Space Tech Funding Comes Back Down To Earth

SpaceX recently made headlines as it became the second most valuable private company — worth a reported $150 billion — behind only TikTok parent ByteDance. But not all space tech companies have seen the valuation and fundraising success of Elon Musk‘s aviation and aerospace darling.

Funding to VC-backed space tech startups — defined here as space travel, satellite communication and aerospace — has dramatically decreased in the last year-plus, and this year is on pace for the lowest total dollars since 2020, according to Crunchbase data.

Like most sectors, space tech funding rocketed to the stars in 2021, hitting an all-time high of $12.1 billion in more than 450 deals. The sector only saw about a 25% decline last year, when space tech startups raised $9 billion in just under 400 deals.

However, this year has been a different story. With the year more than half over, the sector has witnessed only $2.4 billion of funding in just 172 deals.

Big round slowdown

One of the main reasons funding has declined is the disappearance of the huge rounds the sector has become so associated with thanks to the likes of SpaceX and Relativity Space.

In 2021, space tech startups received 14 rounds of a quarter-billion dollars or more, including Louisville, Colorado-based Sierra Space raising a $1.4 billion round and SpaceX locking up an $850 million round.

Last year, the number of those types of rounds dropped to only five, but did include a $1.7 billion raise by SpaceX and Costa Mesa, California-based defense firm Anduril closing a $1.5 billion Series E that valued the company at $8.5 billion.

This year, however, no space startup has come that close to such a round. Some of the biggest rounds this year include:

• In March, Germany-based Isar Aerospace, which helps launch small and medium satellites, raised a Series C of just more than $174 million.
• In early April, San Francisco-based satellite developer Astranis locked up a $200 million round at a $1.6 billion valuation, per a Bloomberg report. The new deal was led by Andreessen Horowitz and came just before the company launched its first satellite aboard the SpaceX Falcon 9 rocket.
• In late April, Berthoud, Colorado-based Ursa Major closed on a $100 million investment. BlackRock and Space Capital took part in the funding. The company is developing the next generation of rocket engines with substantially more power. According to a report, Ursa Major was looking to secure the funding at a $400 million pre-money valuation.

Falling star?

Of course, big rounds are down in mostly all sectors as VCs and growth firms have pulled back significantly in funding such rounds at big valuations.

The numbers do not mean the “Space 2.0” era — the current wave of investment that came after the initial excitement of firms like SpaceX and Rocket Lab being founded — is over.

Space tech — like other deep sectors — typically sees the most dramatic pullback from investors in a slowing market as they look for more “sure” bets with a much shorter time horizon to liquidity.

The near collapse of the SPAC market also likely has caused investor anxiety, as one avenue for potential exits has been severely limited. It was just a couple of years ago when startups including Google-backed Planet Labs and Spire Global were able to access the public market through such vehicles, but the poor performance of SPACs in general has made that a less than likely option for many companies.

However, there is no denying the interest in new launch and propulsion technologies, as well as other opportunities space may hold — think manufacturing or mining. Such markets and the possible return on investment from such space opportunities are likely too much for VCs to resist.

While the days of spending like in 2021 may be gone, it is unlikely investors are going to stop looking to go where no man (or woman) has gone before.

Related Crunchbase Pro query

• Space Tech Funding In 2023

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: Li-Anne Dias

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