Is space a viable industry for UK businesses to pursue?

Space – a fantasy for many children and cause for existentialism for many adults. But it is also now an opportunity for exploration and advancement.  

The UK space industry income grew 5.1% to £17.5bn in 2021, according to research. A seemingly niche industry is getting bigger and spacetech looks an increasingly exciting and accessible sector for entrepreneurs and businesses.  

“Contact light” 

Communication is at the forefront of the spacetech sector. This includes launching new ways to communicate with people, faster broadband, and connecting the remotest parts of the world to the internet.

Craig Brown, director of investment for the UK Space Agency, says there has been a shift in spacetech to more consumer-led products. “There has been a shift in the way in which space business has been done and a shift in the customer base, it’s potentially going to become more consumer-led, as more and more people have access to space capabilities at home,” he said.

We can see this with SpaceX’s successful launch of Starlink, the satellite internet constellation providing internet to over 60 countries. Whilst not affordable for most of the general public, Starlink hardware can start from £449 with an added standard cost of £75 per month for data subscription.

According to the Space Index by Seraphim Space, a spacetech investment company, only the US and China have more space-focused businesses winning investment than the UK. 

“A lot of the projections around the growth of the sector are largely derived from the fact that people on Earth really want to be able to communicate wherever they may be, whenever,” said Brown. “And to do that, you need to have satellite services allowing you to do that, what we call ubiquitous communications.” 

“Houston, we’ve had a problem here”  

However, investment in the UK space sector has had mixed results. Virgin Orbit recently ceased its operations after a failed mission caused investors to lose confidence. An anomaly meant the rocket launched from Cornwall couldn’t reach the desired altitude. However, Virgin Orbit’s real problem then stemmed from needing to raise funds after the launch, with investors uncertain about putting more money in.

The challenges for Virgin Orbit highlight that spacetech is a slow-moving industry riddled with uncertainty where investors need to be patient. 

Kenn Herskind, director of communication and spacetech services for Goonhilly Earth Station said setbacks are common. “We’ve seen quite a lot of billionaires invest into space, because banks wouldn’t do it,” he said. “And private equity wouldn’t do it because they typically had a shorter time horizon. It’s a long investment cycle, along with a very high degree of capital expenditure.” 

“The stars don’t look bigger, but they do look brighter”   

The space industry has previously relied on government funding but the recent rise in private investment has paved the way for new innovations, such as Starlink’s private internet and potential benefits for consumers. 

Nasa’s space shuttle cost around $1.5bn to launch into Low Earth Orbit (LEO), which is about $54,000 per kg, according to research. In comparison, it costs SpaceX’s Falcon 9 $67m to launch 22,000kg to LEO. That is approximately $3,045 per kg, according to the company. 

Andrew Greenhalgh, head of marketing for Surrey Satellite Technology Limited, said the innovation driven by private investment is decreasing the reliance on government funding, especially in the UK.  

“The attractiveness of the UK space sector has been increased in recent years by the matched funding programmes offered by the UK government,” he said. “Private investors need to see that opportunities are supported by HMG on an ongoing basis.” 

Simplifying standardised technology is key to prioritising innovative technologies. 

Herskind believes we’ll look for more standardised operations to make financing easier, following the reduction of launch costs. He said: “We’ll see more standardised manufacturing, which makes financing easier, and it makes satellites cheaper.” 

The search for standardised operations and the reduction of launch costs make way for new technologies that aren’t being sold yet. 

“There’s a lot of very big problems in the world that can be solved by using space technology,” Herskind added. “And we’re currently not being sold it because it’s been too expensive or too inaccessible. I think it’ll get cheaper and more accessible.”