In 2021, the space economy benefited from a significant increase in global venture funding.
- Space technologies are critical infrastructure that operate at a global scale. It is nowhere more apparent than in the Russian invasion of Ukraine, which has spotlighted the growing importance of satellite communications, geospatial intelligence, space domain awareness, and access to orbit.
- While the space economy has experienced exponential growth over the past decade – with another $7.2B invested into 118 space companies in Q1 there has now been over a quarter trillion dollars ($258.4B) of private capital fueling innovation across 1,688 unique companies – it appears that Russia hasn’t been paying attention, to their detriment.
- This macro context translated into plummeting returns for public equities at the end of 2021 and effectively put an end to the past year’s IPO boom as new issuance ground to a halt in late February. That didn’t stop two space SPACs from closing, but they only managed to do so with redemption rates greater than 90%, while another company canceled their proposed SPAC merger in favor of a private market financing.
- But despite the spotlight on the importance of space tech, we are seeing a risk-off market and a general unwillingness to fund hardware and deep tech. This appears to be particularly true for investors who have significant SPAC exposure.