Several synergistic and convergent trends are acting as a catalyst for the recent investment boom in geospatial analytics companies. Constellations of smaller, smarter satellites are being launched into space, providing high frequency imaging and enabling near-real-time monitoring of the earth. Leaps forward in AI and data science are allowing companies to convert near-constant streams of imaging and data into more than just satellite imagery, providing actionable insights for clients in a range of industries.
Here, we profile one of these geospatial big data companies, Orbital Insight, which uses machine learning and AI algorithms to interpret what’s happening in a variety of industrial verticals.
How innovation has enabled a monetizable value proposition
Orbital Insight CEO, James ‘Jimi’ Crawford, has led the company since it was founded in 2013. His career path ranges from working as NASA Ames Research Center’s robotics and autonomy leader on projects such as the Mars Rover Project, to stints at Google, commercial space company Moon Express, and most recently big data agriculture company, The Climate Corporation, which was acquired by Monsanto for $1.1 billion in 2013.
Since Crawford’s days at NASA in the early 2000s, the frequency relay of images from satellites has gone from a monthly to a daily occurrence – and in the near future, an hourly cadence. But other technological innovations during this time have further facilitated the growth of geospatial analytics companies such as Orbital Insight.
Exponential improvements in computational processing power has led to a democratization of analytic muscle – data scientists can today plug satellite data into cheap(ish) and powerful processors, and work on creating algorithmic solutions and analytic outputs. In the past, this kind of activity was reserved for government institutions with the deepest of pockets.
Secondly, the falling cost of data storage has been driven by companies such as Amazon and its Web Services division, as well as Google and Microsoft. This change has enabled companies like Orbital Insight to store and process huge amounts of satellite data. In fact, one of Orbital Insight’s suppliers, Planet, processes almost two petabytes (two million gigabytes) per year. Lastly, graphics processing unit (GPU) development has enabled hi-resolution imagery at a macroscopic level, led by technological advances from companies such as NVIDIA.
These collective technological breakthroughs have led the market to a point where there is a clear demand and a monetizable value proposition for Orbital Insight’s downstream geospatial data. In this enabling environment, the company has grown rapidly over recent years, with around 100 employees and a client base of 80+ customers. Many of these clients are financial firms, such as hedge funds, who see the clear value proposition in gaining access to information regarding macro-economic changes affecting prices much more quickly than was possible before. For example, when trading on futures in markets such as oil & gas or commodities, algorithms from Orbital Insight can turn imagery of oil storage tanks and piles of commodities into aggregated, actionable forecasts on market fluctuations.
Defensibility through diversification
The focus of hedge funds and traders naturally spans across multiple industries, but they are only one type of customer, and therefore one type of revenue stream for companies like Orbital Insight. By increasing the breadth of customer types across industries, the company achieves a two-fold benefit of increasing the total addressable market, as well as strengthening value creation for existing financial sector clients by gaining a greater degree of understanding of the fundamental cross-sectoral drivers that affect markets.
Beyond finance, Orbital Insight is beginning to look at the market from the perspective of resource innovation in industrial verticals. The company is increasingly focused on connecting the dots between macro-economic trends and sector-specific efficiencies that can be made, such as reduction of operational expenditure, more effective utilization of assets and a reduction of supply chain risk.
For example, in the case of alternative energy, the company is working with a wind turbine manufacturer to optimize the utilization rate of turbines. By analyzing macroscopic data from above, Orbital Insight can holistically monitor utilization signals from assets, helping to forecast future demand, as well as optimize replacement cycles for component parts of each turbine.
Another example is in the agriculture sector, for which Orbital Insight is soon to release a new suite of products. While providing information on production and yield on a macro-level is not revolutionary in and of itself, by extrapolating the same analytics to other parts of the value chain, Orbital Insight can create different models of monetization. For example, through macroscopic analytics, macro-level production flows can be tracked, isolating points in the value chain where margin accrues. Additionally, macroscopic analytics are used to find ways to reduce friction and risk in supply chains.
Through working on intermediate and long-term pilots in a broad range of industries, Orbital Insight is moving towards a diversified client-base and knowledge pool, as well as finding opportunities to transition some of these clients to its primary cloud-based subscription model of revenue generation.
Positioning for future growth
Through diversification of application, revenue model and target market, Orbital Insight is seemingly developing a defensible position in the satellite and geospatial analytics vertical. The company utilizes an IP-based model of harnessing satellite data from upstream players (including DigitalGlobe, Airbus and Planet), and works on complex algorithmic analytical tools that provide unique insights to clients.
With diversity in application of satellite data across multiple industries, a geospatial analytics company can transition towards a horizontally embedded position within several verticals. From this position, a fully integrated understanding of the causal relationships that drive changes across a range of industries could potentially create a competitive advantage via this network effect. Once this effect is in place, revenues from this primary model of business can then be redistributed to other areas of potential growth. In this respect, Orbital Insight could look to imitate its Mountain View neighbor, Google, which has applied a similar model of growth via its primary business of search and advertisement analytics, before expanding into a wider range of markets and technologies.
The scope for diversified growth is reflected in the LPs that have participated in venture funding rounds for Orbital Insight. Leading venture capital firms including GV, Bloomberg Beta, Lux Capital and Sequoia have taken positions in multiple investment rounds. Strategic investor participation in these rounds is also indicative of a broad strategic vision – from investment firm Balyasny Asset Management to ITOCHU, a Japanese conglomerate with strategic goals in a broad array of sectors ranging from machinery, metals & mining, energy and chemicals.
With two participants in the most recent $50 million Series C funding round having Japanese ties (ITOCHU and Geodesic Capital), Orbital Insight appears to be laying out a vision of future growth in Asian markets, reflecting a wider global industrial shift towards deepening ‘East meets West’ relations. Japan appears an attractive market to explore, with its roster of large blue chip global brands, spanning across a range of industries. Orbital Insight can provide services here beyond satellite analytics for large manufacturers such as Mitsubishi (who happens to be an LP for Geodesic’s $335 million growth equity fund, providing a third of the total value). Squeezing marginal opex improvements, a 1-2% uptick in customers, or lower underwriting of risk have significant impact on bottom line profitability for these corporate strategics.
Within this global ecosystem, Orbital Insight is looking to go beyond today’s primary ‘tech-oriented’ iteration of satellite imagery analytics firms, moving towards a customized premium service offering to tier 1 companies beyond existing market positions.
Over the past few decades, there has been an unparalleled leap forward in several convergent technological innovations, which have enabled companies to process data of the events on Earth at unprecedented levels.
By utilizing these innovations, Orbital Insight has taken a first-mover advantage in existing markets for geospatial analytics. But beyond this initial loosely termed ‘spacetech’ market, there is a plethora of use cases for the technology in a broad spectrum of vertical industries. With an $80 million war chest, and a workforce consisting largely of engineering and data scientists, Orbital Insight appears well placed to execute on a plan of expansion into a broadening market of analytic applications in multiple global industries.
Jimi Crawford will be speaking at our upcoming Cleantech Forum San Francisco in January on the session, Next Generation: Spacetech and Satellites. Register today so you don’t miss out!