The billionaires compete and the US wins the 21st century space raceby Eytan Tepper
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| The model of centralized, government-directed space activities born in the 1960s has, over the last two decades, made way for a new model in which the private sector shares the stage. |
On July 11, billionaire Richard Branson rode Virgin Galactic's Unity 22 mission to space, making him the first of the racing billionaires to go to space, and by that launch his company’s space tourism business. Jeff Bezos rode Blue Origin’s New Shepard to space just nine days later. Elon Musk hasn’t yet been to space himself, but his company SpaceX carried astronauts to the International Space Station, and his red Tesla roadster, launched to space in 2018, orbits the Sun. You can follow its current whereabout here.
“Jealousy among teachers increases wisdom” provides the Babylonian Talmud; in the space context, the competition, perhaps jealousy, among billionaires and other space entrepreneurs is bringing a boom to space activities.
The commercial space sector is rapidly growing and taking the lead from national space agencies. It is reducing the costs of launch and introducing new activities and business models, including tourism, space-based Internet, factories in space, and manufacturing pharmaceuticals in microgravity.
Harvard business professor Matthew Weinzierl pointed that the model of centralized, government-directed space activities born in the 1960s has, over the last two decades, made way for a new model in which the private sector shares the stage. Three quarters the global space activity ($400 billion) are commercial space revenues, spearheaded by the satellite communications segment. The US already reaps the lion’s share in the traditional space segments, with 44% of the global satellite industry revenues. It is now on track to lead the way also in the new segments.
A new dataset built at Laval University by Prof. Jean-Frédéric Morin and I as part of the Astro-environmentalism project reveals trends in the global space sector. The dataset includes details on more than 1,500 space actors from around the world and preliminary findings from its analysis were presented in June at the 60th Session of the Legal Subcommittee of the UN Committee on the Peaceful Uses of Outer Space. The data shows the sharp increase in the share of the private space actors compared with the first decades of the space age (1957 onwards), and while there is more geographical diversity today in where actors are based, the US is widening the gap. Between 2010 and 2019 the number of space actors almost doubled (an 89% increase), with more than 86% of them private actors, of which 34% are based in the US; this amounts to five times those based in the second and third places, the UK and China, respectively. The number of new organizations based in EU countries taken together (without the UK) is bit over half of that of the US (56%). The new organizations are significantly smaller than before, with an average size index (combining number of employees and budget) of 2.9 versus 8 in the early days of space exploration. Space startups is a thing.
| Whoever is declared winner in the billionaire space race, the commercial sector is handing the US the victory in the 21st Century space race. |
While revenues from the space sector are already mostly commercial, the investment side is still dominated by governments, but it is on track to be led by private funds. International government spending has been generally consistent over time, around $80 billion annually, of which 60% is US government spending. Private investment, previously marginal, reached a record $8.9 billion in 2020, despite COVID-19, and it reached new heights in 2021 so far with $5.7 billion in the first quarter alone. A total of $113 billion was invested in the high-tech sector in the US alone in 2019, followed by China with $45 billion. There is no reason why private investments in the space sector will not eventually surpass government spending. Also here, it is the US where most of the venture capital firms investing in the space sector are based, including some who are dedicated to this sector, and where most of the private funds are invested: 55% of the private funds in 2019 invested in US-based firms and 24% in UK-based. Indeed, despite the increase in private funding in China, the US is far ahead. Morgan Stanley estimates that the global space industry could generate revenue of more than $1 trillion or more in 2040. This is a big pie, and, according to current trends, it will be mostly American.
Symbolically, the first billionaire to ride his rocket to space, Branson, is an Englishman who made his fortune in the UK, but and he took off to space from Spaceport America in New Mexico, where his Virgin Galactic is based.
Being the first does not necessarily mean being the final winner. In the first space race, the Soviet Union had all the initial “firsts,” notably the first satellite (Sputnik 1), first human in space (Yuri Gagarin), first woman in space (Valentina Tereshkova), and the first human-made object to touch the Moon (Luna 2). But it is the US that is largely remembered as the winner of that race. On July 20, 1969, NASA’s Apollo 11 landed humans on the Moon for the first time ever (Neil Armstrong and Edwin “Buzz” Aldrin), handing the US the victory in the first Space Race. While Richard Branson is the first space tycoon to launch himself to space, the race is not over yet, and we might even see new names coming, from previously established billionaires or space startups. Yet, whoever is declared winner in the billionaire space race, the commercial sector is handing the US the victory in the 21st Century space race.
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