This issue of the Satellite Applications Catapult’s quarterly Small Satellite Market Intelligence report provides an update of the small satellites launched in Q1 2019 (1st January to 31st March 2019). This edition also includes an analysis of spacecraft start-ups.

Q1

2019

SMALL SATELLITE MARKET INTELLIGENCEREPORT

02SMALL SATELLITE MARKET INTELLIGENCE Q1 2019

OVERVIEW 23 satellites were launched in Q1, a slow start to the year following the 198 launched in Q4 2018. These satellites were spread over 8 launches, however 3 of these ended in failure. At least two high volume launches (20+ satellites) are expected in Q2 that will at least triple the number of satellites launched in 2019.

Note: The mathematical model line in the graph above (simulating an accelerating market uptake followed by a levelling off) represents a general trend and not a prediction per year.

Launch announcements later in the year will increase the expected number of satellites to be launched in 2019.

03APPLICATIONS

Applications are defined by the primary objective of the mission as categorised below:

• Communications: the objective of the mission is to transmit or receive signals to/from a user terminal or gateway; • Technology/ Scientific: the objective of the mission is to gather knowledge to better understand physical

phenomena or to test the functionality of the payload or equipment; • Earth observation/ Remote sensing: the objective of the mission is to provide imagery or data relating to the

Earth or its atmosphere.

There was an almost equal split between Technology/Scientific, Communications and Earth Observation/Remote Sensing missions launched this quarter. However, the low sample size limits the conclusions that can be drawn from this. The launch of OneWeb’s first six satellites on 27th February dominated the Communications category. OneWeb will now progress with an aggressive launch campaign over the next few years to get the remaining 642 satellites of their first-generation constellation into orbit.

SpaceX are close behind and have announced they plan to launch a first batch of 60 operational Starlink commu-nication satellites in mid May, following two pathfinder satellites launched last year. SpaceX eventually plan to have over 4400 satellites in orbit.

04SIZE AND MASS

10 satellites launched this quarter were minisatellites, six were microsatellites and seven were nanosatellites, including three 6U platforms. The 6U platform has continued to grow in popularity, from the first 6U launched in 2014 to 14 in 2017 and 40 in 2018.

The Virginia Space ThinSat-1 mission comprising 60 educational picosatellites deployed from three 3U CubeSat platforms is expected to launch to the ISS in Q2.

Satelliteclassification Satellitesubclassification Associated wet mass range

Small Satellite < 500 kg Mini-satellite 100 kg - 500 kg Micro-satellite 10 kg – 100 kg Nano-satellite 1 kg – 10 kg Pico-satellite 0.1 kg – 1 kg

05SIZE AND MASS

Despite the low volume of launches, over two tonnes of small satellite hardware was launched this quarter, mostly due to the six 145 kg OneWeb minisatellites and the 150 kg DARPA R3D2 technology demonstration mission.

On the 19th March, Kicksat 2, an 3U educational CubeSat project launched in November 2018, released most if not all of its 104 ChipSats, or ‘Sprites’. These are 3.5 cm² boards able to downlink data from basic sensors, before burning up within a few days. The mission was crowdfunded and developed by Cornell University.

The past three years have seen a slight increase in the average mass of small satellites launched. This is due to the large volumes of Planet 3U satellites launched in 2017, as well as a recent increase in the number of 6U satellites launched. This time period has also seen more smaller mini satellites with masses of around 100-200 kg.

06ORBITS

Note: Launch failure includes orbit failures whereby the satellites significantly missed their intended orbit to the detriment of the mission.

There were no ISS launches of small satellites this period, with the next batch expected for mid-April.

All but one successful launch inserted satellites into sun-synchronous or other polar orbits this quarter. S5, a 60kg US Air Force Research Laboratory technology satellite was launched into GEO as a rideshare with a larger Indonesian telecommunciations satellite.

07LAUNCH

Three launches failed this quarter. Two were launched from Iran: a novel Simorgh small launch vehicle and a Safir 1-B. Chinese startup OneSpace’s first launch of its OS-M rocket on 27th March also failed to reach orbit.

08SPACECRAFT STARTUPS

LAUNCH The past decade has seen a boom in the number of new companies entering the small satellite industry, fuelled by the miniaturisation of satellite technology, more accessible launch opportunities and increasing private capital investment. This has enabled new business models to exploit the emerging market opportunities.

This article presents an analysis of start-ups formed in the last decade who have launched or plan to launch small spacecraft (<500kg). These companies are looking at delivering services using constellations of remote sensing and telecommunications satellites, as well as emerging markets such as in-orbit servicing. Satellite manufacturers who do not intend to operate spacecraft are not included.

At the leading edge of innovation and entrepreneurship, the opportunities for new services from space are evolving continually.The following is a snapshot of the companies, ideas and funding as it stands in early 2019. It is not exhaustive, as companies are created and pivot every week, but with a sample size of around 100 companies it gives an idea of the current space start-up ecosystem.

Most satellite start-ups are aiming to utilise large numbers of small satellites in constellations. These constellations are split between communications constellations, that aim to provide voice and data services, mostly for broadband and Internet of Things (IoT) applications, and remote sensing constellations, which actively or passively collect data from the Earth and its atmosphere. A smaller number of companies are aiming to provide services in space, including satellite servicing and resource mining. Alongside them, a small handful of other companies are aiming to provide novel services including data relay constellations, Quantum Key Distribution from space, and Blockchain based satellites.

APPLICATIONS

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REMOTE SENSING CONSTELLATIONS

6 https://s-matching.jp/

About a decade ago, CubeSats, once an academic only domain, were identified as a way of conducting lower cost commercial missions. Planet Labs, an early adopter of the technology, was formed in 2010 and launched its first satellite in 2013, subsequently showing the industry that commercial quality data, specifically optical imagery, could be collected by platforms the size of a loaf of bread. Since then, they have gone on to raise over $183m and launch more than 375 satellites, the most satellites of any commercial organisation in history. Around 150 of them are still in orbit, imaging the Earth daily at 3m resolution.

Another pioneer, Spire Global, also launched its first satellite in 2013, and uses a range of different sensors to supply data to different markets. This includes AIS data for maritime, GPS Radio Occultation for weather forecasting and more recently ADS-B data for air traffic management. They have raised $140m to date and launched their 100th satellite on 1st April 2019. Planet and Spire demonstrated that datasets provided by CubeSats can be valuable and that mass manufacture and launch of small satellites is possible. This provided confidence to entrepreneurs and investors, fuelling the growth in venture capital and satellite launches seen over the past five years.

Other companies are using Synthetic Aperture Radar (SAR) satellites, which can take images of the Earth at night or in bad weather. Finland’s ICEYE have raised $65m and launched two satellites since its foundation in 2012. Capella Space of the US are close behind, having raised $34m and launched their first satellite in December 2018. A handful of other companies are also developing SAR constellations, including Trident Space, Synspective and UmbraLab.In addition to imaging companies, several companies are developing signals intelligence satellite constellations. These include Hawkeye 360, who launched their first three satellites in December 2018 and have raised $16.3m. These satellites listen out for UHF and VHF signals, supplying data for maritime domain awareness, emergency response and communications companies.

Finally, some start-ups are also looking at atmospheric monitoring, including methane detection and weather monitoring. GHGSat of Canada launched its first satellite in 2016 and plans to launch another later this year.

COMMUNICATIONS CONSTELLATIONSCommunications constellations have a longer history than remote sensing constellations, with ambitious plans by Iridium, Globalstar and Teledesic at the turn of the millennium thwarted by bulky handsets and competition with terrestrial networks. All three went bankrupt. Despite this, Iridium and Globalstar went on to become profitable businesses and have since launched second constellations. It is against this backdrop that a few companies aim to launch hundreds and thousands of satellites to provide internet connectivity. OneWeb is one such company. Founded in 2012, they launched their first six 150 kg minisatellites on 28th February and plan to launch over 600 more in the coming years. Up against similar constellations planned by SpaceX, and now Amazon, they will be closely watched. They are the most funded start-up in our sample, having raised over $3.5B, much of which comes from the Japanese technology conglomerate SoftBank.

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The increasing use of low Earth orbit for telecommunications satellites allows lower latency communication links than traditional geostationary satellites. This means that it has the potential to be integrated into future 5G networks for backhaul.

Leosat, another internet constellation venture, have backing from geostationary telecommunication satellite operators Japan’s Sky Perfect JSAT and Hispasat for their planned constellation of 108 satellites. Alongside them, several newer companies are aiming for a similar goal, differentiated by laser technologies, novel antennas and communication links.

The other group of telecommunication satellite start-ups are the IoT constellations. Numbering 17, they vary from those who have raised Series A fundings and have satellites in orbit, to those who are just figuring out their business plans. Leaders include Kepler Communications, Swarm Technologies, Fleet Space and Hiber Global. The wider IoT market is growing largely, and these satellites will help fill in the gaps terrestrial wide area networks cannot reach, such as out at sea. But they are not the only companies aiming to exploit this opportunity. Incumbent satellite operators such as Iridium and Inmarsat are creating dedicated products and services to claim some of this high-volume, low-margin market. Eutelsat is creating its own LEO cubesat constellation specifically for IoT.

SATELLITE SERVICING AND RESOURCE MININGThe satellite servicing market is just emerging (see Q4 2018 report), and a smattering of companies are looking to exploit it. Satellite servicing includes in-orbit refuelling, repairing, upgrading or deorbiting of satellites. In this field, companies are split between well-funded and technically resourced companies, and significantly more nascent start-ups.

