Space startups line up for takeoff on Centre's privatisation bid

More than half a century after India launched its first indigenous rocket developed by its national space agency ISRO, its private sector is all set to achieve a similar feat. Space-tech startup Skyroot Aerospace will launch India’s first private rocket from ISRO’s Sriharikota satellite launch centre between November 12 and 16.

The launch is a reflection of the boom in India’s space-tech startup space, which has won more fund flow in the last two years than ever before, according to Crunchbase data. The government unveiled a slew of reforms in 2020 to boost private participation in the sector.

The efforts are certainly bearing fruit.

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“Space tech has evolved drastically over the last few years. This has been made possible by the emergence of deep technical expertise from universities and a great deal of impetus from organisations like ISRO,” said Anurag Ramdasan, a partner at private equity firm 3One4Capital, which has funded many space startups.

“Companies such as Pixxel and Agnikul Cosmos have fired up the ecosystem’s growth by validating the viability of the sector with tireless innovation. Also, investors today have more than just ‘Proof of Concepts’ to bank on. There has been enough R&D, execution, and production at scale to prove efficacy,” the seasoned investor added.

Some such as KaleidEO Chief Technical Officer Akash Yalagach also tied the success to ISRO’s draft bills and policies around earth observation, satellite communication and launch that serve as “a strong message” about the government’s interest in privatising space exploration.

The sector is expected to grow to $13 billion by 2025, growing at a 6 per cent compounded annual growth rate, across domains including satellite manufacturing, ground segment, launch services and satellite services, according to a recent report by the Indian Space Association and EY.

Bellatrix co-founder and chief executive officer Yashas Karanam said that there was a global opportunity for India to bridge the market gap in this sector, “unlike the gap in semiconductor space because we have lost the bus.”

Privatisation push

In June 2020, the Union government opened space exploration to private players through the Indian National Space Promotion and Authorisation Centre, which serves as an autonomous agency in the Department of Space.

The private sector, which was formerly a vendor to the Department of Space-controlled ISRO, has now been allowed to “play the role of a big winner in the space sector”, Prime Minister Narendra Modi said this year.

“When the strength of government space institutions and the passion of India’s private sector will meet, not even the sky will be the limit,” Modi added in the statement.

And the effect of the changes are being felt across the sector.

For instance, a lot has changed in the past decade, said Space Kidz India founder and chief executive Dr Srimathy Kesan, who makes space accessible for educational and research needs. One of the payloads of India’s first private rocket will be a satellite developed by school students, she told DH.

The funding problem

“There is only one challenge in our country – funding,” Kesan said.

Industry experts agreed, with some pointing out why the sector was not for everyone.

“Majority of the space-tech startups are capex heavy in nature with a longer gestation period,” said Vipul Patel, Partner - Seed Investing, CIIE CO, which has invested in space-tech startups such as Agnikul, Bellatrix, ePlane and GalaxEye. “The vacuum for patient catalytic capital can be filled by investors who are looking for opportunities in the deep-tech segments.”

And there is enough of the pie for more investors.

“The opportunity for space-tech in India is large and appropriate government support, investor funding and talent would be key to make India a space-tech hub for the world,” said Raja Lahiri, a partner at Grant Thornton Bharat.

A few success stories could help in addressing that funding issue.

“There is a positive sentiment from investors (towards space-tech startups) to diversify their portfolio due to a few success stories in the sector and a positive forecast,” said Aakash Porwal, the founder of Space Aura, which plans to send tourists up to 30 kilometres above sea level (‘near space’) by 2025.

He also pushed for more policy support.

“Human space missions also need to be included in policies just like satellite communication is done,” said Porwal, adding that space tourism was the next frontier.