Space Infrastructure Stayed Aloft In Tough Funding Climate

The past few quarters have been a sluggish period for funding to scads of startup technology sectors. Spacetech, however, is not one of them.

Last year, investors poured more than $4.6 billion globally into startups in the space travel and satellite categories, as well as space-related aerospace sectors, per . Supersize rounds went to companies developing everything from satellite networks to space stations.

Space infrastructure was the hottest area, per , managing partner at early investor , who calculated that last year鈥檚 investment totals were second only to the 2021 peak. He attributes the enthusiasm to broader bullishness around defense tech and sectors with government funding.

鈥淚n this challenging revenue market, everyone is chasing government dollars,鈥� Anderson said, observing that: 鈥淕overnments are continuing to spend regardless of market cycles.鈥�

Using 附近上门 data, we charted out investment to select space categories for the past five calendar years.

Looking at the chart, it’s notable that although it shows a year-over-year decline in 2023, this is mostly due to two big 2022 fundraises that don鈥檛 cleanly fit into the space startup category. One is , which at 22 years old is arguably not a startup. The other is , a defense unicorn that is not primarily spacetech-focused but has received funding to in space surveillance systems.

By contrast, nearly all of the biggest space funding rounds for 2023 went to Series A through Series D stage companies that are solely focused on the sector.

Supergiant space rounds

The lineup includes some rather large financings. Standouts include:

, a Houston-based startup building a commercial space station, picked up $350 million in an August financing. The company also has a long-term contract worth $1.26 billion to provide 鈥淓xploration Extravehicular Activity Services鈥� and spacesuits for use on the moon and in other space programs.
, of Louisville, Colorado, landed a $290 million Series B in September that values the company at $5.3 billion. Sierra says it鈥檚 developing the first commercial space station and is also transitioning its Dream Chaser space plane for use in NASA cargo resupply flights to the International Space Station.
, a San Francisco startup building a network of satellites to provide internet access in remote regions, locked up a $200 million venture round in April at a $1.6 billion valuation.
, a Germany-based launch service provider for small and medium-sized satellites, secured $168 million in a March Series C financing.

One common factor among the well-funded startups above is that all are infrastructure plays, which goes against the stereotype of startup investors as an infrastructure-averse crowd.

Partly, it is because the cost of launching a satellite has decreased dramatically over roughly the past decade, making the economics more appealing to startup backers. Another factor may be the enduring success of SpaceX, said to be valued recently at around , which proves that big outcomes are possible.

But where are the apps?

While space infrastructure funding is going strong, Anderson said applications that use satellite data have not attracted much interest from startup investors lately.

That sector isn鈥檛 necessarily reflected in 附近上门 data though, which doesn鈥檛 categorize many power users of satellite data as spacetech companies. For instance and , both of which rely heavily on satellite-enabled GPS data for their apps, aren鈥檛 listed as space companies.

However, Anderson makes the case that to understand the space economy as a whole requires looking at the value created by all businesses that incorporate satellite information. This includes GPS, a technology he posits has generated trillions in economic value.

Down the road, Anderson is optimistic that the out-of-favor app economy startup sector will see a lift as more satellite-enabled information streams mature. In particular, he鈥檚 enthused about geospatial satellite intelligence, an enabling technology with applications in insurance, climate change modeling, crop management and much more.

Launches, not exits

One thing we鈥檙e not seeing much of in the space sector lately is exits.

The combination of a weak M&A environment and quiet IPO market means startups and their backers probably aren鈥檛 thinking much about immediate investment returns. At least for now, however, it looks like venture investors are willing to keep the funding flowing as space startups launch the next phases of their business plans.

附近上门