Partially due to a new financial mechanism, investments in space companies surged in a way few things have since the end of Q1 2020.
Space News reports that Quilty Analytics, a market research and advisory firm, figured $5.7 billion in space investments coming to the end of the first fiscal quarter of this year, marking a 356% surge from the same period last year.
Private investments increased, by reckoning of Seraphim Capital, to a total of $8.7 billion in the twelve months ending on March 31st this year, a doubling of this previous period.
The mechanism that has channeled this massive windfall into the space industries, whether telecommunications, earth-monitoring and GPS, or transportation and rockets, has been special purpose acquisition companies, or (SPACs) which are essentially companies with no commercial operations that are formed to raise money for the express purpose of buying an existing company.
Companies like Momentus, which is building capacity for space heavy industry, Rocket Lab, which is pioneering fast and simple launch infrastructure to increase the availability and ease of microsatellite launches, and Astra, which offers a variety of space technology services including launches, are all currently carrying out a SPAC acquisition at this moment.
James Bruegger, Seraphim Capital’s chief investment officer, said in a statement: “We believe SpaceTech is at the nexus of mega-trends that will define societal change over forthcoming decades and has a unique role to play in addressing the world’s most pressing problems”.
“Radical advances in the Space sector mean a data and connectivity tsunami is about to transform the world as we know it, driving the next major paradigm shift in the global economy. Having so far largely weathered the worst of the impact of the downturn, the New Space economy is now primed for further strong growth in 2021 and beyond”.
Indeed, cheaper and universal telecommunications infrastructure, asteroid mining, and a hundred other unforeseen inventions that would come to pass from getting private industry into space, will in effect rain back down, as NASA so often likes to point out, and merge space tech with our terrestrial variety.
SPACs, as Jason Rainbow and Jeff Foust report for Space News, are useful tools because they allow the initial investors to receive their principle back plus healthy interest, while simultaneously taking the space startup in question public through the merger with another company. Virgin Galactic, the space-arm of Richard Branson’s Virgin empire, went public through a SPAC merger in 2019.
The SPAC ticket to ride is a lifeline in a crowded field. These days, according to a report from Bryce Space and Tech, itself a space company, the number of space startups that manage to receive funding each year in the U.S. averages around 29, while around 2,400 go unfunded.