Sunday, February 7, 2016

2016 could be a big year for space: Is Ottawa paying attention?

Is the space business really growing?

A group called Space Angels Network says it is. The organization describes themselves this way:

“Space Angels Network is a global network for angel investors, offering insider access to the emerging private space industry and sophisticated investment opportunities across diverse market segments, with the expertise and network connections to cultivate stellar returns on investment. We are the largest community of space investors and entrepreneurs in the world.”

An article at their website, 2015 an epic year for the space industry, makes the case that 2015 was a big year for space activities and 2016 will be even better.

The first half of the article is a summary of the events that took place in space in 2015. It’s the second half of the article, starting with the heading, “Record Levels of Investment,” that’s of real interest.

Here’s a summary of what that part of the article says:
  • The compound annual growth rate (CAGR) for commercial space between 2012-2015 was 180%.
  • In the last 10 years over USD$20 billion of non-governmental money has been invested in commercial space companies.
  • In 2015 the level of non-governmental investing in commercial space was USD$3.3 billion, with most of it coming from corporations. A majority of this money went to launch systems and satellites.
  • Venture capital and angel investment to space start-ups in 2015 was over USD$800 million. Companies like Virgin, Qualcomm and Coca Cola invested in space. Venture capital came from Sequoia, Bloomberg Beta, Google Ventures, Bessemer Venture Partners, and Lux Capital.
  • Acquisitions of space assets in 2015 totalled nearly USD$4 billion.
Are these numbers reliable? Naturally Space Angels Network would want to put the industry in the best possible light. Did they put some spin on the numbers?

It doesn’t seem so, because other space organizations have come to a similar conclusion.

A Commercial Space Blog post, Space economy now $330B U.S. annually, says report, examines the numbers in a report from the Space Foundation, a U.S.-based non-profit organization that advocates for the global space industry. They agree that a breakthrough year is likely. The data in the report on European space activities comes from Eurospace, the trade association of the European space industry, who also thinks that way.

The 2015 state of the satellite industry report, a 32-page PDF document produced by the Satellite Industry Association (SIA), shows that the satellite communications area has the most potential in the near term. That’s an area where Canada does well.

Canada’s federal government has made a big deal about promoting technology. When it comes to space, though, so far the only announcement was about Neptec Design Group getting $1.7 million to design a damage detection system for the International Space Station. This contract had already been announced in November 2015, as outlined in the Commercial Space Blog post Innovation minister's latest announcement a rehash of November 2015 announcement.

Commercial space is picking up speed. What should the Canadian government be doing to get us a piece of that action?

If you’re about to say create more projects for space companies, forget it. Canada’s economy is slow, the dollar is down and the government will likely run deficits for a few years. It’s unlikely that they’ll put a lot more money into government space projects.

Here’s what they can do:
  • Implement the rest of the Emerson Report from Volume 2: Reaching higher: Canada's interests and future in space. It’s a good framework for building the space industry.
  • Stabilize the Canadian Space Agency. As recommended by Emerson, give it a clear mandate and the funding it needs to carry out that mandate.
  • Create an environment that helps space companies grow through initiatives like tax breaks and access to financing.
  • Promote the Canadian space industry internationally. The government has been promoting Canadian technology, as Prime Minister Justin Trudeau did at the recent 2016 World Economic Forum(WEF), but more focus on space is needed.
  • Create an environment where more young Canadians can get their space dreams off the ground while they’re still in university. Some schools, the University of Waterloo in Ontario being one example, are doing well at this on their own, but promoting entrepreneurship needs to be done at a national level.
If the growth trend in 2015 continues, 2016 will be a strong year for commercial space. Let’s hope the Canadian government is paying attention and puts some effort into promoting our space industry. Commercial space is the future and we need to carve out our place in it.