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Russia-Ukraine war ‘showcased the growing commercial capabilities’ of space companies: VC investor

Space Capital managing partner and SpaceX investor Chad Anderson joins Yahoo Finance Live to discuss new investment frontiers, space stocks, innovation, and the outlook for space ventures going into 2023.

Video Transcript

BRAD SMITH: Switching gears, everyone, it hasn't exactly been a to the moon kind of year for space stocks. The sector another casualty of snarled supply chains and a brutal stock selloff, thanks to mostly tighter monetary policy. Space companies that rode the SPAC wave of the last few years facing more than a little downside pressure.

On the other side of the coin, it's been a big year for innovation and successful launches, like Artemis 1. Though investment this year has been down, it's worth remembering the hundreds of billions of dollars that have flowed into space ventures over the past decade. The likes of Virgin Galactic, Rocket Lab, and of course, SpaceX are now industry leaders.

Joining us now is a man with a lot of skin in the game. We've got Chad Anderson, who is the managing partner of Space Capital and a SpaceX investor as well. Chad, great to see you here to really cap off 2022. We were just running through the kind of moves that we've seen within the space industry, both for privately traded companies and for some of those that have made their way into the publicly traded realm. They've struggled out of the gate this year, as many of the SPACs have and the class of 2021 has as well.

CHAD ANDERSON: That's certainly true. I mean, SPACs are a story in their own right. So I think thinking about where we are and where we're going in 2023, recapping 2022 pretty quickly is a good place to start. So I mean, in the first half of the year, the Russian invasion of Ukraine really showcased the growing commercial capabilities of commercial space companies. So SpaceX's Starlink satellites kept the Ukrainians connected and helped them combat Russian misinformation. And Earth imaging companies like Maxar, publicly traded, Planet, a SPAC company, publicly traded, were providing ground truth, what's actually happening on the ground to, again, combat Russian misinformation.

And they're providing essential information and insights to enterprises and governments, which they're willing to pay for it. The NRO, one of the big five US intelligence agencies, made their first-- sorry, their largest ever purchase of satellite imagery in Q2. And record revenues for these Earth observation companies like Planet are really showcasing how data and insights from space-based assets are really essential, so.

BRAD SMITH: One of the interesting things that we've heard cited going into 2023 is this kind of overhang of geopolitical tensions. What does that mean, or what does that translate into some of these space ventures that have come to light over the past few years and in an investment accelerated fashion, too?

CHAD ANDERSON: Every space technology in existence was developed by the government for the government and military purposes. I mean, think about GPS is the original space technology and the most successful in history. It's generated trillions of dollars in economic value and some of the largest venture outcomes we've ever seen. And that was built by the government for the government and military purposes.

Earth observation is the same situation. We wanted intelligence about what was happening in different areas. It was used for Earth science for government programs to understand what was happening on the surface of the planet. And then eventually, you know, it became to grow into a commercial market. The same thing is happening through all aspects of the space economy. You mentioned the Artemis program, and that's another great example of one that we're on the front end of.

BRIAN SOZZI: What do you think next is for SpaceX?

CHAD ANDERSON: 2023 should be a very big year. They've just started launching their next generation Starlink satellites. These have interoptical intersatellite links. So you think about it as a mesh network, an internet backbone that's in orbit that is a redundant internet backbone to the Earth, providing new capability, new capacity to all corners of the planet. And this is going to enable all types of new applications from enterprise, government, defense, and consumer. And also obviously, there are other big programs. There's Starship program. And we're hoping to see Starship get up and in an orbital test launch early in the year.

BRAD SMITH: And we had already seen as of, I believe, late last week, over 59 launches. And there were still two more for the Falcon 9 that were planned before the end of the year. And so I mean, I guess, that would have happened by now or perhaps today or tomorrow. And so what does the pipeline for the launches look like in 2023?

CHAD ANDERSON: Yeah, so they've broken that number. I think they're at 60 now. So more than one launch per week. That's SpaceX alone, let alone globally. This was a record year for launches, commercial and government driven launches. We have new vehicles coming online next year. So SpaceX's Falcon 9 has really dominated the market. It's the best, most cost effective, safest, most reliable vehicle that exists. And next year, we're going to see more launch vehicles come online, several of them that are going to be increasing competition for the space.

But Starship is in a class of its own, the biggest rocket we've ever seen, the lowest cost, fully reusable, rapidly reusable. You can think about us moving to the era of expendable launch vehicles, moving into a realm of more like commercial jetliners.

BRIAN SOZZI: Are you concerned on what SpaceX may or may not do, just given Elon's-- everything that's happening with Twitter? We've seen Tesla shares sell off very aggressively because of what may or may not happen at Tesla. Do you share that concern for SpaceX?

CHAD ANDERSON: No, so Twitter is clearly a distraction for him and all of us. But the people that are in charge at SpaceX, Gwynne Shotwell, is leading the charge there. And she's been the lieutenant there since the very beginning in the early days. He has-- Elon has put her and [INAUDIBLE], two key executives, down at Starbase, leading Starship development. And so I actually look at that as a positive thing. They weren't making the progress that they wanted to see. They were hoping to get to orbit by the end of this year. That didn't happen. So he's put his best people on the job.

BRAD SMITH: Does the appetite for-- you think about the number of space tourism pursuits that were really pioneered in 2021, the likes of Blue Origin, the likes of SpaceX as well, and Virgin. And so with all of that, in a recession, does that just kind of evaporate, or does that kind of crash land, at least, for an extended period of time because of those dollars being spent in a discretionary fashion elsewhere, even by the most affluent people who could afford a trip to space?

CHAD ANDERSON: Yeah, it's a good point. And I mean, I think it's important to also note that space tourism is a very, very small part of what's happening in the space economy at large. It's mostly about the data that's coming off of space-based assets. And as investors, that's really where we see a lot of the growth. But the space tourism is very interesting.

You know, last year, there wasn't really an opportunity to go-- to buy a ticket to go to space. That all changed this year. We saw 30+ private astronauts go to the edge of space, the suborbital space, or to go into orbit on a SpaceX vehicle, and to go to the International Space Station as well. So that became a reality this year. And we know there's long waiting lists. And there's actually several orbital missions lined up for next year as well, where we're going to see the first private extravehicular activity or space walk in a space suit on a SpaceX vehicle. So next year should be pretty interesting from a space tourism perspective as well.

BRAD SMITH: Chad, extremely knowledgeable insight, analysis, as always. We appreciate you joining us here on set to close out 2022 in the year that has been, but a lot of exciting pursuits still left in the space frontier. Chad Anderson joining us here today on set. Thanks so much, Chad.