The Space Economy: A Trillion Dollar Industry?
Guest author - Arthur Branch
Key Takeaways:
The space economy is projected to reach USD 1 trillion by 2030, driven by falling launch costs, private sector innovation, and growing investor interest.
Private firms are transforming the sector with services like satellite internet, climate monitoring, and in-space manufacturing, but face high entry barriers and funding challenges.
Outdated international treaties are struggling to keep up with the commercialisation and militarisation of space, raising concerns around regulation and governance.
The proliferation of satellites risks triggering the Kessler effect, threatening future access to space and highlighting the urgent need for debris mitigation efforts.
Space mining and orbital services present transformative economic potential but remain constrained by high development costs and legal uncertainties.
Overview
A once state-dominated domain, the space economy is now booming—on track to reach USD 1 trillion by 2030. Falling launch costs, rising investor appetite, and an explosion in satellite applications are transforming Earth’s orbit into the next great economic frontier. Since the 1980s, launch costs have fallen 30-fold, dramatically lowering entry barriers and opening opportunities for startups, established firms, and investors alike. The small satellite boom is transforming everything from communications to weather forecasting. With over 100,000 satellites expected in orbit by 2030, strong regulation is essential to manage risks. As low Earth orbit (LEO) grows more crowded and satellites reach end-of-life, the threat of a chain-reaction collision—like the Kessler Syndrome—could jeopardise future space activity. Addressing these challenges is vital to keeping space open for innovation and exploration. Governments are shifting from sole operators to enablers of space investment. The UK Space Agency aims to catalyse private funding, while NASA now partners with firms—transitioning from pioneer to customer. Commercial contracts for crew missions, lunar landers, and future space stations are driving a more competitive, market-led industry.
The Importance of the Commercial Space Age
Private investment in space has grown rapidly, with a 21% annual increase since 2015—highlighting the sector’s rising strategic value. A UK government report shows strong returns: every GBP 1 spent on space communications yields GBP 9.80 in public benefits, while general space operations return GBP 3. UK funding to the European Space Agency also delivers GBP 9.80 per GBP 1. Even without factoring in broader benefits, the economic case for commercial space is clear.
Innovation is driving down space launch costs. Reusable rockets and a competitive launch market—boosted by rideshare missions from firms like SpaceX and Rocket Lab—are giving smaller players easier access to LEO. This increased access fuels competition and enhances the scientific and strategic value space firms offer to governments, researchers, and industry. Space-based technologies are playing a vital role in tackling climate change and could be key to improving global living standards. For example, CubeSats developed by Planet Labs, Microsoft, and the University of Washington help monitor shifting climate patterns from orbit.
As Earth observation becomes increasingly vital in the commercial space age, crewed spaceflights are also growing more frequent. Blue Origin routinely carries wealthy passengers just beyond the Karman line for brief suborbital trips, while SpaceX transports agency astronauts to the ISS for six-month missions. In recent years, SpaceX has also launched 'tourist' missions lasting up to two weeks, many of which include a wide range of scientific research aboard both the ISS and Dragon spacecraft. As competition rises and costs fall, space travel opportunities will expand—but widespread access for ordinary people remains unlikely without rapid commercialisation.
A New Era of Space Geopolitics and Security
The commercialisation of space has outpaced the frameworks established by international treaties, such as the 1967 Outer Space Treaty, which primarily governs state activities and lacks provisions for private enterprises. Efforts like the U.S.-led Artemis Accords aim to establish norms for space exploration, but major players like China and Russia have not endorsed them, citing concerns over perceived U.S. dominance.
Tensions among the U.S., China, and Russia are intensifying, leading to a renewed space race with both economic and security motivations. The deployment of reconnaissance satellites, atmospheric balloons, and secretive spaceplanes—such as the U.S. X-37B and China's Shenlong—highlight the strategic importance nations place on space capabilities.
Anti-satellite (ASAT) weapon tests have raised significant concerns about the militarisation of space and the risks to critical infrastructure. Notably, China’s 2007 ASAT test created over 3,000 pieces of trackable debris, posing long-term hazards to satellites and space operations. Russia's 2021 destruction of its own satellite similarly generated a substantial debris field, threatening the safety of the ISS.
The dispute over territories like Taiwan have not yet extended into space, but any future invasion would likely be preceded by cyber or kinetic attacks on satellite communications (SATCOMs) and surveillance infrastructure. These systems are vital for early warning, navigation, and real-time battlefield coordination. Targeting them could delay military response times and create strategic blind spots, giving an aggressor the upper hand in the opening stages of a conflict. Recent efforts by Taiwan to develop satellite internet as a contingency against such attacks reflect growing awareness of this threat vector.
