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The Capitalist High Frontier: Space-Based VC Fundraising Surges

Tom Burroughes, Group Editor , 22 September 2020


Demand for satellite technology and dramatic falls in rocket launch costs are, among other forces, propelling more capital into these areas, new figures show.

Aerospace-linked venture capital deals are riding high in value terms, suggesting that demand for private capital into space-based technology is strong more than half a century on from the Apollo 11 mission, industry data show.

Today, Silicon Valley tech rainmakers Elon Musk and Jeff Bezos are grabbing headlines and winning business by their rocket launches. In Musk’s case, his reusable rocket flights have dramatically cut launch costs, reshaping the economics of space flight. Between 1970 and 2000, the cost of launching a kilogram into space held steady, with an average of $18,500 per kilogram. For a SpaceX Falcon 9, the Musk rocket used to access the International Space Station, the cost is just $2,720 per kilogram (source: The Conversation, March, 2019).

Such economics, coupled with demand for satellite communications and other technologies, are a boost for venture capital. Preqin, the research organization that tracks alternative assets, said that, as of August this year, VC deals in aerospace reached an aggregate $3.6 billion - a record. That sum was chalked up across half the number of 2019’s completed deals (56 versus 121), Preqin said.

The five largest deals, accounting for $3.2 billion of the total, were in companies seeking to operate outside the Earth’s atmosphere, the report said. 

“Technological advancement and renewed public and government interest in space are key driving forces behind the surge,” Preqin said. It said that Elon Musk’s SpaceX is the “clear leader” in the private sector. It raised $1.9 billion 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, Preqin said. 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. 

Cosmic Deal Variety
Satellite imagery analytics, geospatial intelligence, and global positioning systems are among innovations competing for VC money.

In February this year, French satellite operator Kinéis raised $110 million 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 deal is the $38 million 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.

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