Covid-19 Taking a Toll on Space Investment
The impact of Covid-19 on the economy has resulted in a significant drop in cash flow for the commercial space industry, according to data compiled by one venture capital firm.
But the news is not all bad. Noosphere Venture Partners found in its Second Quarter 2020 report that while there was less cash being invested, there was also a sustained upward trend in interest, which may bode well for the segment in the future.
Noosphere collected and analyzed public data which showed that 47 rounds of financing closed during the second quarter with a total investment of $312 million by up to 81 funds. Most of the completed contracts were early-stage VC and Angel/seed funding, according to the report.
The largest recipients are names you will recognize. SpaceX and Commsat received sizable investments. Both companies are involved in the development of satellite-delivered internet services. SpaceX, of course, also has interests in manned spaceflight and satellite-delivery services.
Noosphere Ventures found that the number of launches was adversely affected by the pandemic. There were no heavy-lift launches during Q2, and medium-lift launches fell from 18 to 14. The number of small-lift launches doubled from 2 to 4.
The data is borne out by the Q2 2020 Space Investment Quarterly report. That report indicates that there was an 85 percent decline in infrastructure worldwide compared to the first quarter of 2020. But the second quarter saw continued momentum in other sectors. Venture capital firms invested in on-demand platforms which leverage GPS for services like food delivery. Space Applications saw a cash influx of $5.3 billion, of which $4.8 billion went to U.S. companies. In fact, VC funding in space was up 4 percent in the first half of 2020 despite expectations that it would dry up.
Part of the momentum can be attributed to companies making use of the shift to remote operations in the broader economy. Innovative companies are leveraging space technology in areas such as GPS, Geospatial Intelligence and communications. Space Capital says the Space Economy will "play an increasingly important role in the post-Covid world."
Prior to the pandemic, 2019 was a solid year for the commercial space industry. A report from The Space Foundation found the global space economy in 2019 grew more than $9 billion over the previous year, reaching $423.8 billion, according to new findings published in the Space Foundation’s 2020 second-quarter issue of The Space Report.
The Space Foundation study of Q2 2020 says that the overall global space economy grew in 2019 to $432.8 billion.
The economic analysis also found:
The growth represents a 2.2% increase from the 2018 global space economy, which was estimated at $414.75 billion.
Commercial revenue climbed to $336.89 billion in 2019, up 6.3% from $328.86 billion in 2018.
Space products and services, a sector of commercial space revenue, totaled $217.72 billion, easing up 1.7% from 2018’s $214.18 billion.
Space infrastructure and support industries, the other main commercial sector, climbed to $119.17 billion — a 16.1% increase over 2018’s $102.66 billion, and marking the first time since 2016 that the sector exceeded the $100-billion mark.
According to the report:
Despite the global pandemic, launches for the first half of 2020 — from January 1 to June 30 — were on par with previous years. The 41 successful launches were slightly below the five-year average of successful launches, which was 43.2.
In 2019, the European space workforce included an estimated 47,895 employees working on design, development, and manufacturing of space assets.
In 12 North American Industry Classification System (NAICS) codes that have some broad affiliation with the space industry, U.S. job losses from December 2019 to May 2020 totaled 241,600, according to data from the U.S. Bureau of Labor Statistics.