When Lisa Rich made an investor call in March to raise funds for Aurvandil Acquisition, a company that buys start-ups focused on space technology, her goal was to raise several million dollars.
Aurvandil board member Ms. Rich almost reached her goal in an hour.
“That just doesn’t happen,” he laughed.
Richard Branson is scheduled to fly into space on Sunday, in a spacecraft built by his company Virgin Galactic. Jeff Bezos, who resigned as Amazon chief executive on Monday, is scheduled to take a spaceflight about a week later, in a spacecraft built by his company Blue Origin. And Elon Musk’s company SpaceX has a deal with the National Aeronautics and Space Administration to get Americans to the moon. But tycoons are far from the only people with their eyes on heaven.
Investors are pouring more money than ever into space technology. Space startups raised more than $ 7 billion in 2020, double the amount from just two years earlier, according to spatial analysis firm BryceTech. That trend continues this year, said Carissa Christensen, CEO of BryceTech.
The biggest deals go to companies that launch rockets into space, such as SpaceX and Relativity Space, which announced $ 650 million in new money last month, a day after Bezos declared he would fly into space.
But startups in all sectors of the space industry, including satellite launch and communications, human life support, supply chains and energy, are attracting investors’ attention. Astranis, a satellite Internet company, closed a $ 280 million deal in April. Axiom Space, which aims to build the first commercial space station, raised $ 130 million in February.
“I’ve never seen a market like this,” said Gabe Dominocielo, co-founder of Umbra, a company that develops satellites designed to take pictures regardless of weather or light conditions. “Since last year, the number of phone calls that I have received – as a start-up, usually the start-up is usually making a phone call to an investor. Now it’s completely the other way around. “
The boom, say many executives, analysts and investors, is fueled in part by advances that have made space technology development and product launches affordable for private companies, not just nations.
Thanks to technology developed for mobile phones, for example, startups like Planet can afford to build and deploy satellites that can image the entire Earth every day. And the analytical capabilities enabled by machine learning, artificial intelligence, and cloud computing have increased demand for the data those satellites produce.
“You can do a lot more with a smaller satellite and launch a lot more,” said Mike Safyan, Planet Vice President, “which ends up enabling new kinds of missions that you couldn’t do if you’re just building a school bus-sized satellite that it has very expensive space technology. “
Additionally, satellite companies can now pay to have their technology mounted on a rocket, greatly reducing their economic barriers. For example, if a rocket has a capacity of 500 kilograms and the main payload is 300 kilograms, another company can use 200 kilograms.
Astra, a start-up company founded in 2016, wants to make space travel even easier by offering smaller and more frequent launches, positioning itself as a core component of the space industry similar to the role of cloud computing in enabling business start-ups. Web. The company is competing in the small-launch market with other more established startups like Rocket Lab, but hopes to stand out by targeting even smaller and cheaper launches. Astra has scheduled its first payload launch for this summer and has 50 launches under contract, including Planet and NASA.
“Astra is filling this gap in the market where there are hundreds of these companies, they all have new technologies that they are developing and you don’t want to wait until next year when SpaceX can get you there,” said Chris. Kemp, CEO of Astra. “Even if it’s free, even if SpaceX paid me money to wait a year, the value of being able to get to space next month is incredibly valuable to a startup that’s burning millions of dollars a month.”
“The ability to reuse something and make it consistent and reliable is transformative in the space industry,” said Ms. Rich, who is also a founder of Hemisphere Ventures, which has invested in space companies since 2014, and a founder and chief operating officer. officer of Xplore, a company that designs orbital missions.
The latest wave of deals has also been driven in part by a late-stage special-purpose acquisition company like Ms. Rich’s Aurvandil. The sole purpose of these publicly traded shell companies, known as SPACS, is to buy one or more private companies. They have been one of the hottest trends in the world for the last year.
From a start-up perspective, merging with a SPAC is an efficient way to raise large sums at an earlier stage. It also changes the calculation for investors.
In the past, some investors shunned space startups because technology often takes much longer than software, such as a social media service or an app, to develop and generate revenue.
“If you are in a software company and you implement an application and it doesn’t work, you just start a new application. That failure can take a month or two months,” said Dominocielo of Umbra. “If you have a satellite, you are spending only millions of dollars, and if that satellite fails, you have wasted years.”
But SPACs allow companies to go public before a traditional initial public offering, giving investors the opportunity to withdraw money much earlier. The value of the public company is often based in part on growth projections rather than actual revenue.
Nine companies in the space industry have announced plans for a SPAC merger, including six in 2021. Astra is one of six. The merger with Holicity will infuse Astra with about $ 489 million in cash, allowing it to expand fast enough to keep up with what Mr. Kemp calls an “absolutely insatiable” lawsuit.
“When you get to the point where you need $ 500 million of capital to build a rocket factory, then you have to go public because it’s beyond the venture funding stage,” he said. “That’s where the SPACs really play well.”
Astra started the merger process in December and went public on Nasdaq last week.
In total, $ 3.9 billion has been raised through the nine SPAC deals, and the companies have a combined business value of $ 20 billion, according to BryceTech’s Ms. Christensen.
Investors, founders, and analysts expect the space industry to continue to expand rapidly. Morgan stanley estimated That space will be a $ 1 trillion industry by 2040, up from $ 350 billion in 2020.
Christensen said increased government contracts, both for research missions like NASA’s Artemis lunar program and for military and national defense purposes like the Space Force, are expected to continue to drive development in the industry. Others see commercial space travel as the “railroad” that will catalyze mass access to the final frontier.
“Everyone is waiting to see if Elon can pull off Starship,” said Rick Tumlinson, founding partner of SpaceFund, a venture company. “And then there will be a window of time where it really starts to fly, when people get business and the things they want to fly together and the funding, so there will be a hit that will happen in, I would say, three years. “
“It’s like the week before the Internet for us,” he said.