It may seem like a great idea on paper, but the reality of your portfolio companies building their own satellite IoT constellation represents a number of risks to your investment.
To begin with, building satellites is extremely costly – no matter how compact they are.
And even though launch prices are slowly falling, it still takes around $500,000 to put a 3kg nano satellite into low-Earth-orbit (LEO).
Perhaps that would be a manageable expense, if you only needed to fund one LEO satellite. But it takes dozens, perhaps hundreds, of LEO satellites to achieve effective regional coverage. And for global coverage, that number surges into the thousands.
Again, perhaps that would be achievable – if LEO satellites lasted for decades. But the lifespan of successfully deployed SmallSats is just five years. Which means the satellite IoT constellation would require continual replacements and substantial maintenance.
Many LEO satellites never get that far, either. A significant proportion of the satellite IoT constellation you would fund, would probably fail upon launch – as the Starlink mission of February 2022 showed. In fact, NASA calculated that 42.6% of SmallSats were partial or total failures from 2009-2016.
Any failed LEO satellites would then become hazardous space debris. And that’s a problem which policymakers are now studying. In fact, new regulations for LEO satellites are probably imminent – and any proposed constellation would have no guarantee of compliance.