Japanese start-ups lead in this capability. Astroscale, focusing on debris mitigation, have raised over $148m (including $30m raised 11th March) and are planning their second satellite for launch next year. Lunar mining venture ispace has raised $92.3m and also intends to launch their first mission next year.

In satellite servicing, the UK/Israel’s Effective Space is looking to launch next year, having raised $15m for its ‘Space Drones’ missions to stabilise ageing geostationary satellites.

Two companies, Planetary Resources and Deep Space Industries, raised significant funding for their ventures to try to mine asteroids. Whilst the technical case for this is proven through government programs such as Hayabusa and OSIRIS-REx, the business case is less clear, and both companies were acquired in unsuccessful exits for their investors. Despite this, several companies are still aiming to mine resources from asteroids, though none have raised significant capital.

11ANALYSIS

The majority of start-ups operating today were formed within the past five years. Given confidence by the early success of satellite startups, venture capital investment in the sector has continued to increase over this time frame.

31 companies, or about a third of the total, have launched at least a pathfinder satellite. 19 of these launched their first satellite in 2018. The average amount of time between founding and launch is 3.5 years.

Over a third of companies have their headquarters in the US. This is followed by the UK, with 12, then China, with at least ten. Many western European companies have a small handful of companies, as does Australia, Canada, Japan and Russia. Most of these countries already have strong governmental space programs, indicating the need for an experienced labour market, favourable regulations and government funding and support.

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Note: other funding sources, such as grants and parent companies fall under ‘Other’.

Of those whose funding status is known, most have conducted a seed or series A round. As is to be expected, companies that have launched satellites skew the distribution to the left, having generally progressed to later funding rounds. The start-ups sampled have raised a collective $5B, over half of which comes from OneWeb, including its latest round on 18th March for $1.3B.

CONCLUSIONSSpace is hard. Starting a business is hard. Combining the two means these Newspace companies face a particularly difficult battle: designing, manufacturing, testing, launching and operating space hardware, and all the associated risk, without running out of cash. Satellites fail; launchers still explode. Many of these companies will fail, pivot from their current aims, or be acquired.

Many space start-ups are dependent on the growth of future demand for geospatial data and connectivity and must be very forward looking, exploiting market opportunities that may not be clearly defined yet. Some of the businesses are dependent on the success of other ventures, anticipating the need for debris removal, or to move large volumes of data from LEO in near real time. The most successful ventures are usually those with a clear set of end customers in mind. In these cases, business owners are driven by the need to access the data or service, rather than own a satellite.

It can be tempting to view investment and satellite launches as proxies for success, and in the short term these milestones should be celebrated. In the long term, however, companies will have to demonstrate that they can generate sustainable revenues and offset the high capital expenditures of manufacture and launch. As most space start-ups are private, we do not how stable their revenues are and whether they are profitable, or who has the most successful business model.

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These companies sit within the large space industry, generally characterised by fewer large companies and intertwined with governmental agencies. ‘newspace’ and ‘oldspace’ are sometimes presented as an irreconcilable dichotomy, but there are clear synergies to be exploited. For example, OneWeb has partnered with Airbus Defence and Space to develop a production line facility for satellite manufacture in Florida, leveraging the company’s extensive experience to develop novel manufacturing processes. Lockheed Martin has invested in CubeSat manufacturer Terran Orbital.

With the CubeSat, we saw a standardised design that has enabled rapid commercial growth. Currently, as companies focus on getting to orbit, the startup ecosystem is focussed on product innovation: creating new satellites, sensors and software to generate valuable datasets. Eventually this will turn to process optimisation as companies figure out the best way to manufacture, transport and launch large volumes of small satellites and keep ahead of the competition. This will be particularly important in communication constellations, where the large volumes of satellites mean every process optimisation can reduce costs, and there is significant competition from margin squeezed geostationary satellite operators. The sector is now experimenting with different platform sizes and modes of operation to enable services to be delivered most effectively, and new facilities are being developed to enable rapid and effective development.

Planet have expanded to be highly vertically integrated, with manufacture through to data analysis conducted in house. Spire have a similar model. This is both capital and labour intensive; newer companies may want to occupy a smaller part of the value chain. The opportunities and interest in delivering new services from space has seen growth of companies such as Open Cosmos and Clyde Space that offer demonstration as a service. By outsourcing satellite manufacture, and even entire missions, companies will get to orbit faster and more reliably, though potentially at some cost to their bottom lines.

The past decade has presented a significant market opportunity for small satellites to be exploited in new ways, especially in constellations of satellites. Over a hundred companies are aiming to capitalise on this, and more are being created or emerging from stealth mode every week. The next five years will be crucial for the industry as most companies bring their constellations to fruition and demonstrate they can exploit outer space with successful and sustainable business models.

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Disclaimer: whilst every effort has been made to provide accurate and up to date information, we recognise that this might not always be the case. If any reader would like to contribute edits or suggestions to our reports, kindly email the team and we will make the amendments.

Q1

2019

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