Investing in the Space Economy: From Sci-Fi to Reality

Introduction

Interest in the space economy has ramped up over the past year for several reasons. SpaceX went public in June, 24 years after its founding, in the largest IPO debut in financial market history. Humans traveled to lunar orbit for the first time in 54 years with the launch of Artemis II in April. The first commercial space stations are being built in earnest, a response to a looming transition: the International Space Station (ISS) retires in 2030, and NASA has opted not to build a replacement, leaning on private operators instead. And finally, the sovereign signals are unmistakable: the U.S. FY2027 request includes $71.1B for Space Force, a ~77% jump over the ~$40B FY2026 level¹; Europe's ESA approved a record €22B three-year civil budget in November 2025, embedding a security and defense mandate for the first time²; and Chinese commercial space companies raised a record ¥26.6B across 137 private rounds in 2025³.

As interest has climbed, so too have the volatility and the questions: what exactly is the space economy, and where do we go from here?

In this piece, we break the topic down into five segments: the history of the space economy, estimates on total addressable market, demystifying the pillars of the space economy, the conditions that need to be met to get there, and investment implications.

The bottom line? Space is more than just rockets and launches. While the falling cost of launch is a key enabler of the proliferation of the space economy, by 2040 launch is expected to account for less than 5% of the total addressable market⁴. The remaining >95%? Satellites. In-space manufacturing. In-space services. Space data analytics. This list goes on. All that said, given how early we are in this innovation cycle, and how fast it's evolving, that opportunity is best accessed through a diversified, intentional approach across the space value chain: anchor near-term exposure in enabling infrastructure, while taking disciplined, selective positions in the in-orbit application layer through venture/ growth and select marquee public market leaders.

History as a Guide: The Space Trilogy

A long time ago in a galaxy not so far away... the space economy began and has subsequently unfolded in three acts: government-led prestige, commercial infrastructure, and now a private-sector buildout.

• Episode I: The Government Race (1957–1990s). Sputnik lit the fuse in 1957, and the space age began not as an industry but as a superpower arms race between the United States and the Soviet Union. Every milestone that followed, from the Soviet Union’s Yuri Gagarin's first orbit in 1961 to the American Apollo 11 landing in 1969, was state-funded and geopolitically charged. National space budgets swelled accordingly: for example, at its peak in 1966, NASA alone commanded ~4.5% of all U.S. federal spending (vs. ~0.5% today⁵).
• Episode II: Satellites as Invisible Infrastructure (1980s–2010s). The next era unfolded quietly. GPS, communications, and Earth-observation satellites embedded themselves into the global economy without fanfare, until banking timestamps, agricultural sensing, aviation routing, and supply chains had all become silently dependent on orbital infrastructure. Yet for all its reach, the industry was large and stagnant. Launch costs barely budged for decades, keeping a firm ceiling on what was commercially possible.
• Episode III: The Commercial Revolution (2010s–present). The breakthrough came in stages. The first private orbital launch arrived in 2008; commercial cargo began docking with the ISS in 2012, marking NASA's decisive pivot from building to buying; and in 2015, reusable rocket boosters were proven at last. The effect was dramatic: cost-per-kilogram to low earth orbit (LEO) collapsed to $3,868 in 2025 (~95% lower than cost in 1960) and, according to a recent study by the University of Cambridge, could fall to below $300 by 2040⁶. That single shift unlocked what had been out of reach for half a century: mega-constellations, commercial space stations, mass-market satellite internet, Earth observation at scale, and a second Moon race, this time with private companies as central players. Indeed, space tech was second-leading segment within defense-tech VC deal activity in Q1 2026 — by both deal value and deal count — with 40 deals totaling ~$2.7B (behind autonomous systems)⁷.

Next Phase of the Space Economy: a multi-trillion dollar industry in the next decade

The global space economy has become one of the decade's more compelling growth stories. In 2024 it stood at roughly $613 billion, up 7.8% year over year and about 1.9 times its 2014 level, according to the Space Foundation. The market has nearly doubled in ten years and shows little sign of slowing.

What distinguishes it is its structure: a commercially driven economy resting on a government demand floor. Commercial activity made up roughly 78% of the 2024 total, with government spending accounting for the remaining 22%⁸. That sovereign demand acts as a durable, counter cyclical anchor, expanding as governments grow their budgets and creating a base that is difficult to displace, providing stability beneath the faster moving commercial layer above.

Forecasters part ways only on timing. The Space Foundation sees $1 trillion by 2032, McKinsey $1.8 trillion by 2035, and PwC $2 trillion by 2040. The disagreement is one of pace, not direction, and the consensus points upward.

A space economy of $1 to $2 trillion by the mid-2030s is therefore plausible, though not inevitable, and the distance between those two words is what anyone sizing the opportunity must weigh. First, let’s break down what the pillars of the space economy are. Second, the conditions we need to get there.

Demystifying today’s space economy: the value chain and total addressable market

Over the coming years, it could very well be that the biggest companies operating in space likely won't be "space companies" at all. Space will become fundamental to nearly every business, the way the internet did after the early 2000s. And the master key that unlocks all of it is the falling cost of reaching, and returning from, orbit, which splits the opportunity into three paths.

Path 1 — On Earth: Satellite Layer as the Backbone

• Substituting for physical infrastructure. The first use of the denser layer is connectivity, and the more interesting shift is satellites standing in for terrestrial networks entirely. Direct-to-device service turns satellites into "cell towers in space," filling coverage gaps where ground towers can't reach, starting with messaging and progressively adding voice and data. This is the layer you already touch, the SOS on your phone in a dead zone, the Wi-Fi at 35,000 feet. The trajectory is striking: direct-to-device is expected to reach over 350 million subscribers by 2030 and generate more than $60 billion in service revenue over the next decade⁹. The next generation goes further, with constellations linked by inter-satellite laser links moving 100+ gigabits per second, effectively building a mesh network in orbit.
• The invisible backbone for autonomy. Once a cheap, ubiquitous layer exists for both connectivity and precise positioning, it becomes the enabling infrastructure for physically-moving businesses that cannot operate without it. Precise, resilient positioning is the linchpin: autonomous systems need far more than consumer GPS; they need high-accuracy, corrected "assured PNT" that is also hard to jam or spoof. The vulnerability is real: 2025 aviation safety data show GPS jamming events up 67% and spoofing up 193% versus 2023¹⁰, and a U.S. government-cited study estimated an extended GPS outage could cost the economy $1 billion a day or more¹¹. A denser satellite layer doesn't just enable autonomy, it's the only thing that can secure it.
• The second-order winners.
  • This is where the autonomous economy on Earth rides on space infrastructure: drones, self-driving vehicles, robotics, and connected logistics. Autonomous drone delivery is the clearest example, exptected to leap from ~3,000–5,000 US deliveries today to 3–5 million a day by 2030, a 1,000x jump¹². And the dependency is direct: unlike a person reading a map, a self-flying drone has no fallback, so it must continuously know its position in real time to fly a route, avoid obstacles, and touch down on a specific doorstep. That is precisely why the assured-PNT layer above matters here, since several meters of drift or a spoofed signal becomes a safety-critical failure in flight, layered on top of the ubiquitous connectivity that keeps the drone linked throughout the mission. The same dependency runs through self-driving vehicles and satellite IoT (asset tracking, maritime, smart agriculture), expected to grow ~19.5% annually from 2025¹³. Each is, in effect, a business riding on space infrastructure.
  • Underpinning this path: Earth observation, where the opportunity isn't in the pictures but in the analytics layered on top. Earth observation value-added services hit $3.2B in 2024, now outgrowing raw data at $2.2B¹⁴, with the value migrating from the image to the intelligence.
• Key risks: customer concentration, execution, regulation, extreme capital intensity.

Path 2 — In Orbit: Space as a Place to Do Business

• Space as an energy layer.
  • Space as an energy layer. AI's power crisis shifts the binding constraint from chips to electricity, pulling forward a decades-old idea in three increasingly investable forms: beaming power satellite-to-satellite (nearest-term and already revenue-generating, recharging satellites by laser so they can shed heavy batteries); compute in orbit (tech companies moving AI workloads to tap near-continuous solar power, with the first data-center GPU already launched and multi-gigawatt concepts on the drawing board); and space-based solar power beamed to Earth (furthest out, demonstrated in 2023 but still at feasibility stage, with costs well above terrestrial solar-plus-storage).
  • Orbital data center spotlight. The defining bottleneck is thermal. In a vacuum, with conduction and convection off the table, hardware can shed heat only by radiating it as infrared, a weak mechanism that demands vast radiator arrays; even a 1-MW facility would need radiators roughly the size of a hockey rink¹⁵. Think of a thermos: the vacuum that keeps coffee hot is exactly what traps a data center's heat, and radiation is the only way out. Placement is a balancing act. Low Earth Orbit keeps round-trip delays under 10 milliseconds for real-time work, while higher orbits and Lagrange points give radiators a clear view of cold deep space but stretch delays into the multi-second range, confining use to batch processing. Engineers must also secure continuous power, often via sun-synchronous dawn-dusk orbits, and shield hardware from cosmic radiation while angling radiators away from sunlight and Earth's glare, so the arrays meant to cool the facility do not end up warming it.
• In-space manufacturing. Microgravity removes the gravity-driven forces (sedimentation, convection) that distort how materials form on Earth, so crystals grow far more uniform and defect-free. ZBLAN optical fiber can carry more than 10x the data of the silica fiber the internet runs on¹⁶, but fails when drawn under gravity; in microgravity, the defects don't form. Pharmaceuticals already have an FDA-approved payoff: space-station research helped inform a newly FDA-approved injectable for early-stage cancers. The commercial payoff isn't the crystal itself but the delivery, since more uniform crystals lower a biologic's viscosity, turning hours-long hospital IV infusions into faster, cheaper injectables. The economics are relatively attractive: the crystalline material to dose 450 million people with a Covid vaccine would fill just two milk jugs¹⁷. And with the ISS winding down around 2030, the opportunity is shifting from the government-run lab to commercial "LEO destinations."
• Keeping orbit usable. The exhaust of all this activity creates its own market. With space agencies now tracking ~40,000 objects in orbit¹⁸, orbital sustainability becomes a business spanning space situational awareness (SSA) software, in-orbit servicing, and active debris removal. Debris-removal systems now combine robotic capture arms, electromagnetic tethers, and "drag sails" that de-orbit multiple objects at once, while in-orbit servicing is evolving from simple life-extension to on-orbit assembly and 3D-printed repairs that could extend satellite lifetimes by decades. Cumulative global SSA spending is expected to reach $61 billion over the next ten years¹⁹.
• Key risks: long pre-revenue horizons, regulatory gaps, execution and financing.

Path 3 — The through-line: enablers (launch, supply chain)

• These are the companies that design, build, and launch spacecraft, sold as dedicated missions or per-kg rideshare, with the economics hinging on one idea: fly the same rocket again, and fly it often. But the rocket is only the visible tip. Beneath it runs a capital-intensive supply chain of specialty alloys, propulsion gases, and radiation-hardened electronics, where multi-year qualification cycles quietly lock customers in. The story turns on concentration, and it cuts both ways: SpaceX flew ~52% of the 259 global orbital launches in 2024²⁰, a dominance rarely seen in any industry, and China controls 60–90% of key materials like rare earths, tungsten, and germanium²¹. Two chokepoints at opposite ends of the same value chain. This layer isn't a path in itself; it's the enabler that sits upstream of both, and the falling cost of launch is what makes everything below investable.
• Looking further ahead, the first enabling commodity of the space economy may not be gold or rare earths, but orbital propellant. Just as oil, electricity, and fiber optics each lowered the cost of participation in their eras, space may follow suit: water ice on the Moon and asteroids can be split via electrolysis into liquid hydrogen and oxygen, the same propellants rockets already burn. Refueling in orbit rather than lifting every kilogram from Earth would sharply cut launch mass and mission complexity, the same cost lever this section turns on, making orbital propellant the enabling commodity behind reusable spacecraft, satellite servicing, and a permanent cislunar economy. The horizon is long and the risk venture-scale, but the logic mirrors launch reusability.
• Key risks: execution, market and supply-chain concentration, regulation, financing.

Five conditions that need to be met to get there

The case for a $1 to $2 trillion space economy by the mid-2030s hinges on five key conditions holding simultaneously, each reasonable in isolation but collectively a compound bet.

• First, launch costs must keep falling across larger payloads. Successful launches have grown at a 25% CAGR over five years (324 global attempts in 2025)²², and reusability has already compressed cost per kilogram, but the next leg, full and rapid reusability, must commercialize on schedule. This is the foundational cost curve for the entire value chain; if it stalls, margin assumptions across satellite operators, data providers, and downstream applications all have to be revisited.
• Second, satellite broadband must reach mass-market penetration, particularly in emerging markets where the addressable market is large but willingness to pay is constrained. The opportunity is realized only if operators can engineer a price point that converts the unconnected, making hardware subsidization and spectrum economics critical diligence items.
• Third, the in-orbit application layer must mature into a working market, requiring the technology to keep advancing, space-derived data to become usable and standardized, and downstream industries to move from pilots to operational integration. Until all three hold, monetization stays lumpy and application-layer valuations are hard to underwrite.
• Fourth, military space spending must keep expanding. Defense contracts are the sector's most durable, high- visibility revenue anchor, making sustained budget commitment from major powers a key macro variable for de-risking early-stage infrastructure bets.
• Fifth, the orbital environment must remain usable. Mega-constellations are compressing collision margins from months to days, debris removal is not yet at scale, incentives are misaligned, and space law remains unsettled. Orbital congestion is an existential systemic risk: a single collision cascade could trigger regulatory overhangs, insurance repricing, and constellation write-downs that impair the entire asset class at once.

Conclusion: positioning for the next evolution of the space economy

To define the space economy as rockets alone is to materially understate both its scale today and its trajectory tomorrow. This is an innovation cycle still in its infancy, and with that early stage comes real risk. The greatest long-term upside potential may likely be within the in-orbit application layer, but it also carries the biggest risk as the as the business models and eventual winners have yet to materialize. We believe that for clients drawn to this theme, the most durable approach is a diversified one: anchor near-term exposure in enabling infrastructure, while taking disciplined, selective positions in the in-orbit application layer through venture/ growth and select marquee public market leaders.

In space, as in investing, the launch is only the beginning.