Tiny Satellites: Eyes in the Sky, Thousands of Them

was in. So they built an initial algorithm and it worked. It identified residential and commercial solar panels and filtered out false positives like skylights, swimming pools and like awesome, Now all we needed was images. Well, it turns out back then coverage was incomplete. Satellites in orbit at the time, we're not covering all geographies, and when they were it was infrequent, like years between passes. So the attempt failed.

We were too early, I guess. We tried a few more times, but were stopped short by issues with image resolution and the computing power needed to process all that imagery. This week on the show, We've got benef technology analysts Sorrow Raza here to tell us how the satellite industry

has caught up. Now over a thousand small satellites scan the Earth all day, every day and are matched by several companies specializing in turning what those satellites see into usable data, making our use case and countless other as possible. Our discussion is based on a report titled Tiny Satellites Spaces Next Frontier being IF. Users can get this report on bf dot com, to BEANF mobile app and the

Bloomberg terminal. As a reminder, BENIF does not provide investment or strategy advice, and you can hear the full disclaimer at the end of the show. I'm Mark Taylor and you're listening to switch on to BENF podcast. Sara, Hi, thanks for joining us, Thank you for having me. Can you start us off with a very basics, Just what is a small satellite? So a small satellite is basically anything below five DRAMs. Within that there are different kind

of variations. So you've got micro satellites that are below a hundred kilograms, nano satellites that are below ten kilograms, and you've even got pico satellites that are below one ram. So why are they out there? Why are we seeing these emerged into the market. So I think that's for a variety of reasons. We have this demand for more data. We want more data to analyze, we want more data to visualize different things on maps and satellite imagery, so I think the demand for this data is one of

the main reasons. And then something that you know has kind of allowed this to happen is the continued improvement in the miniaturization of subsystems sensus miniature computers, and a lot of this innovation is obviously coming from adjacent sectors such as the smartphone industry and consumer electronics. So it seems like there's kind of two sides of this that

are pushing it. There's an improvement in technology that are enabling the satellites to be made and sent into space, and we'll get to that, But the other part is a hunger there'st for more data. The third part, I guess is though those two things are pushing to to what end? Like what are people using this, you know, new data for. So it's it's actually pretty interesting in

terms of the different use cases. It's based on the different technologies, right, So you've got things like satellite imagery that can help with precision agriculture for things like crop production, soil seeding zones. This kind of optical imagery can also help with fixed asset monitoring, such as you know for oil and gas, well paid construction, change detection, pipeline maintenance. Again, that can also have applications in you know, for renewables,

for the construction of wind farms, solar parks. I mean that's just one technology, right, that's just using miniaturized cameras on satellites. Can you help us out with that to visualize what is actually happening here when you say it's healthy to monitor of fixed asset and just fixed asset could be like an oil well or a power plant or something like that. How does it actually work? Obviously you may be familiar with large geo station right satellites.

These are you know, thousands kilometers above the Earth surface and they kind of hover in a in a stationary orbit. These kind of tiny satellites allbit in something called a polar orbit. So you might have seen images of tons of satellites in a ring around the Earth, and these operate in a constellation form rather than independent large satellites. The crucial difference which allows for a high revisit rate over the same spots on the Earth and ultimately global coverage.

I remember a few years ago we were looking at a few years ago, it's like six years ago now, we were looking at getting some imagery to look at solar panel build out. But the problem back then was we would only get revisiting of a particular area with the satellite technology available once every six months seven months. But we've revisited it recently and the coverage can be daily.

Is that kind of what you're getting out here? Yeah, exactly, So you can even get twice daily coverage to And bear in mind this is dependent on the number of these tiny satellites that you have in these rings around the Earth. The more satellites you have in one of these rings, the higher their revisit rate. So there's a bunch of satellites in rings that essentially create a scanner around the Earth exactly. And on top of these rings, they all are usually flown in a low Earth orbit.

But if I wanted to launch a constellation of satellites myself, is there space for me? So that's a great question. There is space, the actual space, and space is a bad one. There's there's a lot of space and space so that there isn't much regulation currently on moving away dead satellites, and E s A and NASA try to regulate as much as they can. Everyone's main question is once these small satellites finish their end of life, they usually because they're so small, just burn up in the atmosphere.

So is there something on them to kick them out of orbit in going into a descent. Most of these CubeSats do have propulsion systems, and what they'll do is they'll use their last little bit of fuel to propel them into the atmosphere. So can you describe the basics of what exactly is the small satellite value chain? I would say there are roughly kind of seven stages to this value chain. So you start with the satellite design. That satellite design can usually come from the satellite operator.

Then you've got kind of the sensor manufacturing. Now, this sensor, you know, can be from a research institute, a university, a small company that's well versed in sense of manufacturing for temperature atmospheric composition. Then you've got the satellite manufacturing, which again is usually outsourced to a manufacturing company. Then you've got launch services, ground operation, data and analytics and end user sales. Now, what we're seeing with this value

chain is a lot of vertical integration. So operators like Planet Inspire actually integrate all stages of the value chain except launch services. Have they started data integration or data

analysis as well. Yes, So obviously we know that there are separate companies like Orbital Insight, Descartet Labs, Chaos who look at data analytics specifically, But a lot of these satellite operators have seen right, instead of just providing people with the raw data, why don't we just analyze it ourselves, hire a couple of data scientists and do this ourselves. Is there consolidation amongst the startups right now, or you know, somebody like Lackheed or some other incombment going to come

in and buy up all these startups. What's really interesting is we're seeing a lot of consolidation M and A in the manufacturing stage of the value chain. So we're seeing these large aerospace companies like Boeing, air Bus, Lockheed, Northrop Grumman. We're seeing them acquiring some of the leading

manufacturers specifically in tiny satellites. So some of these startups Boeing, you know, has got Millennium Space Systems Airbus took sorry satellite technology, Northrop Grumman took orbital A, t K max A took Space Systems Laurel, and these kind of startups were really coming up with innovative techniques to manufacture CubeSats

and nanosatellites on a large scale. So do you see there's the future of this industry that it's just going to be consolidated amongst the old in comments, or do you think these startups will grow into fully fledged competitors to those other players. I think in terms of satellite operators such as planets by a Satellogic Capella, I do see those growing. In terms of the manufacturing companies, I see a lot of those getting acquired by larger aerospace companies.

And my reasoning for that is that the satellite operators have a unique skill set and engineering capability that they've kind of honed in on on their niche kind of area g h G SAT for greenhouse gas emissions, monitoring, blue field for methane more monitoring, state logic for optical sensors. Whereas with the manufacturing startups there in a field that's extremely competitive with these large aerospace companies really dominate eating of the industry in the manufacturing a bit of the

value chain. A lot of those are just getting acquired, you know, sort of every sort of month. Is there a theme in the types of companies that are getting brought every month? So I think the acquisitions that are happening are of these tiny startups that are manufacturing cubes ats. So the startups that are getting miniaturized components from various subsectors and creating these these CubeSats on a mass sort

of production scale. Let's change directions and move into large Can you tell us how these things get up into space in the first place. As a child the eighties, you know, I'm used to seeing big rackets go up in the space every once in a while, But apparently that is not the case. That these things fly up in in droves quite often, Is that right? Yeah? So, I think one of the largest subsectors of the space industry that has changed the most is the launch industry.

In parallel with these developments in satellites and senses, there are a bunch of innovations with in launch vehicles, and I think this is what's led to not only a higher number of commercially procured launches, but also a higher number of satellites launched in general. And I think that's due to the fact that these launch vehicles are now becoming reusable, especially stage one of the rockets and ride sharing, as these satellites are so tiny, you can fit many

satellites onto one launch vehicle. And I think in twenty seventeen a hundred and four satellites were launched on one rocket, which is, you know, the highest in history. There was Planet, right, yeah, so the majority of those were Planet from an Indian

polar launch vehicle. But that there are companies like SpaceX who have created things like the Small Sat ride share program, a specialized program for these startups with these small satellites who you know, just need to get two cube SATs weighing five kilograms each up into space, who want to just jump on a rocket and pay a pretty small price. So the barrier to entry has really really come down,

it seems, definitely. And you know that this innovation has also seen new companies such as space Flight who kind of organize everything from you know, if you've let's say you have a satellite, right, you have a five kilogram satellite with a temperature sensor on it. You've cre you've created it, you kind of outsourced the manufacturing. It didn't cost you too much, and you want to get this into space. Someone like space Flight will do all of the launch services for you, and you kind of go

to them. You give them your satellite, you pay a price, and they'll organize the whole launch and put you on a on a vehicle. So it's kind of like a an airline ticket market. Yeah, is it working. Yeah, it's working pretty well. In my uninitiated perspective, it seems like there wouldn't be enough demand for a business like space flight to be viable. But it seems like you're telling me otherwise that there are plenty of satellites to go up on, plenty of rockets, and there's a lot to

