Space Economy Sees $5.8 Billion in Q3 Investment as Defense and AI Drive Growth
Infrastructure Companies Lead Funding as Industry Shifts from Speculation to Proven Capabilities
The commercial space industry attracted $5.8 billion across 115 companies in the third quarter of 2025, putting the year on track to rank among the top three funding years on record, according to Space Capital’s latest quarterly report. Venture capital firms drove 86% of investment activity, with infrastructure companies capturing $4.4 billion of the total.
The third quarter saw 29 exits worth $33.2 billion, including three initial public offerings and 26 acquisitions. Synopsys acquired engineering simulation firm Ansys for $35 billion, while SES purchased Intelsat for $3.1 billion. The median valuation step-up for acquisitions reached 2.1 times, below the 2.8 times seen at the market peak.
SpaceX maintained its position as the world’s most valuable private company at a $400 billion valuation despite political uncertainty. The company’s Starship vehicle completed Integrated Flight Test 10 with multiple technical milestones, including booster soft splashdown, payload deployment and controlled upper-stage reentry. SpaceX also agreed to acquire EchoStar’s AWS-4 and PCS H-block spectrum holdings for approximately $17 billion to enhance its direct-to-cell capabilities through Starlink.
Defense spending emerged as the primary investment driver, with the Space Force potentially receiving $40 billion in fiscal year 2026, representing 40% year-over-year growth. The report noted that NASA faces budget constraints, with the administration proposing cuts while Congress works to maintain funding near $25 billion.
In the infrastructure sector, satellite manufacturing showed sustained momentum, with Apex Space raising $200 million in its Series D round. Chinese launch company Galactic Energy secured $336 million, the largest publicly disclosed round for a Chinese launch startup. Cambridge Aerospace, a United Kingdom startup developing missile defense systems, raised $100 million in the largest seed round in UK history for the infrastructure category.
Amazon’s Project Kuiper reached 129 satellites in orbit following the latest United Launch Alliance mission, bringing initial U.S. service within approximately six months. JetBlue selected Kuiper for in-flight Wi-Fi service, marking a competitive alternative to Starlink in the commercial aviation market.
Investment in geospatial intelligence applications surged from $1 billion in 2020 to a record $21.6 billion as of the third quarter of 2025. Google launched AlphaEarth Foundations during the quarter, creating a planetary-scale AI model from satellite and aerial data. The development accelerates the industry’s architectural shift from pixel-based analysis to embedding-based representations.
The report tracked cumulative private market equity investment of $393 billion across 2,286 unique companies since 2009. North America captured 69% of global investment over the past three years, followed by Asia at 17% and Europe at 8%.
Public market performance diverged based on execution, with Rocket Lab posting record revenue and margin expansion while Planet delivered record revenue and a sizable backlog. Firefly Aerospace’s initial public offering priced at approximately 61.5 times trailing 12-month revenue but faced pressure following light revenue, significant losses and a booster test failure.
The report emphasized that consolidation and selective initial public offerings will likely dominate exit strategies, with multiples rewarding operational performance over narratives. Defense demand provides near-term growth, while dual-use capabilities offer the fastest path to durable revenue.