In Part 1 of this series, I argued that what many of us still call the “New Space revolution” is starting to look less like a revolution and more like an industry evolution. That matters because complex, other high-reliability sectors have tended to go through recognizable phases.
They fragment first. New entrants appear everywhere along the value chain. Subsystems become products. Components become companies. Capability becomes distributed. The market feels energetic and inventive—right up until integration effort and failure consequences begin to dominate the conversation.
At that point, consolidation becomes the natural counterforce. Not because bigger is inherently better, but because high-reliability supply chains demand stable interfaces, repeatable quality systems, configuration control, and commercial durability. The customer’s problem shifts from “can anyone build this?” to “who can build this predictably, at scale, and stand behind it?”
That is the phase the space sector is now entering.
This follow-on column is aimed at founders and investors navigating that transition. It is not primarily about technology choices. It is about how to sell—and how to invest—when the thing your customer is buying is not performance, but reduced risk. It’s also about how to set yourself up to benefit from the wave of consolidation that is coming.
The customer’s logic (and why it feels rational from the inside)
When component suppliers talk about slow sales cycles or stalled customer conversations, they often assume the customer is unconvinced by their technical value. I think, in this market, that may actually be the wrong diagnosis in a lot of cases.
What I hear—especially from newer primes—is something more specific and more emotional: they have either been burned by an underperforming supplier themselves, or they have heard enough stories from peers that they assume it will happen to them. A component arrives late. A spec turns out to be optimistic. Support is thin. A key engineer leaves. A small shortfall becomes an integration fire—and the schedule dislocation spreads through the whole program. This has made them averse to outsourcing anything – no matter how what advantages it promises.
This is not risk aversion born of long experience. It’s risk aversion born of perception and narrative. A handful of vivid failures, their own or someone else’s, begins to dominate their mental model of outsourcing. And that perception pushes them toward a conclusion that feels sensible: they believe they can solve technical problems themselves; and they realize that they don’t know how to manage a supply chain. And so, they decide the “safer” option is to vertically integrate.
To them—and often to their investors—that looks like reduced risk. They picture fewer external dependencies, fewer surprises, fewer schedule shocks, and fewer uncomfortable conversations with customers and backers.
In reality, though, vertical integration often does not eliminate risk; it internalizes it. It converts supplier risk into execution risk, hiring risk, working-capital risk, quality-system risk, and scaling risk—many of which are less visible until they explode and become urgent and capitally intensive problems that need to be solved.
But to be fair, the concern that small primes are trying to address is real – a fragmented supply chain is a risk that must be managed. For suppliers whether or not their conclusion about how to manage it is correct is almost beside the point. This is where they are in their analysis. This is the pain they are trying to avoid. If you want to sell into this market, especially to companies early in their integration maturity, you have to address that pain directly.
That means reframing your offer. Before you can sell your product, you have to sell a way for them to procure it without feeling like they are outsourcing their future.
So, how can you do that? Here are a few suggestions:
Strategy 1: Put “how do I know you’ll deliver?” in the front window
The first question a risk-aware customer wants you to answer is not: “why is your product better than the alternative?”
Rather it is: “How do I know you will give me what I need, when I need it, and support it when reality misbehaves?”
If you don’t put that question front-and-centre in your sales motion, you force the customer to answer it themselves. And when customers have to guess, they guess “risky.”
So, remember when you identify the problem the customer needs to solve it is not that they need something better, it is that they need something better that does not increase their risk. In other words, lead with the confidence-building artifacts that let a cautious integrator justify the decision internally. Make sure you emphasize qualification approach and evidence, acceptance test flow with clear pass/fail criteria, interface control discipline (real ICDs, versioned and maintained), configuration management and change notice.
Also make sure you are clear that you expect to sign up to contract terms that will commit you to a support model so that you will be there if there are issues during integration, and delivery reliability including lead times, buffers, spares, and realism.
Your goal is not to impress them with your technical acumen. It is to give them the confidence that you have the heritage and experience earned from helping other customers succeed on orbit and that you want to do the same for them.
Strategy 2: Start consolidation informally — and make outsourcing feel simple
A significant amount of customer fear comes from having to coordinate multiple suppliers who don’t coordinate with each other. Every seam is a place where schedule slips, interface mismatches, and blame can breed. This is not a situation that the founders of new space primes are experienced in managing. That lack of experience massively magnifies the perceived risk.
If you are a component supplier, you can reduce this perceived risk—quickly and with little capital—by starting consolidation informally. You don’t need a merger to reduce supply-chain pain. You need to demonstrate that you can help with the management of the supply chain and a simple way to do this is simply to build trust and coordination among suppliers.
