$1.9 billion invested, led by SpaceX

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A Falcon 9 rockets launches a Starlink mission on January 20, 2021.

SpaceX

Private investment in space companies hit $1.9 billion in the first quarter, according to a report on Wednesday by New York-based firm Space Capital.

“The trend towards larger late-stage deals continued in Q1, with the top 10 rounds accounting for 77% of total investment,” Space Capital managing partner Chad Anderson wrote in the report.

“At the early-stage, we’re seeing larger deal sizes at higher valuations and looser terms as VCs push to deploy the historical amounts of capital they raised in 2020,” he noted.

The quarterly Space Capital report divides investment in the industry into three technology categories.

The first, infrastructure, includes what many would consider space companies, such as firms that build rockets and satellites.

The other two categories are application and distribution. The former includes space-dependent services, like ride hailing or navigation, while the latter represents terrestrial-based technologies that connect to space-based networks.

In total, Space Capital tracks 1,480 companies with $186.7 billion in cumulative global equity investment since 2012 across its three categories.

The broad analysis of the space economy reflects Anderson’s underlying thesis, and a phrase—increasingly repeated in the industry—he coined to represent it: “In the same way that every company today is a technology company, every company of tomorrow will be a space company.”

Space infrastructure ‘very likely’ to break above $10 billion this year

More space SPACs expected

The 16th Electron launch in November 2020, when the company recovered the rocket after splashdown for the first time.

Rocket Lab

Space Capital is tracking eight space deals with SPACs, or special purpose acquisition companies, that are expected to close and “more exits are on the way,” the report said.

Seven of these companies are in the space infrastructure segment and, in all, the close of the SPACs will add nearly $3 billion in cash to company balance sheets.

A SPAC or special purpose acquisition company is a shell company that raises money from investors via an initial public offering and then uses the capital to buy a private company and take it public, usually within two years.

“We welcome the access to additional capital that SPACs offer for infrastructure companies, but are cautious that valuations and growth targets may be out of reach for companies that don’t have a defensible data angle,” Space Capital said.

A defensible data angle means a company is offering a service beyond launching rockets to orbit, Anderson said. He gave Rocket Lab, which is merging with SPAC Vector Acquisition, as an example. Last year, the company expanded its business into spacecraft system services.

“We’ve seen SpaceX again leading in this way. They’re a launch business first, but the main driver of their valuation is their satellite communications services business [called Starlink], and so many other things that they’re doing,” Anderson said.

The PIPEs, or private investments in public equity, of these SPACs are going to also boost the second quarter’s investment totals, which Anderson says “is going to be massive.”

He believes there are three companies “that are highly likely” to announce SPAC mergers in the coming months, and expects about a dozen space SPAC deals in total for the year.

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