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EARTH OBSERVATION

Aggressors on the horizon, and above it.

Space Force and aggressor satellites. Lockheed says LINUSS is a win. Amazon’s new startup cohort. GPT for overhead. ESA preps human spaceflight. And more.

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Summary

Space Force and aggressor satellites. Lockheed says LINUSS is a win. Amazon’s working with new space startups. Our featured interview today is Chad Anderson, Founder and Managing Partner at Space Capital, on the state of the space economy, venture capital, the unique challenges and opportunities for space businesses.

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T-Minus Guest

Our featured interview is Chad Anderson, Founder and Managing Partner at Space Capital, on the state of the space economy, venture capital, the unique challenges and opportunities for space businesses. Chad just published his book, The Space Economy, available now.

You can follow Chad on LinkedIn and Twitter

Selected Reading

Keeping watch on aggressor satellites a key challenge for U.S. Space Force | SpaceNews 

Dead NASA satellite will crash to Earth this week | Space.com

New European satellite targets space debris detection | Austrian Space Forum

Lockheed Martin declares success demonstrating tech for in-orbit satellite servicing | SpaceNews

Crunchtime ahead for Victus Nox | SpaceNews 

AWS chooses 14 startups for its third space accelerator program | SpaceNews 

ESA working on human spaceflight scenarios for European space summit | SpaceNews

Rocket Lab Introduces Suborbital Testbed Rocket, Selected for Hypersonic Test Flights | Business Wire 

A ‘ChatGPT’ For Satellite Photos Already Exists | Defense One  

Speed and safety are top priorities for regulators | SpaceNews

Artemis II astronaut speaks to skepticism in space spending, workforce challenges | The Gazette 

Courting the Sirens of the Southern Sky - The New York Times 

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>> Maria Varmazis: There's lots of interests on what's happening on low Earth orbit, but we cannot and should not forget that the big satellites hanging out up in geostationary orbit (or GEO) are extremely high-value. The US Space Force says, it's up there in GEO that they're especially concerned about adversaries trying to cause problems with military satellites. Space domain awareness, it's not and never has been just about orbital debris, it's about orbital attacks too.

 

Today is April 18, 2023. I'm Maria Varmazis, and this is T-Minus.

 

Space Force and aggressor satellites. Lockheed says LINUSS is a win. Amazon's working with new space startups. Plus my interview with Chad Anderson, founder and managing partner at Space Capital, on the state of the space economy, venture capital, and the unique challenges and opportunities for space businesses. And lots more today, stay with us.

 

Now, here are the headlines for today. The US Space Force says, "space domain awareness is a critical capability. And funding additional sensors on the ground and in space, especially starting in the 2024 financial year, will help ramp up needed capabilities." In an interview with Space News, Lieutenant General Philip Garrant, deputy chief of Space Operations, Strategy, Plans, Programs, and Requirements for the Space Force, said this: "Space domain awareness is a really critical part of our investment. It's not just tracking and monitoring, but also characterizing what type of spacecraft it is and anticipating its behavior." Now, many commercial, governmental, and military organizations are laser focused on getting lots of new satellites into low Earth orbit (or LEO) because those satellites are much easier and cheaper to get to their orbit. But a lot of the satellite jewels in the military orbit crown, so to speak, are large, expensive satellites out in geostationary orbit (or GEO). And while it's not the exclusive domain of concern, of course, GEO is where the Space Force is especially concerned about being able to keep an eye on what's going on and reduce the element of surprise to know if what the Space Force calls an "adversary satellite" is committing an orbital attack. Now, there are a lot of efforts to ramp up capabilities here both within the Space Force as well as in Space Command. As we've mentioned in the show before, getting the new panglobal radar site network called "DARC" (or "Deep Space Advanced Radar Capability") up and running is a major component in the Space Force's plan to improve visibility into what's going on and where and when it all comes into orbit.

