The investment potential of the so-called “space economy” could be vast, but the Top1000funds.com Fiduciary Investors Symposium at Harvard University has heard that for some it resembles the wild west as a legal as well as a literal vacuum.
The space economy, which the OECD describes as “all activities and resources that contribute to human progress through the exploration, research, understanding, management, and utilisation of space”, reached a record $613 billion in 2024 and is forecast to hit $1.8 trillion by 2035, driven by falling launch costs and a proliferation of satellite constellations.
Luba Nikulina, chief strategy officer at IFM Investors, told the symposium that the headline number depends on “how you classify SpaceX, because we may actually reach this amount within one company”.
Just days away, SpaceX’s IPO values the business at about $1.8 trillion. Nikulina said space is simultaneously an infrastructure investment – with connotations of reliability and predictability – and speculative, and that the line between the two is thinner than it looks.
“Any infrastructure asset could potentially be made speculative if you don’t buy it at a good price or don’t manage rightly or put too much leverage, and then also just thinking about all technologies that we depend on and use in our day-to-day, most of them, if not all, were speculative at some point,” she said.
But even as the space economy booms, asset owners must ponder a range of issues beyond the pure investment potential.
Avi Loeb, the Frank B Baird Jr Professor of Science at Harvard University and head of its Galileo Project, said the ethical and governance framework for investing in space was basically non-existent.
“There is no international law. It’s sort of like the wild west, and the question is, if we go there and we conquer a piece of land, is it ours, and there is no legal definition, and there is no police that will monitor what happens there.”
Nikulina said the case for paying attention to what’s happening in space did not require going anywhere, or resolving who owned what. She said two historical examples, one financial and one technological, explain how today’s speculative investment routinely becomes tomorrow’s core portfolio holding.
“Lots of people lost lots of money” in the British railway financial mania of the 1840s, yet “railway now sits comfortably in our infrastructure portfolios”.
She said technological advances mean that it is only 123 years since the Wright brothers took (briefly) to the air at Kitty Hawk. Now, we’re seriously entertaining crewed missions to Mars.
“Even in my career, if I think about renewable energy or digital assets data centres, we were talking about today, they moved from speculative stage to fairly robust place in infrastructure portfolios,” she said.
Communication and defence already resembled infrastructure, with government-backed revenue and essential services. Solar panels and data centres in orbit were something else, Nikulina said.
“It’s literally early stage venture, technologies are developing, and we’re figuring out, are they going to work, and is there a commercial use there.”
She put travelling to the moon in a third category of being important to society but not investable by private capital. There was also the issue of unavoidable exposure. An IPO of $1.7 trillion would mean index funds were compelled to hold it, whether they viewed the investment as speculative or not.
“You would probably become a space investor, even if you were not planning to become a space investor,” Nikulina said. “So it’s better that we learn about how to invest in space.”
Loeb said space really matters for four reasons: basic science, commerce, the military, and a technological race with China that had replaced the old contest with the Soviet Union. The commercial case is underpinned by its sheer scale. But he rejected one currently fashionable idea: “There are discussions about data centres in space. I don’t believe in that.”
The next frontier
Loeb said there’s a clear distortion in where research funding is directed, and it’s mostly dictated by ease. He said the mainstream of astronomers is willing to invest more than $10 billion in the next two decades to search for microbes, the most primitive form of life, simply because it’s abundant.
He said he would instead direct funding toward identifying the technological signatures of advanced civilisations.
“When you date, you should aim high, not low,” he said. “You should look for someone who is smarter than you are, more intelligent, that you can learn from.”
Loeb said Mars is a poor second home for humans, given its temperature swing of hundreds of degrees between day and night, and a constant bombardment of cosmic rays which more or less guarantees that inhabitants there will die within a couple of years.
“It’s just like saying you want to get a second home to guarantee the housing opportunities for your family in the future, and you purchase a home in the South Pole. I mean, who would do that?”
Loeb said the payoff would not be lunar habitation but the technology developed getting there, much as the Apollo programme had spun out applications on Earth.
“It’s not so much that it will be practical to live on the moon, but in order to get there and establish a base, we will develop new technologies that will have applications on earth, and if you have an investment in a leading company, you could benefit from that.”
