Space Industry Market Research: Size a Niche First

TL;DR: Space industry market research means answering three questions before you build: who buys this, how many of them are there and what do they spend on the problem today? Use free public data (federal spending, census, regulators and program pages) to size a niche bottom-up, map the competitors and alternatives, then test the numbers with real buyer conversations.

Key takeaways

• Size the market bottom-up from real buyers, not from headline industry totals.
• Free public data covers much of what early founders need.
• Competitors include doing nothing and building it in-house.
• Desk research sets up interviews; it doesn't replace them.

What is space industry market research?

Market research is how you find out whether enough customers have a problem worth solving, and what they'll pay to solve it. The SBA's market research and competitive analysis guide sums it up: market research helps you find customers, and competitive analysis helps you make your business unique.

In the space industry, research has a few extra layers: government buyers, long programs, export controls and markets that depend on launch and regulation. If you're still choosing what to build, start with our list of space business ideas.

What questions should your research answer?

1. Who is the buyer? The organization, the role that signs and the people who influence the decision.
2. What problem do they have, and how do they solve it today?
3. How many buyers are there in your first market? Our space tech GTM strategy guide covers how to pick that first market.
4. How much do they spend on the problem now, and through what budget or program?
5. Who else is solving it, including in-house teams and "do nothing"?
6. What could block a sale: certification, export controls, procurement rules or launch timing?

Where can you find free space industry data?

Source	What it tells you
USAspending.gov	Which agencies and contractors are spending on work like yours. It describes itself as the official source for U.S. government spending data.
SBIR.gov	Which topics agencies fund through SBIR and STTR, and which companies win awards.
Census Economic Census	The official five-year measure of U.S. businesses, useful for sizing commercial buyer industries such as agriculture or insurance.
FAA Commercial Space Data	Data from the FAA, which licenses U.S. commercial launches and reentries.
Data.gov	The U.S. government's open data catalog, for industry and geographic datasets.
Company filings and announcements	Public companies' annual reports and investor materials, and private companies' funding and contract news.
Program and solicitation pages	What agencies and primes say they need next.

Use paid industry reports if you can access them, but check their methods. Headline market totals rarely tell you how much your specific buyers will spend.

How do you size a space niche bottom-up?

Top-down sizing ("the space economy is huge, so 1 percent of it is a big business") doesn't convince investors or help you plan. Build it bottom-up instead:

1. Count the buyers in your first market, using lists, directories and award data. Our guide to building a prospect list for the space industry shows where to find them.
2. Estimate what each one would spend with you, based on what they spend on the problem today or on similar contracts.
3. Multiply to get the market you can serve.
4. Estimate your realistic share over the next few years, given your sales capacity.

This is the logic behind TAM, SAM and SOM:

• TAM (total addressable market): everyone who could ever buy.
• SAM (serviceable available market): the buyers you can actually reach with your product and channels.
• SOM (serviceable obtainable market): the share you can realistically win soon.

Write down every assumption and its source. Investors will ask, and you'll update them as you learn. To see how different space business models turn these markets into revenue, read how space companies make money.

How do you map competitors and alternatives?

List everything a buyer could do instead of buying from you:

• Direct competitors with a similar product.
• Different technologies that solve the same problem (for example, aerial or ground sensors instead of satellites).
• In-house builds by primes or large operators.
• Doing nothing, often the biggest competitor.

For each, note price model, strengths, weaknesses and who they sell to. Look for gaps where buyers are underserved.

How do you test your research with buyers?

Desk research tells you where to look. Buyer conversations tell you whether you're right. Take your assumptions about problem, budget and buying process into interviews, and change the numbers when the answers don't match. Our guide to space startup customer validation covers how to run those interviews.

Then use the results in your pitch. Our space startup funding guide shows where market sizing fits in a fundraising story, and our space marketing guide shows how research feeds positioning.

What market research mistakes should space founders avoid?

• Quoting the size of the whole space economy as your market.
• Assuming government budgets will flow to you without checking programs and timing.
• Ignoring in-house and "do nothing" alternatives.
• Never updating the numbers after talking to buyers.
• Skipping regulatory and export-control checks that limit who you can sell to.

Want feedback on your market sizing? Share it with other founders in Space Entrepreneurs, our free Skool community (link below).

Frequently asked questions

How do I do market research for a space startup?

Define your buyer and problem, gather free public data on spending, programs and buyer industries, size the market bottom-up, map competitors and alternatives, then test your assumptions in buyer interviews.

Where can I find free space industry data?

Useful free sources include USAspending.gov, SBIR.gov, the Census Bureau's Economic Census, the FAA's commercial space data and Data.gov, plus company filings and program pages.

What is TAM, SAM and SOM?

TAM is everyone who could ever buy, SAM is the part you can reach with your product and channels, and SOM is the share you can realistically win in the near term.

Should I use top-down or bottom-up market sizing?

Bottom-up. Counting real buyers and estimating what each spends gives a more credible and useful number than taking a percentage of a large industry total.

Is desk research enough to validate a space business idea?

No. Desk research shows where to look, but you need conversations with real buyers to confirm the problem, the budget and the buying process.

Want to work through this with other space founders?

Join Space Entrepreneurs, free. Space Entrepreneurs is the free Skool community I host for founders who are starting, marketing and growing space companies. Bring your questions, share what you are working on and learn from people building in the same industry.

Join Space Entrepreneurs free