 

And Space Force is also ramping up a capability to launch small surveillance satellites with a lightning fast turnaround. They're calling this superfast satellite launch program "Tactically Responsive Space." And the first mission, expected to launch this May or later, will launch a Millennium Space Systems small satellite on a Firefly Aerospace small launch vehicle. How tactically responsive are we talking here? Not months or weeks, not even days. The timelines are measured in hours here. 60 hours for the satellite and ground system to make it to its Space Force base. And then the launch team needs to be ready to launch within 24 hours of receipt. Once the satellite is on its orbit, commissioning the satellite is the next challenge. And the timeline for that is equally challenging, just 48 hours. Expect to hear about the results of this stress test over the next few months. And the name of the satellite for this breakneck test, by the way, is "Victus Nox." My Latin is a bit rusty and that roughly translates to "conquer the night."

 

Zero surprise after that story that tracking and monitoring space debris is a big concern, especially given how crowded it's getting in LEO. One of the satellites that launched over the weekend on SpaceX's Transporter 7 rideshare is the Adler-2 satellite, which was developed by the Austrian Space Forum in order to enhance debris tracking in LEO and study clouds and aerosols in the atmosphere. Adler-2 joins its predecessor, Adler-1, to augment space debris detection and tracking capabilities and increase debris detection rates overall.

 

In another bit of satellite news -- yep, we have a lot today -- this one from Lockheed Martin about their LINUSS, or Lockheed Martin's "In Space Upgrade Satellite System Experiment." Lockheed is saying their experiment to show the viability of their in-orbit servicing operations was a success. For their LINUSS experiment, two CubeSats were launched to GEO back in November, about three days apart, about 750 kilometers away from each other. The two CubeSats had roles to play up there. One as a servicing vehicle, and another as a space object. Within a month of launch, they maneuvered closer to each other. And Lockheed says they had imagery of both CubeSats within a mere 400 meters apart. Though Karla Brown, who is the program manager for the LINUSS experiment, says, "We know they have gotten even closer."

 

Amazon Web Services has selected 14 companies to join its third annual Space Accelerator program starting in May. The program will run for four weeks and aims to provide technical and business support for startup space companies. The 14 participating organizations could receive up to $100,000 of technical services from Amazon's cloud subsidiary. The space startups selected for the program cover a range of services from software development, aerospace manufacturing, satellite operations, and space robotic systems, and are located across the US and Europe. The program concludes with a demonstration day, which will be held in San Francisco on July 19th. Amazon Web Services says, including this cohort of companies, that 34 startups have participated in the Space Accelerator program in the last three years.

 

And some news from across the pond. The European Space Agency is seeking support for future human space flight initiatives. In an interview with Space News, ESA director general Josef Aschbacher announced a new space summit to be held later this year in Seville, Spain, in order to discuss a new human spaceflight program, as well as a new launch strategy. This new effort comes after delays in the introduction of the Ariane 6 and on the heels of the Vega-C launch failure in December. Aschbacher says he's working on plans for European human spaceflight infrastructure in orbit and on the Moon and is evaluating cost estimates.

 

In December 2022, ESA member states approved 16.9 billion euros, or about $17.8 billion, for the agency. This marked a 17% increase over the previous budget in 2019. And this was at a meeting in Paris where the agency also announced its first astronaut selection round since 2009. Now, the summit in Spain won't immediately provide funding for the human spaceflight program, but it will guide planning ahead of the next ESA Ministerial Council to be held in 2025.

 

And some news dropping at the space symposium in Colorado this week. Rocket Lab has announced a new launch vehicle it says will accelerate the development of hypersonic technology. The new rocket is called "HASTE," or "Hypersonic Accelerator Suborbital Test Electron." We do love an acronym in space, and, just you wait, there's more to come. HASTE uses the same carbon composite structure and 3-D printed Rutherford engine as Rocket Lab's Electron vehicle, but the company says they have modified their third stage for suborbital payload deployment.

