Author: Maureen Haverty
The space economy is thriving, and venture capital is playing a crucial role, says Maureen Haverty, Vice President of Seraphim Space.
The events of the last few years have changed the economic imperatives of financial markets in a way that had not been seen for decades. Faced with a new set of challenges, western economies have innovated. Both the venture capital industry and SpaceTech are playing a crucial part in this process, strengthening, developing, and diversifying the capability and supply chains that the modern world depends upon.
Investment trends have increasingly focused on addressing urgent global challenges, such as climate change. Remote sensing and earth observation technologies, in particular, have attracted significant funding. Satellite-based monitoring systems provide invaluable data on weather patterns, climate-related extreme weather events, carbon emissions, and other factors essential for mitigating climate change impacts.
While these areas continue to receive record levels of funding, we are now witnessing venture capital being driven into new sub-sectors. Seed deals were up 50% in 2022 compared to 2021 as entrepreneurs and investors turn their focus to supporting new space companies that are working to address more long-term aspirations.
For many, the in-space economy seems far-off. However, it is precisely the role of VCs to identify these nascent market opportunities. Various sectors, like in-space services, space exploration, and the lunar economy, are witnessing considerable growth. This mirrors trends that led to low Earth orbit (LEO) commercialisation. There has been a dramatic increase in the number of satellites launched, with more than twice as many orbiting earth’s atmosphere at the end of 2022 as there were at the end of 2020. Government support for industry giants like SpaceX, Rocket Lab, and India's PSLV, has significantly reduced rocket launch costs and made space more accessible. As more companies have launched satellites into low Earth orbit (LEO), governments are now turning their sights, and their budgets, further afield. We expect initial government support for space stations and the lunar economy, to fuel rapid commercial development.
Investment trends have increasingly focused on addressing urgent global challenges, such as climate change. Remote sensing and earth observation technologies, in particular, have attracted significant funding. Satellite-based monitoring systems provide invaluable data on weather patterns, climate-related extreme weather events, carbon emissions, and other factors essential for mitigating climate change impacts.
While these areas continue to receive record levels of funding, we are now witnessing venture capital being driven into new sub-sectors. Seed deals were up 50% in 2022 compared to 2021 as entrepreneurs and investors turn their focus to supporting new space companies that are working to address more long-term aspirations.
For many, the in-space economy seems far-off. However, it is precisely the role of VCs to identify these nascent market opportunities. Various sectors, like in-space services, space exploration, and the lunar economy, are witnessing considerable growth. This mirrors trends that led to low Earth orbit (LEO) commercialisation. There has been a dramatic increase in the number of satellites launched, with more than twice as many orbiting earth’s atmosphere at the end of 2022 as there were at the end of 2020. Government support for industry giants like SpaceX, Rocket Lab, and India's PSLV, has significantly reduced rocket launch costs and made space more accessible. As more companies have launched satellites into low Earth orbit (LEO), governments are now turning their sights, and their budgets, further afield. We expect initial government support for space stations and the lunar economy, to fuel rapid commercial development.
Key Areas of Investor Interest
As the in-space economy takes off, major players in the industry are now positioning themselves to capture a slice of the burgeoning market. From servicing the growing number of satellites in orbit to developing the lunar economy and building the next generation of private space stations, opportunities for growth and innovation are becoming ever more accessible.
In-Space Services
In-Space Services Markets are expected to witness the highest growth, as companies offer services like orbital tugs, satellite servicing, and in-space communications. As businesses mature, maximising revenue from each satellite is paramount. Orbital tugs get satellites to the right orbit faster, so they start generating revenue sooner. In-space communications get satellite imagery into customers' hands quicker for which they are willing to pay a huge premium.
The Lunar Economy
The Lunar Economy – covering everything around and on the Moon's surface - is also seeing significant growth, with projects like the Artemis Program making significant strides towards transforming our capabilities on the Moon. With Human Landing Systems, the lunar surface is becoming increasingly accessible. Companies can now realistically take advantage of the lunar resources, such as rare chemicals, and return them to Earth or use them to propel humankind into deep space exploration. At Seraphim, we see 2023 as a particularly busy year for lunar landers. Companies such as ispace have already raised over $150 million and launched their first commercial lander in December of 2022, with an expected landing in April this year. Intuitive Machines, who went public in February, also plan to launch a commercial lander containing five NASA payloads and commercial cargo in June this year. As lunar landers and Human Landing Systems make the lunar surface more accessible, opportunities for resource utilisation and deep space exploration are set to expand.
Space Life Sciences
But it's not just about reaching for the stars. Another market that is generating a great deal of excitement is the research and design sector in space which is helping to transform areas such as the life science sector on Earth. The most exciting innovations are not in astronaut health but in medicines we will use on Earth. Household name drug companies like Merck have already conducted key research that could revolutionise their drug delivery. Many startups are also building on work conducted on the International Space Station to revolutionise tissue and organ growth, drug delivery, and protein crystallisation. The possibilities are endless, and the potential for returns is astronomical. These startups have the potential to help improve drug delivery, tissue and organ growth and patient care, all of which will have real-world impacts down on Earth.
Conclusion
The foundational infrastructure laid by leading space companies in recent years has paved the way for an explosion of new in-space ventures. This thriving environment is building an entirely new world above our planet, with venture capital playing a crucial role in fuelling growth and innovation in the in-space economy. The sky is no longer the limit as we embark on an exciting journey to explore and utilise the vast expanse of space.
Maureen Haverty, Vice President at Seraphim Space
