This article is the first of a series by the Perkins Coie New Space industry group on developments in the “new space” industry.
Responsible for lowering the cost to access space, the “new space” industry has been developing new and fast-moving business models that have opened up new markets. It has advanced technological innovations, including by rapidly iterating technology optimizations for customer fit. These private operators are increasingly backed by private investors, arrangements that are driving space investment in what was traditionally a mostly government-backed industry. This update summarizes the recent rapid growth of private investment in three key areas: venture investment, special purpose acquisition corporation (SPAC) trends, and acquisition activity. It also touches on the impact of the volatile financial markets on each of these at the start of 2022.
Venture capital (VC) investment in space-related startups is markedly increasing. From 2020-2021, venture funds have placed billions of dollars of capital into space startups, with investments ranging from small seed rounds to large late-stage series investments. The volume of 2021 raises in each of Seed, Series A, and Series B categories exceeded the annual volume of both 2019 and 2020. Satellite constellations and similar platform technology (such as HawkEye 360’s $145 million raise to scale space-based radio frequency analytics) accounted for nearly half of year-to-Q3 venture investments in 2021. However, it did decline slightly in total share in favor of the “build” segment (satellite manufacturing, propulsion, and related sub-systems) and the “launch” segment (launch, orbital deployment, and orbital transfer vehicles, such as Loft Orbital’s $140 million Series B for its platform designed to assist the launch and operation of satellites). Intersatellite communications and space infrastructure also received significant attention, with Sierra Space raising a $1.4 billion Series A to finance the building blocks of its planned commercial space station. This influx of capital has led to heightened innovation and market momentum in the new space sector, which we expect to carry forward into the coming years.
2021 stands out as the year that new space companies arrived on public markets. The SPAC boom that marked the first half of the year extended to the new space sector, with a significant number of space companies going public through SPAC mergers in 2021 and others announcing SPAC mergers that have yet to be completed. The newly listed companies were in a wide range of subcategories, but the largest subcategories by value were grouped around launch (Astra, Archer Aviation, Rocket Lab, and Virgin Orbit, among others) and earth observation and analytics (Spire, BlackSky, and Planet Labs, among others).
While the resulting listed companies in many cases ended up trading below their de-SPAC value by end of year (some significantly), the access to public markets is itself a validation …….