Homepage / Technology / Investors have poured $2.8 billion into reaching the final frontier
Overstock.com shares spike after blockchain unit announces for-profit property registry Dow stock Boeing is on track for best year in nearly 4 decades, but the charts point to trouble Another bitcoin rival leaps to a record high, surpassing litecoin's market value Martin Sorrell: Finalized Disney-Fox deal would be a top media investment for us What to expect in Yellen's swan song: 'She's not a showboater' Target to buy grocery delivery service Shipt for $550 million When politicians and executives get caught out Some of Facebook’s early friends now its sharpest critics US says hacker to plead guilty for role in 2016 cyber attacks Laser chip maker Finisar jumps 25% on news that Apple's investing $390 million in the company The Amazon Echo now lets you play Spotify across all of your Echos Citi has 5 reasons — including tax reform and global growth — why Apple can keep crushing market Facebook will start streaming WWE professional wrestling next month Deregulation, global stock rally to 'propel' Morgan Stanley higher in 2018: KBW analyst A new law bans Kaspersky software from use in the US government Bitcoin 'dwarfs' nearly all bubbles, including 1929 crash: Investor Ken Fisher How 2017 became a turning point for tech giants The biggest risk you face when choosing between a human and a robo-advisor Disney deal with Fox would be a ‘home run’ in its battle against Netflix, Amazon, analyst Ives says Stocks making the biggest moves premarket: HON, LLY, AMGN, TM, HD & more Apple's 'innovation complacency' could see it lag Google, Amazon in post-smartphone world, study says Cryptocurrency market now worth $500 billion, more than Warren Buffett's Berkshire Hathaway Tesla stock is up 12 percent in a week — but it could be time to pump the brakes Why Donald Trump's Jerusalem move might have made Russia a lot stronger Weekly mortgage applications fall 2.3% as rates rise Apple invests $390 million into Finisar, which makes laser chips for iPhone X and AirPods Leuthold's Doug Ramsey reveals top sector picks, bullish market predictions Tillerson says the US is ready to begin direct talks with North Korea German stock exchange operator Deutsche Boerse experiences trading disruption Russian court freezes $1.7 billion of Sistema assets at request of Rosneft A top Facebook exec is jumping on the bitcoin bandwagon ECB set to lift its growth outlook as massive bond-buying slowly winds down Swedish fintech start-up iZettle raises $47 million; CEO says 'time will tell' for IPO plans Google's top searches in 2017: Hurricanes, Matt Lauer and Tom Petty Google is blocked in China, but that's not stopping it from opening an AI center there UAE oil giant must build regional 'credibility' ahead of Saudi Aramco IPO next year European markets set to tread water ahead of Fed's decision Founder of a would-be tech powerhouse is blacklisted by China for allegedly disobeying court order Japanese start-up ispace just secured funds for first two lunar missions starting in 2019 China's GDP growth set to plunge to near 30-year low in 2018, ADB warns FBI agents called Trump an 'idiot' during presidential race South Korea may tax capital gains from cryptocurrency trading Japanese e-commerce firm to launch program for tech startups in Singapore I was wrong about bitcoin. Here's why Free money from China comes with strings — as one country's learning the hard way This power couple bought bitcoin in 2013, donated gains to cancer hospital Cramer Remix: What being young and broke taught me about the stock market Companies must have 'a culture of security' to prevent cyberattacks, McAfee CEO says Cramer's charts predict full speed ahead for industrial stocks like Caterpillar, Honeywell Asia markets take cues from a mixed US trading day ahead of Fed decision Cramer finds value-creating, investment-worthy CEOs across industries Novogratz says he would sell litecoin after its surge, sees bitcoin hitting $40k within a few months Here's why bitcoin prices are different on each exchange This start-up is making remote-controlled robots that can do surgery in space Apple’s up 43,000 percent since its IPO, and could soon surpass $1 trillion in market cap MongoDB falls despite earnings beat Why investors should beware stocks getting the bitcoin boost Billionaire investor Druckenmiller: ‘I love Amazon' more than Apple Facebook's accounting shift shows it expects a higher European tax bill next year Coinbase suspends ethereum buys and sells twice in one day Tesla shares pop after PepsiCo orders biggest fleet of Semi trucks so far San Francisco's mayor oversaw tax break that helped spark a new tech boom in the city Net neutrality protests have moved online, but big tech is keeping quiet My kids get 'no screen time whatsoever,' says Silicon Valley investor Chamath Palihapitiya I owned bitcoin for a weekend and here's what I learned NYU's Scott Galloway on bitcoin: It shows young people 'have no faith in our institutions' Some Ryanair pilots in Ireland to strike, German union steps up pressure Companies are already paying a tax rate as low as 13%, economist Yardeni estimates Facebook slams former exec Palihapitiya, saying it 'was a very different company back then' 80% of Wall Street economists, strategists believe bitcoin is a bubble: Survey Facebook to book advertising revenue locally amid political pressure Strategist Tom Lee: Young people will drive bitcoin gains just as boomers boosted stocks in the '80s This founder started in his parents' garage—now his company does over $100 million a year Activision shares to get a boost from Overwatch, Diablo sequels, Goldman says Bank of England to meet amid UK inflation surge: What to look out for Verizon will launch over-the-top service before year-end with NFL as key piece, analyst predicts Chamath Palihapitiya: Apple is 'no different than Louis Vuitton or any other luxury good' Passport's flagship fund to close after 'unacceptable' returns Apple's powerful new computer launches December 14 Despite a deluge of criticism, Mark Zuckerberg had a bountiful year Chamath Palihapitiya says Elon Musk is the 'most important entrepreneur of our generation' Senior Australian politician resigns over China ties scandal Forget bitcoin, one of its biggest cryptocurrency rivals is up nearly 5,800 percent this year Bitcoin futures fall on second day of trading on very low volume as interest wanes Bitcoin millionaire: Don't buy bitcoin Stocks making the biggest moves premarket: PEP, MAT, VZ, MYL & more Tech high flyers could soar 10% or more next year, investor Paul Meeks says Goldman Sachs predicts bumper returns for commodities next year Amazon is not a monopoly but there's no question why it's so dominant, tech investor Palihapitiya says Starbucks customer laptops hacked to mine cryptocurrency Fed Survey: Tax cuts and rate hikes on the way Social Capital's Palihapitiya says bitcoin is going to $1 million in the next 20 years Bitcoin bulls looking to diversify can now put money in a crypto-index fund Ex-Facebook executive Chamath Palihapitiya: Social media is creating a society that confuses 'truth and popularity' More American jobs? Broadcom deal might mean the opposite The bull case for gold as bitcoin captivates America One person reported dead after Austrian gas hub explosion Bitcoin bubble could lead to 'destructive' consequences, UBS says While you were watching bitcoin, the world’s second-largest cryptocurrency hit a big milestone French retail giant to buy mall operator Westfield in the biggest takeover of an Australian company ever

