Unlocking the Universe: New Technologies Driving Space Progress

The space technology sector (spacetech) is currently undergoing rapid changes due to a number of reasons, including technological innovation, increased private investment, growing commercial demand, regulatory changes, and important geopolitical trends. Not so long ago, the sector was dominated by government agencies such as NASA and ESA, but today the industry has become a dynamically developing ecosystem of startups, venture capital firms, and publicly traded companies specializing in launches, satellite communications, Earth observation, space logistics, and deep space exploration. Among the public names of the sector are Rocket Lab (by the way, shares have grown by 555% in the last 12 months), Planet Labs, BlackSky, and Spire Global. ETFs such as the Procure Space ETF (UFO) and the ARK Space Exploration & Innovation ETF (ARKX) also operate in the sector. These are the signs of spacetech maturity and acceptance.

Among the key segments of spacetech today are the following: spacecraft launch services, satellite communications and the Internet, Earth and deep space observation, navigation and geopositioning, manufacturing and logistics in space, and space tourism. Analysts also divide the spacetech industry into two groups: upstream and downstream. The upstream segment includes the development and launch of space assets such as satellites and rockets while the downstream focuses on the use of space data and space services on Earth.

Nowadays the spacetech is quite generously funded. According to Crunchbase, the volume of global venture investments in the industry in 2024 reached $6.4 billion across 232 rounds, which is higher than the pre-pandemic levels yet still below the peak level in 2021. Among the startups with a high level of funding: Anduril (defense), Loft Orbital (satellite sharing services), and Slingshot Aerospace (space domain awareness).

McKinsey & Company expects the global spacetech market to grow to an impressive $1.8 trillion by 2035 from $630 billion recorded in 2023. The key growth factors in this sector are the growing demand for satellite data, advances in rocket engines, and the growth of space assets production. Morgan Stanley estimates that the spacetech market size will surge to over $1.0 trillion by 2040. It is also expected that in 2025 NASA’s budget will increase to $26 billion, with priority given to the Moon exploration (several unmanned and manned Artemis missions are planned), as well as climate monitoring.

So, what technologies are currently determining the development of the entire sector? Where is technological progress particularly visible and where can we expect a high return on investments? In our opinion, today these are reusable launch systems, space AI-applications, as well as in-space manufacturing (ISM).

Upstream companies (SpaceX, Blue Origin and Rocket Lab) are actively implementing next generation launch technologies. The focus is on reusable systems. They can significantly reduce the cost of launching and per ton of payload, thus democratizing access to space for many organizations. For example, according to data by the World Economic Forum in 2024, the number of satellites launched per year has increased by 50% over the past 20 years, while launch costs have decreased 10-fold. Similarly, as the technology for building superheavy rockets becomes ubiquitous by the early 2030s, a wider range of payloads can be launched into orbit at more affordable costs.

New disruptive geospatial AI-based applications (such as high-precision GPS and disaster monitoring) are gaining momentum in the downstream group, and startups such as Xona Space Systems are leading the way in this area of innovation. Hyperspectral images and advanced Earth observation systems currently provide 50% of global climate data, allowing for real-time environmental information. Satellite data is processed in real time and used in projects on agriculture, climate monitoring, defense, and insurance. Startups such as Umbra Space, Capella Space, and Iceye offer high-resolution SAR images. AI/ML technologies are used to analyze these vast datasets to obtain useful information. Also notable is the expansion of partnerships between satellite operators and cloud/AI providers such as Microsoft Azure Space and AWS Ground Station.

ISM-technologies and space robotics reduce dependence on ground-based manufacturing and reduce the cost of work in orbit, allowing for significantly longer-term missions. These are technologies of the upstream group. Elon Musk recently announced plans to send the humanoid robot Optimus to Mars. Additive manufacturing, or 3D printing, is a cornerstone ISM-technology. It allows astronauts and robotic systems to produce tools, spare parts, and complex components on demand, reducing the need to ship large amounts of supplies from Earth. Active players in this field include Firefly Aerospace, Northrop Grumman, and Masten Space Systems.

That said, it is important to keep in mind risk factors: high initial capex on R&D and manufacturing; technical difficulties such as equipment failures in space and launch failures; regulatory uncertainties such as licensing delays and disputes over spectrum allocation. Higher interest rates and geopolitical instability also have a negative impact, in particular, tensions between the United States and China can disrupt several supply chains.

The development of space tech continues to gain momentum, and many factors are driving the industry’s long-term growth. The gradual transition to the wider commercial use of space opens attractive investment opportunities in the above areas.

Written by Anton Alikov.
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