Indian Spacetech Startups Shoot for the Skies

In November 2022 alone, startups such as Agnikul and Pixxel have had significant successes, prompting spectators to wonder what more it will take to facilitate a true space revolution in the country

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From just a single startup in 2012 to over a 100 in 2022, the Indian spacetech startup ecosystem has grown by leaps and bounds over the last decade. In November 2022 alone, startups such as Agnikul and Pixxel have had significant successes, prompting spectators to wonder what more it will take to facilitate a true space revolution in the country.

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Hyderbad-based Skyroot Aerospace's launch of Vikram-S Rocket, the country's first private rocket, and Bengaluru-headquartered Pixxel's launch of their hyperspectral satellite, Anand, both from the Sriharikota Launch Complex in Andhra Pradesh drew widespread appreciation by space enthusiasts. Among other key achievements, Chennai-based Agnikul Cosmos unveiled India's maiden launchpad designed and operated by a private player at the Satish Dhawan Space Centre (SDSC) in Andhra Pradesh.

Agnikul has also successfully tested Agnilet—the world's first single-piece 3D-printed rocket engine designed and manufactured in India—at the Vikram Sarabhai Space Center in Kerala. Naturally, it has attracted many an interested investor, including early-stage micro VC fund Java Capital.

"From the start, Agnikul's stellar founders were passionate about the sector and had a long-term commitment to space, especially when the space sector was getting privatised globally and India was not far away from opening it up," said Vinod Kumar Shankar, co-founder and partner, Java Capital. "Agnikul also targets a segment (100-200 kilo payload) which was ripe for picking at the time of making the investment, unlike SpaceX and ISRO launch vehicles available for higher tonnage payloads. Imagine Agnikul as an Uber for satellites versus the legacy players as long distance trains/bus to carry satellites," he added.

The Helping Hand of Policy Support

These spacetech startups' recent feats have resulted, in part, from the support of the Indian Space Research Organisation (ISRO), the national space agency, as well as IN-SPACe, the single window nodal agency for promoting and regulating space-tech players.

"A historic moment for India as the rocket Vikram-S, developed by Skyroot Aerospace, took off from Sriharikota today! It is an important milestone in the journey of India's private space industry. Congrats to @isro and @INSPACeIND for enabling this feat," tweeted Prime Minister Narendra Modi late last month.

"This accomplishment bears testimony to the immense talent of our youth, who took full advantage of the landmark space sector reforms of June 2020," he further said.

A string of recent government initiatives have aimed at deregulating the private space sector: In June 2020, the Union government opened space exploration to private players through the Indian National Space Promotion and Authorisation Centre (IN-SPACe), which serves as an autonomous agency in the Department of Space (DoS). IN-SPACe incubates technology in private firms, known as Non-Government Private Entities (NGPEs), which were prominently featured in ISRO's Space Communication Policy draft issued in October 2020. At present, a new Space Activities Bill and a space policy are being drafted by NALSAR Centre for Aerospace and Defence laws to regulate space manufacturing and the legal aspects of the industry in India.

What Does the Future Hold?

The space economy in India is set to grow to $13 billion by 2025 at a CAGR of 6 per cent, according to a recent ISpA-EY report. By the said year, the satellite manufacturing segment is further expected to be the second fastest growing in the Indian space economy. "Setting-up space parks across the country is likely to give a fillip to companies operating across the space value chain, especially manufacturing. It will be key to attracting global startups working in the space sector and help to incubate spacetech companies in India," states the report.

Funding, however, continues to be a roadblock in spacetech startups' progress. "There is a bit of an educational phase when space tech startups approach investors. Since this is a new area, the startups will have to explain what the sector is and where the true values add is. This usually adds to the lead time of fundraise," explained Srinath Ravichandran, co-founder and CEO, Agnikul.

Monetisation for space tech startups is not easy. But it is not an insurmountable challenge either, according to Shankar. "In the past, commercial space has been dominated by the companies in the west, especially for private sector launches. Demand for satellite launches is way higher than available capacity globally, which provides an opportunity in the rocket launch segment for companies like Agnikul and Skyroot. In the satellite space, both hardware and data present monetisation opportunities, today satellites are not just used by government agencies," he said.

"Hedge funds using satellites monitor the utilisation of parking lots of Walmart, and predict their quarterly sales and execute their trading strategies accordingly. Satellite data has found more democratised usage than ever before in agriculture, in predicting crop cycles, monitoring for pests, etc., by the likes ITC, bigBasket etc. Overall monetisation opportunities for both rockets and satellites are large and feasible," added Shankar.

In the recent past, pre-seed- and seed-focused funds in deeptech have been able to fulfil the need for spacetech funding at the earliest stages to a considerable length. But we still see a paucity of capital in the growth stage (Series B/C) for companies in the space sector. Now is perhaps the time for some of the large funds in the country to start playing much more actively in the sector, which will also help the government avoid dependence on foreign capital alone.