Technology

Investors have poured $2.8 billion into reaching the final frontier

Investment in space start-ups continues to soar, buoyed by the exploits of highly visible space concerns, like SpaceX and Jeff Bezos’ Blue Origin. But it’s the terabytes of data streaming to Earth daily from a new generation of smaller, less-expensive satellites — thousands of which are slated to join the roughly 1,500 satellites already in orbit over the next several years — that have piqued investors’ interest in everything from satellites themselves to software used to analyze their data and new rockets designed to loft them into orbit.

Newly compiled data from space industry consulting shop Bryce Space and Technology released Wednesday demonstrates the trend.

In 2016 space start-ups received a record-setting $2.8 billion in investment, $400 million more than in the year prior. With roughly 25 venture deals already reported in 2017 — including a $351 million investment in Elon Musk’s SpaceX that pushed that company’s valuation to more than $20 billion last month — these so-called “new space” ventures are once again on pace to raise billions in seed, venture and private-equity cash.

“Fundamentally, investors go after opportunity, and the way I would sum it up is, this is one of the last frontiers, to be a little cliché,” says Tom Barton, chief operating officer at Planet, whose 190 imaging satellites generate some 7 terabytes of fresh overhead imagery of Earth each day. “It’s still old-school; it hasn’t really been touched by Moore’s Law.”

But while cash continues to flow toward space start-ups at an unprecedented rate, the industry is also hurtling toward a kind of reckoning, industry sources say. For every new space start-up like Planet and Spire Global (which also operates a small and growing constellation of data-gathering satellites), there are several more that are developing satellite hardware or new launch vehicles that have yet to make it to orbit.