There are a couple ways to do this.
First, there is the obvious choice of actually moving up the “value chain” yourself. Become a “sub-system integrator”. Bundle your component with supporting electronics, harnessing, mounting, thermal solutions, calibration, or test tooling. That reduces interfaces and gives the customer fewer things to manage. Done well, it produces “Tier-1 behaviour” without requiring you to become a prime.
But this approach does transfer a lot of risk to you, and it assumes that you have the resources to manage your own supply chain – which can be capitally intensive. I think there are also lower risk, lower cost options that can still generate the same kinds of effects. And those are actions that start building informal integration “clusters” with peer suppliers
This may sound a little strange. It is not a common strategy. And it is unlikely to be a long-term solution to the fragmentation issue. But it is a strategy that fits the market we’re actually in – a fragmented supply chain that is only the early stages of consolidation and where the capital necessary to complete full consolidation is not yet present.
In practical terms what I am suggesting is that founders of component or technology companies should spend time with other suppliers, especially ones that are in adjacent or even overlapping markets. Stop thinking of these companies purely as competitors. Instead, develop strong working relationships with these adjacent subsystem providers. Sign NDA’s to build mutual familiarity with each other’s products that goes beyond the brochure level. Sign MOU’s committing to exchanging ICDs early and keeping them synchronized as changes occur. Perhaps even do some lightweight joint validation where possible (even simple integration tests). Produce and keep current shared integration guidance and reference designs.
Then when you speak to customers align expectations on schedules, integration, and support that allow you to cross-sell for each other by presenting the combination as a “pre-integrated package.”
To the customer, this changes the experience from “I’m managing a supply chain” to “I’m buying into a small ecosystem that already works together.”
There is also a strategic pay-off here, because you are starting consolidation as a behaviour before it becomes a corporate transaction. This will prepare you, your team, and your collaborators to have much better-informed discussions about those transactions when they start to become a possibility.
If you start with these kinds of fairly informal measures, it requires little capital, it’s low-risk, and it can be implemented quickly. But it also creates something investors can, should, and will notice when suppliers collaborate tightly. It creates shared interfaces, shared customers, shared integration patterns. It creates an ecosystem of suppliers that are more successful, they sell more, and they develop reputations that put them at the top of the list of companies with high potential to scale with the market. In short, they begin to form natural consolidation candidates. They create “pre-fit” for mergers and acquisitions.
Investors with capital can see that the risks of formal consolidation have already been reduced, because the technical and operational integration work has already started. It becomes less like “two companies crashing together” and more like “a relationship getting a legal document.”
The other advantage if this approach, if you step back, is that the market isn’t paying a premium for clever components anymore. It’s paying a premium for confidence.
And confidence is not created by a single supplier saying, “trust us.” It is created when the customer can see that a supplier, or a community of suppliers has done this before—together—and has built habits that prevent small issues from turning into program-level disasters.
This is where supplier collaboration becomes more than a sales tactic. It becomes a product.
Most new primes do not fear physics. They fear the mess: interfaces, schedule slips, quality escapes, unexpected interactions between subsystems, and the slow-motion panic amongst their investors that starts when a program falls behind.
A connected supplier community can offer something many customers don’t have – borrowed maturity.
Collectively, that community’s experience and flight heritage can exceed the integration experience of a new space customer by an order of magnitude. In effect, the suppliers are selling their ability to manage the kinds of risks involved in building a spacecraft—not just their components.
The thing that component supplier needs to get past is the “deep tech” mental model that since they build a great product that no one else has, the market will reward them. Therefore, stay stealthy, treat everyone as a competitor until you can charge on to the seen with a “killer app” that no one has seen before.
Unfortunately, in a high reliability, high quality environment “killer app” and “unproven technology” are pretty much synonyms. So that approach just does not work here.
Sure, during the fragmentation phase novelty gets attention. But then the industry starts to pivot to consolidation, because the value of novelty does not outweigh the cost of risk management.
If you want to win in this market, you don’t start by arguing that your component is novel.
You start by proving that buying it is safe—and by making it feel safe for them to buy more than one thing from outside their walls – and then by proving it is also better than what they could make themselves – or buy anywhere else.
That’s what the informal consolidation I am suggesting is really trying to do. It makes outsourcing feel survivable. It makes customer success more likely. And it sets the stage for the more formal consolidation that will follow—whether we like it or not.
In other words: the companies that can deliver trust at scale are the ones that will still be standing when the sector comes out the other side. The quicker you learn how to do work with others to achieve that the more likely you will benefit from wave of consolidation.