Why it’s time for investors to get into low earth orbit satellites

LEO PNT also delivers stronger signals than existing satellite offerings and the ability to dramatically improve indoor reception, which again will enable a variety of use cases with applications in the mobility, defense, IoT, disaster management, environmental monitoring, travel and tourism, and telecommunications industries. As rising demand for resilient, accurate and low-cost solutions across industries, sectors and geographies unfold, the category value is expected to grow twenty-fold from 1.5 billion dollars in 2024 to 35 billion dollars by 2038.

Diverse use cases for potential investment returns

LEO PNT brings a wide variety of benefits to many use cases and industries, especially where accuracy and timing of data is mission critical. In mobility, for instance, there are applications for live and intelligent transportation management and vehicle connectivity. In autonomous technologies, LEO provides centimeter-accurate positioning guarantees. In defense, faster response times for emergency responders, jam-proof communications and search and rescue accuracy in remote locations provide great benefits. In maritime and aviation, we can expect far greater location accuracy with integrated sensing and communications systems (ISDAC), doppler positioning, e-navigation, civil aviation level integrity and localizer performance with vertical guidance (LPV).

There are also LEO applications for earth observation, including remote sensing of precipitation levels and upper atmosphere forecasting, or in farming similarly, remote livestock management and yield mapping. And in the consumer sector, LEO PNTs can enable use cases for remote real-time data collection and intelligence analysis, as well as accuracy positioning in digital twin environments. In the IT, finance and telecom sectors, we expect to see greater timing accuracy, maintenance of 5G standards and more effective synchronization diversified data processing.

Broad benefits promise efficiencies and savings 

As the LEO PNT category moves from launch to full flight, we can also expect a long list of benefits that will drive efficiencies across industries. LEO satellites are 25 times closer in earth orbit than traditional GNSS satellites, meaning <10-cm location accuracy, as well as time to first fix (TIFF) in seconds vs. minutes taken by traditional technology. There’s an additional cost benefit with current GNSS and broadband constellations, too, bringing a $1 billion-$10 billion price tag per satellite to build, while LEO PNT costs around $500,000 per satellite.² The resilience of LEO PNT translates to heightened signal strength, improved indoor penetration, accelerated PPP convergence and the capability to offer redundant observations and enhanced satellite geometric distributions. While LEO satellites promise the most comprehensive potential for achieving true global coverage, their high-powered signals also offer more robust security and anti-jamming capabilities compared to existing GNSS systems. These significantly enhanced performance advantages have wide-ranging implications for businesses, products and services across both private and public sectors.

LEO PNT race: the immediate future

The LEO PNT opportunity window will not stay open forever. Government space agencies are joining the LEO PNT race, albeit at a measured pace. Meanwhile, newer, private and agile space companies are generating momentum that will soon compel established legacy companies to accelerate their actions. This will only increase in speed as commercial alignments take shape and industries from aviation to telecoms look at benefits of involvement. Early investment adopters should monitor this developing landscape, as well as emerging regulatory guidelines, which at present in Europe, the US and beyond include only regulatory oversight of existing satellite technologies. But that will change, and as it does, regulatory controls will limit investment opportunities for those not already in the space.

Imperative for investors

The emerging nature of LEO PNT provides a unique investment opportunity for corporate investors but requires changes in approach, tools and mindsets, to maximize potential returns while lowering risk. Assessing the multitude of direct and enabled applications with a technology synergy or portfolio lens can allow investors to benefit not only from a direct investment in LEO PNT, but also open new windows in other application segments. Taking a portfolio perspective when approaching and evaluating a potential investment in LEO PNT can facilitate positive spillovers into not only other space companies working in areas like launch or data analytics, but also accelerate development and reach into nontraditional segments such as agriculture or emergency response. The typical objective of investors is to comprehensively assess the opportunity presented by LEO PNT constellations, considering potential advantages, drawbacks, risks, optionality and timing, to make well-informed decisions.

However, traditional approaches of investing don’t work for emerging and cross-functional opportunities like LEO PNT. While startups and venture capital funded firms thrive in this process, traditional and legacy corporate players in aerospace, defense and even telecommunication sectors struggle in making early-stage speculative investments. The use cases enabled by LEO PNT technology and market are so broad across many different verticals, it is difficult for corporates to think about products and services across these – as well as where to start placing their bets.

Typical corporate toolkit, templates, diligence processes and methodologies to make investment decisions can also be inadequate when evaluating the potentially wide outcomes enabled by this emerging technology. As a result, corporate entities are often late to the game as they fit these developing opportunities into a framework, process, review cycles and governance that are structured more for investments in stable assets with known growth profiles and risks. Legacy corporations that conduct venture building correctly, for example, deliver breakthrough shareholder returns. Our experience learning from these successes suggests a number of imperatives for corporate investors to consider: