Canadian SMEs playing an increasingly important role in domestic and global space industries, experts say

Mark Lowey
February 16, 2022

Canadian SMEs and universities are becoming more significant players in the space sector at home and internationally due to the “democratization” of space, say industry experts.

A six-fold drop in cost-per-kilogram of a space launch during last two decades, along with the miniaturization of science instruments and satellites, has opened up space to many dozens of SMEs in Canada, experts say.

“SMEs are very important in space. They represented 94 per cent of all space companies in Canada in 2019,” David Haight, chief economist at the Canadian Space Agency, told Research Money.

The “New Space” industry, or “Space 2.0” as experts call it, has shifted emphasis toward large numbers of small, cheap spacecraft, especially satellites. Across Canada, space organizations are working in areas that include Earth observation from space, space robotics, space science and exploration, and satellite communications.

SMEs accounted for $2.3 billion, or about 42 per cent, of the Canadian space industry’s total revenues of $5.5 billion in 2019, Haight said. SMEs, which refer to small- and medium-size enterprises with fewer than 500 employees, also employed almost 30 per cent of the sector’s workforce.

The top 30 Canadian space organizations based on revenue size included 22 SMEs and four universities, according to the annual 2020 State of the Canadian Space Sector Report produced by Haight and his group.

“The space world has changed,” Andre Dupuis, president and CEO of Ottawa-based Space Strategies Consulting Limited, said in an interview. “Some of the most innovative work that’s being done is on satellites that can be built in a very small lab — a university is more than capable."

“With the democratization of space-derived data, the ability of SMEs to thrive in Canada is just growing," he added.

Federal funding for space SMEs and government procurement have been “absolutely key” in establishing startups, growing them and supporting launches, said Dupuis, who is a retired colonel and the former director of space requirements for the Department of National Defence.

For example, since 2018, the Strategic Innovation Fund has invested a total of $116 million in four space-related projects, including three by SMEs:

  • Advanced Satellite Networks (now Spacebridge Inc. in Montreal) to develop an advanced satellite broadband network;
  • exactEarth Ltd. in Cambridge, Ont. to use satellites to identify and track ships; and
  • NorthStar Earth and Space Inc. in Montreal to develop a way to protect space assets by tracking space debris.

In 2020-21, the Canadian Space Agency awarded $23 million in funding from its Space Technology Development Program to 40 Canadian companies — including 31 SMEs — for R&D in 48 advanced space technologies.

Since 2008, this program has invested close to $200 million to support development of more than 300 space-related technologies by over 100 organizations, according to Haight.

SMEs landing national contracts, attracting investment

Dupuis pointed to a company he works with, Space Flight Laboratory (SFL) at the University of Toronto’s Institute for Aerospace Studies, as a model of a successful space SME.

“They do everything, from conception, design, build, launch and operate satellites on behalf of their clients,” he said.

SFL has landed contracts with Canada’s Department of National Defence, NASA, the Norwegian Space Agency, SpaceX, Dubai Municipality in the United Arab Emirates and other clients.

SFL also has collaborated with other Canadian space SMEs, such as Toronto-based Kepler Communications Inc., which plans to put a fleet of 200 small satellites into low-Earth orbit to establish an internet-of-the-sky service called Aether.

Another SME, GHGSat of Montreal, received $20 million last year from Sustainable Development Technology Canada (SDTC) to advance the world’s only high-resolution, satellite system to detect greenhouse gas emissions from industrial facilities. GHGSat also raised US$45 million in Series B funding.

Dupuis said his own small company has benefited from contracts with the Canadian Space Agency and the Department of National Defence’s Innovation for Defence Excellence and Security (IDEaS) program.

Last week, SDTC announced $4 million in funding for Wyvern Inc., an Edmonton-based space data company developing high-resolution hyperspectral imaging technology that unfolds from telescopes in space. (See our coverage of Wyvern).

