Space technology is influencing more and more applications on Earth, creating a billion-dollar market. A new consulting universe is opening up for lawyers and strategy consultants.
By Sabine Reifenberger, Frankfurt
Space, endless expanses – and enormous economic potential. The management consultancy McKinsey and the World Economic Forum predict that the space-based economy will see sales growth in the coming years from the current 630 billion dollars to 1.8 trillion dollars in 2035. On the one hand, the growth will come from core topics such as satellites or GPS services (backbone applications), which currently account for a good half of the space industry at 330 billion dollars. In addition, there is the use of space technology in other industries (reach applications).
“The space industry is increasingly expanding into the non-space sector,” observes Ulrich Hermann, general partner at Einstein Industries Ventures, a fund specializing in new space. He assumes that in ten years, all industrial sectors will include space applications at some point. “Creating the interfaces between space infrastructure and applications in industry is a new growth market.”
Space technology changes value chain
This creates a new field of activity for strategy and technology consultants. Hermann himself is also a senior partner at the management consultancy Einstein Space Consulting. He is concerned with the question of where space technology could create added value in other industries along the value chain – and when the right time is to address this. “The target images and capabilities are often already there, you just have to overlay them and model the costs,” he explains.
There are already applications for the use of space technologies, for example in the area of mobility. “Earth observation services can give the railways advance information about whether and when repairs to tracks are due – without an employee having to walk the route,” says Hermann. In agriculture, the images could allow conclusions to be drawn about whether a field already needs to be irrigated and fertilized, or whether it can be postponed and resources saved.
Agricultural industry leader
Space components are also becoming increasingly important in the automotive industry – although Hermann sees the European automotive industry as “surprisingly still at the beginning” in this regard. This is also due to the still sparse infrastructure. “Without a European infrastructure, the autonomous vehicle will otherwise depend on Chinese satellites – then Europe will build the metal around it, but not the driving experience that it actually wants to sell.”
In his view, maritime logistics, which traditionally uses space technologies to control its use of resources for route planning, for example, is much further ahead. Agriculture is also massively expanding “smart farming” thanks to the reduced costs of New Space. “There, core applications of space are part of the digital business model and provide the basis for cost advantages in competition or for compliance with environmental standards,” says Hermann.
Smart farming technology shows where a field needs to be irrigated. Photo: zapp2photo/stock.adobe.com
Conversely, the use of known technologies in space can also represent an extension. The mechanical engineering company Trumpf, for example, is looking into how 3D printing can be used in aerospace. However, a product that works on Earth is not automatically suitable for space travel: “Anyone who wants to use additive manufacturing processes such as 3D printing on the moon must qualify their machine or the process for extreme conditions such as cold, radiation, dust and weightlessness,” says Hermann. To solve these challenges, companies from various industries must begin to cooperate with the aerospace industry, such as satellite manufacturers.
Space is more than rockets
According to the McKinsey survey, the supply chain and transport, agriculture, defence, retail/consumer goods and lifestyle, and digital communications sectors are expected to account for more than 60% of the growth of the space economy by 2035. “Many people still think of space travel in the traditional sense of rocket launches and satellites. They still exist – but the efficiency of the space-based economy is much higher,” says Björn Hagemann, Senior Partner at McKinsey, commenting on the results. Services such as communication, positioning, navigation, timing, and earth observation are inconceivable without space-based technology. “These areas in particular will grow strongly.” In addition, new, commercial providers are entering the market and complementing government activities with their offerings.
The new competition in space offerings is a key driver for making the technologies widely available at reasonable costs. Many capabilities are not new, but are now becoming more attractive in terms of price. According to McKinsey, the role of private players is tending to increase: Private sector investments reached an all-time high in 2021 and 2022, totaling more than $70 billion. The number of satellites launched increased by 50% per year between 2019 and 2023, driven by falling launch costs. These were recently 90% lower than 20 years ago.
New framework conditions sought
Falling costs thanks to offers such as Space X are fueling plans for the beginning of space management. But this raises completely new questions: What laws apply there? Who actually owns what? And which authority mediates in conflicts? “We need rules for a completely new economy – if I had a law firm, I would open a department for it immediately,” says management consultant Hermann.
We need rules of the game for a completely new economy – if I had a law firm, I would open a department for it immediately.
Ulrich Hermann, Einstein Industries Ventures
The commercialization of space technology is creating a large market for law firms, and the first firms are already bundling their offerings on this range of topics. At Heuking, this is happening in the “Space, New Space & Space Tech” focus area, which was founded at the beginning of the year. In addition to legal advice on space-related projects, this area will also include knowledge of related areas such as technology, intellectual property, venture capital, procurement and corporate law. “A team of six lawyers with different areas of expertise regularly exchange ideas on space-related topics,” says Heuking partner Andreas Lenz, who coordinates the activities for Heuking together with Munich technology partner Thomas Jansen.
Other law firms are also covering the topic. SKW Schwarz, for example, has dedicated a focus topic to the area of space; the website lists twelve experts on key areas such as intellectual property, M&A, public commercial law and data protection. At the GvW Graf von Westphalen law firm, lawyers advise on space and satellite law.
New players on the field
In terms of economic and technological relevance, but also in public perception, the space sector is increasingly “moving beyond the orchid area,” reports Lenz. However, the foundations of international space law date back to the 1960s and 1970s. “Much of what is already reality today was still science fiction from that perspective,” Lenz points out. Since then, special regulations have been used at the international level, for example on orbits and frequencies, as well as bilateral and multilateral agreements.
Private providers such as Space X are expanding the range of services. Photo: picture alliance / Sipa USA | Ted Soqui
According to the lawyer, a German space law is apparently in preparation, and a topic-specific EU space law has been announced for 2025. However, he does not see a globally uniform legal regulation in the short term: “There is still a long way to go, which must be shaped above all by politics.” In the investment sector, on the other hand, Lenz expects sustained growth in activity, promoted by macro effects such as digitization, environmental monitoring, the pursuit of security autonomy and a new race for places in Earth’s orbit and to the moon. “There are new players on the field, both public and private.” Many innovations are only made possible by the support of companies and ideas, for example in the context of accelerator programs or through investments in the start-up environment, and are specifically promoted by public institutions and private sector initiatives.
Start-ups receive encouragement
Young companies in the space sector are benefiting from the current influx of venture capital, and development banks are also active. “The start-up scene in New Space is reminiscent of the boom of the Internet years 20 years ago,” observes management consultant Hermann. Commercial banks are also likely to become more involved soon.
Heuking partner Lenz describes the focus area of space as a future sector that offers great potential because it brings together the expert knowledge of many areas. “It is often also about cleverly networking topics and players with one another.” He initially followed the developments in the space sector out of personal interest, but his professional focus is on private equity, M&A and corporate law.
What fascinates him about the topic of space? “Enthusiasm for discoveries and technology development and – from a legal perspective – the fact that more and more areas of expertise are being added,” says Lenz. He is certain that New Space offers potential not only for law firms: “Companies of all sizes and areas have a lot to gain from using space technology.”