Space startups need to start preparing for a post-Starship world

SpaceX’s super-heavy launch system Starship is poised to fundamentally reshape the space economy. The 394-foot-tall vehicle, which took to the skies for the first time last month, is designed to carry a staggering amount of mass to low Earth orbit and into deep space.

TechCrunch+ spoke with three pure-play space VCs — Space Capital founder and managing partner Chad Anderson, Space.VC founder and general partner Jonathan Lacoste and E2MC Ventures founder Raphael Roettgen — to learn more about how they advise founders to think through Starship’s super-heavy implications.

While the trio diverges on many fine points, they all agreed that founders should be thinking now about how Starship could affect their operations, for better or worse.

“Starship has such high importance to the space sector that probably almost everyone who has a space company has to war game what that means for their business,” Roettgen said.

Changing the face of launch …

The most obvious way in which Starship is likely to revolutionize the industry is by continuing the trend SpaceX firmly established with the debut of Falcon 9: further lowering the cost of launching mass to space. Starship will be capable of carrying 100 to 150 tons of stuff to orbit, a paradigm-shifting quantity that far outstrips the payload capacity of any rocket that humans have ever designed.

While future Starship launch costs are still very much up for debate — the major question being how much of those cost-savings SpaceX will pass on to customers — SpaceX CEO Elon Musk has estimated that launches could eventually cost less than $10 million per mission, or about $100 per kilogram of mass launched. (To put it in perspective, the cost for a ride-share launch on a Falcon 9 is about $6,500 per kilogram.)

Its payload capacity alone could exacerbate existing segmentation in the launch market, for example. If SpaceX’s popular ride-share launch program, which splits the cost of a Falcon 9 launch among many customers, was extended to Starship it could greatly “aggravate the threat of ride share to whoever is [currently] threatened by ride share,” Roettgen said. Any rival platform already suffering due to the Falcon 9 sharing system would be under even more pressure.

Some of the changes could be unexpected. Space.VC’s Lacoste suggests that Starship could change the way we measure success in the space industry entirely. “What if launch numbers actually go down, but mass to orbit has gone up?” he said. “It might force people [inside] and people outside the industry to think about success in a slightly different way.”

… and everything else

It’s not just launch that will be disrupted. According to Space Capital’s Anderson, many of today’s most interesting market developments are “based on a Falcon 9 launch paradigm.” That companies are even thinking up solutions like orbital debris removal, commercial space stations and in-space manufacturing companies is due in large part to SpaceX’s innovation with that workhorse rocket. But Starship has the potential to make these markets obsolete before they even have a chance to mature.

“There’s been +$3 billion dollars as of Q1 invested in these emerging industries,” he said. “But if you think about the change that happened with Falcon 9, the same thing is coming with Starship, and it’s going to make a lot of these systems and solutions obsolete.”

According to Space Capital’s most recent quarterly investment report, investors have poured $272.2 billion into private space companies since 2014. Startups dealing in emerging industries scored $309 million in venture funding in Q1, carried in part by tailwinds from the United States’ great powers competition with China. But despite some very promising signs of growth, the report cautioned that market correction is continuing to drive a sharp bifurcation between industry winners and losers. It’s a distinction that could become even more stark with the coming of Starship.

Anderson pointed to SpaceX President Gwynne Shotwell’s comments in 2020, when she suggested that Starship could be used to clean up used rocket bodies and dead satellites that are cluttering low Earth orbit. This is just one potential use case for Starship’s massive metal shell, Anderson said.

“What we’re thinking internally is, we don’t want to invest in something that’s going to be obsolete,” he said. “We’re looking for people who are building for this post-Starship world.”

But building a business from scratch is incredibly risky — building one that is relying on another company’s business plan just compounds the risk, Anderson added. So he stipulated that while Space Capital is looking for founders factoring in Starship’s capabilities, their business plans should have some way of bringing in revenue and not just relying on equity capital until the day that Starship is flying customer payloads.

Roettgen thinks that ideally founders would have some flexibility in their business model. “Let’s say ultimately your business plan could take advantage of Starship and its large payload capacity and could be made very compelling with Starship being in service, but maybe you can already start with Falcon 9 or [another large vehicle],” he said.

Lacoste framed the issue as one of resource allocation: “If you’re spending 60% of your time on a Starship-oriented [satellite] bus, my thought is, this should probably be 5% to 10% of your time now,” he said. “The reality is most space companies need to continue building and executing against their business targets and product development plans over the next three years.”

Proceeding with caution

Timelines are always tricky in the space industry, and Starship’s development timeline is no different. While SpaceX’s April 20 orbital launch attempt was a promising sign that the new launch program is coming together, it also revealed that the company still has much to do to prepare Starship for commercial launches.

Given this uncertainty, Lacoste suggested startups focus on customers first. “I would not recommend to companies to change their hardware development for the sake of Starship unless it is inherently beneficial to how they run their business or more importantly, to their customers,” Lacoste said. “Just because there is more mass available, doesn’t mean that if you’re building a smaller bus or smaller widget, you should have a much larger one. We should be taking our signals from the customers to hear what size and cadence of satellite busses they want.”

Overall, the three VCs agreed that we can only guess at the possibilities that Starship might enable. But it’s a near-certainty that it will leverage humanity’s considerable inventiveness to unlock a whole new way of using and visiting space.

“We’re entering a new launch paradigm,” Anderson said. “Starship is going to make a lot of existing infrastructure obsolete. It’s going to accelerate growth in existing markets. And it’s going to create entirely new markets that we can’t even imagine.”