Does space technology matter?

Space technology is a key underpinning of our everyday lives. The world economy runs on space technology. Yet economic headwinds meant that private investment in the space sector hit a record low in 2023, according to the Space Capital's space investment data. The year ahead looks more promising.

Which trends are behind that promise?

💥 Heightened geopolitical tensions.

In a more volatile and uncertain world, with continuing US-China tensions and more conflict hot spots, many nations are looking to tap into the strategic geopolitical advantage that space-based assets offer. As defence budgets grow, space based investments are likely to increase.

📉 Lower interest rates.

Expectations that the US will start lowering interest rates later this year might encourage greater investment. Lower rates reduce the cost of borrowing, making it more attractive for organizations to invest in ambitious space projects.

🤖 Rise in AI-driven geospatial data.

Advances in AI enable companies to extract valuable insights from vast amounts troves of satellite imagery and geospatial data and the two areas will become increasingly integrated.

What stories are emerging in the space economy?

*A tale of aspiration*.

The US accounts for nearly half of all private equity investment in the space economy over the past decade (48%).

But more countries are emerging as contenders to space dominance. China's investment follows closely behind with 27%, with plans to double the size of its self-built space station Tiangong, coinciding with the decommissioning of the ISS in 2030.

And the European Space Agency - ESA member states have committed to making Earth observation for climate science a priority for future investments.

*A tale of exploration*.

Satellites make up the bulk of investment, accounting for 87% of all invested capital in the past decade, whereas emerging industries account for 2%. They are relatively small at $2bn, but interest is growing, with a 250% year on year increase in investment.

Japan is notable for investments in Astroscale, a debris removal company with a sustainable space aim, and ispace, inc., a robotic lunar exploration company.

*A tale of pioneering vision*.

There are many cool companies worth keeping an eye on as future disruptors.

Take Metropolis Technologies. It uses their AI-enabled computer vision platform to reimagine something quite mundane: the way we park our cars. Their long-term vision is to create a checkout-free driving experience, and build the infrastructure for mobility commerce.

Solar Foods, a Finnish-based biotech startup, is another inspiring example. They have invented Solein, a protein made using air and electricity, instead of water and fertiliser. The vision? Food that can be grown in-flight and therefore enable human Mars missions--and crucially an endless food supply for our world here on Earth, as we no longer rely on land.

Despite short-term volatility in investment trends, the long-term fundamentals for the sector remain strong.