Investing In The Space Race: Who's Set To Dominate Orbit

The modern space race isn't just a geopolitical concept; it's an investor's emerging frontier. Andrey Belozerov, a top VC in the space industry, shares insights on key players and strategic opportunities reshaping the landscape.

The space industry, once dominated by government-funded projects like Apollo, is now witnessing a major shift, thanks to trailblazers like Elon Musk. This new era, often dubbed "Space Race 2.0," presents a lucrative investment opportunity as private companies rush to dominate orbit. 

How was this pivotal moment reached? In 2011, the focus shifted to public-private partnerships. SpaceX emerged as a key partner, developing the Falcon launch vehicle and Dragon spacecraft. 

By 2023, the global space market reached $570 billion, with 78% — or $445 billion — coming from private sector revenues.

"Government contributions now account for less than 25% of the market," said Belozerov. "This trend highlights the success of commercial space ventures, presenting a significant opportunity for venture capital."

With barriers to entry lowering, startups are stepping into the spotlight, offering a range of services from satellite deployment to space communication. 

"New technology, such as AI, is set to make a major impact in everything from unmanned navigation to spacecraft design," Belozerov said. "But don't expect AI to take over the space industry overnight. It'll be a gradual process," he noted.

Heavyweights face off against new challengers

While SpaceX and Virgin Galactic dominate headlines, Rocket Lab, founded by Sir Peter Beck, is quietly becoming a major player. Unlike Musk, Beck's path to the space industry was unconventional, involving stints in dishwasher manufacturing.

Rocket Lab has carved out a niche with its Electron rocket, which specializes in small satellite launches. The company's success is evident in its market cap of $3.5 billion and its plans to launch a larger rocket, Neutron, by 2025.

"Rocket Lab's approach is a textbook example of how smaller companies can thrive in the shadow of giants like SpaceX," Belozerov said. "By focusing on a specific segment of the market — small satellite launches — Rocket Lab has positioned itself as a reliable and cost-effective option."

The new rivals also include a number of smaller startups, such as Relativity Space. This year, the company, known for its innovative use of 3D printing in building launch vehicles, has landed an $8.7 million contract with the U.S. Air Force Research Laboratory (AFRL). This partnership aims to advance real-time flaw detection in additive manufacturing.

AstroForge, a space mining startup, plans to launch its third landmark asteroid-landing mission in 2025. And Jeff Bezos' Blue Origin has announced the launch of its eighth human space flight on August 29. The reusable New Shepard rocket-capsule will carry six crew members into space, and the entire event will be available for live viewing from home.

Other startups to watch include the space video platform Sen, the satellite ‘Ground Segment as a Service' (GSaaS) provider Infostellar, and the quantum communications company SpeQtral.

The Competitive Landscape

The space industry is divided into several sectors, each offering unique opportunities and challenges for investors, according to Belozerov.

The upstream segment involves research, space manufacturing, and ground systems focused on launching and exploring space. In-orbit servicing, which falls under the midstream category, includes diverse services and operations that maintain and manage space assets. Downstream activities leverage space data for applications such as telecommunications and Earth observation.

Upstream: Currently, Rocket Lab and SpaceX are leading the charge in launch services. "However, the market is expanding to include startups focused on innovations like 3D-printed rockets, which promise faster and cheaper production," Belozerov said. "These advancements are lowering the barriers to entry, creating a more competitive landscape."

In-Orbit Infrastructure: This segment is rapidly growing, with new entrants such as Japanese startup Astroscale offering innovative solutions like space waste management. Recently, its shares surged about 19 percent following the announcement that the company had secured an $81 million contract with Japan's space agency for debris removal from Earth's orbit.

Downstream Services: The downstream segment includes services like Earth observation, remote sensing, and space-based communications. "Starlink's success in bringing satellite internet to the mass market is a prime example," Belozerov said. "This segment is poised for growth as technologies advance, making space-based services more accessible and affordable."

Public-Private Partnerships and the Future of Space

"The U.S. government's collaboration with private companies is now being extended to space stations," said Belozerov. "This approach allows for faster innovation and greater efficiency in space infrastructure development."

Axiom Space, for example, has secured a contract to install a series of commercial modules on the ISS. The first one is set to launch in late 2026 and will dock with the forward port of the ISS Harmony module.

The space industry offers multiple avenues for investment, from public companies like Boeing and Airbus to pre-IPO giants like Axiom.

"The market is also fertile ground for VCs, with startups developing technologies for space equipment, electrical control systems, and in-orbit services," Belozerov said. "The entry threshold for investors has lowered significantly, thanks to cheaper launches and the miniaturization of space technology."

According to Belozerov, for investors looking to gain exposure to the growing space industry, diversification is key. "Our portfolio includes a mix of established public companies, pre-IPO firms with high growth potential, and early-stage startups pushing the boundaries of space technology," he said.

With new players entering the market, the space industry offers investors a chance to tap into the next wave of innovation. As Andrey Belozerov points out, the future of space is not just about exploration but also about sustainable business models that will thrive beyond our planet.

This post was authored by an external contributor and does not represent Benzinga’s opinions and has not been edited for content. The information contained above is provided for informational and educational purposes only, and nothing contained herein should be construed as investment advice. Benzinga does not make any recommendation to buy or sell any security or any representation about the financial condition of any company.