Space-tech India is raring to take off, except it is short on ‘fuel’

Start-ups are working on small satellites, launchers, propulsion systems and geospatial data analysis; investors are interested but wary

India’s first rocket launch in 1963 happened only after relocating a St Mary Magdalene church in what was then Trivandrum. The parishioners helped. At the research centre, with the church building converted to a workshop and cattle sheds to labs, the rocket was assembled with its parts transported on cycles and bullock carts. This country leapt into the space age with little more than enthusiasm and intelligence, and it is at a threshold once more. This is the era of private space exploration. This May, Elon Musk’s SpaceX even launched the first, commercial crewed mission to the International Space Station from the Kennedy Space Center.

Understandably, startupreneurs across the globe want a piece. Does Indian enterprise stand a chance? A bunch of start-ups – Pixxel, Kawa Space, Astrome, Skyroot Aerospace and Bellatrix —and few investors think so (See: Reaching for the stars). They have planned their first phase of ‘launches’ between end-2020 to 2022, and have their fingers crossed. Not all are going to launch rockets and send out satellites. While some are indeed looking to develop miniature satellites and small launch vehicles, others are working on ancillary services (such as propulsion systems) and more are using data from satellites to provide insights to industries— from agriculture and infrastructure to mining and oil exploration.

Traditional vendors to ISRO such as Godrej Aerospace are taking note of this boom. In fact, Godrej Aerospace is setting up a new facility to cater to orders from these private enterprises, which began pouring in 2019. Their current capacity is tied up for the next five years with orders from ISRO, says the company’s vice president and business head Surendra Vaidya. According to a PwC-Antrix report, India’s $7 billion market for space technology is expected to reach $50 billion by 2024.

For now, India only has 2% market share in the global industry. This could mean plenty of headroom for growth, or plenty of room for improvement in our products and services. The jury, we must add, is still out on that one.

Beyond the Karman Line
Perhaps the first satellite launch of the year is going to be in November 2020, by two 22-year-old BITS Pilani graduates Awais Ahmed and Kshitij Khandelwal, co-founders of Pixxel. The start-up’s satellite is going to be the size of a small refrigerator weighing 30 kg and will be launched by a Russian space agency, GK Launch Services, a subsidiary of Roscosmos. Within the next two and a half years, they plan to launch 23 more to create a constellation. Their revenue model is based on selling the data gathered from the satellites. Once the constellation is in place, it will capture images at different frequencies and save them in the cloud, which will be accessible to the start-up’s clients. “They can access any picture at a chosen frequency from our paid platform. We would be providing detailed insights and not just data through imagery,” says Ahmed.

Ahmed and Khandelwal were students at BITS Pilani in 2017, when they entered the SpaceX Hyperloop Pod competition. It was to make a pod that could travel through a mile-long hyperloop test track, at the American giant’s LA headquarters. The pod had to travel at the speed of light. Their team made it to the top 24, and was the only one from India, among the 2,500 applicants. The two moved to Bengaluru since BITS didn’t have the necessary facility and completed the pod design in two and a half months. The working prototype was then carted to LA and presented before Musk and team. They ranked eighth and it gave them much-needed experience in this nascent industry. They noticed gaps in the data quality from satellites, did a survey with global companies to understand if there was a need to improve the quality and the results led them to Pixxel.

Like Pixxel, many of these space-tech start-ups can trace their beginnings to projects done (or interest taken) in college. Astrome’s founders Neha Satak and Prasad Bhat were students of IISc Bangalore and worked together on an assignment to create a microsatellite Aerosat while pursuing their Masters. Their company is aiming to launch 200 micro-satellites by 2021, and is already testing a terrestrial technology, the Gigamesh. It is a wireless radio wave box, which when connected to the fibre channel, can provide high-speed internet connectivity (80 Gbps against the current average of 2 Gbps) to the remotest areas at one-tenth of the cost of laying optic fibre. “Additionally, whenever there is a downtime in one part of the city due to rain or other disruption, we can connect and source internet from another part of the city,” explains Venkatesh Kumaran, president, Astrome.

Bellatrix’s Rohan Ganapathy was trying to build a propulsion system even when he was studying at IISc. He discussed this with Yashas Karanam, a family friend and an engineering graduate, and both decided to give it a shot after graduation. The company, later incubated at IISc, offers a range of electrical propulsion systems against the traditional chemical ones.

Skyroot’s Pawan Kumar Chandana didn’t begin work on his company from college, but after working in ISRO for six years. He quit the organisation in 2018 and collaborated with Naga Bharath Daka, who had also worked at ISRO as a scientist. Skyroot builds launch vehicles of 300-kg capacity for small satellites, for which Chandana believes there will be great demand internationally. “Since the rockets are smaller, you can produce them in very large numbers and within weeks or a month. We are looking at launching 30-40 per year against the government’s two to three over several months,” says Chandana.

The co-founders ISRO connection gave confidence to its investors such as Mukesh Bansal, founder of Myntra and co-founder of Cure.fit. Bansal says, besides the founders being former scientists at an institution that has been “pioneering the space for many decades now”, the space organisation’s suppliers coming onboard also helped. Rahul Papney, principal consultant at BIS Research, which tracks emerging technologies, acknowledges ISRO’s “continued efforts to promote entrepreneurship in the country”. He thinks the start-ups also help the government organisation by sharing the load of manufacturing and launching vehicles. “A large chunk of ISRO’s manpower is involved in these. Active involvement of new start-ups will help the research organisation devote more time to core research,” he says.

