARK Space Exploration & Innovation has the objective of growing its capital through investing at least 80% of its assets in equity securities of companies that are engaged in the area of space exploration and innovation. The ETF is relatively active in the market.

The S&P Kensho Final Frontiers index, also known as ROKT, is focused primarily on the companies that deal with deep space and deep ocean exploration. It tracks companies that are involved in product development related to space travel, exploration, and ultimately, settlement.

Conclusion

In recent years, the SpaceTech industry has grown immensely and attracted more and more attention. At SpaceTech Analytics, we have used our own methodology to analyze the current state of the sector as of September 2021.

Overall, the industry has more than 12,000 companies, with this number increasing year by year. The sector continues to expand through the addition of new subsectors and the expansion of its cooperation with other industries.

The most prominent regions in their involvement in the industry are North America, East Asia & Pacific, and Europe & Central Asia. The approach towards the strategy of investment and the building of the market’s ecosystem varies by region. Historically, western regions tend to prefer a more decentralized approach, having a significant number of different private companies, while eastern regions tend to concentrate investment on a smaller group of companies, avoiding dispersion.

The SpaceTech Industry currently operates on significant amounts of investment funding, showing solid growth potential. In 2020–2021, it remained relatively stable and unharmed by the pandemic. The industry has reached $4.7T in capitalization as of the third quarter of 2021. Even with relatively conservative predictions, the market is expected to read $10T in capitalization, equivalent to 5% of global GDP.

As of 2021, there are several key players in the sector that tend to attract the most investment, the leading of these being SpaceX, OneView, and Inmarsat. As far as capitalization and revenue generation are concerned, some noteworthy companies include KAI, Honeywell, AT&T, HI Corp, and Boeing. These companies are providing significant results and return to their investors. Additionally, the market is represented by several ETFs, including Ark Space Exploration, S&P Kensho Final Frontiers, and Procure Space.

In conclusion, the state of the SpaceTech Industry in 2021 provides key and promising insights into the future of this innovative sector, with current investments showing every chance of pushing space technology toward new frontiers. The SpaceTech Industry tends to yield extremely high returns on investment, while also generating a positive response from the media and the public. As such, investment in this industry is not just financial but also humanitarian in nature. To conclude, the overall current investment climate of the SpaceTech sector is exciting and should not be ignored. So don’t miss the opportunity to get involved.

SpaceTech Analytics, a Deep Knowledge Group’s flagship subsidiary is a strategic analytics and investment agency focused on markets in the Space Exploration, Spaceflight, Space Medicine, and Satellite Tech industries. The range of activities includes research and analysis on major areas of high potential in the SpaceTech industry, maintaining profiling of companies and government agencies based on their innovation potential and business activity, and providing consulting and analytical services to advance the SpaceTech sector.

SpaceTech Analytics (STA) is a strategic analytics agency focused on the SpaceTech industry.