Space Tech Gains Ground in Spending, Funding, Feasibility

The space race of the 1950s and ’60s was a contest between governments, but in 2022 things are different. There is a new space race unfolding, playing out this time in the private sector. It has affected most folks primarily by populating social media feeds with flashy headlines about billionaire CEOs, Jeff Bezos flying on a rocket or Elon Musk proposing the creation of a city called Starbase, Texas. 

This new space race, however, also stands to have major implications for the wider world.

Experts in the field say that state governments, local governments and eventually even everyday people will come to rely more on new and emerging space-based technologies. While mayors and governors and most average folks aren’t likely to be seated beside the billionaire set on rockets to the stars any time soon, technological advances in space are likely to have a greater effect on our lives in other ways.

Perhaps the most direct means by which this will happen is through the advancements being made in satellite technologies. To put it simply, satellites have shrunk, both in terms of their physical size — once the size of school buses, some are now as small as a loaf of bread — and in terms of the costs associated with launching, operating and benefiting from them. As such, all things satellite have increased, from money companies are investing in them to the number orbiting the Earth at a given time.

Consider the Start-Up Space Report 2022 from BryceTech, an analytics and engineering consultancy firm that works in both the government and commercial space arenas. That report shows a massive spike in space company investments between 2012 and 2021, rising steadily both in terms of the amount of money and the number of new companies. 

In 2020, for example, space investments set a record with $7.7 billion in financing, BryceTech reports. Then in 2021, investments shattered that level by reaching roughly double, with $15.4 billion. All of this marks a major increase over the less than

$2 billion being spent annually as recently as 2012. Since 2000, cumulative space startup investment is now at $52 billion, with almost 70 percent of it happening in the past five years. And while the majority of this money in 2021 was from venture capitalists — $9 billion, to be exact — funds also came from private equity, grants, public offerings and acquisitions. All told, 10 space startups went public in 2021, while 241 total space startup deals were struck.

To explore what this empirical spike in support for space technology means for state and local government, as well as the vendors in their space, Government Technology spoke with academics in the field, as well as experts at BryceTech, and leaders in the private sector that are betting heavily on the market. 

Steve Kitay is the senior director of Azure Space for Microsoft, one of several industry-leading tech companies that while not traditionally involved with space are now investing heavily in their technologies being a significant part of the world’s future. Kitay has worked for the company for about a year and a half, after a career spent largely within the federal government, where he also worked on space. Right before coming to Microsoft, Kitay was the U.S. Department of Defense’s deputy assistant secretary of defense for space policy.

Kitay’s move from the federal government to the private sector is perhaps telling, emblematic of the larger shift that has happened with the development of space technology in general. It’s a notion that pops up in most conversations around this topic — private-sector investments are now largely leading the way in space.

 “Huge changes [are] going on in the space sector,” Kitay said, “really kind of a transformational moment that we’re at for a variety of reasons.”

Essentially, technology has changed, investments have gone up and the costs for being in the market have gone down, fueling the first two factors. What this means for Microsoft Azure specifically, Kitay said, is that it is “bringing space technologies and cloud computing together with a partner ecosystem.”

Microsoft is not building or launching satellites, which is also the case for the vast majority of companies in this growing field. Instead, they are partnering with space-specific companies that already do that, like SpaceX, Airbus and others. What Microsoft offers is called ground-station-as-a-service. 

And it means the company is partnering with those satellite-launching firms on ground infrastructure that supports satellite Internet that can be used for connectivity, as well as data analytics around Earth observation technologies. Microsoft’s involvement in space comes down to data — moving data, understanding data, driving insights and, ultimately, getting those insights to customers, some of whom are public-sector entities at the state and local levels.

One common use case for space technology in this way has to do with wildfires. During a wildfire, satellite Internet can be used for communications when Earth-based infrastructure like cell towers goes down. In addition, imaging from space can help identify a fire’s status and scope, and whether conditions are right for a new fire to begin.

Indeed, those kinds of geospatial insights are one of the growing uses for space technology. With more money leading to more satellites being launched, space imagery is going over sections of the Earth far more frequently than it once did, creating new and better data. Companies like Microsoft, Amazon Web Services and Google are all working to offer cloud-based analytics products that handle this data.

