Chad Anderson, the Founder and Managing Partner of SpaceCapital
(Source: The Miilk’s Sejin Kim)
Elon Musk’s orbital ambitions are reshaping investment landscapes and sparking a new space race. The Real Money in Space Isn’t Where You Think.
Chad Anderson leans back in his chair at Space Capital’s Manhattan office, surrounded by scale models of satellites and rockets that tell the old story of space exploration. But he’s not interested in those anymore. “Don’t compete with SpaceX,” he says. “That’s not where the real money is.”
In an era where data is the new oil, a goldmine lies not beneath our feet but above our heads. The space economy, once the exclusive realm of governments and sci-fi dreams, is poised to outpace the semiconductor industry, promising trillions in value—and it’s happening faster than you think.
As founder and managing partner of one of the earliest space-focused venture firms, he’s watched countless aerospace startups crash and burn—both literally and figuratively—in their quest to become the next SpaceX. But while entrepreneurs chase Elon Musk’s rocket dreams, Anderson sees a different goldmine: not in reaching for the stars, but in the invisible web of data flowing from thousands of satellites above our heads.
Recent projections from the World Economic Forum and McKinsey suggest he might be right. They expect the space economy to hit $1.8 trillion by 2035, surpassing even the semiconductor industry’s projected $1 trillion valuation by 2030. The surprise? Rocket launches, despite capturing public imagination, represent just 9% of this astronomical figure.
“We’re tracking over 100 launch companies that have raised more than $30 billion,” Anderson says. “Only two of them are actually flying. That’s because it’s technically very challenging, and the economics are low margins.”
In a report published last April, the World Economic Forum (WEF) and McKinsey noted that “the estimated value of space-related industries is comparable to that of semiconductors.”
(Source: WEF, McKinsey)
The Musk Effect: Creating Silicon Valley’s New Playground
What Musk and SpaceX have really done is build the railroad to space. Since 2009, their Falcon 9 rocket has slashed launch costs by 95%—from $65,000 per kilogram to $1,500—thanks to reusable components and transparent pricing. With over 5,000 Starlink satellites already orbiting Earth and more than 300 launches as of June 2024, SpaceX has effectively become the first orbital utility company.
The company’s political connections haven’t hurt either. Musk’s occasional alignment with figures like Donald Trump has led to speculation about potential regulatory benefits under certain administrations. “Given Musk’s influence, SpaceX could benefit from a lighter regulatory touch,” Anderson notes. “But they’re not the only ones who’ll profit. A favorable administration could accelerate the entire industry’s growth.”
Yet Anderson insists the real opportunity lies elsewhere. “Ninety percent of the opportunity is in satellites,” he says, “and it’s not just in investing in the hardware. It’s thinking about how that signal is being accessed and distributed here on Earth, because Earth is where the customers are.”
The Lockheed Martin-built Orion spacecraft on its way to the Moon.
(Source: NASA)
Opportunities for Startups: Synthetic Data and AR Integration
The explosion in satellite deployment has created an unexpected solution to one of technology’s most pressing problems: data shortage for AI training. “There’s a firehose of information being beamed down from thousands of satellites,” Anderson explains. “The U.S. government and commercial companies are desperate for ways to analyze this data.”
While most online data consists of incomplete sentences or information inadequate for advancing AI models, satellites and sensors observing Earth generate enormous amounts of high-quality data. “Applying AI to geospatial datasets is probably one of the biggest opportunities we see,” Anderson reveals. “Businesses can leverage this data not just for training AI models, but for generating valuable insights through generative AI technology.”
Another frontier is augmented reality. “Imagine walking past a coffee shop and receiving a personalized offer through your AR glasses,” Anderson explains. “You need centimeter-level accuracy to know whether you’re walking past a Starbucks or a Target. That’s not possible without next-generation satellite systems.” His firm is investing in companies putting up new GPS satellites to help augment the existing system.
“Expertise in high-value manufacturing like semiconductors is directly applicable to manufacturing satellites,” Anderson adds. “But even more important is the ability to scale. A lot of companies are good at building a few satellites. Going from that to manufacturing at scale is not trivial.”
According to the report, the projected growth of the space industry is expected to rise from $630 billion in 2023 to approximately $1.8 trillion by 2035.
(Source: McKinsey)
What’s Next: The Five-Year Horizon
The global race is intensifying. While U.S. companies have captured 50% of the $300 billion in private space investment over the past decade, China isn’t far behind at 25%. Japan is making aggressive moves into emerging sectors, and other nations are scrambling to catch up.
The risks remain substantial. Space ventures often require long time horizons before yielding returns. The industry depends heavily on government policies, which can shift with each administration. Environmental concerns are mounting too—the European Space Agency tracks approximately 9,000 tons of space debris, a number that grows with each launch.
But for those who can navigate these challenges, the opportunities seem limitless. “When you don’t have to optimize everything for size and weight, when failure becomes an acceptable part of the process—that’s when traditional industries will jump in,” Anderson predicts. “Mining, construction, manufacturing—they’re all coming to space.”
Looking toward the future, Anderson’s vision extends beyond the current market. “The question isn’t whether space will become the next trillion-dollar industry—it’s who will capture the value when it does.”
We look forward to hearing your thoughts on this emerging technology and its potential impact, please drop us a line at [email protected].
Considering the potential environmental impact of space mining and manufacturing, what regulations should be prioritized in international agreements governing space resource utilization?
Here are some open-ended questions focusing on the key topics covered in the article, designed to encourage discussion and different viewpoints:
**I. The Musk Effect: Reshaping the Space Landscape**
* Elon Musk’s ambition has dramatically lowered launch costs. While this opens up accessibility to space, does it also create a risk of monopolization or unchecked expansion?
* Do you agree with Anderson that political connections contribute to SpaceX’s success? How does this interplay between technology, politics, and business influence the development of space exploration?
**II. Beyond Rockets: The Data-Driven Economy of Space**
* The article emphasizes the vast potential of satellite data. Beyond AI development and real-time location services, what other unforeseen applications could this data unlock?
* Will the “data gold mine” of space lead to new ethical dilemmas concerning privacy, data ownership, and potential misuse of information?
**III. The Future of Space Enterprise: Challenges and Opportunities**
* Anderson predicts space will attract traditional industries like mining and manufacturing. How realistic is this scenario, and what are the potential environmental and social consequences of such a shift?
* What role should international cooperation play in regulating space exploration, preventing debris accumulation, and ensuring equitable access to space resources?
* The article suggests the question isn’t if space will be a trillion-dollar industry, but who will benefit. Who do YOU believe is best positioned to capture this value: nations, corporations, or individuals?
**IV. Investing in the Future: Risks and Rewards**
* Space ventures often involve long-term investments and high risk. What strategies can investors use to navigate this uncertainty and maximize their chances of success?
* Do you think the focus on financial gain overshadows the broader societal implications of space exploration?
* What ethical considerations should guide future investments in the space sector?
**Remember:**
* These questions are intended as starting points. Encourage participants to share their own perspectives, challenge assumptions, and explore the complexities of this evolving field.
* Promote active listening and respectful dialog to create a constructive and insightful discussion.
