Satellites are attracting more VC funding as investors target the $600bn space economy

The low Earth orbit (LEO) satellite market is taking off with the help of venture funding, as we reported in Preqin First Close earlier this month.

Here, we take a second look at what’s driving investment in satellite technology – and spacetech more broadly – as well as some major activity in the sector.


A rising star for investors

LEO satellites can beam data back to Earth faster and more efficiently than those in higher orbits. Pioneered by companies like SpaceX and OneWeb, they’re less expensive to make and launch, and smaller in size.

According to Goldman Sachs, the global satellite market could skyrocket to $108bn by 2035 (its base-case forecast), up from the current $15bn.

This technology is a key part of the $600bn space economy. It’s prompting a major shift in telecoms and is being increasingly integrated into defense, industry, energy, and consumer applications.

According to asset manager Seraphim Space, 2024 was a standout year for VC investment in spacetech, including satellites. A record 601 deals were completed – a 50% year-on-year increase on 2023. Total investment for the year reached $8.6bn, compared with $6.9bn in 2023.

Seraphim also reported a steady flow of VC investment in Q1 this year: ‘Activity remained focused on capital-intensive sectors such as space hardware and infrastructure, launch services, and satellites.’


Global moves shaping spacetech

A number of developments are fueling investment activity. These include:

Defense applications

National security has traditionally been a major driver of satellite investment, including private capital. This looks set to continue as the LEO market expands and as global defense spending increases. For example, the EU’s proposed IRIS2 secure satellite system may lead to commercial opportunities.

In a sign of the times, Geodesic Capital announced it had raised $250mn for its national security-related venture fund earlier this month. The Geodesic Alliance Fund is focused on advancing US-Japan technology and security collaboration. It primarily targets US start-ups in sectors like space, AI, and cybersecurity.

Recent VC funding rounds listed on Preqin Pro relating to satellite-enabled defense include:

  • True Anomaly raised $260mn in a series C in April, led by Accel. The Colorado-based company plans to expand its operations and products, which include tactical orbital vehicles.

  • San Francisco-based Aethero Space, a defense-focused start-up that builds AI-enabled computers and satellite platforms, announced $8.4mn in seed funding this month, led by Kindred Ventures.

  • San Carlos-based Aetherflux secured $50mn in a series A in April, co-led by Index Ventures and Interlagos. It has identified defense as an early market for its satellite technology, which transmits solar power back to Earth.


China’s satcom expansion

Strategic moves by China to compete with the US on satellite communications will likely come into play.

According to Goldman Sachs, 70,000 LEO satellites are expected to launch over the next five years, with about 53,000 of these from China.

State-backed operators like Spacesail and Hongqing Technology are looking to compete with Western satcom companies by planning mega networks of more than 10,000 satellites.

‘We expect to continue to see large investment in high-capex businesses as China advances its commercial space ecosystem to compete more directly with the US in launch, manufacturing, and satellite communications,’ says Seraphim Space.

In a recent deal, Beijing-headquartered Jiangsu Deep Blue Aerospace secured CNY 500mn. The series B was led by Tai’an Yuanwang New Energy Industry Investment Fund. It will finance the R&D and commercialization of the company’s reusable launch vehicles and services.


Global connectivity

LEO networks can beam high-speed broadband to under-served and remote parts of the planet. They can also provide direct-to-device (D2D) services, enabling communication where traditional cellular networks are unavailable or unreliable.

Satellite operators are increasingly partnering with telecom and mobile companies to roll out these services. T-Mobile is set to launch a messaging service linked to SpaceX’s Starlink satellites in July, and Vodafone and AST SpaceMobile are creating a joint European D2D business.


Innovative applications

VC investors are also funding satellite technology for innovative purposes beyond communications and defense.

For example, Reflect Orbital announced a $20mn series A in May, led by Lux Capital. The Los Angeles-based company is developing satellites that reflect sunlight to Earth-based solar panels, providing on-demand lighting for various applications like emergency response and agriculture.

Cardiff-based Space Forge closed a £22.6mn round in May, led by NATO Innovation Fund. The series A will finance the development and launch of its in-orbit manufacturing system for producing materials in microgravity.


Other recent activity in satellites and spacetech

Satellite-related deals in the last two months, recorded on Preqin Pro, include:

  • Impulse Space secured $300mn in a series C led by Linse Capital. The Redondo Beach-based company plans to scale production of its technology for positioning payloads. It’s now raised total capital of $525mn.

  • Toulouse-based Look Up Space completed a €50mn series A, including equity funding led by ETF Partners. It will accelerate the rollout of its ground-based radars for tracking space traffic.

  • Muon Space closed a $89.5mn round led by Congruent Ventures. The round will support a major scale-up of its operations and the acquisition of start-up Starlight Engines. The Mountain View-based company has now raised a total of $146bn in series B funding.

  • Vilnius-based Astrolight announced a €2.8mn seed round, led by Balnord, to develop its laser-based satcom platform.


Rupert Gilbey is Senior Content Editor at Preqin, a part of BlackRock.

Second look is edited by Libby Fennessy, Production Editor of Preqin First Close.

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