The Business Case for Space: 3 Reasons Why Cape Fear Ventures Targets Emerging Aerospace Opportunities

I started investing in SpaceX in 2019 because I realized the potential business impacts of advanced aerospace technology. I saw how innovations in this field could revolutionize various industries, create new opportunities, and drive significant business growth. The progress and vision of SpaceX, in particular, convinced me that supporting such advancements would be a wise and impactful investment. With the advent of privatized space exploration, space travel was moving from a scientific pursuit to an enterprise with far more significance for our everyday lives.

In this blog, I explain Cape Fear Ventures' early interest in aerospace and provide three reasons why we’re still investing in innovative space projects like LeoLabs, Cesium Astro and Morpheus Space. Let’s start with impact potential.

Numerous Emerging Use Cases

I’ve written a lot about our interest in AI. We recognize that the rapid development and iteration of space technologies have a similar trajectory in terms of having a systemic, disruptive impact on the global economy. Like AI, aerospace projects are poised to significantly affect numerous sectors, including communications, transportation, shipping and freight, and national security.

Many innovations are well underway. Starlink is the most obvious example, as it delivers a service that was considered to be impossible even 10 years ago — affordable, wireless, high-speed internet connectivity to virtually any location on Earth.

Starlink made satellite communication capabilities that were only accessible to a very small percentage of the population available to just about everyone. Basically, they took satellite communications retail, and the technology has already proven itself indispensable and reliable in a wide range of challenging circumstances, including natural disasters and on the ground in Ukraine following the Russian invasion.

It’s especially noteworthy that this level of capability has been achieved with only a fraction of SpaceX 's planned number of satellites in orbit.

At the time of this writing, SpaceX has more than 6,100 satellites in low-Earth orbit, but the company ultimately plans to launch up to seven times that number—42,000 low-orbit satellites. Considering how rapidly the technology aboard each satellite is advancing, it’s hard to estimate how many more new use cases and possibilities Starlink will offer in the coming years.

Having that much hardware in orbit will drive a space software technology boom, and LeoLabs is a great example of what I’m talking about. The company produces a highly customized collision avoidance service that delivers real-time alerts to ensure the safety of space flights. And of course, the new software being developed by LeoLabs and myriad other startups will unlock further innovations and use cases, and on and on.

Innovation-Driven Cost Efficiencies

Disruptive technologies often require cost-intensive inputs in order to scale. In the case of AI, for example, the exponentially increasing amount of hardware required to field and operate the technology is driving massive investment in new, state-of-the-art GPUs made by companies like 英伟达 . As AI technology continues to mature and scale, these hardware inputs will (for the time being, at least) continue to increase as more companies adopt AI platforms.

The space industry, however, is an exception to this rule because it has been incredibly resource- and cost-intensive from the beginning. However, private-sector companies like SpaceX are designing more cost-efficiency and sustainability into the process.

Once space was no longer monopolized, free-market pressures drove innovation on several fronts. SpaceX was built around the ideas of repeatable, adaptable systems and products, and an optimized organizational structure. This approach led to the production of the Falcon 9, Falcon Heavy, and Starship systems, which feature reusable rocket components.

Falcon 9 is the world’s first orbital rocket capable of reflight, and Starship (in development) will be a “fully reusable transportation system designed to carry both crew and cargo to Earth orbit, the Moon, Mars and beyond.”

While there are many metrics to demonstrate SpaceX’s success, the company’s incredibly cost-efficient $/kg of launch capacity is most relevant here: Under NASA’s space shuttle program, launch payload cost $54,500 per kilogram. The SpaceX Falcon 9 boasts a launch payload cost of only $2,720 per kilogram.

The cost efficiencies being engineered into the space industry will benefit these companies and their investors for decades to come.

Good Timing

One of the best reasons to consider investments in space tech is that the industry is still in its infancy. As I see it, we’re in the infrastructure stage of building this industry. Companies are designing and improving rockets, launching thousands of satellites, and getting all the pieces in place for the real coming-of-age of the aerospace industry, which will likely be in the next 5 to 15 years.

I prefer to invest in early-stage technologies because the return potential is much higher, and because I enjoy partnering with founders early in their journey who can benefit from my experience and advice. I think this is a sound strategy for any investor.

The space industry is moving from the scientific and research frontier to something much more practical and geared toward solving problems here on Earth — and it represents a huge opportunity.

Contact me through LinkedIn if you’re looking to invest capital in emerging aerospace, or if you’re a founder with the next big idea in space travel. I would love to hear about your investment goals and projects.