 

Rocket Lab claims that the HASTE rocket will move from idea to in the air in 12 months, and it will be operated from the company's launch site at the Mid-Atlantic Regional Spaceport at NASA's Wallops facility in Virginia.

 

Rocket Lab was selected by the Department of Defense to provide hypersonic launch test capabilities under the Multiservice Advanced Capability Test Bed (or MACH-TB project).

 

Separately, Rocket Lab was also selected by the Defense Innovation Unit (or DIU) to prototype hypersonic launch capability on HASTE under the agency's Hypersonic and High-Cadence Testing Capabilities (or HYCAT program), which aims to increase the cadence of hypersonic testing at a decreased cost of traditional flight tests. I told you there'd be a lot of acronyms.

 

AI company Synthetaic has created a tool that will allow users to find any large object that exists in any satellite photo of the Earth within 24 hours. Dubbed as "chat GPT for satellite photos," the satellite imaging tool Rapid Automatic Image Categorization (or RAIC) was developed to track objects around the Earth following the discovery of a Chinese weather balloon over the US.

 

Developer Corey Jaskolski applied RAIC to photos of the Earth's surface collected by a satellite imaging company Planet and was able to trace the balloon's origins to China in just a matter of days. Jaskolski told Defense One that he was able to teach the RAIC AI tool to look for the balloon based on a handmade drawing. His drawing depicting what a balloon might look like in satellite data. And RAIC was able to find it. Then once they found the actual balloon in one of the satellite data sets, RAIC was able to look for that in other images. Now Synthetaic says it has used that experience and applied lessons learned to its new AI tool to reduce tracing time to less than one day. What will an AI tool solve next?

 

So that's it for our stories for today. Coming up next is my interview with Chad Anderson of Space Capital. Be sure to stick around.

 

An educated look to the economic horizons is always welcome. And theories abound about the overall direction of the space economy for the fiscal year 2023, which has already been pretty eventful, and we're just entering Q2. And it's never just as simple as things are boom or bust, bullish or bearish. As with so many things, there are some bright spots for growth and areas expected to contract. So let's walk through that a little bit with someone who knows the space economy very well.

 

Chad Anderson: Hi. My name is Chad Anderson. I'm the founder and managing partner of Space Capital. I've been investing in this category for over a decade. And prior to founding Space Capital, I was at JP Morgan, where I led a $50 billion real estate portfolio till the Great Recession.

 

Maria Varmazis: That's awesome. Thank you so much, Chad, and thank you so much for joining me today. All right, so we've had a very eventful year already. So I'd love to just kind of get your thoughts on the year, where we're at. And especially when we look back maybe the last two years where, you know, there was a lot of excitement. And now things have changed a little bit. What are your thoughts on where we're going in 2023?

 

Chad Anderson: Yeah. Well, I mean, 2022 was a tough year for space stocks, but a big year for innovation. It was really a tale of two halves. We saw the first half was really dominated by the Russian invasion of Ukraine, which was really a showcase of the growing capabilities of commercial space companies. We saw satellite communications in Starlink keeping the Ukrainians connected. And we also saw Earth imaging companies giving us a sense of truth to what was actually happening on the ground there and combating Russian misinformation and propaganda.

 

Chad Anderson: And so that has been really showcasing sort of how space-based technologies are generating insights and information that are essential to government but also enterprise customers who, you know, importantly are willing to pay.

 

Chad Anderson: The NRO -- so in Q2 of last year when the market was sort of at its steepest decline, the National Reconnaissance Office purchased their largest ever -- made their largest ever purchase order for satellite imagery. And so we're seeing record revenues actually in this market decline through, you know, in Earth imaging companies across our portfolio and those that are leveraging that data to provide insights and information for enterprises and governments.

 

Chad Anderson: And so it's really, you know, from our perspective, the market is in -- from a macro perspective, the market is in a tough position. But some segments of the space economy are countercyclical and doing quite well in this market. And actually, in our experience, the more dynamic and uncertain the world becomes, the more of the insights and information that enterprises and governments want.

