We’re on the brink of an IoT (Internet-of-Things) Revolution with the promise of low-cost edge devices, 5G and broadband mega-constellations just around the corner. Everything and everyone will be connected to the internet, enabling smart devices to drive significantly higher business efficiency and customer satisfaction. At Seraphim Capital, we believe satellite is essential to powering our connected future, complementing terrestrial networks to provide anywhere and anytime coverage. In this article, we discuss what role will satellites play in IoT connectivity, provide an overview of leading startups and what we think could be a winning strategy.

Incumbents see strong growth in asset tracking and monitoring. Historically, satellite has been the connectivity of last resort given the multitude of lower cost terrestrial options. These technologies including cellular, WiFi, Bluetooth, LPWAN and Ethernet. However, satellite provides incredible range and coverage on a single network. Satellite IoT is not new and provides connectivity in remote areas where terrestrial options are not available. It also provides cellular backhaul and backup when towers are down. Incumbent operators such as Iridium and Orbcomm have seen robust growth of their IoT business by tracking and monitoring high-value assets on the move. i.e. trucks, airplane, ships etc.  

Satellite will play a growing role in IoT connectivity as bandwidth costs decrease. Availability of low-cost bandwidth will drive new applications. Currently, only 10% of the earth’s surface has cellular coverage, the rest is remote and rural or water and mountains that require satellite coverage. Cheap and high frequency satellite connectivity supports wide commercial adoption of low-power and low-latency IoTs. Sensors/devices enabling asset tracking, monitoring, predictive analytics and maintenance for industries such as transportation, oil & gas, heavy equipment, maritime/fishing and more. Longer term, satellites will be an essential part of a hybrid solution ensuring connectivity of autonomous vehicles, drones and flying cars in areas without terrestrial coverage and provide resiliency and backup.

Summary of leading IoT startups and winning strategy. In recent years, technology innovations have led to the emergence of more than a dozen startups in satellite IoT. These companies are building new generations of constellations with smaller satellites to fill the gap for low-cost global connectivity. In addition to cost, we believe that companies that can develop strong ecosystems with differentiated and integrated end-to-end solutions based on their spectrum and domain expertise are most likely to succeed. Below we provide a summary of five leading satellite IoT startups, including two companies (Skylo and Kineis) that recently closed more than $100 million in venture financing each.  

• Kepler Communications (Canada) has two demonstration satellites in orbit and is deploying up to 140 Ku band cubesats in LEO to establish in space telecom networks for spaceborne assets. Their flexible network can support high data rate across many devices and a variety of data capability.
• Astrocast (Switzerland) has two demonstration satellites in orbit and is planning to launch 80 L band nanosats in LEO and provide low cost, low latency global two-way IoT connectivity for remote asset tracking and monitoring. Target markets include maritime, infrastructure and energy.
• Fleet Space (Australia) already has 4 cubesats in orbit and plans to deploy more to meet demand coming primarily from asset tracking in energy and mining. Fleet provides low-cost connectivity by having flexible protocols including those developed for terrestrial infrastructure. Use case range from cattle tracking in the outback to temperature monitoring among beehives.                                  
• Skylo Technologies (US) raised $103 million led by Softbank to develop a compact satellite terminal to connect machines to it network and plans to connect devices by transferring data more efficiently over existing Geostationary communications satellites.
• Kineis (France) a spinout from Collecte Localisation Satellites (CLS), a French maritime and environmental monitoring company. Kineis plans to build a 25 cubesat LEO constellation to scale its heritage business with a more powerful two-way connectivity system that can link devices in multiple markets.