“Over the next couple of years, there’s a real series of systems that are poised to come online,” says Raphael Perrino, the lead aerospace analyst on the Bryce report. But while investors see huge potential in space start-ups, the race is now on to see which companies can successfully convert vision to space-based revenue streams.

“As much as I say that we’re at the start of consolidation in the new space sector, I think we’re probably at the start of some of these companies going bankrupt,” Planet’s Barton says. “I would guess that over the next two years we see five or 10 significant bankruptcies or acquisitions for pennies on the dollar for people that just aren’t going to make it on their own.”

More from CNBC Disruptor 50:
Elon Musk is rushing to beat NASA to Mars
Who’s next? Unicorn watch

According to Bryce’s report, 114 investors poured more than $2.8 billion into space start-ups last year. What’s more interesting than raw dollar values is exactly who is piling in and how they are doing so, Bryce Space and Technology founder and CEO Carissa Christensen says.

In 2016 the biggest VC deal came from Softbank, an atypical venture investor (some have characterized the deal as private equity, though Bryce analysts have defined it as venture-based on its nature and purpose). The most active conventional VC funds in the space start-up ecosystem have been and continue to be Draper Fisher Jurvetson and Founders Fund (both early backers of SpaceX) as well as In-Q-Tel, the venture arm of the Central Intelligence Agency.

Though there were roughly half as many venture deals in 2016 than in 2015, the average deal value rose by more than $20 million, to $80.7 million, per deal. Moreover, of the 62 venture investors that funded space start-ups in 2016, fewer than a third had put money into the commercial space industry previously, Christensen says. Both points suggest that investor perceptions about the long-term viability and nearer-term profitability of space start-ups is changing.

The influx of new investors send a strong signal that perceptions of the commercial space industry and its ability to create viable business models are shifting among mainstream investors, Christensen says. “There are strategic investors that are investing in space because it aligns with their business,” she says. “But the most interesting investors, and the ones that have really entered the arena in the last few years, are the financial investors — the ones that are entering the space market because they see the potential for outsized returns.”

“The cost structure is coming down, and I think that’s fundamentally what investors are interested in,” Planet’s Barton says, and as those costs go down, the path to profitability becomes easier to navigate than it was just a few years ago. “What’s different today versus five years ago is, we now have these data sets, and the cost to apply machine learning and analytics has probably come down by a factor of 10 in the last five years.”

While we haven’t see a blockbuster deal like Softbank’s $1.2 billion investment in satellite communications start-up OneWeb last December, it’s possible we will see something like it before year’s end.

In terms of performance, the commercial space industry is arguably enjoying its best year ever. SpaceX, the industry darling, is on pace to launch more rockets this year than it ever has before by quite a wide margin (the company also plans to fly its much more powerful Falcon Heavy rocket for the first time later this year). Bezos’ Blue Origin continues to test critical technologies and construct new rocket-building facilities. Small satellite constellations continue to grow, bringing the industry closer to the Holy Grail of on-demand real-time satellite coverage of the entire planet.

For the investor who can stomach a little risk, it’s an industry that can suddenly look very attractive, says Marco Caceres, a senior analyst and director of space studies at aerospace consultancy Teal Group. “If you look at the traditional market, nothing exciting is really happening,” he says. “The Boeings and Lockheeds of the world, in terms of launch services or manufacturing satellites — there’s no big boom in the market. But if you look at what’s proposed, it looks like the market in five to 10 years is going to look a lot different.”

The trick is, of course, transitioning from proposed satellite constellations to real, revenue-producing data sets and insights — and doing so before investor enthusiasm runs out. There’s nowhere near enough launch capacity in the world to put all these proposed satellites into orbit in the near term, Caceres says, creating risk for satellite companies and opportunity for new launch providers. But at some point in the next year or two, the entire space start-up ecosystem will have to start delivering in a major way.

“We’re not yet seeing the outcome of investment in a lot of funded companies,” Bryce’s Christensen says. “We’re seeing their ability to raise money, we’re seeing their ability to design and deploy their systems, but we’re not seeing their ability to return profits.”

Starting as soon as next year, that will have to change.

— By Clay Dillow, special to CNBC.com

Source: Tech CNBC
Investors have poured .8 billion into reaching the final frontier

Comments are closed.