SpaceX’s Crew Dragon capsule, named Freedom, docked with the International Space Station in May 2023 during the Axiom Axe-2 mission.
NASA
Investment in the space sector, particularly from venture capital, is steadily flowing into companies seeking and winning government contracts, according to a report from New York-based Space Capital on Monday.
“In this market – 21 months into this liquidity crisis – people are hunting for government money. They are more willing to chase government money, and infrastructure companies are eyeing a lot of that,” Chad Anderson, managing partner of Space Capital, told CNBC.
The company’s third-quarter report found that space infrastructure companies attracted $1.6 billion in private investments in the third quarter. This brings the sector to $8.4 billion in investments year-to-date, exceeding the total investment of $8.3 billion in 2022.
Space Capital’s quarterly report breaks down industry investments into three technology categories: infrastructure, distribution and application. Infrastructure includes companies that are commonly considered space companies, such as companies that build rockets and satellites.
Anderson noted that “infrastructure companies have been fairly resilient across market cycles,” a factor he attributed to “higher competitive advantages” such as higher capital requirements, longer development timelines and significant intellectual property advantages.
Venture capital accounted for 50% of space infrastructure investments in the third quarter, following the historical trend of VCs being the main contributor to space investments.
Space Capital highlighted the trend of companies and investors chasing government money, evident in space infrastructure subsectors, particularly in emerging markets such as space stations and the moon.
“Look at the emerging industries – they are all government-controlled markets. So it’s actually quite easy to assess the market – you know how many dollars are available, how big the market is now and how big it will be in the next few years.” “We need a few years because we already know what state budgets look like,” Anderson said.
Space Capital noted that “the majority of private investment” has favored space stations among the sector’s emerging markets, “while in reality lunar and logistics are significantly larger markets.”
“The amount of money going into space stations is chasing a very small amount of government money, and the amount of money going into lunar stations is very small, and it’s chasing a lot more government dollars,” Anderson said.