Investing in the space industry: Expanding private funds to revamp sectors and address worldwide issues
The global space sector has seen significant growth in the past few years, with over $47 billion of private capital invested since 2015. This capital, consisting of equity, debt, and acquisition finance, has been instrumental in driving innovation across the industry.
The integration of space technology in various sectors, such as agriculture, construction, transport, retail, food, and beverage, presents opportunities for continued space innovation to help tackle climate, environment, and humanitarian crises. This growth is expected to continue, with the global space economy currently estimated to be worth $596 billion and projected to grow to $1.8 trillion by 2035, at an annual growth rate of 9%.
Government spending on national space programs, particularly focused on defense and national security, will remain the largest component of global space funding. However, public-private partnerships present a significant opportunity to scale up private investment to support commercial space activity by private entities.
The European Space Agency (ESA) is a leader in this area, with its Advanced Research in Telecommunications Systems (ARTES) Program providing co-funding support for space entities seeking to develop new satellite technologies and commercial applications. NASA has also embraced public-private partnerships to stimulate commercial space innovation and the development of new space exploration technologies for deep space exploration.
In the United States, public-private partnership opportunities are focused on defense-related funding to support national security space launches and space infrastructure. The German Aerospace Center (DLR), the German space agency, is responsible for fostering cooperation between the public and private sectors in aerospace research and innovation.
Venture capital and public-private partnerships are two viable pathways to deliver the required "scaling up" of private sector investment to support the expanding space economy. Equity finance, particularly venture capital, accounts for around 80% of private space capital inflows. Notable dedicated space VC funds include Seraphim Capital, Starbridge, Noosphere Ventures, TypeOne VC, and Space Capital.
The ESA operates an Investor Network, fostering connections between space startups and a growing network of private investors, including venture capital funds and institutional investors. In the United Kingdom, the Government's "Unlocking Space for Investment" initiative supports space companies to become "investor ready" and addresses access to finance barriers for growth-stage space businesses. The United Kingdom Space Agency operates an Innovation and Science Seed Fund, a publicly funded, privately managed venture capital fund that invests public R&D funding as equity capital to support early-stage space businesses.
However, the growth in private funding has seen a downturn in recent years due to economic instability caused by COVID-19, supply chain disruptions, rising inflation, and declining business and consumer confidence. Despite these challenges, the continued growth of the space economy will be driven by expansion of both public and private sector funding.
The ESA's ARTES Program has delivered groundbreaking space infrastructure, such as Eagle-1, Space Inspire Novacom II, and OneSat Novacom I, which have revolutionized satellite telecommunications and broadband connectivity. These advancements highlight the potential for the commercialization of outer space, with the potential to transform industries and solve humanitarian and environmental challenges, depending on leveraging greater private funding opportunities.
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