 

Maria Varmazis: Yeah. It's interesting you mentioned the countercyclical nature. In some of my conversations with -- I guess it does depend a little bit of what you're doing in the space industry. But access to capital comes up a lot. People mentioning challenges there. I mean, that's always going to be a challenge, but it seems like especially now, that seems to be a huge pain point for people. Do we expect anything to change significantly there, or is it just sort of white-knuckle time for folks right now?

 

Chad Anderson: Sure, and, I mean, it sort of depends on where you're focused, right? That space economy is quite broad. We have -- you know, to sort of try and get our arms around it, we published the "GPS Playbook," which looks at how GPS went from being a government-backed military capability to now being ubiquitous in our everyday lives, right? And you look at, you know, and the framework that we came together in that report are really helpful for understanding, you know, how big this opportunity set is.

 

Chad Anderson: In GPS, you've got the satellites that are built by Lockheed. And that signal was very valuable but restricted to government and military users until GPS receivers built by Trimble, Magellan, and others, Garmin and others, harnessed that signal and made it accessible to the tech community, who then built location-based services on the back of that. GPS has generated trillions of dollars in economic value and some the largest venture outcomes we've ever seen. So a lot of that value is actually captured in the applications portion of that, which is what we've kind of been talking about so far in this conversation.

 

Chad Anderson: If you just focus on the infrastructure -- which, you know, in this category, there's more interest, there's a lot more media coverage, there's lot more, you know, banks covering this category -- most people look at it through a very narrow lens where they're only focused on the infrastructure. That is very risky business, high CapEx, long timelines to any revenue. And so if you only focus on infrastructure, then not only is the opportunity set very, very limited, but you're focusing on the most difficult, highest risk things and letting others sort of run, you know, and generate all the value.

 

Chad Anderson: So if you're focused on infrastructure alone, then, yes, you're going to be in a tough spot. We've said this several times that, in a market environment like this, where capital is no longer cheap, capital is expensive, you're going to have a hard time raising if you need a lot of capital before you see any revenue. So these infrastructure companies certainly are in a white-knuckle situation.

 

Maria Varmazis: Understood. So speaking of looking in other areas, what opportunities do you see there? What are you interested in and excited about?

 

Chad Anderson: Well, so this year, we're particularly interested in the geospatial intelligence stacks. So these are the Earth imaging satellites. But it's not just Earth imaging. There is many other sensor types, whether it be stratospheric balloons or drones or ground sensors, that are making up this really valuable geospatial data set. We have all these new small satellites that are going up and generating an unprecedented amount of new data. Which we've now started to bring down through Amazon Ground Services and other ground networks, and we've now brought it all onto the cloud. Which is allowing us to structure it and do really interesting things with it. So just like GPS, where we are now, you know, we've unlocked access to this really valuable data set, we're now starting to see applications being built on top of it.

 

Chad Anderson: And so we're really excited about what's coming down the pipe. We've got a couple of companies in our portfolio that our application is built on this data set. And they are doing incredibly well raising additional rounds of capital in this market environment in 2022 and 2023 at much larger valuations, because it's underpinned by the revenue that they're generating. Again, the countercyclical nature of what's happening here. So we've kind of just unlocked this data in the last, you know, year or two. So now we're basically witnessing the birth of location-based services but in geospatial intelligence. And we think, you know, that this has the potential to be even larger than the $36 billion location-based services market.

 

Maria Varmazis: Any unique challenges that you foresee maybe not just this year but just in general for the space market?

 

Chad Anderson: Well, we break down the space economy into a few different industries. But primarily, there is launch, which makes up about 9% of the overall activity here, whether, you know, you're measuring it by valuation or revenue or investment dollars. And then you've got what we call "emerging industries," which are the space stations and in the in-space manufacturing and these new areas that really get a lot of the lion's share of media coverage, but really only make about a percent of what's happening in the overall space economy. And 90% of what's happening is happening in satellites, like we've been talking about so far.

