What Drives Technology Innovation in New Space?: A Preliminary Analysis of Venture Capital Investments in Earth Observation Start-Ups

This article analyzes venture capital (VC) investments in the Earth observation (EO) industry, with the aim of identifying technology trends. We collected tech- and investment -related publicly available data on all private, nonsubsidiary companies using their own satellite constellation or other EO instruments as needed to solve the problem of remote sensing of Earth's surface in the optical part of the electromagnetic spectrum and that were attracting investment and announcing plans for the future, as of 31 December 2016. We refer to these companies as EO start-ups. In the final sample, there are nine EO start-ups and 21 instruments used in their missions. This article also presents a first attempt to use start-up valuations by VC investment as an input for the quantitative analyses of technology trends in the EO sector. We believe that, next to shedding light on technology trends, the proposed method itself is the article's primary contribution. The method is based on understanding that venture capitalists, by selecting the most promising market opportunities in industries where the main technology assets cannot be changed easily, quickly, and without risks are a kind of invisible hand that (indirectly) shapes technology development We are also convinced that the provided evidence is sufficient for the method validation and offers grounds for critical discussion in future research.