Words like bounce-back, rebuild, pivot and restart are being used in articles, webinars and conversation in today’s day-to-day business. Some reports predict the economy is on a slow rebuild post Covid-19, others of a delayed bounce-back as headlines warn us of the worst recession in our lifetime.
In the space industry, discussions with industry professionals are highlighting a more optimistic view, referring to nearer-term bounce-back opportunities. The question remains – what does this really mean? What does it mean to the survival of space companies in the short-term, their ability to adapt to a new normal in the medium term and their resilience against future disruptions in the long-term?
Technology transfer is one way to build a diversified portfolio, embedding resilience and enabling growth in a post Covid-19 space sector. Building on recent industry discussions including feedback as a guest speaker at the AstroAgency hosted Technology Transfer webinar. At the end of the article there is a link to a short survey to allow us to gather further intelligence and better understand technology transfer activity in the space industry. Findings from this survey will provide a snapshot of the current environment and future opportunities or challenges to inform industry and government.
What could a bounce-back look like?
When economic confidence starts to return, so will investment and funding. To build confidence companies need to demonstrate their viability and growth potential:
- Existing - companies focus on growing their market share and developing their existing products for that market.
- New - companies focus on entering new markets with existing offerings, taking their products or services into new applications with existing or new markets, they may even look to develop entirely new products.
Not all routes are right for every company, but all need to be considered as part of a strategic review. For those companies looking at the new approach, they should be looking at technology transfer.
In financial markets, a diversified investment portfolio is one that focusses on a mix of assets to realise the highest return for the least risk. Different assets (stocks, fixed income, commodities etc.) react differently to economic changes, which makes a diversified portfolio more resilient. Even colloquially, people speak about “not putting all their eggs in one basket”.
Why are technology companies often singularly focused on products for one market? This is in part linked to the maturity of the company. Start-ups are focused on delivering on their initial investment promises; while established technology companies in mass markets often already serve multiple sectors and applications. Therefore, this question is directed to revenue-generating post-seed, pre-listed, companies.
With what we’ve learnt from Covid-19 is that there is a need to build resilience, as well as growth potential, into businesses much earlier. Participants in a webinar organised during the peak of lockdown by strategic space marketing firm AstroAgency, were excitedly using phrases such a "dual income" and “multiple routes to market”. The concept of finding multiple clients for technology that was developed primarily for space resonated with the group.
Technology transfer is about diversifying a portfolio and spreading risk, so improving opportunities for success. It is about transferring technology, skills and capability into new markets (industries and geographies) and new applications - often using new business models.
Space agencies, including NASA and ESA, have dedicated pro-active technology transfer programmes. However, technology transfer is often referred to as “spill-overs” in the commercial business-to-business context, implying a reactive, accidental activity. Spill-over value to the public far exceeds the direct three to four times return on every public dollar, euro or pound invested by space agencies in single-purpose technology development.
There is no definitive measure of the economic value from space technology transfer, particularly given the intangible elements like skill and knowledge sharing. However, studies indicate the size of the potential impact.
NASA estimates it has generated USA$1.5 billion added value through its life sciences technology transfer programme. If this is the size of the opportunity created by one public organisation in a single sector, it raises the question - what value could be generated if the commercial space industry did more business-to-business technology transfer?
In 2018, MULTIPLY held a number of interviews with UK space companies to get their views on technology transfer. All participants recognized the value, citing revenue growth as a primary driver for them to pro-actively do technology transfer. Other reasons cited included:
- Demonstrating scalability to raise investment
- Accessing new geographic regions with new products, which then enables cross-sell back to their original product
- Brings learnings back into their core offering
- De-risking the business from disruption by removing reliance on only a few revenue streams
- Demonstrating innovation and leadership, boosting company and employer brand, building pride amongst employees and improving retention.
Despite this, a number of barriers (perceived and actual) were also cited:
- Considered a distraction from core business
- Do not have the bandwidth to put time into non-core activity
- Do not have resources to invest into non-core activity
- Don’t have in-house skills and experience
- Don’t have access into other markets
- Considered too early in their growth to diversify
- Existing investors want them to focus on one core offering.
At Multiply, we’ve considered technology transfer as a vehicle for resilience and growth for the post Covid-19 space sector and what this could this look like.
Diversified portfolio approach
What if taking a diversified portfolio approach became the new norm? I’d go so far as to say not “if” but “why aren’t we already doing so”? What if technology transfer was considered as core business? What if investors and governments looked at technology transfer value-add as a scored criterion in investment and funding decisions?
I am not suggesting this as a silver bullet, nor as the right solution for every company. But Multiply’s study in 2018 saw that technology transfer could pose a challenge for those early stage R&D companies that were not sufficiently resourced, securely funded, nor their technology yet proven in their core business. However, more established companies with proven technology, typically with early adopters already buying their products, looking to move into high value or high-volume markets, were well placed to benefit from diversification.
An industry that is achieving revenue growth cross-sector, driving export and stimulating private investment, is one that is succeeding. An industry too dependent on public financing or limited customer channels is at risk. To realise sustainable commercial industries, we need to build sustainable commercial companies. With the reality of our vulnerabilities laid bare by COVID-19, resilience and growth need to be at the heart of every company’s strategy. Technology transfer, for many, has a core role to play.
We’ve considered technology transfer to build a diversified portfolio approach to the post Covid-19 space sector and what this could look like. Now we’d like to get your input to understand your current technology transfer activity and your future technology transfer intentions and appetite.
Please follow the link to a short survey here https://www.surveymonkey.co.uk/r/CCZK7TB. Your input will enable us to present a snapshot of the current environment and make recommendations for the future to both industry and government.
Founder & CEO of MULTIPLY Global Ltd
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