Opportunity Abounds: Roadshow Reveals Investor Appetite in Space Remains Strong
‘This Is Now the Most Exciting Time To Work and Invest in Space’
On June 15, 2023, Aird & Berlis LLP hosted a first-of-its-kind Space Tech Investor Roadshow in Toronto, bringing together the worlds of space and finance to discuss the realities and opportunities ahead in the space sector. Attendees were treated to presentations from industry veterans, market intelligence specialists and panellists who addressed the private and public capital markets outlook and high-growth opportunities in Canada and abroad. A few central messages from the day emerged: keep things simple and focus on revenue; institutional investor appetite for pure-play space remains high; and space as a commercial vertical is just hitting its stride.
“There is lots of growth in the space sector and Canada is very well-positioned to tap into these markets,” according to Nathan de Ruiter, managing director of Euroconsult Canada, who discussed seven areas of particular impact where Canadian space innovators have, potentially, the greatest opportunity to have a major presence. Areas identified include satellite broadband connectivity, earth observation, defence and security, satellite IoT, launch, space situational awareness and beyond earth space exploration.
But how do we funnel focus and opportunities? The answer: Start simple and focus on the revenue. If you remove nationalism from the picture and focus on revenue, “you can start to plan small and then go big,” said Bruno Geoffrion, founder of Moon and Mars Industries and keynote speaker for the roadshow. Geoffrion, a veteran of SpaceX from 2007 to 2015, explained how SpaceX’s initial motto of keeping things simple and small enabled the company to grow into the industry leader that it is today, whereas competing orbital launch provider Virgin Orbit experienced failure after beginning with a concept and technology that was overly complex right out of the gate.
Canada’s space opportunities remain vast, but a change of focus on supporting space endeavours that capture market revenue might enable it to focus on the small, as opposed to the larger, nationalistic-driven projects. Geoffrion led with the example of a commercial space station and questioned whether and why we need to conceptualize a Canadian space station with human participants, for example. Imagine the cost difference of placing a commercial space station in orbit that does not support a human presence, whose sole objective is to generate revenue from science and manufacturing, and whose developer is one corporation instead of a multitude of nations? “Very quickly you go from requiring complicated life support systems, lavatories, food production and sleep quarters… and what started as a multi-million-dollar mansion all of a sudden takes the form, cost and complexity of a garden shed,” he told attendees.
Doug Taylor, senior research analyst at Canaccord Genuity Corp. and Keith Abriel, CFO at Maritime Launch Services both noted that there is institutional interest and demand for pure-play space technology in the public markets, but industry is still experiencing “hangover” effects from the wild valuations and catastrophic special purpose acquisition company failures of 2020 to 2021. Public company funding is scarce and this has had knock-on effects upstream with venture capital companies as they are, in many cases, reluctantly funding companies for much longer than their anticipated exit horizon.
In the broader space industry and particularly in Canada, there is an opportunity for traditional lending and infrastructure finance tools to come into the industry. Aaron Burnett, CEO of Spaced Ventures, is working on just that, having identified gaps in the funding stack. From an investment perspective, Burnett noted that space-based robotics is an area of opportunity and interest for him, while Christine Tovee, CTO at Wyvern, suggested that for near-term returns of three to five years, anything earth-bound focused is a solid target.
The event concluded with a panel discussion involving five high-growth space technology plays, four Canadian and one U.S.-based. Stéphane Germain, CEO of GHGSat, noted that space is such an exciting opportunity now because “it used to take $100 million to do something meaningful in space, but now you can do something useful with as little as $1 million (with small satellites)… This is now the most exciting time to work and invest in space.”
Stewart Bain, CEO of NorthStar Earth & Space, encouraged people to begin thinking about space “not as the space economy, but as the economy.” So much of what we do in our daily lives and our economy is processed in space that our space infrastructure is inextricably linked to our economic needs, he said.
“A satellite is now the fastest, most affordable way to get information about any location on the planet,” added James Slifierz, CEO of SkyWatch. Only now, the utility of space infrastructure is becoming commercially apparent en masse, and those that appreciate the opportunity will ride this generational high-growth opportunity.
The event also included remarks from David Haight, director of economic, international and regulatory affairs at the Canadian Space Agency.
The Space Tech Investor Roadshow was supported by world-class industry partners, including the Canadian Space Agency, Euroconsult, Space Canada and Creative Destruction Lab Space Stream. Collaborators and sponsors include LodeRock Advisors, TMX Group, HighMont Advisors, MNP LLP, Celestial Growth Corp. and Odyssey Trust Company.