Maritime SME building Canada’s first launch facility

To support the fast-growing business in small satellites, Maritime Launch Services Ltd., based in Halifax, has raised $10.5 million in private financing to build Canada’s first commercial launch spaceport. The facility, located near the town of Canso close to the Eastern Atlantic edge of Nova Scotia, plans to offer eight to 10 rocket launches per year to place satellites into low-Earth orbit.

In January, the federal government announced Canada’s strategy for satellite Earth observation along with $8 million in funding through the Canadian Space Agency’s smartEarth initiative for 21 SMEs across Canada.

As an example of a smartEarth initiative, the CSA, in collaboration with Fisheries and Oceans Canada,   invested $5.3 million in five SMEs last year in the smartWhales project. The smartWhales project is developing ways to use satellites to detect, monitor and predict the movements of endangered whales to reduce the risk of entanglement in fishing gear and collisions with vessels.

The CSA’s Lunar Exploration Accelerator Program has committed $150 million over five years to help Canadian SMEs develop new technologies for use and testing in lunar orbit and on the Moon’s surface in fields like artificial intelligence, robotics and health.

This program is part of Ottawa’s investment of $1.9 billion to support Canada’s contribution to the NASA-Lunar Gateway, a cornerstone of Canada’s space strategy. Canada will develop and contribute a smart robotic system, Canadarm3, for the Gateway. The nation also plans to land a small Canadian-made lunar rover on the Moon within the next five years.

“With our enabling role, international partnerships are critical to sales and access to market for Canadian companies, including SMEs,” said Haight at the Canadian Space Agency.

In 2020, the CSA invested $4.36 million through its Lunar Exploration Accelerator Program to award seven contracts to five SMEs and to Western University to advance concepts for nano- and micro-rovers and autonomous science instruments. The SMEs are:

  • ABB in Quebec to design, build and test a prototype for an autonomous infrared spectrometer to measure and study the mineralogical composition of the Moon’s surface.
  • Bubble Technology Industries in Ontario to develop a spectrometer that will search for hydrogen near the Moon’s surface.
  • Canadensys Aerospace Corporation in Ontario to develop concepts and prototypes for lunar science rovers.
  • Magellan Aerospace in Manitoba to develop a lunar impactor probe to deliver instruments to the surface of the Moon.
  • Mission Control Space Services in Ontario to advance an autonomous soil assessment system for rovers navigating on the Moon.

Morgan Stanley forecasts that the $350-billion global space market is expected to triple over the next 20 years, to $1.1 trillion by 2040.

By the Numbers: Canada’s space industry

Economic Value

 $5.5 billion: Canadian space industry’s total revenue in 2019

$2.5 billion: space industry’s contribution to Canada’s GDP

$2.3 billion: space industry’s export revenues

75: number of space sector organizations with revenues in excess of $1 million

$2.50: Return on investment for every dollar spent on Canadian Space Agency space development programs

$150 million: revenues by universities and research centres in Canada’s space sector, or 2.7 per cent of total revenue

Company Size & Workforce

Over 200: number of organizations, including firms, universities and research centres in Canada’s space sector

94 per cent: percentage of space companies that are SMEs

6 per cent: percentage of space companies classified as large enterprises

10,541: number of full-time equivalent (FTE) jobs in the space sector

22 per cent: percentage of FTEs (2,370) in the space sector contributed by academic organizations

0.9 per cent: average annual growth of the space sector between 2015 and 2019

R&D

$376 million: business expenditures on R&D by the space industry

$253 million: revenues derived by space companies through the commercialization of externally funded R&D projects

87: number of companies undertaking space R&D projects

243: number of new inventions by 57 Canadian space sector organizations

66: number of new patents registered by these space sector organizations

36 per cent: R&D intensity of the space manufacturing sector, 13 times higher than the Canadian manufacturing average

Launch Costs

$18,000: cost-per-kilogram of a launch in the 1990s

Less than $3,000: cost-per-kilogram of a launch today

Sources: Canadian Space Agency, MDA (all figures are for 2019)

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