The Security of Intelligent Observation
To our Valued Investors:
In its Semiannual Artificial Intelligence Tracker released last August, International Data Corporation (IDC) estimated that worldwide revenues for the artificial intelligence (AI) market would grow in 2021 to $341.8 billion, a 15.2% improvement over 2020. They also predicted that this trend would continue to accelerate in ‘22 with 18.8% growth, and then would likely proceed to break the $500 billion mark by 2024. The “AI market” to which they refer includes software, hardware, and service providers. The increasing year-over-year numbers are an important metric because they paint a picture of a commercial sector that has increasing significance in technology, security, and, of course, Venture Capital. In the past twelve months, AI has been a prominent feature of several major Iron Edge VC deals. If you have invested in NextRoll, Embodied, Attentive Mobile, or Palo Alto’s Orbital Insight, you stand a good chance of benefiting financially from AI’s anticipated windfall.
Technology news and analysis provider The Channel Company has obviously taken notice. Their annual ranking of the ten hottest AI startups was published last month with an infectious kind of enthusiasm. At Iron Edge, we were thrilled (but not at all surprised) to see Orbital included in the 2021 list. Orbital has been one of our primary investments in recent months, and we are in good company. Other backers include Google Ventures, Goldman Sachs, Bloomberg Beta, Booz Allen Hamilton, and Sequoia Capital. The company has raised $128.7 million to date, according to Crunchbase.
Orbital Insight, primarily using satellite imagery and anonymized cell phone data, collects and compiles massive amounts of data on what’s happening on the Earth’s surface, and then translates it into information that is highly useful to a wide array of commercial and government entities. The examples of how Orbital’s services are applied can be downright fascinating. At the start of 2020, when the world was just beginning to try to get its collective head wrapped around the far-reaching implications of the Covid-19 pandemic, Orbital was well-positioned to provide a unique perspective. The coronavirus that was spreading like an international wildfire had seized the attention of epidemiologists, economists, and millions of otherwise concerned citizens, and an accurate study of the pandemic’s socioeconomic impact was critically needed. Orbital provided an enhanced understanding of what was truly going on with an analysis of the ebbs and flows of vehicular traffic around urban areas, monitoring the daily changes in how many people were stuck at home versus how many were venturing out to work or to buy groceries.
Satellite data can also let stock analysts know how many parking spaces are routinely occupied at Five Guys vs. McDonald’s, at Home Depot vs. Lowe’s, or at Walmart vs. Target. Insurance companies need to understand the extent of damages wrought by natural disasters, and Orbital’s before-and-after shots deliver the goods. Did you know that the roofs on top of those massive oil storage tanks along the highway are not a fixed part of the structure, but rather floating on the surface of the oil inside? This is done to protect the environment and to preserve the precious resource by minimizing evaporation. This industry engineering secret has paved the way for Orbital to apply a really clever bit of innovation. For almost as long as rigs have been extracting the commodity from the earth and the sea, global crude oil supply estimates had been reported on a monthly basis. Industry analysts had no option but to wait for weeks to study a fresh report because the collection of such data was a very time-consuming endeavor. In 2018, though, Orbital debuted its Global Geospatial Crude Index (GCI), reporting for the first time in history the daily changes in the amount of oil being held in storage worldwide. Starting with satellite imagery of 25,000 floating roof tanks across the globe, Orbital’s AI algorithms would measure the length of the shadows cast upon the rising and falling roofs at certain times of the day. The resulting estimates of how much oil sat in each tank proved to be remarkably accurate. A lot of people will pay a lot of money for such valuable intel. These, of course, are just a few examples of how Orbital can turn seemingly obscure bits of information into cash. This should sound awfully familiar to those who profited from their Palantir investments at Iron Edge a while back.
Beyond health and business benefits, of course, Orbital Insight has much to offer to government agencies. The company’s technology lifts the veil from the shipping ports, airports, air force bases, and energy infrastructure locations of friends and foes alike. The value of this kind of knowledge for our Defense Department is hard to overstate, and it is in this area that Orbital’s services take on a much more serious type of relevance. Traditional image analysts working for the government would typically be assigned to look at hundreds of samples of satellite photos of the same site around the same time every day, trying to identify any unusual changes or spot new objects. As technology improved over the years and the materials that needed to be analyzed became more detailed and prolific, the task of monitoring changes with an acceptable level of proficiency became increasingly difficult. Orbital’s AI accomplishes the mission automatically, and it does so with a level of expertise that the human eye is simply not equipped to achieve. Last summer, the Center for Security and International Cooperation projected that Iran is 18 to 24 months from completing an underground centrifuge assembly hall at its Natanz nuclear facility. The agency drew this conclusion with much assistance from Orbital’s AI tools. They tracked labor fluctuations after an explosion last year at Natanz, and then subsequent activity related to the excavation and construction of the new subterranean assembly hall. Similarly, Stanford researchers recently discovered the construction of uranium storage containers and an overall increase in activity at North Korea’s Pyongsan uranium mine over the past three years. The material from this mine can be refined into low-enriched uranium suitable for nuclear power reactors, or weapons-grade high-enriched uranium. Of course, no outsiders have been permitted to see Pyongsan up-close for about thirty years, but technology eventually prevailed. Using Orbital Insight machine learning software, the researchers detected a rapid degradation of the forested area surrounding Pyongsan, with a 20% reduction in vegetation from 2017 to 2020. Critically, this covers a time period during which the North Korean regime was seeking sanctions relief from the Trump administration in exchange for an outright cessation of North Korean nuclear activity. That’s right --- Orbital caught them cheating.
From mid-March to May of this year, Orbital’s GO platform had its sights set on Ukraine’s Crimean Peninsula. Moscow’s annexation of the region has already drawn much international criticism, but perhaps more ominous is the peninsula’s strategic location that could allow for further aggression into Ukraine. Data collected last spring from satellite and cell phone activity revealed heightened levels of Russian military activity. In addition to the buildup of more than 100,000 troops and a large accumulation of aircraft on the airfield near the peninsula’s western coast, the Orbital Insight analysis shows vehicles near the training ground practicing to use smoke to obscure troop movements. This maneuver, according to military intelligence, strongly suggests a preparation for offensive action. Of course, other explanations or interpretations may exist, but this kind of data accumulation always has great value in the context of national defense.
Artificial Intelligence has been evolving for decades, and Orbital Insight is steering it in the most exciting, unexpected, and singularly useful places. Unfortunately for most, the company’s shares are not yet available to the investing public. It is privately held, not for sale at the stock exchange, but your friends at Iron Edge VC can deliver your piece of this promising enterprise, at an extremely attractive valuation, through our fund before the masses have the opportunity drive the stock price higher. Demand for ownership is likely to spike in this name as public awareness of its impressive technology inevitably grows. Orbital was the most substantial investment we had in the first quarter of 2021, and it had been “sold out” for the middle part of the year. Today, we have very limited quantities of Orbital in inventory, but we hope to acquire more next year. If you would like to learn more, or if you know of anybody else who would, do not hesitate to contact us by clicking “Get in Touch” below.
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All the Best,
Founder & Managing Partner