be organized. I think that the reason why there is a huge demand for it is again because the capabilities of these companies don't extend to the launch services industry. It's historically been an industry dominated by military and government. It's historically not been a commercial industry. SpaceX is new Rocket Lab, all becks. These are brand new commercialized companies that are entering this industry for the first time, so not many companies are well versed in the area of

launching something into space. So what's the next big thing in this sector? What are you most excited about seeing. I think I'm most excited about seeing the new technologies that are coming from these miniaturized satellites. You know, the more time goes on, the more technological improvements that are miniaturization of subsystems, the more we'll be able to do with these satellites. And I'm most excited to see if we can get minute by minute coverage, if we can

get five minute coverage, yeah, that would be amazing. Would be Another really exciting innovation that's happening is on the data analytics side of things, which isn't really talked about that much. It's everyone loves space and everyone talks about rockets,

you know, going into space. But you know, either side of the launch industry, the manufacturing industry is seeing a lot of digitalization and mass production, three D printing, advanced materials being used, you know, nanodiamond coatings or on night triede things like that. I think I think a lot

of the new materials coming out are really interesting. And then at the other end of the value chain, you've got data analytics where like we discussed before, there are a lot of companies just in this area who are investing in data scientists and looking at how you can create cool you know, mL models and applying different algorithms to analyze this vast amount of data. So the hardware is getting better, but the software is getting better as well, which will lead to more use cases and more that

we can do with this data. So it's no secret that b NF itself is new to this area to to looking at space. How did it start? I guess why did we start looking into space? And can you tell us a bit about the approach to the research. BENF has historically not covered space. The reason why I think that we're going into this kind of these kind of endeavors now is to push the boundaries of being efforts.

See what's really on the edges now. Space is an industry that is related to all of the current sectors that we currently look at, wind, polar oil, gas, I mean even from simple things like monitoring oil and gas operations, wind turbines using IoT sensors to track predictive maintenance. These small satellites are related to everything we already cover. Then on top of that, benef could also leverage the satellite

data for our own research. The manufacturing industry for satellites is growing and using things like three D printing additive manufacturing, which ties into our advanced materials team. So I think there's a lot of crossover and it was just waiting to happen. In terms of what I found during my research, I a pretty surprised at how little publicly available data there there is on satellites and on the space industry in general. I'm guessing that because of the history, if

it being mostly military government, funder didn't necessarily have to disclose. Yeah, exactly, And I think that's definitely changing. I think next year, and you know, the next five years, will will have a lot more data given this. You know, just even things like the launch industry has now become a bit more commercialized and the manufacturing industry. There are a ton of startups evolving in in this space that are trying to specialize in tiny cube SATs and in technologies, and

you know, even in the data analytics side. Given that this whole sort of value chain is transitioning from military and governmental to commercial, I think we'll we'll definitely have a lot more data in the next five years. So following under that, how did you actually end up getting the data you needed? So it was a tricky one. Um. I definitely had to reach out to a bunch of different companies and try and gather as much data as

possible from what they were willing to disclose. As the industry is so private and you know these companies that are emerging are all startups, it was definitely difficult to get a lot of this data. So imagine going forward it could be a bit of a slog Yes, yeah, I think I think the industry definitely needs to be a bit more transparent, and I think that will naturally happen given how commercialize it's becoming. All sectors start off

like this. I remember back in the in the early days of any f we this is the exact approach we took with wind and solar and geothermal and carbon captured data. You know, it just didn't exist and so somebody has to go out and collect it. So you're not only on the forefront of technology here, but you're on the forefront of research in terms of analyzing a new market. Can we go into the industry growth just

a little bit. Some people listening might think, like, all these startups are emerging, they're sending up more and more satellites. There's got to be a point where there's just too much you know, space junk up there. In terms of

space junk, there really are three main options here. There are some companies like Leo Apps who are investigating things like collision avoidance and signing contracts with a bunch of small satellite operators to monitor this for them, which obviously in the long term saves them, you know, a lot of money in case there's satellites crash into each other. Are they attempting to be an air traffic controller? Yeah, pretty much. Yeah, I mean that there doesn't seem to

be too many of those in the industry. So we have these constellations that are making scanners around the Earth, and I'm using the camera to look down at the Earth to gather data. But I think you alluded to in the report at least you mentioned several times in the report that there are several different technologies available on these cube sets and small satellites that go beyond cameras.

Can you tell us about some of those and what those might be used for a lot of these satellite operators and companies in the space have found their niche. So you've got companies like Capella Space Sat a Loogic Planet, which are, like you say, focusing on these miniaturized cameras. But then you've got a bunch of other companies like Spire who are really leading into terms of atmospheric monitoring.

