A new space race is underway as aerospace deal value soars to a record high
A new space race is underway as aerospace deal value soars to a record high
Today, over half a century since Neil Armstrong and the Apollo 11 crew landed on the moon, a new space race is afoot – this time, fueled by private capital. Deal value has taken off: as of August this year, venture capital deals in aerospace reached an aggregate $3.6bn, the sector’s highest-ever deal value. This feat was achieved across half the number of 2019’s completed deals (56 vs. 121), and in eight months as opposed to the whole of 2019. The five largest deals, accounting for $3.2bn of the total, were in companies looking to operate outside the Earth’s atmosphere.
Technological advancement and renewed public and government interest in space are key driving forces behind the surge. At a press conference ahead of NASA and SpaceX’s bid to send astronauts to the International Space Station, NASA deputy administrator James Morhard said the world is “at the dawn of a new age, and we’re really leading the beginning of a space revolution.”
Elon Musk’s SpaceX is the clear leader in the private sector. It raised $1.9bn in venture funding led by an unnamed individual investor in August 2020, with participation from San Francisco-based 137 Ventures and other unspecified investors. It was the largest-ever private venture capital investment in an aerospace company.
The California-based company took seven years to go from its first official launch, in 2006, to its 10ᵗʰ. In the subsequent seven years, it went from 10 launches to 100, with 15 rockets blasting off in 2020 alone. Furthermore, SpaceX became the first privately owned company to accomplish the propulsive vertical landing of a rocket in 2015. This exemplifies the sheer pace of innovation within the industry, creating lucrative opportunities for keen-eyed investors.
Cosmic Deal Variety
It’s not just rocket launches that are propelling investors toward aerospace. Satellite imagery analytics, geospatial intelligence, and global positioning systems are just a few of the innovations being pioneered. Over the past decade the falling cost of launching and operating satellites has opened space up to a wider range of players.
In February 2020, French satellite operator Kinéis raised $110mn in venture funding from new investors BNP Paribas Développement, Bpifrance, CELAD, Centre National d’Etudes Spatiales, CLS Group, Hemeria Group, Ifremer, and Thales Corporation, along with individual and other unspecified investors. The company develops nanosatellites powered by Internet of Things connectivity solutions and sensors to gather data and geolocate objects on the planet.
Another notable deal is the $38mn Series B funding of Beijing-based Commsat, co-led by new investor AVIC Trust and Beijing Wealth Capital. Established in 2015, Commsat is a developer and operator of commercial satellites that provides launching services.
Reaching for the Stars
Despite the earthly challenges of 2020, investors clearly see opportunity in the aerospace sector. Even after the SpaceX deal is removed, aggregate deal value so far in 2020 ($1.67bn) would be almost on par with last year’s total ($1.75bn). A far cry from the $0.45bn in deal value observed in 2016.
SpaceX’s ultimate goal is to send humanity to Mars. This may sound unrealistic to some, but 10 years ago, not many could have predicted that spacefaring rockets would land themselves safely back on Earth. For the pioneering to continue, private investment will be paramount.