Venrock’s Ethan Batraski on the Promise of the Space Industry
Space is getting closer.
Investment in the industry has exploded in recent years, and space exploration is back in the public consciousness thanks to SpaceX and forward-thinking startups. Excitement is growing, especially about the potential this work has for advancements here on Earth.
To understand what’s driving this shift and where it can take us, we recently sat down with Ethan Batraski, a Partner at Venrock and self-described space geek. Ethan focuses on space investment as well as developer infrastructure and advanced computing. He also serves on the board of companies including Astranis, which creates internet satellites.
Read on to learn about big changes in the industry, why Ethan believes there’s room for more space startups to solve big problems and what will bring about the next space heyday.
What’s most exciting to you in the space industry right now?
There are two big challenges in the space industry today. First, demand for launch substantially outweighs supply. There are more than 20,000 satellites filed with the FCC to launch over the next five to eight years, but available capacity can only handle about 400 per year. The second is that it’s still too expensive to launch. Until recently, the industry has been focused on very large launch vehicles designed to bring school bus-sized satellites into orbit.
We are moving away from large, expensive satellites to much smaller microsatellites that are cheaper to build, launch into lower orbits and enable new use cases. That demand has driven a new class of launch companies, meaning access to dedicated launch becomes much more available, responsive and reliable. For example, we invested in ABL Space Systems, which was founded by SpaceX engineers who saw what SpaceX could do with a lean team and built a business with margins that look a lot more like software than aerospace.
Demand for smaller satellites continues to grow as access to launch increases, and both the costs of launch and spacecraft decrease. Eventually, instead of launching a spacecraft into orbit and never being able to physically access it again, new architectures will drive down the cost curve through mass manufacturing. This would dramatically change the economics of space.
The only way for us to be a multi-planet species is to build infrastructure in space.
What will be the biggest benefits of more satellites in space?
There are three main use cases, and they all require making launches much cheaper than they are today.
The first is terrestrial, or satellites pointing down at earth. Its main benefits are internet connectivity and earth observation. Three billion more people will come online over the next ten years, and our current infrastructure can’t support that. Satellites are the only way to reach people in areas that are remote, dispersed or climate constrained.
The second is to create a deep space network. The only way for us to be a multi-planet species is to build infrastructure in space. That must include communications networks beyond the moon and fueling stations to power space tugs, which will carry things from low earth orbit to Mars and beyond.
Lastly, there’s opportunity for manufacturing. For example, we can develop more efficient protein crystals for pharmaceuticals in space.
SpaceX has proven that a commercial company can outpace defense primes and bloated federal programs. Innovation is back at a much lower cost, and their work inspires people.
In the 1960s, the U.S. going to space was a big source of national pride. Do you see a resurgence in public excitement about space?
Yes, definitely. In the private sector, SpaceX has proven that a commercial company can outpace defense primes and bloated federal programs. Innovation is back at a much lower cost, and their work inspires people.
What space trends are overhyped?
It’s all about market timing and maturity. Some companies are focused on areas that will become very important but that are just too premature. Space tugs or refueling systems, for example, will be important, but companies working on them now are way ahead of the market. We need to focus on increasing access to space, lower costs to orbit, lower costs of manufacturing and increased access to space-based data.
Is there still room for new players in the industry?
There’s certainly still room. It can be challenging and capital-intensive, but there are ways to build very big companies that deliver real solutions quickly, in much more capital efficient ways. More are emerging all the time, and there’s room for many more billion-dollar companies in space.
There’s room for many more billion-dollar companies in space.
2020 was a tough year. What did you learn that you’re taking with you into this year?
This time last year was the most uncertain thing I have experienced in my career. Was a dollar saved today worth two next year? Would we need to go into cash conservation mode? Would the world pause until the pandemic was under control?
In the following months, the stock market hit all time highs while unemployment was at an all time high. Low interest rates led to unprecedented capital flowing into venture and growth stage companies. Rounds got bigger, valuations steeper, and there were more interesting companies emerging than ever before. Against the backdrop of a very tough year for the world, it’s been a very good time to be a founder.
Against the backdrop of a very tough year for the world, it’s been a very good time to be a founder.
Personally, the last year taught me how resilient and adaptable people are. The shift to remote work and being distanced from each other reminded us that we need to actively pursue moments of joy: detach ourselves from what’s happening to smile, laugh and create connections. It’s easy to forget to go outside, call a friend or go on a run. 2020 was an extreme pendulum swing for so many – it’s important to bring balance back into daily life.