Editor's note: This article is part of Inc.'s 2020 Best Industries report.

When Malaysia Airlines Flight 370 disappeared on its way from Kuala Lumpur to Beijing in 2014, aerospace engineer Payam Banazadeh, then 23, fixated on one question: Why couldn't satellites scan the area where the plane disappeared in real-time?

"As I pulled the thread, what was very clear was that there was a huge gap in monitoring our planet from space," Banazadeh says.

Of the hundreds of schoolbus-size Earth-observation satellites currently in orbit, the majority use optical imaging, which typically can't see 75 percent of the Earth's surface because of weather issues and darkness, according to Banazadeh. At the same time, the cost of sending satellites into orbit is falling dramatically as governments and private companies launch a growing number of rockets into space, creating new opportunities for entrepreneurs to put eyes in the sky.

Banazadeh, a former project manager at NASA, saw a problem he could solve and the perfect moment to do it, so he founded Capella Space in 2016 with the goal of developing a smaller, more powerful satellite. In 2019, the company launched its first prototype satellite Denali, a backpack-size device that uses a technology called Synthetic Aperture Radar (SAR), which can see through clouds and at night.

In 2020, Capella will launch seven satellites that together will be able to monitor the entire surface of the planet every six hours, on average, according to Banazadeh. The company will launch an additional six to 12 satellites per year until it has 36 in orbit, at which point he says the time between updates will drop from up six hours to up to one hour. Capella will allow customers to submit requests for data and imagery through an automated system in a matter of minutes, 16 times faster than rival companies can, according to Banazadeh.

A wide range of applications

Unlike optical imaging satellites, which rely on incoming light to produce an image, Capella's satellites send a radar signal that hits the Earth's surface and is reflected back to the satellite. The resulting data is used to produce an image that can detect changes to the Earth's surface less than a meter in size. The structural integrity of a bridge, for example, can be monitored over time to determine whether maintenance work needs to be done.

Although Capella's fleet of satellites isn't commercially operational yet, the company has already signed multimillion-dollar contracts with U.S. government agencies, including the U.S. Air Force and the Department of Defense's National Reconnaissance Office. "We will be monitoring certain spots for them and alerting them of any change," Banazadeh says.

The applications for Capella's services extend far beyond providing information for government agencies. Banazadeh says the company has deals in place with private sector customers, though he can't disclose their names. Being able to track the supply chain of major commodities like oil is one capability he says will create significant value. And because Capella's radar can also measure the moisture levels of soil, monitoring the health of crops for the agricultural industry represents another opportunity. Perhaps the most valuable service will be providing information to first responders during emergencies like storms, fires, and other natural disasters. 

"The ability for us to immediately look through the clouds while the storm or disaster is happening, do damage assessment, and provide that to the first responders to tell them what the best route is--those are the types of interactions we can start having," Banazadeh says. 

Lower costs mean greater opportunity

With around 100 rocket launches taking place every year, the cost of sending satellites into space has fallen to between $20,000 and $40,000 per kilogram. "It used to be that governments would launch these gigantic, billion-dollar satellites into space once every couple years," says Todd Dagres, a co-founder at Spark Capital, one of Capella's investors. "What's happened is, the bar has dropped so precipitously that countries that before could hardly get a train to run on time are pumping iron to the sky."

Elon Musk's SpaceX recently began offering monthly missions to small satellite operators starting at $1 million, or $5,000 per kilogram for up to 200 kilograms of payload mass. (In March, Capella's first operational satellite, called Sequoia, is scheduled to launch on a SpaceX Falcon 9 rocket from Cape Canaveral, Florida.) The industry also has benefited from lower costs for the components required to build small satellites. "A lot of that is driven by the commercial electronics industry--the stuff that is feeding the newest features on our iPhones and laptops," says Mike Safyan, vice president of launch at Planet, an Earth-observation company that provides satellite imagery data. "That's being folded into the space industry in a way that hasn't really been done before." Capella declined to disclose how much it costs to build its satellites.

Venture capital investment into space technology companies has grown to $2.27 billion in 2019 from $2.6 million in 2011, according to market data provider PitchBook. Capella has raised more than $80 million in funding, primarily from venture capital firms Data Collective and Spark Capital. The global nanosatellite and microsatellite market is expected to grow to $3.6 billion by 2024 from $1.5 billion in 2019, according to research firm MarketsandMarkets.

Companies that provide satellite observation services similar to Capella's, albeit using much larger satellites, include multinational aerospace corporation Airbus and Italian company e-GEOS. Banazadeh says the value Capella brings is significantly different from what these companies can offer thanks to its constellation that can repeatedly observe specific areas of the planet.

"They have these giant satellites that can do more things than our satellites can do, but they can't really have the cadence at the cost that we can provide," he says. "I think we're very much complementary with those guys." One startup competitor is Japanese SAR company Synspective, which raised $100 million in funding last July. Two of the biggest challenges facing all satellite companies, according to Banazadeh, are securing reliable launch vehicles and putting satellites into orbit on time, as rockets are in high demand and launch delays are the norm rather than the exception.

In as soon as the next five years, Banazadeh says Capella's data could be useful for predicting future events, like where illegal fishing is likely to take place.

"If I were looking at that area from space using my satellite and combining it with other satellites and other data--this is the route they take and this is what the boat looks like--the next time I can start predicting who is doing what," he says. "As we start building this really dense data set of high quality and high cadence, that's going to be really interesting."

Published on: Feb 4, 2020