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Space investors should separate hype from reality argues strategic adviser

Nicholas Earl, 11/05/2021

Investors should be wary of fanciful forecasting when it comes to space investing, suggests Micah Walter-Range, partner and president of strategic consulting firm Caelus Partners.

Commenting on the surge of investor interest in space over the past few months, and the industry reaching the $400 billion milestone last summer, Mr Walter-Range argued that while there were exciting opportunities within the sector, people had to ignore exaggerated estimations of growth and act cautiously.

He believes that previous predictions from investment firms of a potential trillion-dollar industry remain reasonable. However, he is sceptical of outlier claims popularised by enthusiasts within the sector of a $2.7 trillion value by the year 2045.

He contrasted Morgan Stanley’s trillion dollar estimations, which were based on what he perceived as credible expectations for the growth within telecommunications, with a workshop hosted by rocket manufacturer United Launch Alliance and referenced by Bank of America which he felt made unrealistic claims about the number of people working within the sector over the coming decades. In his view, the idea of thousands working in the sector was wishful thinking.

Mr Walter-Range explained: “I do still see tremendous value and tremendous opportunity in space. I just think it's incredibly important to separate out the hype from the reality as it is in any industry.”

Alongside this grounded take on the ascending sector, Mr Walter-Range also felt that investors had to think more broadly when it comes to defining space investing.

It was not simply about rockets or interstellar travel. These aspects of the space industry are predominantly funded by government research and development, and evolve at a very gradual, measured pace. Overall, he estimated that only $30 billion out of the $190 billion in private investment over the past decade, flowed into what would be defined as space investing under these terms. 

Instead, space investing has included developing navigational technology, and digital photography of the planet, which have benefitted private companies such as Uber. These are not romanticised parts of the space economy, but were sources of significant innovation and opportunity, alongside practical benefits.

Outlining the situation for investors, he said: “Ultimately, I think we're going to this point where it's not so much about building a satellite or building a rocket. It's about creating this view of the Earth and creating this digital twin. With all of the information, the satellite imagery, the other forms of Earth observation flowing down from space, we could receive real time insight about the planet. We could tie that up with all of the navigation and location-based elements so that we can take that information and then make real time use of it. We could say, ‘There's a fire coming, I'm going to move here’.”

As a consequence, he believed the questions investors needed to ask were about economic growth and expansion, and the possibilities this provided for innovation.

He concluded: “The question, I would just leave you with is: what does it look like when that economic zone of influence expands again to encompass the moon? What does it look like when it expands again to encompass Mars or asteroids or other parts of the solar system? Think about the value creation that will go along with that and the way that it's going to affect our daily lives.”

Micah Walter-Range was speaking at a webinar hosted by HANetf, titled Investing in space: the final frontier market, alongside Elia Montanari and Gonzalo de Mercado from the European Space Agency.

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