SPAC Travel & tourism Venture

Star-Gazing Investors Launch More Money Into Space Tech

Although Jeff Bezos‘ and Richard Branson‘s brief space jaunts have generated massive media interest in space travel for the last week, investors have been over the moon about space tech for at least two years now.

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Venture funding in space travel, satellite communication and aerospace — which includes space-related technologies such as thrusters and propulsion systems — hit a new high last year, and that record is likely to be eclipsed this year.

According to Crunchbase data, nearly $5.2 billion in venture funding has gone into space tech funding already this year — including huge rounds such as SpaceX’s $850 million round and Long Beach, California-based Relatively Space‘s$650 million Series E.

Those figures put this year on pace to rocket past the nearly $6 billion invested in space tech last year. Deal flow also is on track to exceed last year’s with 136 funding rounds announced thus far this year compared to 238 in 2020.

“I think in the last 12 to 18 months … you are seeing investors open up to new types of space technologies,” said Beau Jarvis, CEO of El Segundo, California-based Phase Four, a developer of a thruster for satellite propulsion that closed a $26 million Series B last month.

“Investors are seeing the ecosystem is more complex than just rocket launching,” he said.

Not just rockets

While companies like Elon Musk’s SpaceX, Bezos’ Blue Origin and Branson’s Virgin Galactic catch many of the headlines, those in the industry say the current escalation in funding is really due to satellite technologies and investors seeing the possibilities involved in building up the infrastructure of space for the betterment of business down below.

“This current interest really started about two years ago,” said Stewart Alsop, co-founder and partner at Alsop Louie Partners, an early-stage technology venture capital firm that has investments in Phase Four and Berthoud, Colorado-based propulsion technology company Ursa Major Technologies.

Alsop said the sector has seen its share of ups and downs as it has grown into what he calls “Space 2.0” after the first wave of companies like SpaceX and Rocket Lab were founded. As launching has become cheaper and propulsion technologies have improved, investors are seeing the commercial, government and military possibilities of space.

“Investor appetite is not waning,” he said. “The deal flow right now is amazing.”

Steve Jurvetson, co-founder of Future Ventures, sits on the board of SpaceX and said that while space tourism “sets people dreaming again,” some of the biggest opportunities related to space tech are really related to communication, earth imaging and telecom.

He said those opportunities and others have definitely increased interest in the sector. By his count, in the last three years, more than 300 venture capital firms have made their first bets in space tech.

“As we see companies have matured, more investors have wanted to invest,” said Mark Boggett, managing director of London-based space investment firm Seraphim Capital.

Boggett said space sits at the crossroads of several large trends, including connectivity, mobility and data, and that is driving investments to new heights — especially as both launch and cost of satellites have decreased about 100x over the years.

As costs have lowered, companies continue to emerge that are using real-time information from satellites that can provide useful — and financially valuable — data around sustainability and climate change or can help bring connectivity to the more than 50 percent of the world that does not have the infrastructure for such, Boggett said.

“We are creating a digital platform in the sky,” he added.

Seeing the money

Of course, while the possibility of making money in an emerging market like space attracts investors’ attention — actually seeing money being made is what makes them flock to an industry.

To that point, SPACs — or special-purpose acquisition companies — have proven very interested in helping birth space tech companies into the public market.

Just this month, Google-backed Planet Labs announced it will go public in a $2.8 billion SPAC deal. In April, Seraphim Capital-backed satellite-to-cell company AST & Science — now known as AST SpaceMobile — went public through a SPAC. Also in April, Canadian space operations and satellite company MDA had an initial public offering on the Toronto Stock Exchange.

In March, another Seraphim Capital-backed company — small satellite builder and data company Spire Global — announced a SPAC deal which will value it at $1.6 billion. That same month, Rocket Lab announced it would merge with a SPAC to go public later in the year in a deal that values the company at more than $4 billion.

Space SPACs

Of course, not all has gone well for space tech companies seeking an entrance to the public market. This month, the Securities and Exchange Commission charged Santa Clara, California-based in-space transit company Momentus and its SPAC with making false claims and allowed investors to drop out.

Peter Kant, CEO of Boston-based propulsion developer Accion Systems, said the interest from SPACs in space technologies is very real. Accion just raised a $42 million Series C this week and Kant said the company was approached by SPACs while fundraising.

“It seems like raising $300 million is easier than raising $30 million because of the aggressiveness of the SPAC market,” he said with a laugh.

In the end, the company raised its money a little earlier than scheduled because of the interest it was seeing from SPACs, but decided going public via a SPAC was not right for Accion at this time.

“There is just such a range of opportunities coming to the market for investors,” said Boggett referring to exit strategies now available to companies in the industry.

With the returns the sector is seeing from going public, he added, the industry now has a complete ecosystem for investing — from seed rounds to large growth raises to the public markets.

“We now have the full funding ladder,” he said.

Methodology

Space technologies are being defined by the industries of space travel, satellite communication and aerospace as according to Crunchbase data. Funding numbers include pre-seed, seed and all venture rounds.

Illustration: Dom Guzman

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