Bansal is not deterred by SpaceX’s presence and dominance in this space. He talks of the growing opportunity for Indian start-ups: “Different organizations will soon need satellite bandwidth. Skyroot being based out of India has cost advantage with a factor of two. So at whatever price SpaceX is doing a launch, Skyroot can do it at half the price.” The pricing advantage of Indian companies is vouched for by Papney. He cites a Space Angels’ report, which states that the average cash burn for a space company is estimated at $300,000/month. “However, the same amount can last for an entire year at Indian companies,” he says.

But, upstream (launch vehicles and satellites) companies such as Skyroot or Bellatrix form the smaller part of India’s burgeoning space-tech story. They account for just $2.3 billion of India’s $7-billion market, while downstream (data gathering and analysis) companies such as Pixxel and Kawa Space make up the rest of the $4.7 billion.

Data rush
Pixxel’s clients are both global and domestic, in varied sectors, from agriculture and forestry to oil exploration and mining. For instance, using imagery, Ahmed claims they can detect illegal mining in Rajasthan and how much soil has been eroded because of it. It can track pollution levels in cities or where effluents are coming from, spot gas leaks and oil spills, and it can even lead to early detection and containment of agricultural pest attacks.

Pixxel’s clients in India include SatSure and Skymet Weather Services. For SatSure, the data Pixxel provides is useful to their financial and insurance clients who serve the agricultural sector. The insurance companies can track crops that are being grown, along with the soil-nutrient level, and thus estimate the yield from a particular season. Ahmed is reluctant to reveal pricing, but says that the average rates for satellite imagery businesses are between $1.5-2 per sq km and $40 per sq km, depending on the imaging quality.

According to the PwC report, the imaging data analytics industry in itself will be a massive market in the coming years, which is poised to grow by 30% in the coming decade. Therefore, more start-ups are gravitating to this area of space-tech. Another company here is Kawa Space, founded by Kris Nair and Bala Menon in 2019. A year before its founding, Nair had led the country’s first private satellite launch at Exseed Space. Since renamed Satellize, it makes custom nano satellites. It is the first Indian private company to have its satellites (two of them) in space, carried aboard rockets from SpaceX and ISRO.

But unlike Satellize or Pixxel, Kawa Space does not build satellites. They have started by making a platform for their clients to access data gleaned from satellites across the world. They source the data from 200 satellites and serve companies in agriculture, strategic risk management, financial services, private equity and insurance. Nair says, “Even the biggest technology or data teams in businesses don’t know how to translate satellite images of our planet into business outcomes. So, we are looking to provide, not just images, but actionable data.” Kawa Space Platform’s fee is $99/month for smaller teams and $999/month for enterprises. At present, 70% of the customers are global companies, mostly private corporations.

For example, one of their clients is a financial institution underwriting projects across Asia. If the institution has lent to a road development company, the Kawa Space cloud can help the financier track project progress. They don’t need a separate office and staff in each of their project cities. For now, the platform has been made available only to enterprise customers but they will soon cater to space agencies and mission managers. “The second version will be a simple dashboard to manage all their satellites in space; from connectivity to monetisation,” says Nair. The start-up, which plans to launch six medium-sized satellites weighing around 100 kg each over the next 18 months, has raised undisclosed seed funding in September 2019 from Paytm’s Vijay Shekhar Sharma, SpecialE Invest, AngelList India and other entrepreneurs.

Running out of gas

Kawa Space is relatively better off as investment is hard to come by for these young companies. Jatin Desai, general partner, IDFC Parampara Fund, which led a round for Bellatrix Aerospace, says that they took longer than usual to decide on this. “Familiarity or the comfort to evaluate the business wasn’t there,” he says. Their reservations were that this is a relatively new industry, which has mostly been supported by the government and is yet to see a success story. Usually, IDFC Paramapara takes three to four months to take a call but, with this, they took seven to eight months. They took the pitch outside India to American and European space experts they knew, to evaluate its merit. Then, they spoke to people at ISRO and IIT Bombay. In fact, the start-up gained prominence when ISRO offered them a contract to build an electric propulsion for a heavy 2-tonne satellite in 2016. “Their having worked with the start-up, formally, gave us confidence,” says Desai.

Bansal agrees that this is a risky business. “This is a long-term investment, for at least five to ten years, he says, adding, “The private space industry is very nascent too, with only a handful of start-ups entering the segment in India in the past few years. They are all at a very early stage. Most investors like to invest in proven markets where market size is clearly established and the risk can be somewhat estimated.”

It is in this early stage that funding is crucial. CS Murali, chairman, STEM Cell at IISc, says the first four to six years of companies are important. “For any space technology start-up, these years go into R&D, which needs funding. Only after going through that phase will they be able to breakthrough,” he adds.

These start-ups aren’t anywhere near disrupting the current status quo, at least according to older players such as Godrej Aerospace. “I don’t see them as competition yet as they are still in the R&D mode, while we are in full production,” says Vaidya, adding, “If they can do some disruption in technology and overtake our engines and innovation, then yes they can compete with us.” But that he does not see happening for the next five years.

Besides the lack of money, there is also lack of clarity in regulation. “We don’t know to what extent the government will support privatisation,” says Bansal. Perhaps, the government could encourage private participation through incentives such as tax waivers, since this is early stage and risky, he suggests. For now, the regulatory mechanism is far from friendly. Entrepreneurs have to take permission to launch each and every space object, or take it to a different country to launch from their agencies. There is the Space Activities Bill, pending clearance from parliament, which aims to promote commercial activities in space exploration.

Once the regulations are in place, Papney sees many start-ups mushrooming. But, eventually, he sees only 10 to 15 of them succeeding — each working on different aspects, with ISRO, and others getting acquired by stronger vendors.

This industry, though built on the enthusiasm of many youngsters in college, will need more than zeal. Meanwhile, Musk has set a deadline of 2024 for four ships to Mars, two of which will be crewed!