Space Capital Access and Growth Strategies Uncovered

Space is becoming increasingly accessible, with private companies like SpaceX and Blue Origin leading the charge.

The cost of accessing space has decreased dramatically, from $10,000 per pound in the 1960s to around $1,000 per pound today.

This reduction in cost has opened up new opportunities for space-based businesses, including satellite manufacturing and space tourism.

Investors are taking notice, with venture capital firms pouring money into space startups.

Space Capital has a rich history that spans over a decade. The company was originally founded in 2007 as an angel investor network.

In 2012, Chad Anderson took the reins as CEO and began to transform the company. By 2015, he had transitioned Space Angels away from its informal structure and into a more formalized model.

Space Capital's growth accelerated in 2015 when Anderson re-founded the company and launched its first special purpose vehicle (SPV) fund. This marked a significant milestone for the firm.

The company continued to expand its reach in 2017 with the launch of its first institutional venture capital fund, which raised $16 million. Tom Ingersoll joined as a partner around this time, bringing valuable expertise to the team.

Today, Space Capital has grown to three funds and manages over $100 million in assets. Its investments focus on space-based technologies like GPS, geospatial intelligence, and satellite communications.

The concept of space capital, or using space as a source of wealth, dates back to the 1950s with the launch of the first artificial satellite, Sputnik, by the Soviet Union.

The Soviet Union's success with Sputnik marked a turning point in the space race, as it demonstrated the feasibility of space exploration and paved the way for future space-based industries.

The United States responded to Sputnik with the creation of NASA in 1958, which would go on to play a crucial role in the development of space capital.

The first commercial satellite, Telstar, was launched in 1962, marking a significant milestone in the development of space-based communication systems.

The launch of Telstar opened up new possibilities for global communication and paved the way for the development of modern telecommunications networks.

The first space station, Salyut 1, was launched by the Soviet Union in 1971, marking a major breakthrough in space-based research and development.

The space capital has come a long way since the early days of space exploration. The first major milestone was the launch of the first artificial satellite, Sputnik, in 1957, which marked the beginning of the space age.

The Soviet Union's achievement sparked a space race between the US and the Soviet Union, with the US responding with the launch of Explorer 1 in 1958. This was the first successful American satellite launch.

The 1960s saw significant advancements in space technology, with the first human spaceflight by Yuri Gagarin in 1961. Gagarin's historic flight marked a major milestone in space exploration.

The US responded with its own manned spaceflight program, with Alan Shepard becoming the first American in space in 1961. Shepard's flight paved the way for future space missions.

The Apollo 11 mission in 1969 was a major breakthrough, with NASA successfully landing astronauts on the moon's surface. This achievement marked a significant milestone in space exploration and cemented the US's position as a leader in space technology.

Space companies have multiple ways to access capital, and one of the main strategies is through private-venture funds. These funds invest in space companies, providing them with the necessary resources to grow and succeed.

Private-venture funds have been a popular choice for space companies in recent years. They offer a way for companies to raise capital without having to go through the traditional IPO route.

Spin-offs have also been used by space companies to access capital. This involves creating a new company that focuses on a specific aspect of the space industry, allowing the original company to raise capital and focus on its core business.

Companies have multiple capital access methods. Space companies have indeed found various ways to secure funding, and it's not just one-size-fits-all.

Private-venture funds have been a popular choice, providing companies with the necessary capital to get off the ground. Spin-offs, on the other hand, allow companies to tap into existing resources and expertise.

Partnerships have also been a successful strategy, enabling companies to collaborate with other organizations and share the financial burden. Special-purpose acquisition companies, or SPACs, offer another option for companies looking to go public.

Internal investment and R&D have been used by some companies to fund their growth, allowing them to maintain control and direction.

Special-purpose acquisition companies, or SPACs, have been a popular way for space companies to access capital in recent years. In 2021, SPAC deals in the space sector increased dramatically in frequency and scale.

Astra went public via SPAC at a $2.1 billion valuation in July 2021 to develop rockets for affordable satellite delivery missions. This was a major milestone for the company.

Momentus Space went public via SPAC in August 2021, raising approximately $250 million at a $567 million valuation. The funds will be used to offer last-mile space delivery and infrastructure services.

Spire Global went public via SPAC in August 2021 at a $1.6 billion valuation, raising $265 million in cash. This influx of capital will help the company expand its satellite constellation.

Planet Labs went public via SPAC in December 2021, raising more than $500 million at a $2.8 billion valuation. The funds will be used to provide Earth observation imagery and analytics.

Since the fourth quarter of 2021, however, the SPAC market in the space sector has significantly cooled. This shift may indicate a change in investor sentiment or a reassessment of the space market's growth prospects.

Space companies can use capital to accelerate innovation and fuel growth. This is made possible by the abundance of private and public capital flowing into commercial space.