In response to these challenges, defence contractors have increasing opportunities to contribute to space security. Events like the Defence and Security Equipment International (DSEI) conference's Space Zone provide platforms for showcasing advancements in satellite technologies, space-based solutions, and collaborations between military and industry stakeholders.
The Role of Small and Mid-Sized Players
The growth of the spaceflight sector has incentivised smaller firms to enter the market. While the UK isn’t a global leader in space, its firms are carving out niches across the industry. Space Forge, based in Cardiff and founded in 2018, is pioneering in-space manufacturing with its re-launchable ForgeStar platform. By leveraging microgravity to grow crystals and reduce contamination in pharmaceutical production, the firm is unlocking new frontiers in medicine, semiconductors, and superalloys. To lower the barriers to entry, Space Forge makes use of ride-share missions, significantly reducing the cost of reaching orbit. Meanwhile, Surrey Satellite Technology (SST) has been building satellites for over 40 years—supporting missions from Europe’s Galileo navigation system to Earth observation projects in Nigeria. Though lesser-known, these firms are quietly shaping the UK’s contribution to the space economy—offering investors exposure to high-impact technologies in early-stage but scalable areas like in-orbit manufacturing and small satellite innovation.
Risks and challenges of a commercialised space sector
Entering the space sector is no small feat, with high barriers to entry and significant funding needs. Developing launch vehicles or spacecraft requires substantial investment, and the risk of failure is high. Securing capital for R&D is crucial, but a clear, confident roadmap is necessary to attract venture capital. While speculative funding was more accessible in the early 2020s, by 2022, 95% of VC deals in the space sector went to established firms already generating revenue, leaving start-ups struggling to secure backing.
Providing a reliable spaceflight product or service continues to be a challenge. Only three private spaceflight companies have repeatedly and safely launched orbital rockets: United Launch Alliance (a joint venture between Lockheed Martin and Boeing), Rocket Lab, and SpaceX. A reliable launch program requires a strong talent pool, significant funding, and an element of luck. For example, if SpaceX’s fourth orbital launch attempt of their Falcon 1 rocket was unsuccessful, they risked bankruptcy.
Satellite constellations, like SpaceX’s Starlink, are revolutionising global internet access, especially in remote areas. Starlink now serves over 4.6 million customers, from schools in isolated regions to fishermen at sea. However, to operate, these constellations require large networks of satellites in LEO, sparking concern among astronomers. They argue that the satellites disrupt sky observations, despite SpaceX’s efforts to install anti-reflective technology on their satellites. Additional challenges include the potential for transmission interference between constellations operating at different frequencies. For a sustainable solution, global regulation and collaboration between satellite companies and astronomers are essential.
As space debris continues to accumulate, the risk of satellite collisions in Earth's orbit is steadily increasing. This raises the likelihood of a chain reaction, known as the Kessler effect, where one collision triggers a series of others, ultimately rendering orbital space unusable. Such a scenario would be catastrophic, jeopardising the future of human space exploration and commercial spaceflight. Preventing Kessler syndrome is crucial to ensuring the continued viability of space activities.
Space’s commercial future
Space debris
If current trends continue, up to 100,000 satellites could be operational by the end of the decade. As satellite numbers rise, so does the need for space debris removal technology. Several companies, backed by space agencies, are developing solutions to address this challenge. One notable project is ClearSpace-1, a collaboration between OHB SE and the European Space Agency, scheduled for launch in 2028. The mission will capture and deorbit ESA’s defunct PROBA-1 satellite, guiding it to burn up upon re-entry. Efforts like these address the urgent problem of orbital debris while also laying the foundation for new, space service markets, turning risk into opportunity.
Space mining
The commercial potential of space mining is immense. NASA’s 2023 mission to asteroid 16 Psyche—estimated to be worth USD 10,000 quadrillion—highlights the scale of the opportunity. If proven viable, asteroid mining could one day supplement terrestrial supply chains for critical minerals. However, realising this potential remains decades away, and the broader economic impacts—such as commodity price shifts—are still highly speculative. While future missions will likely cost well over USD 1 billion, the economic returns could be unprecedented.
The biggest obstacle to space mining is still its immense cost. AstroForge, founded in 2022 by Matt Gialich and Jose Acain—both veterans of Virgin Orbit, NASA, and SpaceX—is working to bring those costs down. Although their recent ‘Odin’ mission didn’t locate any viable metallic asteroids, it laid valuable groundwork for future extraction and in-orbit construction efforts.
Space mining also faces considerable legal issues, provided states continue to adhere to UN space treaties. The Outer Space Treaty states, “Outer space… is not subject to national appropriation by claim of sovereignty, by means of use or occupation, or by any other means.” While this clause prevents state ownership, it leaves ambiguity around whether private firms can exploit off-world resources. Legal interpretations vary, with some arguing it permits commercial use absent sovereign claims—creating a regulatory grey zone that could delay or complicate investment. Though several firms are focusing on space mining, significant breakthroughs are likely only to occur only in the longer term.
Space tourism
The future of space tourism is poised to grow but will depend heavily on regulatory developments and future space treaties. Tourism in space falls into three main categories: suborbital, orbital, and interplanetary. Suborbital flights—such as those by Blue Origin—now occur semi-regularly, while Virgin Galactic is developing a new spacecraft scheduled to debut in 2026. These short flights, like Blue Origin’s 11-minute New Shepard missions, reach near or above the Karman line, the edge of space. Orbital tourism, by contrast, involves multi-day missions like those on SpaceX’s Dragon capsule, which orbits Earth every 90 minutes. Dragon has flown private citizens, researchers, and the first astronaut with a prosthetic limb, combining tourism with scientific advancement and helping pave the way for future missions.
While suborbital and orbital space tourism is now becoming semi-routine, interplanetary travel—to the Moon, Mars, and beyond—remains a major long-term goal for both governments and private firms. Though such missions will likely involve collaboration between national space agencies and the private sector, companies like SpaceX are leading the charge. Its 120-metre Starship rocket, designed specifically for manned expeditions to Mars, is progressing rapidly through iterative development. However, key hurdles remain, including proving in-orbit refuelling and finding solutions to long-duration radiation exposure—both essential for making a crewed Mars landing viable.
The future of commercial space is exciting, but challenges lie ahead, and the private sector, with government backing, will be eager to identify solutions.
Opportunities for Businesses & Investors
Since the early 2020s, securing venture capital has become more difficult for space companies, leading many to turn to alternatives like debt and project financing. Start-up valuations have fallen, and investors are now more selective—focusing on firms with clear, realistic paths to profitability. As a result, mergers and acquisitions have become more common. Lower valuations have made smaller firms more attractive targets, giving larger players opportunities to scale quickly. In 2023, ViaSat’s USD 5.8bn acquisition of Inmarsat exemplified this trend, which is likely to continue in the current financial climate.
The space sector remains a turbulent market for investors, with stock volatility driven largely by the unpredictable nature of the launch market. Venture capital dominates the investment landscape—13 of the 15 largest VC firms globally have backed space companies. However, most VC funding now goes to established players. Since 2016, SpaceX alone has received 37% of disclosed VC investment in the sector. Private equity follows a similar pattern, typically favouring companies that have already raised over USD 300 million. This shift makes it increasingly difficult for start-ups and smaller firms to secure funding.
Investing in publicly-listed space companies comes with high risk, as stock performance often hinges on mission outcomes. Astra, which went public in 2021 during a market boom, suffered repeated launch failures, saw its share price crash, and was taken private in 2024. Rocket Lab has performed better but remains sensitive to launch success. In March 2025, a failed lunar landing by Intuitive Machines caused its share price to drop 20% in a single day.
Outlook
The space economy is poised for exponential growth, with the sector projected to reach USD 1 trillion by 2030. In the short term, the industry will see increased launch frequency, with both government agencies and private companies ramping up activities as lunar exploration gains traction. Space tourism will continue its upward trajectory, while smaller firms offering satellite services, space-based climate monitoring, and in-space manufacturing will increase their market share.
In the medium term, the geopolitical space race between the U.S. and China will intensify, particularly with efforts to return humans to the Moon and beyond. New regulatory frameworks will need to emerge to address mounting space debris and ensure safe, sustainable practices. As the commercialisation of space accelerates, collaboration between governments and private enterprises will be essential to managing these risks and maximising potential.
In the long term, space mining and orbital services will unlock transformative economic opportunities, though these markets remain constrained by significant technical and legal hurdles. As the sector matures, space will become an increasingly critical component of the global economy.
Author Bio - Arthur Branch:
Arthur Branch is an Economics and Politics student at the University of Exeter and Director of Geopolitical Advisory at Exe Consulting. A former TEDx speaker on space exploration, he has written for Space Explored and led social media strategy at Primal Space, growing its following from under 1,000 to over 27,000. Arthur is passionate about bridging the gap between complex global issues and public understanding.