Making sure these products are truly helpful requires use of other emerging technologies, specifically artificial intelligence and machine learning.

“There are huge applications for artificial intelligence and machine learning to be used with space-born data because it’s such a large amount of data and large areas that are often being covered,” Kitay said. “What’s really helpful and important is when you’re talking about these use cases of monitoring the globe and monitoring the Earth, it can be very large areas … being able to take this data — geospatial information of the globe — and automatically run it through artificial intelligence algorithms and processing.”

Within Microsoft Azure, Kitay notes, is a product called Custom Vision. It allows users to look at imagery, identify conditions they’re looking for and train a model to make the same identifications in the future, eliminating the need to manually sort through tons of geospatial data. 

Use cases for geospatial imaging aren’t just limited to wildfires, and they also aren’t entirely theoretical or solely possibilities to be realized in the future. There are state and local governments actually using this sort of space imaging right now, like Humboldt County, Calif.

Humboldt County partnered with Planet, a spatial imaging company that boasts on its website that it “has 1,700 images of every place on Earth.” Humbolt County, a relatively remote area on the Pacific Coast west of Redding, Calif., used Planet’s imaging to find cannabis cultivation areas that were operating without a permit. 

Richard Leshner, vice president of consulting for BryceTech, was previously the executive vice president of operations for Planet, and he said examples like the work in Humboldt County have been possible for some time. They weren’t done at the county — or state or local — level, because the resources for that imaging were mostly dedicated to federal government work. For counties, the cost of such imagery was often just too high.

“In the past several years, you’ve seen the market add more players with a couple of different approaches to collecting imagery and adding new price points for that imagery,” Leshner said. “It enabled the demand to actually meet supply.”

No new technology was invented that enabled that use case for Humboldt County. Instead, what made it possible was the creation of new business models. 

Lower prices and increased accessibility, of course, enable innovation, and that could mean the continued evolution of common use cases. Within this, one of the biggest would be for agriculture, with farms using satellite imagery to better monitor fields and crop health in ways that inform their decision-making. The list goes on from there. State governments could use it to pinpoint the sources of methane emissions. If things get granular enough, local governments could potentially use satellite imagery in combination with artificial intelligence to more effectively pinpoint construction happening without a permit, or structures that have fallen into disrepair. It could even be used to inform decision-making around traffic and parking. It’s all dependent on whether companies can make the analytics between the collection of the imagery and the end user work.

“There is this intermediary step between a company like Planet collecting all this data and a big Fortune 500 company using it,” Leshner said, “and that is a lot of analytics work in the middle. For lack of a better way of putting it, it’s a lot of smart computers trying to make sense out of the imagery.”


The other major crossover between what’s happening with private-sector space investments and government at the state or local level has to do with Internet connectivity, specifically satellite Internet. Satellite Internet is exactly what it sounds like, and in addition to being a viable means of communication during emergencies, it also has the potential to help connect residents of remote areas of the United States without needing costly infrastructure build-outs. 

Scott Pace is the director of the Space Policy Institute and professor of the practice of international affairs at the George Washington University’s Elliott School of International Affairs, and he said satellite Internet is having a growth moment as well, with major players powering it like SpaceX’s Starlink, which currently uses low Earth orbit (LEO) satellites to provide high-speed Internet in 32 countries.

“Governments need communications,” Pace said. “They don’t need LEO communications; LEO just happens to be another way of solving it. The government is not going to make or break [satellite Internet]. The commercial market will determine their outcome.”

Carissa Christensen, CEO of BryceTech, noted that the Federal Communications Commission’s decision to award some funds to support Starlink speaks to a government vision for it to help connect remote areas. The relationship between satellite Internet and terrestrial high-speed Internet providers, ultimately, may end up mirroring that of the dynamic between cable TV companies and satellite television. 

Satellite Internet will offer better speeds and fill gaps where infrastructure can’t reach. It could also create competition in some areas, capturing new customers who don’t want to deal with other Internet providers.

“If SpaceX and Starlink can become beloved,” Christensen said, “maybe that will open the door for them in the same way.”