Charting a course in a new market is challenging. Understanding the prevailing dynamics can help. While the New Space economy is certainly a place of rapid change, there are features that — if understood — can help investors and companies maximize prospects for success. An important insight is that the New Space economy has evolved in a series of successive waves that differ in important respects, including the way private capital is deployed, the locus of market activity, and key success factors. Viewed in this light, the market has rapidly progressed through two waves and is now entering into a third. Succeeding in this new phase of the market requires understanding how it has developed and where it is now heading.
The First Wave of the New Space economy was perhaps most importantly about proving that private capital and entrepreneurial business efforts could succeed in this market that had formerly been the exclusive domain of governments, and in the course, dramatically reducing the cost of launch. Several private launch companies were founded in the first decade of the century, but the real impact was driven by SpaceX. In 2008 Falcon 1 became the first private liquid-fueled rocket to reach orbit. Many factors contributed to SpaceX’s success, with the core being the relentless elimination of cost, first through engineering and production, and then through reuse. A new era opened in 2010 with Falcon 9 slashing the cost per kilogram to LEO by one-half compared to Long March and two-thirds or more to Atlas and Delta.
This success unleashed the Second Wave, primarily characterized by the enthusiastic expansion of private capital and entrepreneurial effort across the space economy. By 2013 two dramatic inflection points were reached: The number of commercial launches exceeded those for government customers, and launches to LEO exceeded those to GEO. Again, SpaceX played a leading role with the Starlink constellation. But this time, the…
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