Commercial space companies are attracting record levels of funding as investors rush to access the market unleashed by SpaceX of Elon Musk, whose reusable rockets have cut costs to get beyond Earth’s atmosphere.
Total venture capital investment in the field increased 95% to $ 8.7 billion in the 12 months ending in late March, according to the Seraphim SpaceTech Index, a quarterly track of funding transactions in the sector.
The increase was spurred by the combined $ 4.2 billion raised by SpaceX and OneWeb, the low-earth orbit constellation rescued by the British government and India Bharti last November. Excluding these outliers and funding deals for drone and flying taxi activities, private funding for commercial space companies jumped 52% to $ 4.1 billion.
“We believe we are at a watershed moment,” said James Bruegger, chief investment officer of Seraphim Capital, a space technology fund. “It is incredible that since the arrival of Covid, private funding in space has doubled. This is an astonishing level of investment and an indication that private capital markets understand the space. “
Space companies also find public funds loaned from investors in special purpose acquisition companies known as Spacs. In the 12 months leading up to March 31, 11 Space Spacs were announced, promising more than $ 7 billion in investment in the sector and giving companies such as Rocket Labs, the New Zealand launch company, and Spire Global, the multi-billion dollar spatial data group. dollar valuations.
Mark Boggett, chief executive of Seraphim, said Spacs provides space companies with the long-term capital they need to grow. It was a sign that there was “a lot more confidence on the part of growth investors. The prices paid by Spacs are equivalent to non-Spac transactions, ”he said.
However, many space startups have yet to prove that they can operate profitable businesses, and some critics recall the high-profile collapses of companies like Iridium, GlobalStar and Teledesic two decades ago. Even OneWeb was forced to protect itself from Chapter 11 last year, after running out of cash to fund its ambitious plan to launch a mega constellation providing high-speed, low-latency internet services from orbit. low terrestrial.
But the space economy is changing rapidly due to smaller, cheaper satellites and the reusable SpaceX rocket. According to NASA, launch costs which had remained stable for 30 years between 1970 and 2000 had been divided by seven in 2018 due to the development of SpaceX’s Falcon 9.
This has caused a rush to launch satellite radiation services from orbit – from Earth observation systems to mega-constellations aimed at delivering the Internet from space. Around 90 mega-constellations have been announced around the world, including several in China.
OneWeb received a substantial boost this week when landline satellite operator Eutelsat announced it would pay $ 550 million for a 24% stake in the satellite broadband provider.
Seraphim predicts that venture capital funding for space start-ups will double in the first half of 2021 compared to the first half of 2020. This could include additional funding for OneWeb.
Among those who found new investors in the first quarter were ABL Space Systems, the rocket launch company that landed $ 170 million in funding in the first quarter, and Axiom Space, a logistics company that raised $ 130 million. dollars.
Some 68 deals were closed in the first quarter, up from 62 in the last quarter of 2020, and the highest level since the tracker’s launch in 2018.