Summer writing: How to be a good space market analyst?

This is a polemic about space market analytics and what it takes to do it well. This summer, I want to spend more time with research and original thinking, and thus — writing. I have a pipeline of topics across defence, space and commerce. The articles will be intentionally more opinionated than I usually write, for what I now want to share more of what I see, rather than what I see after thousands of excel rows.

In this article, I do not necessarily imply I’m doing space analytics right — I’m sharing some observations, thoughts and learnings from watching the best people in the industry. There are many people I’m learning from. Among those, two stand out and they know who they are. I haven’t asked for consent to share their names, but if you want to know amazing space/satcom analysts/consultants — let me tell you.

Understanding the role

All of those people who are around space — but aren’t really doing space — are making the space market efficient. And there are a lot of those people, because markets need to be efficient to work — and a lot of people are needed to make the markets efficient.

And those people, who are around space, but quite don’t do space — they differ. There are analysts, consultants, researchers. Analysts are saying how things could be, consultants are saying how things should be. There are advisors and investors, too. There are content creators. They all have different incentives, roles, perspectives.

My major takeaway is that it made me a better contributor to startups to understand, which one or another role do I resemble for this or that client. And the differences and trade-offs between them.

My minor takeaway to the industry is, that often we confuse the roles — content creators pretending to be consultants, investors role-playing analysts. And the lines are blurry, and I too do the same — but this should be one of the filters to deploy when seeing yet another space market analysis — is this person equipped to produce this piece?

Added-value

I wrote the 2021 Space Funding Dynamics report having a particular company in mind. I was writing it for them, have they looked up the “EO upstream” section (page 14), they would have a complete sales pipeline for this year. Yet instead, they looked up the report and said, “it is way too long, Filip, can you break it down for us”.

Corresponding with how major consultancies work, the core of work, added value and money lies in the follow-up work and I’m learning how to do it well.

I will repeat this line over and over the coming months, but there is tremendous learning in having seen 150 space capital markets transactions, together with knowing many VCs, companies, rumours, frameworks — enormously valuable for startups across the industry. And the follow-up work is core to doing the analysis right.

Data and context

This is again no surprising structure in how reports are written. I start with gathering data, into docs and sheets and pile notes alongside. I gather venture rounds in a segment during a time period and list them. Then I do math (need to get better at this).

And then the interesting part begins. I take a look for example — at the smallsat manufacturing startups — what are the round sizes? Which investors are in — are those their first space checks written? Or perhaps not — then, what are other portcos? Is there a broader vision behind, maybe a thesis, maybe one partner? Possible cooperation or adverse interests? What did the CEO say at the “Whatever” Summit the year earlier? Do competing companies in the field choose the same fundraising strategy? Are there patterns to be seen in exits?

Things I’m good at

Data. Borrowing the phrase from John Holst “I’m good at finding stuff on the internet.” I know where to find the data I need and spend more time in Crunchbase than with my friends. I also know when the data is wrong — so often, there are underreported fundraising rounds or reported rounds which don’t exist or BS websites and lists with no methodology. I have done this for a while and got reasonably good at knowing when data aren’t right.

Context. I have no magical hat. I don’t hide that I just take stuff which are on SpaceNews, Techcrunch and my Twitter feed, compile them, do the math, repackage and publish again. So often, some journalists could replace 70% of my work would they want to do it, but — via point one, that is not their role. I also consciously spend much more time speaking with the folks out there, which makes the context cohort much stronger. (Something I regret not having done much earlier — regularly speaking to new people — tho, back then, nobody wanted to speak with me). There is a trade-off between having the context and publishing negative opinions on companies. I was — again — thinking about my role I decided I rather sacrifice a piece of my objectivity to better capture context. It’s the journalist’s role to be objective, it is the financial analyst’s role to write from public statements — my role is to use the context to deliver meaningful analysis. That said, I will continue to trash scam companies like Phantom Space — because, it is a responsibility of a founder not to make his startup look like a scam.