By deploying capital through mergers and acquisitions, space ventures can gain share of high-growth space segments.

Material capital raises can help space players pull forward innovation and product development by several years. This can lead to a significant boost in organic growth.

Capital can also provide innovative space companies with the flexibility to invest in leading-edge products and IP. This can unlock innovative new business models, such as as-a-service models, to provide additional value to core government customers.

Players can invest to strengthen key relationships with suppliers and customers, providing a solid foundation for long-term growth and success.

Strategic partnerships can be a game-changer for space companies, allowing them to accelerate their development and improve their ability to move quickly on promising investment opportunities.

AE Industrial Partners and Boeing formed a strategic partnership to manage HorizonX, Boeing's venture capital fund, which has since led to the launch of a second venture fund with a goal of raising $250 million to invest in promising start-ups.

This type of partnership benefits both parties, giving the investment company access to the space company's industry connections, technical expertise, and capabilities to support the growth of portfolio companies.

The US government also recognizes the value of strategic partnerships, as seen in the agreement between the US Space Force and the VC company Embedded Ventures to collaborate on R&D opportunities.

By investing in customer and supplier relationships, space companies can provide needed up-front capital and improve the stability of early-stage suppliers, while also securing advantageous deal terms and ensuring sufficient capacity.

Partnerships can be a game-changer for space sector players, allowing them to accelerate the development of their corporate venture arms and quickly move on promising investment opportunities.

AE Industrial Partners and Boeing have a strategic partnership to expand early-stage investing at HorizonX Ventures, which was announced in August 2021.

This partnership benefits both parties, giving AE Industrial Partners access to Boeing's industry connections, technical expertise, and capabilities to support the growth of portfolio companies.

The partnership between AE Industrial Partners and Boeing has been deepened, with the launch of a second HorizonX venture fund in July 2022, aiming to raise $250 million to invest in promising start-ups in various fields.

The US government has also recognized the value of partnering with investment companies to spur innovation in the space sector, as seen in the agreement between the US Space Force and Embedded Ventures in October 2021.

This collaboration is focused on R&D opportunities to promote the growth of the US space industry.

Strengthening customer and supplier relationships is crucial for space players to secure and deploy private capital. By investing in these relationships, space companies can provide needed up-front capital and improve the stability of early-stage suppliers.

Exclusive agreements can be a powerful tool for establishing long-term customer bases. For example, KSAT entered into an exclusive agreement with Rocket Lab to provide ground station services to all Rocket Lab launch customers.

Capella Space invested in an exclusive relationship with AWS Ground Station to download satellite imagery and data directly into Amazon Web Services. This partnership allows Capella Space to provide real-time data to customers without having to invest in its own ground stations or other infrastructure.

Having access to a patient pool of private capital can be a major advantage for players that face long product development timelines in immature markets. This capital will be crucial to winning market share in the space sector.

To secure investment, space companies must make a strong case to investors on the appeal of their target markets, the strength of their proprietary tech, the diversity of their customer bases, and the speed of their go-to-market plans.

Space investment has been rocketing higher, with total annual investment growing to over $10 billion between 2012 and 2021, from just $300 million.

One key driver of this growth is the spin-off strategy, where large legacy companies and even space companies themselves create separate entities to focus on specific areas of the industry.

For example, Sierra Nevada Corporation spun off its space division into a stand-alone company, Sierra Space, to operate with greater agility and independence while still benefiting from the parent company's resources and expertise.

The spin-off strategy has allowed companies like Virgin Galactic to focus on their core businesses, such as space tourism, while creating separate entities to pursue other opportunities, like small-satellite launches through Virgin Orbit.

Spin-offs can be a smart move for companies looking to rocket higher. Sierra Nevada Corporation spun off its space division into a stand-alone company called Sierra Space, citing the need for greater agility and independence.

This spin-off allowed Sierra Space to tap into the resources, expertise, and relationships of its parent company. Sierra Space even landed a top executive, Tom Vice, as its CEO in 2021.

Virgin Galactic took a similar approach by spinning off its LauncherOne rocket program into Virgin Orbit. This move enabled Virgin Orbit to focus on serving the booming small-satellite industry.

By becoming a separate entity, Virgin Orbit was able to better meet the needs of this growing market.

The space sector has experienced massive growth in investment activity over the past decade, with total annual investment growing to over $10 billion between 2012 and 2021, from just $300 million.

Investors have been attracted to Low Earth Orbit (LEO) ventures, which have seen a surge in interest and funding. Small-satellite-constellation ventures have proliferated, driving down launch costs in the small-satellite-launch market.

Between 2012 and 2021, total annual investment in the space sector grew to over $10 billion. This significant increase in investment is a testament to the sector's growing potential.

LEO ventures are particularly promising, with investor interest driven by the variety of near-term use cases, including telecom and Earth observation.