Space Investments Quarterly Report Released by Space Capital
Signs Show that the Investment Climate in Space is Improving
The most recent quarterly report for space investments has been released by Space Capital, and it finds that while there is reason for optimism for space investments in the second half of the year, there are still significant challenges being faced by space companies.
Earlier in the year, Space Capital was forecasting several interest rate cuts from the Fed, but those cuts have not been forthcoming. Now, the Fed is anticipating only one rate cut this year due to stubborn inflation. That and uncertainty about the November election are leading to what Space Capital sees as a prolonged market correction, a challenging fundraising environment, and a "tepid" exit environment.
The optimism comes from signs that the space economy is improving. Last year saw investment activity hit a decade low, but 2024 is a different environment. Examples cited by Space Capital include the fact that more deals were done in the second quarter of the year than in the past nine quarters, and space investment has already surpassed all of 2023 with half of 2024 to go. Acquisitions are also on track for their highest activity of the past decade.
That consolidation can be in part attributed to the challenging times being faced by space companies that are now seen as acquisition targets, and the values of those companies have been depressed.
Several predictions emerged from the recent Space Capital Summit. Among them is that AI will accelerate innovation in the space economy and enable companies to more fully realize the value of geospatial data. Government funding will continue to be a major driver of growth in the space economy. As companies seek additional revenue, there appear to be more investors willing to fund them.
One of the standout companies in the report is SpaceX, which has completed 67 launches in the first half of the year, and flew a booster for a record 20th time. The first soft landings of a SpaceX super heavy booster and Starship spacecraft have also boosted the company's fortunes. But Space Capital sees the potential for challenges to SpaceX's dominance in this arena with nearly a dozen new launch systems coming online this year.
According to the report, since 2015, the United States has led the world in investment, adding 46 percent of the world's total investment. Satellites are the dominant segment for investment, with $249.3 billion pouring into the satellite industry. Launch is a distant second, seeing $35.1 billion invested in that segment.
In terms of private investment, the space industry has seen $10.7 billion invested year to date in 235 rounds.