 

Chad Anderson: But in the emerging industries space, there has been over a quarter of a trillion dollars invested into space companies over the last 10 years. Three billion of that has gone to these emerging industries. So not very much. But even more interestingly, half of that, half of all the investment, has gone into these industries in the last 10 years happened in 2021 at the height of market mania. And it was, you know, these investments were made by a lot of investors who these were their first foray into the space economy, making their first investments, in some of the riskiest, most capital-intensive type companies, right? And those are the companies that are going to have a difficult time in this market environment.

 

Chad Anderson: And so, you know, you combine that with what are they going to do this year when they need to go out and raise capital again. And you combine that with some of the stuff that was happening in the public markets where some space companies that were not even just prerevenue but preproduct went public probably, you know, a few years too early, you know, there's a bit of distraction here, a bit of, you know, headwinds coming that the markets -- you know, for investors who aren't following this category as closely, you know, there's going to be a bit of carnage coming. Which is natural, and you'd expect to see it in a new category like this. But, you know, we do foresee that coming. And what we're trying to do is basically get the message out that it's not -- that the space economy is quite large, and some segments of it are countercyclical. But you need to understand the nuances of this market in order to be able to navigate that and choose wisely.

 

Chad Anderson: Look, I mean, amid these challenging economic times, there's one thing that remains certain is that space-based technologies are playing an increasingly vital role in our global economy. It's the invisible backbone. These technologies are the invisible backbone that powers our global economy. And identifying those areas in which the information, the insights, and the technologies in demand is going to go a long way. You know, and that's on the founder side. And on the investor side, you know, you can't be a tourist investor in this category. There's too much happening too quickly. You know, what sets us apart as a firm is that we have built rockets, satellites, and operating systems. We founded companies with assets that are currently in orbit. And we've been pioneering investment in this category for 10 years. And now, we've literally written the book on the subject with "The Space Economy" that's published by Wiley and is going to be coming out next month. So, you know, if you want to dive deeper into that, you can do that there.

 

Maria Varmazis: I really appreciate it, Chad, thank you. And I'll be taking a look at your book when it comes out as well. I'm really excited to read it. So I appreciate your time today.

 

Chad Anderson: Thanks, Maria.

 

Maria Varmazis: I appreciate it, thank you. Chad Anderson's book "The Space Economy: Capitalize on the Greatest Business Opportunity of Our Lifetime" is available now.

 

Maria Varmazis: We'll be right back.

 

Maria Varmazis: Welcome back. A 600-pound dead NASA satellite is going to reenter Earth's atmosphere tomorrow, Wednesday, April 19th, around 9:30 PM Eastern, give or take 16 hours. This is not normally news in our line of work because it should just burn up as it blazes through the atmosphere, right? Well, NASA is telling us that, "Some components are expected to survive reentry." And that's why we're telling you about it. No need to panic, of course. As satellites go, 270 kilos, or 600 pounds, is not a big deal. And most of it should burn up, most of it, anyway. Though I don't want any of it landing on me. The retired "RHESSI" (or "Reuven Ramaty High Energy Solar Spectroscopic Imager") sat in LEO and studied the Sun with its onboard imaging spectrometer, which recorded both x-rays and gamma rays from the Sun, specifically its solar flares, from 2002 to 2018. And NASA says the chance of its reentry hurting anyone is only one in 2,467. I'll take those odds.

 

Maria Varmazis: And that's it for T-Minus for April 18, 2023. T-Minus is a production of N2K Networks, your source for strategic workforce intelligence. For additional links and resources from today's report, check out our show notes at space.n2k.com. Elliott Peltzman composed our theme song. Mixing is by Elliott Peltzman and Tre Hester. Alice Carruth is our executive producer. Our executive producer is Brandon Karpf. And I'm Maria Varmazis. See you tomorrow.

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