Space is a frontier that's fast becoming accessible to everyone. (Image via Timez5)

The space economy is poised for explosive growth in the next 10 years and it’ll be space agencies working with the private sector pushing this forward.

From private spaceflight, to new life -saving and age-extending medical technologies such as CanadaArm, or logistical solutions such as GPS for Google Earth and ride sharing apps like Uber, space technologies are creating a whole new economy - the space economy - made up of commercial activities that take place outside the Earth’s atmosphere.

In 2014 the global space economy grew by 9 percent to hit $330 billion, according to the US Space Foundation’s Space Report 2015. It was made up of “launch and ground services, satellite manufacturing, satellite television and communications, government exploration, military spending, and other interests”. 

MENA space agencies accounted for less than 1 percent of non-US space investments in 2014, but in the past five years have taken on more ambitious space initiatives. Most notable is the UAE space agency and Mohammed Bin Rashid Space Centre that want to reach Mars by 2020.

The make up of the global space economy in 2014, in US$ billions (Image via US Space Foundation, 'The Space Report 2015)

Private sector impact

The commercial space economy grew by 9.7 percent in 2014, most of which came from the $128 billion commercial infrastructure and support industries sector, where revenues shot up by 18 percent.

“Industries such as launch, ground stations and equipment, and satellite manufacturing were some of the mainstays,” the report said. “The number of launches conducted in 2014 increased significantly, rising to levels not seen in more than a decade.”

There’s room for companies to leverage space for new industries, because as sexy as human spaceflight is, there are many more ways in which space can enhance human life back here on earth, such as agriculture or climate.

One indication of how valuable space tech can be is in the technologies NASA has commercialized over the last four decades. Systems such as GPS, which are now relied on by the Ubers and Lyfts of the world, and a ‘smart probe’ for accurately detecting breast cancer, all started in NASA’s labs.

The market for space technology is growing in value, (Data in US$ billions, image via US Space Foundation, 'The Space Report 2015)

Government involvement

Yet while SpaceX and Virgin Galactic are making headlines today with their rocket launches, government funding will still be the foundation of the space economy for some time to come.

The main state investors in space tech are Brazil, Canada, European Space Agency, France, Germany, India, Italy, Japan, Russia, South Korea, Spain and the UK, but the US still constitutes over half of all global state investments in the space economy.

Government investment in space technologies serves three primary purposes: to develop core infrastructure such as launch pads; fund the pure science likely to provide the building blocks for future commercial technologies, which private companies or institutions don’t have the capacity or inclination for; and provide financial support such as the Commercial Crew Program (CCP) for commercial companies and NASA’s Space Launch System (SLS) to explore the Moon, asteroids, and Mars.

Today the majority of rocket launches are made by the US military. In 2014, of the 92 launches in the US, 69 were made by government and military entities, according to sensitive data I’ve seen. Around 20 percent of launches are conducted by private companies.  

Revenues from space infrastructure, in US$ billions. (Image via US Space Foundation, 'The Space Report 2015)

Barriers to the space economy

At the Space Technology & Investment Forum last September in San Francisco, I identified some important barriers that need to be overcome for the very young space economy to thrive.

Firstly, there is a misalignment between key stakeholders working in the space technology sector, due as much to the fact that this is still a very young industry as to the diversity of players in it. Where NASA might spend $50 million on R&D over five years, a VC will naturally have a different time horizon and budget.

Secondly, for new ideas to thrive space agencies must let private companies use their facilities. Currently, agencies hold all the cards when it come to space access; they, not the corporations striving to commercialize space - are the ones that own the launch infrastructure.

And thirdly, funding crunches mean many startups turn to crowdfunding for their early products which can be problematic if they give away their intellectual property. This means governments need to get involved early to fund basic research that would be otherwise too expensive and time consuming for startups to do, and for VCs to fund.  

The future of commercial space

The democratization of the space economy is the root of future disruption. This means allowing more researchers, entrepreneurs, and industry experts to collaborate in more effective ways.  

Giving free access to raw data allows researchers and experts around the world to work on space-related problems, such as the cost of getting there.

And last but not least is cutting the cost of getting to space.

Aside from the issue of non-reusable rockets, which still make up the main expense of getting a thing from the Earth to space (the cheapest rate today to get something into orbit is around $2,000 per pound), we can also do this by innovating elsewhere.

We can creating products or technologies that have a mass application (and therefore more people use them thus bringing the cost down); by spreading costs around research or development across different entities, such as between government organisations, companies and private institutions; and by finding new revenue streams for current technologies.

The space economy is one of the most exciting sectors that entrepreneurs can get into today. The possibilities posed by both private and public sector R&D are vast and, in spite of the usual difficulties faced by a very young industry, there are ways to make this sector accessible to startups and to create benefits on a mass scale.