So some other technologies include atmospheric sensors that measure water pressure, temperature, humidity, and these can be obviously really helpful to insurance companies and for monitoring weather, daily weather and pretty accurate. You've got other technologies including IoT sensors which can be useful for the smart agriculture, predictive maintenance of wind turbines, vehicle accidents were kind of fourth other main area for these

technologies would be geolocations. So you've got a I S and a D S B sensors that's kind of a use for tracking I somehow can't get past the demand side of this that it seems to me like these companies are launching these satellites with all these capabilities and then are going to these companies and saying, hey, insurance company, you could use this you want to buy it? Is it pushers at pool? You know that the insurance companies

are saying, actually, I really could use some better weather data. Hey, how that you go along to satellite? Is there one that's winning there or is it equal? How should I think about this? I think that it varies. That demands from customers is a lot stronger, right, And that's where these satellite operators have come in and said, we see this need for more data. For example of insurance companies, if you just take the number of fraudulent claims per year,

looking at that, they obviously want to reduce that. And the answer to that is more more data. A great way of getting that data is to get this data from a constellation of satellites monitoring the Earth every single day. So I think that in terms of a push and pull,

it definitely varies. At the same time, these satellite operators have noticed a kind of I guess, a gap in the market where if you have great engineering capabilities, perhaps from other endeavors that you've you've gone for, and you have that capability to create these you know, these nano

satellites with these materials, there is a market. So where is the technology coming from Is it coming from startups you know that are just getting these ideas, or is it coming from large corporates that have already been in the space industry for decades. It definitely varies. What's common is, for example, a university research lab will design a sensor,

for example, to measure things like atmospheric composition or space radiation. Now, usually this kind of research facility or university is is definitely well versed in sense of manufacturing and scientific instruments with the sensor. However, they probably don't have the expertise to build a satellite and launch a satellite operator satellite in that case. What we've been seeing is a lot of universities and research labs and and even companies kind

of building out this sensor. I mean an example is blue Field who have a mething sensor and will outsource everything else with another satellite operator, and that would be as a hosted payload. How common is that where you have a satellite that has multiple technologies from multiple companies,

So it's becoming more and more common. Companies like Planet Inspire initially started off with just their own As they've kind of grown in the industry, they are now doing a lot more hosted payloads from various other startups, various research institutes who have these specialized sensors, specialized scientific instruments, but no capability of engineering and launching. It seems to be the mark of an industry that is maturing. You know.

It seems like in the very beginning stages of something, you'd have everything in house, everything home built, right, and as you grow, you'd have companies specializing, and then you'd have other companies that just bring things together and get things going. Yeah, so we are actually seeing more vertical

integration within satellite companies in the industry. A bunch of companies are actually fully vertically integrated, obviously excluding launch and launch services, but you know, all the way through from senser manufacturing through to satellite manufacturing obviously outsourcing launch, but then ground station operation to the data and analytics, which is,

you know, a really big emerging subsector. You've got companies in data analytics, specifically only analyzing satellite data without operating their own constellations. From what I've seen, there are several of those that have popped up in just recent years. Right when we first started looking at this as as ben if there weren't that many companies doing this. They were all launching and then providing imagery and then leaving you kind of on your own to do the analysis.

But in the last couple years, there's been a lot of companies that I've seen that have been offering to analyze the data force and just give us a data stream at the end of the day, right exactly. And there are there are countless companies. There's Orbital inside Descarte Labs that there are. There are a bunch of companies in that area just kind of pulling data from different

satellite operators. So they might pull atmospheric data combined with imagery, mind with ragar data and putting this all together on a platform, analyzing it for you and offering these kind of packages based on different layers of data. And you know, a lot of these satellite operators are also going into data and analytics with their own platforms. What's next in

your line of research in this area. I really want to delve into the industry changes within manufacturing these things, because ultimately these need to be designed faster, they need to be built faster, and they need to be launched faster. And you know that kind of all comes from a speedy manufacturing process. So I think looking at that process and seeing how that's changing, and and you know, how we utilizing advanced materials in this process. What sort of

carbon composites are we using? How are we using three D printing to make these satellite components. I think we'll leave it there, Sarah, thanks for joining us, Thank you for having me. Bloomberginnia is a service provided by Bloomberg Finance LP and its affiliates. This recording does not constitute, nor should it be construed as investment advice, investment recommendations, or a recommendation as to an investment or other strategy.

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