Move mountains (10/19/22)

Good morning. Today, we’ll start with artificial-gravity space stations, survey the difficult financing landscape facing the industry, and close with a whale-like airplane transporting a big satellite. Never a dull day in space.

In today's newsletter:🌌 A Q+A with Vast📊 Q3 space investing💸 The term sheet

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A Q+A with Vast's Jed McCaleb

Earlier this year, Vast emerged from stealth with a bold goal: to build the world’s (or solar system’s?) first artificial-gravity space station.

The benefit of such a design, the El Segundo startup argues, is that it would offer “a healthier environment for long-term stays in space.” It’s still early days, but the thinking is that a large spinning structure would produce a gravity-like pull.

Vast is the brainchild of Jed McCaleb, a coder who cofounded American crypto startup Ripple and the Stellar protocol, along with creating Mt. Gox, the world’s first bitcoin exchange. Last month, Forbes pegged McCaleb’s net worth at $2.5B.

Vast’s vision takes shape

Ideas are cheap; execution is expensive. And building a space station is something that only a handful of superpowers and nation-states have been able to pull off to date.

“There’s never been a commercial station before,” McCaleb noted to Payload in an interview. That could change by the time the decade’s out—led by Houston unicorn Axiom, a bevy of developers have their sights set on privately operated orbital outposts and a continuous crewed presence in low Earth orbit.

What makes the company more confident that it may be able to move mountains, essentially, into orbit?

1. The plan is predicated on SpaceX’s next-gen launcher—or a similar heavy-lift capability—coming online. “We believe that Starship will launch,” McCaleb said, and his company intends to take advantage of the larger fairing and cargo capacity.

2. By taking Point #1 for granted, Vast is employing a “first principles” approach and can take more liberties with its station’s design.

3. Vast will be self-funded for the foreseeable future. “I think in terms of raising outside money,” McCaleb noted, “the current plan is to put that off for as long as possible.”

4. The company consists almost entirely of former SpaceX’ers (and, notably, counts Hans Koenigsmann as an advisor). It intends to continue to focus heavily on recruiting, McCaleb said, and nearly 4x headcount over the next year.

At this point, there are still quite a few unknown unknowns with regard to how—or if—Vast can get its idea off the ground. But the company has a new way of thinking about things, an experienced team, and less external pressure on the financing front.

For more on Vast, read Payload’s full Q+A with McCaleb here.

Q3 Investment in Space

Space Capital has released its quarterly report on investment in the space industry. In the third quarter of 2022, investors injected $3.4B into 79 individual space companies, broadly defined across infrastructure, distribution, and applications.

Infrastructure

It comes as no surprise that SpaceX takes the cake in capital raised over Q3 with its $1.9B Series R. Over the past decade, the industry leader in launch has accounted for 38% of investment into launch.

In total, investors put $2.5B into space infrastructure companies last quarter, a significant decrease from the wild highs in 2021 investment.

Emerging industries: Though the launch sector represented far and away the largest piece of the pie last quarter, the analysts made a point to highlight the smaller players in the game. This subset excludes the launch and satellite industries, and has represented $3.1B of $54.8B of total investment into infrastructure since 2013. Most of this has been concentrated in stations, logistics, and lunar infrastructure.

2021 saw a spike in emerging industry investment at $1.4B (45% of the total amount ever invested in the sector), but the trend didn’t continue in 2022. So far this year, emerging industries investment is essentially on par with 2020 numbers.

Distribution

The distribution investment area covers “hardware and software to connect, manage, and process data from space-based assets.” Of the three areas, it’s seen the least investment since 2013 at $8.3B. In Q3, investors dedicated $44M across five rounds.

ATLAS Space Operations’ $26M Series B accounted for 59% of the dollars flowing into distribution last quarter. Sofant Technologies’ $2M seed and Fixposition’s $1M round joined ATLAS at the top of the list.

Applications

The third area of space investment is far and away the largest, as it covers the broadest swath of companies—namely, any startup building a hardware or software product utilizing space data. Since 2013, investors have funneled $204.5B into companies building space applications. This quarter, though, it saw a serious decline in investor dollars, down 74% QoQ at ~850M invested across 43 rounds.

53% of Q3 investment into the space sector overall flowed into position, navigation, and timing (PNT) services. Since 2013, companies in the PNT sector have accounted for 74% of the applications funding rounds.

An opportunity emerges: EO. Though the sector accounted for far less of the investing share last quarter than PNT, the discrepancy only points to a higher level of opportunity. As the analysts wrote, “Earth Observation has the largest difference in rounds vs. capital (24% vs. 4%), indicating early-stage activity and strong potential for innovation.”

The upshot: The macro environment continued to disproportionately affect the space investing landscape in Q3, and Space Capital expects that to continue. Investment in the space industry dropped 44% last quarter, compared to the overall market decrease of 31%.

Still, the space industry is resilient due the counter-cyclical nature of government programs (and aerospace’s close association with defense). Plus, Space Capital highlighted, a number of high-profile household names (AT&T and Apple) have their sights set on adopting space technology.

Sponsored

Get Your Satellite Data From Ursa Space

One of the most difficult aspects of ordering satellite imagery is starting a relationship with a vendor. Yearly contracts, minimum spends, and limited archives can curb the consumer base.

What's worse, as Ursa's market research found, is that customers spend 90% of their time in the ordering process, from first engaging with a satellite analytics platform, to the final step of receiving an analytical result.

It has always been the mission of Ursa Space to get satellite imagery into as many hands as possible. In February 2022, the Ursa Platform was built with a focus to reduce the time a customer spends waiting for a satellite image, and to simplify the experience for these potential customers.

With more satellite data at the ready, accessibility is no longer only for the few. Accounts in the Ursa Platform are free to set up, and users only pay for the images they wish to use.

In Other News

• SpaceX announced Starlink Aviation, with a $12,500–$25,000 subscription fee and one-time hardware cost of $150,000.

• Momentus ($MNTS) completed solar array testing ahead of its next Vigoride mission.

• Turkey test-fired a domestically built, short-range ICBM over the Black Sea yesterday, per Bloomberg.

• Dubai opened a ground station to command and communicate with satellites operated by its electricity and water utility.

• The EU may pick up part of the tab for Starlink’s Ukrainian operations. “For the time being, let’s be happy that [Elon] is paying for it. But we need to be on the safe side,” an unnamed official told the FT. “The Ukrainians are very worried that he will still cut it off.”

• BlackSky ($BKSY) will report Q3 financial results on Tuesday, Nov. 8, at 8:30am ET.

The View from Land and Space

Airbus’s BelugaST landed at KSC in Cape Canaveral over the weekend with the company-built, Eutelsat-operated Hotbird 13G satellite. The whale of an airplane touched down just hours after its twin payload, the Hotbird 13F, launched successfully from the Cape on a Falcon 9. If the terrestrial shot above doesn’t do it for you, here’s a Pléiades Neo satellite image of Beluga and Hotbird at KSC, too, for good measure: