As much of the economy is reeling amid COVID-19, one venture capital firm sees opportunities in space companies “more resilient” to the downturn.
“While everyone is retrenching, there are opportunities opening up,” Chad Anderson, managing partner at Space Capital tells Yahoo Finance.
“A number of our companies particularly that are focused on Earth observation, geospatial intelligence — governments and businesses are turning to these companies in this crisis to understand macro economic trends, use satellite data to monitor their their supply chains and their facilities,” said Anderson.
One Goldman Sachs–backed company recently revealed to Yahoo Finance how it uses satellite images to track the oil glut around the world and what auto traffic patterns around Beijing tell us about China’s COVID-19 recovery.
Anderson says space companies focused on businesses-to-business and business-to-government will fare better during this crisis.
“The government is stepping up and providing a lifeline in a lot of cases. So there’s a number of agencies that are increasing their contract amount, contract amounts or advancing payments,” said Anderson. “These things are important in terms of resiliency, especially in a downturn.”
Much of the spending is happening in ‘space gathering intelligence’ — to service almost any industry you can imagine, from agriculture to insurance.
“In the same way that GPS is ubiquitous and a pervasive part of our everyday lives, Earth observation is going to be the same way,” said Anderson. “We have all of this infrastructure and all of these new satellites in space gathering intelligence about our planet.’
‘Appetite in public markets for space based opportunities’
On Tuesday Virgin Galactic (SPCE) reported a first quarter loss but touted potential revenue from hundreds of people who signed up for future sub-orbital flights. The company also announced a partnership with NASA to develop high-speed point-to-point travel technology.
“Virgin is a really interesting case study for the appetite in public markets for space-based opportunities,” says Anderson, noting his fund does not invest in the company.
“Virgin is for the most part, pre-revenue, pre-profits certainly — and so what would happen if a company went onto the public markets to have good revenue growth, and was profitable — think SpaceX talking about spinning out Starlink. I think this is going to be a huge opportunity here”
Earlier this year, SpaceX was considering eventually spinning out its satellite business and taking it public.
Ines covers the U.S. stock market from the floor of the New York Exchange. Follow her on Twitter at @ines_ferre