When Ms.Lisa Rich held a call with investors in the month of March to raise money for the Aurvandil Acquisition, a company that buys start-ups focused on space technology, she aimed to bring in million dollars.
Ms.Rich, a member of the Aurvandil’s board, almost hit her goal within an hour.
“That just doesn’t happen,” she said, laughing.
Mr.Richard Branson is set to fly into space on Sunday on a spaceship built by his firm Virgin Galactic. Mr.Jeff Bezos, who stepped down as Amazon’s Chief Executive, is set to take a spaceflight about a week later in a craft built by his own company Blue Origin. And Mr.Elon Musk’s SpaceX company deals with the National Aeronautics and Space Administration (NASA) to land their people on the moon. But celebrities are away from the only people with their eyes to the skies.
Investors are investing more than ever into space technology. Space start-ups have raised over 7 billion dollars in 2020, double the amount from just two years earlier, according to the space analytics company BryceTech. That trend is continuing this year, said Ms.Carissa Christensen, BryceTech’s Chief Executive.
The most significant deals are going to firms that launch rockets into space, like SpaceX and Relativity Space, who announced $650 million in new money last month, just a day after Mr. Bezos declared that he would fly into space.
Although, start-ups in every sector of the space industry, including launch and satellite communications, supply chains, human life support, supply chains, and energy, have investors’ attention. Astranis, a satellite internet company, signed a $280 million deal in April. Axiom Space, a space infrastructure developer that aims to build the first commercial space station, has raised $130 million in February.
“I have never seen any market unlike this, ever in my life,” stated Mr.Gabe Dominocielo, a Co-founder of Umbra. This start-up builds satellites that are designed to click quality pictures regardless of the weather or light conditions. “Since 2020, the number of phone calls I have received, as a start-up, typically, the start-up is actually making a phone call to an investor. Now it’s completely the reverse.”
Many executives, analysts, and investors say the boom is spiked partly by advancements that has made it affordable for private companies and not just nations to develop space technology and launch products into space.
Thanks to the technologies developed for mobile phones, start-ups such as Planet can afford to develop and deploy satellites that can picture the entire Earth each day. And analytical capabilities enabled by machine learning, AI, and cloud computing has accelerated the demand for the information those satellites collect and produce.
“You can achieve a lot more with smaller satellites and launch many more of them,” stated Mr.Mike Safyan, Vice President at Planet, “which ends up letting new types of missions that you cannot do if you’re building just one satellite the size of a school bus that has costly space-specific technology.”
Also, satellite enterprises can now pay to have their technology hitch a ride on a rocket, significantly lowering their economic barriers. For example, if a missile has a 500-kgs capacity and the primary payload is 300 kgs, another company can use the rest 200 kgs.
Astra, another start-up established in 2016, wants to make space travel, even more, more accessible by offering smaller and more frequent launches positioning itself as a building block of the space industry, similar to the role played by cloud computing in enabling web start-ups. The firm is competing in the small launch market with other established start-ups such as Rocket Lab but also hopes to stand out by aiming for even smaller and feasible launches. Astra have scheduled their first launch with a payload for this summer and has fifty launches under contract, including NASA and Planet.
“Astra is there filling the gap in the market where you have hundreds of companies, who have all new technologies and they’re developing, and you don’t want to wait until next year when SpaceX can get you there,” said Mr.Chris Kemp, Astra’s Chief Executive. “Even if it’s free of cost, even if SpaceX paid me money to wait for a year, the value of the ability to get to space right in the next month is precious to a start-up who are burning millions of dollars every month.”
“The potential to reuse something and make it consistent and reliable is significantly transformative in the space industry,” stated Ms.Rich, who is also the founder of Hemisphere Ventures, which has invested in space enterprises since 2014, and a founder and the chief operating officer of Xplore, a company designing orbital missions.
The latest wave of deals have partly been driven by a spate of exceptional purpose acquisition companies like Ms. Rich’s Aurvandil. The primary purpose of these publicly traded shell firms, known as SPACS, is to buy one or more private firms. They have been the financial world’s hottest trend over the past year.
From the start-up’s view, merging with a SPAC is an effective way to raise large sums of capital at an earlier stage. It also changes the calculus for investors.
Some investors shied from space start-ups previously because the technology often takes much longer than software, like a social media service or an application, to develop and generate revenue.
“If you’re in a software firm and you deploy an application, and it doesn’t work, you just spin up a new app. That failure may cost a month or two months,” Mr. Dominocielo of Umbra stated. “If you have a satellite, you’re spending several millions of dollars, and if that satellite fails, you’ve lost not just months but years.”
But SPACs allow firms to go public earlier than a traditional initial public offering, allowing investors to cash out much earlier. The value of the public firm is often based partially on growth projections rather than actual income.
Nine major firms in the space industry have announced their plans for a SPAC merger, including six in 2021. Astra is one of the six. The union with Holicity will infuse Astra with about $489 million in hard cash, allowing it to expand fast enough to cope up with what Mr. Kemp calls “absolutely insatiable” demand.
“When you get to a point where you need half a billion dollars to build a rocket factory, then you go public because you’re beyond the venture phase of financing,” he stated. “That’s the point where SPACs play well.”
Astra began the union process in December and went public on Nasdaq the previous week.
According to the nine SPAC deals, a net total of 3.9 billion dollars has been raised, and the firms have a combined enterprise value of $20 billion, according to Ms. Christensen of BryceTech.
Investors, analysts, and founders expect the space industry to continue to expand rapidly. Morgan Stanley estimated that space would be a one trillion dollars industry by 2040, up from $350 billion in 2020.
Ms. Christensen said increased govt contracts, both for research missions like NASA’s Artemis moon program and military and national defense motives like the Space Force, are anticipated to continue attracting industrial development. Others see commercial space travel as the “force” that will breed mass access to the final frontier.
“Everyone is kind of waiting to see if Mr.Elon can pull off Starship,” said Mr.Rick Tumlinson, founding partner of SpaceFund, a venture company. “And then there will be a time delay when he starts flying, and people get businesses and the things they want to fly together and the funding, so there’ll be this bump that occurs in, I would say, another three years.”