SpaceX, Virgin Galactic, Blue Origin driving affordable space travel: Space Capital managing partner

Space Capital Managing Partner Chad Anderson speaks with Yahoo Finance Live about the outlook for the space economy after a record year of launches by Elon Musk's SpaceX, Richard Branson's Virgin Galactic, and Jeff Bezos's Blue Origin.

Video transcript

- 3, 2, 1, 0, ignition.

- Lift off. Cargo Dragon soars with the final supply run in 2021 for the astronauts aboard the International Space Station.

- You are looking at SpaceX's Falcon rocket lifting off from NASA's Kennedy Space Center this morning for an early Christmas delivery. The rocket hoisting the Dragon capsule loaded with more than 6,500 pounds of supplies and Christmas gifts for astronauts at the International Space Station.

It has been a historic year for space tourism with Blue Origin, SpaceX, and Virgin Galactic, all successfully launching commercial flights into orbit. But our next guest sees that momentum carrying into the new year with the first commercial trips to the moon set to take off.

Let's bring in Chad Anderson, Space Capital managing partner. And Chad, we always like to turn to you as somebody who's well invested in this space. I want to look to 2022. But I'd love to start by just talking about the year that was. I mean, the amount of investments alone, $10.3 billion in infrastructure in the space, the number of human space flights that we saw, it feels like it was really a banner year. How do you think this sets things up going into 2022?

CHAD ANDERSON: We have 13 human space flight missions. Three private companies had milestone historic missions. Probably the biggest of those was the all civilian Inspiration4 mission that launched with SpaceX.

And you just showed some footage. SpaceX had a massive year. They had three launches in the last few days to end the year. And they marked another milestone with the 100th recovery of a booster. So they had 31 launches this year and nearly all of them, 94%, were on flight proven rockets, so boosters that had flown before.

So this is a really big step forward for the space economy and in reducing costs and providing more access. And so that's driving a lot of the investment that we've seen. So as you mentioned, according to our data, we've seen over $10 billion invested into space infrastructure through Q3, and $25 billion across all space technology stacks.

And Q4 is already massive. We've seen a lot of investment come in Q4. So this is going to be an even bigger, more historic year for investment into the category. And so it's been a huge year. And already investors are starting to think about 2022 and what comes next.

- So let's look ahead to the next year. You mentioned one particular one you're watching here was Starship, expected to reach orbit in early 2022. How significant is that going to be?

CHAD ANDERSON: It's really hard to put into words. So remember, 10 years ago, the entire space economy was a handful of defense contractors and the government on the other side of the market. I mean, it was a very limited market. And SpaceX fundamentally changed the economics of space and provided access to the 1,600 or so privately funded companies that we're tracking to date.

So massive change driving a lot of innovation. And Starship is going to have an equally, if not bigger, impact on the space economy. They're going to further reduce costs of getting to orbit. And they're going to stimulate the growth of entirely new markets.

So this is a very big development. Starship is going to be a massive, 100 tons to orbit, fully reusable system. It can do things that we've never done before at a price point that we've never done them at.

- We've seen a number of big names come to the market through SPACs. And you know, we were talking earlier in the show about a lot of scrutiny that's been placed on some of these transactions. And you highlighted in your notes here that investors need to realize the space economy requires special expertise. What do you mean by that, specifically? And do you think maybe the misunderstanding points to the kind of valuations we've seen?

CHAD ANDERSON: Yeah. Specialist expertise, no doubt. So SPACs had a big year for space companies in 2021 also. Two of our portfolio companies went public via SPAC, Rocket Lab and Planet Labs, most recently. But I think that it's important for investors to realize that not all SPACs are created equal, and not all of these target companies that they merged with are created equal either.

So I think that this is going to become more apparent as we go into 2022 and out years, as things start to shake out and we start to see the quality companies really separate themselves from the pack. I think a lot of investors are looking at these space technology stocks and kind of painting them with a broad brush. But I think we're going to start to see some separation in 2022.

- And finally, we started by talking about these human space flights. You know, tourism certainly a big draw. We saw these huge spectacles, whether it's somebody like Michael Strahan, William Shatner, all traveling into orbit. How is that going to continue going into next year? And at what point does it become a little more affordable for the average American or the average person?

CHAD ANDERSON: I mean, so there's three different companies driving this forward. SpaceX is taking government, NASA astronauts, and private citizens to orbit where they're staying for multiple days or weeks or longer. You've got Virgin Galactic and Blue Origin that are taking paying passengers, "cashtronauts," if you will, up into the edge of space. They're basically kissing the edge of space, staying there for a couple of minutes and experiencing microgravity.

This was a historic year. We'd never done this before. There's been several missions this year. There's more slated for next year. So as we continue to do this and the number of these flights continues to go up, and it becomes more commonplace, we're going to see the price reflect that as more options become available, so as the supply starts to meet the demand.

- Certainly a lot of people looking forward to that. Chad Anderson, Space Capital managing partner. Good to talk to you today. Happy holidays.