How Spacetech Startups Solved the Monetization Puzzle Capital infusion into the segment has increased, making it easy for startups to expand the scope of profitability
By S Shanthi •
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Monetization was the biggest challenge for India's spacetech startups till a few years ago. But today, investors are showing keen interest in the startups and are infusing capital, which eventually results in product and service expansion for the startups.
Last month, spacetech startup Skyroot Aerospace raised $27.5 million in a fresh round of funding led by Singapore's state investment firm Temasek Holdings. The overall funding raised by the startup is $95 million, which is the highest-ever amount raised by an Indian spacetech startup. In June this year, Google led a $36 million round of funding in Bengaluru-based spacetech startup Pixxel. This was the tech giant's first investment in India's spacetech sector.
"Predominantly, any consumable product development period is pretty long in spacetech, because of which early-stage product proof of concepts and prototype offerings with customers take longer than anticipated. Hence, monetization becomes challenging during the first few years of a startup's journey. Having said that, the speed of execution has been increasing rapidly in recent years. With the modularisation approach of this industry, where multiple startups are trying to solve one part of the large problem is a great way to move forward," said Suyash Singh, co-founder and CEO, GalaxEye Space. He also said that at his speed of building products and iterating is relatively faster, and in just two years of business he claims to be knocking doors of customers to serve and hence monetize.
India has made significant milestones in the recent past. This includes the successful Mars Orbiter Mission (Mangalyaan- 1), the Chandrayaan-3 expedition to explore the dark side of the Moon that gathered world attention and the latest Aditya-L1 solar observation project. "Historically, space exploration required immense funding, making it an exclusive arena for government entities. However, the landscape is changing. Governments worldwide are increasingly opening up their facilities and knowledge base, catalyzing the growth of spacetech startups. This democratization of space has given rise to companies like SpaceX, Virgin Galactic, and, closer to home, Skyroot and Agnikul. These entities simplify space access, much like the first transatlantic flights that revolutionized air travel," said Anirudh A Damani, managing partner, Artha Venture Fund
According to experts, what stands out in establishing India as a leader in the global space economy is the increased involvement of private enterprises.
"This has given rise to 150+ spacetech startups in India. What really do the startups have in store to contribute to a $77 Bn+ Indian spacetech market? The rise of spacetech startups (with funding more than $285mn+ in the last 7 years) has brought in fresh perspectives, tech innovation and a competitive edge, be it deep space observation and exploration, launching objects to different orbital levels or remote sensing and satellite data analytics for a wide range of industry segments," said said Ivy Chin, Partner, Inflection Point Ventures.
According to Tracxn released in August this year, India's spacetech sector had received $62 million funding in 2023 till then, registering a 60% increase, compared to the same period last year.
Chin also explained how the spacetech landscape is categorized into upstream (launch vehicles, satellite infra & solutions, in-space solutions) and downstream (earth observation, communications) verticals and space technology has traditionally been a domain of governments and not private players. "Existing laws and regulations are dated and were formed with the participation of the few countries that had created space technology. In today's environment of new countries joining the space race, laws have started to evolve faster and will now have newer considerations like ESG as an additional criterion for e.g., addressing issues of space debris. With this background, while an exciting space, private investors are yet getting used to the very different criteria for evaluating spacetech and will require more patience and higher risk appetite," she added.
Ecosystem builds out of testing facilities, deeper public-private partnerships, security concerns will impact the evaluation of this industry but are yet developing themselves. Monetization for these startups has thus been a longer wait, believe experts. "However, with evolving technologies and the need to stay ahead, openness to new technologies from existing industries is now picking up pace. Solutions via Space tech are being driven by the above as well as various governments' enabling private players participation in the segment," said Chin.
"The future seems luminous. Private missions are eyeing the international space station, and there's a burgeoning interest in deep space exploration, including commercial ventures to the Moon and Mars colonization. The current SpaceTech economy is valued at $460 billion and is projected to grow to over $1 trillion by 2030. Yet, I believe we are grossly underestimating its potential; it could be far bigger," said Damani.
