The modern space economy is no longer defined primarily by governments, astronauts, or science fiction. Increasingly, it is being shaped by private capital, commercial infrastructure, and venture-backed companies operating at a scale that would have been difficult to imagine even a decade ago.

In a recent keynote at the Private Capital Symposium, Professor Bill Megginson, Professor and Price Chair in Finance at The University of Oklahoma, explored the economics behind the rapid transformation of the global space industry. His talk focused not on space exploration alone, but on the financial architecture powering what is becoming one of the world’s fastest-growing industries.

The timing of the discussion feels especially relevant following the recent SpaceX IPO, which intensified global attention on the economics of the private space sector and the scale of capital flowing into the industry.

One of the most striking themes from the keynote was how much of today’s space economy is already private.

“Over three-quarters of it is private contracting between private companies, private investment,” Megginson noted. While public perception still associates space with government agencies like NASA, the underlying economics tell a different story. Government contracts remain important — especially in the early stages of company development — but the broader market is increasingly commercial.

Satellites are the real business of space

Megginson emphasized repeatedly that the space economy is overwhelmingly a satellite economy.
Communications, GPS, Earth observation, navigation, logistics, and data infrastructure all depend on satellite networks. Even companies that are not traditionally considered “space companies” rely heavily on space infrastructure.
His example was Uber.

“Uber could not exist without GPS,” he explained, arguing that positioning, timing, and navigation systems have quietly become some of the most economically important outputs of the space industry.

This broader framing matters. The commercial value of space is no longer limited to rockets or launches. Instead, it increasingly sits in the services and infrastructure enabled by satellites orbiting the Earth. According to the figures discussed during the keynote, approximately 80% of the industry is connected directly or indirectly to satellites.

Falling launch costs changed everything

A major driver behind the expansion of the private space economy has been the dramatic reduction in launch costs.
Megginson compared the current moment to earlier historical shifts in transportation technology — from sail to steam, from propeller aircraft to jets, and from manual cargo handling to container shipping.
For decades, the average cost of sending payloads into space remained extraordinarily high. He noted that before 2011, sending one kilogram into orbit cost roughly $18,500.

Today, reusable launch systems have changed the economics entirely. According to Megginson, launch costs using Falcon Heavy have fallen to roughly $1,400 per kilogram, with the possibility of further declines if fully reusable systems become operational at scale.
This reduction in cost has had cascading effects across the industry. Lower launch costs have made it possible to deploy far more satellites, enabled entirely new business models, and opened the market to venture-backed startups that previously could not have participated. At the same time, private infrastructure has scaled more rapidly, creating the conditions for new commercial applications and services to emerge across the broader economy.

In many ways, lower launch costs appear to be the foundational economic shift enabling the broader commercialization of space.

Venture capital and private equity are central to the industry

Unlike many traditional industries, space companies often cannot rely heavily on debt financing. Megginson described the sector as unusually difficult to finance:

• Development cycles are long
• Technologies are highly specialized
• Revenue is uncertain in early stages
• Assets are difficult to collateralize
• Secondary markets are limited

As a result, equity financing dominates. “Venture capital and private equity” have become the primary funding engines of the industry.
The figures presented during the keynote illustrated just how significant this trend has become. Since 2009, private capital investment into space-related companies has reached hundreds of billions of dollars, with recent years accelerating sharply.

Importantly, Megginson stressed that this is not purely a venture capital story. Private equity participation has also expanded substantially, reflecting growing confidence that the sector is moving beyond experimentation and into large-scale infrastructure deployment.
At the same time, he acknowledged that the industry still carries high risk.

Historically, many space startups have struggled to generate strong financial returns, and failure rates remain significant. Yet investor appetite continues to grow, driven by expectations that space infrastructure will become increasingly embedded within the global economy.

Space infrastructure is becoming strategic infrastructure

Another major theme from the keynote was the growing strategic importance of space systems. Governments still play a critical role, particularly through military and reconnaissance spending. Megginson noted that more than half of global government space expenditure is connected to defence and military applications.

At the same time, commercial systems are increasingly intertwined with national infrastructure.
GPS, satellite communications, Earth observation, and low Earth orbit networks now support everything from logistics and navigation to telecommunications and autonomous systems.

This convergence between commercial technology and strategic infrastructure is likely one reason why the industry continues attracting both public and private investment at unprecedented levels.

The emergence of space as an asset class and the governance challenge ahead

Reflecting on Megginson’s keynote, Professor Florin Vasvari, Academic Director of the Institute of Entrepreneurship and Private Capital and host of the Private Capital Symposium, noted that one of the most interesting implications of the discussion is how closely the modern space economy now resembles other infrastructure-heavy sectors historically financed by private equity or infrastructure funds. The evolution of space increasingly looks less like speculative science fiction and more like the emergence of a new infrastructure asset class, with long-duration assets, high upfront capital requirements and potentially scalable commercial applications.

Vasvari also highlighted that the rise of large-scale private capital in space raises broader governance and operational questions that extend beyond technology alone. In particular, the continued role of governments as both regulators and anchor customers is becoming central to how investors evaluate risk and long-term value creation in the sector.

The future may be larger than expected

The keynote concluded with a broader discussion about where the industry may be heading. Megginson referenced projections suggesting the global space economy could grow toward $1.8 trillion over the next decade. Much of this growth is expected to come not from exploration alone, but from the expansion of applications enabled by space infrastructure.

Some areas remain highly speculative. Megginson expressed scepticism about the near-term economics of activities such as large-scale space mining or lunar commercialization. But other trends appear far more tangible:

• Rapid expansion of satellite constellations
• Growth in low Earth orbit infrastructure
• Increased launch frequency
• Commercial servicing and transportation systems
• AI and data infrastructure in orbit
• Continued private capital deployment

Perhaps the most important takeaway from the keynote was that space is no longer a niche sector. It is becoming part of the broader global economic system. The industry’s future may still involve rockets, moon missions, and ambitious visions of Mars. But increasingly, its present is about infrastructure, capital allocation, communications networks, logistics, data systems, and the economics of scale.
In that sense, the modern space economy may be less about leaving Earth — and more about reshaping the industries already operating on it.