Writing

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I don’t have much to say here — writing well is a must-have for analysts. I try to write in a concise, engaging way and continue in fixing the grammar errors along the way.

Leaving the echo chamber

Some topics just get people so excited — remember OneWeb + Eutelsat transaction? There was nowhere to hide from the announcement. Or RocketLab’s SPAC. And then in the flat and rainy Denmark, GOMspace claims 700M in potential revenue till 2030.

Is it likely for a USD 53M company to achieve 700M in 8 years?

No, not quite — or the valuation is not right.

Is GomSpace profitable — absolutely.

Are Danish people known for claiming targets they can’t achieve?

No.

Is anybody in the self-proclaimed bubble of space analysts paying any attention?

No.

So, regardless how far will GOMspace miss its ambitious targets, Space analysts should spend less time echo chambering the news on Linkedin and Twitter, and spend more time with research, thinking and speaking to people.

International industry. And ladies and gentlemen — there is not only the US in the world. Have a look at what is happening in the Baltics, Nordics, the forgotten land of CEE, Turkey, the Middle East, Latin America, India, Australia, South Korea, Singapore, Hong Kong, China, Taiwan and on you go. One important work I try to do is to intentionally promote happenings in the industry beyond the traditional hubs.

Being slow. As a good space analyst, there is no issue with being slow. When WSJ broke the news about Elon and Brin, I was almost to write about Google formerly having about 7% in SpaceX and being tangled through a web of board members and what it implies. And — I would be wrong, as the affair was shown to likely be a hoax the day after. When the news about OneWeb and Eutelsat broke, people were too fast to compare how the merger would compete with Starlink. But again, a proper analysis would require comparing major segments (mobility, residential, government, enterprise…), other competitors (ie SES was completely ignored by the analysis, so was ViaSat, Intelsat), and how they compare in serving the given vertical and that would deliver about right analysis. It’s okay to sit down and think, even at the price of being slow.

Hands-on analysis

We all will reference the Euroconsult forecast — and there is no value for me to recreate it. Circling back to the first point, my value is in digging into specific verticals and providing much more context. Writing about specific companies brings disadvantages — it is much easier to piss off people and to be wrong. But ultimately this is a useful format my clients look for — aggregate statistics are perhaps for European Commission, but this 15-people-startup will appreciate much more down-to-Earth research.

My worries

Sugar and spice and everything nice

Wasn’t only made for [space markets analysts]

I can never stop thinking of making a mistake in a report, or worse, a client’s deck. In the last report, I made two notable mistakes I know — funny enough, one of them will make up for a story, sooner or later. I don’t think there is a way to avoid it. Long reports consist of thousands of data points and checking them will take dozens of hours. I work to double-check most of my work and have proofreaders — plus I use reasonable sources, in combinations. If I ever do a mistake in facts/data about your company, know it is an unintended mistake. If you have negative commentary in the opinion part — you probably deserve it.

Notably lower in the chain, there is a worry of not being exhaustive — I always disclaim I’m not exhaustive, although I’m trying to be. But always, there will be one more rocket, satellite, or transaction I have missed out on (well, I wouldn’t miss a rocket in a market assessment, probably). But likely, if the subject could have been omitted, it is not as important.

There are more topics I would like to share:

• The importance of a broad grasp — good analysis lies in combining knowledge of technology, business, economics, politics
• Dealing with contrasting opinions — so often I hear polar opposites and try to understand where is the truth. Usually, I stick with what I think and usually, I’m right.
• What I learned from my past reports. Clearly split facts and commentary, dig more into LPs (really good one), understand the nuance between EO downstream startups (they are really different). And so on.

In the years to come, I have a lot to learn and improve about analysing this wonderful complex dynamic of data, satellites, rockets, people and money. Industry, too, has a way to go in delivering analysis well-serving to the clients. It is about making the markets more efficient, beating information asymmetry and helping to extend the impact which the space industry can offer.