The Space industry has been resilient despite disruptions and economic headwinds from COVID-19. Rather than retrenching, the industry made tremendous progress in 2020, successfully completing historic missions to Mars and the first commercial human spaceflight. As for investments in Space, 2020 set a record at $7.7 billion, up 70% from 2019, according to the Seraphim Space Index. After a brief dip in Q2, investments bounced back to a record $5.5 billion in the second half, driven by strong government support and investor interest. Increase in ‘mega’ rounds of more than $50 million, primarily in launch and constellations, contributed to the strength in that period. Larger and later stage (Series C and D) financing rounds accounted for more than 75% of all investments in 2020, demonstrating the maturing of the ecosystem as investors made bigger commitments to emerging category leaders.
The pandemic has increased awareness about Space technologies as critical enablers to our everyday activities, and solutions to urgent problems like Climate Change. Over the last year, governments and businesses embraced satellite data to track the spread of COVID-19 and support public safety/first responders. Satellite IoT and Earth Observation made remote asset inspection, tracking and monitoring possible, delivering essential services with limited workers on site. Autonomous drones enabled ‘contactless’ delivery of much-needed medical supplies around the world. These trends will likely accelerate in 2021, as the use cases become more integrated into regular workflow.
The year 2021 could be even better for three reasons. First, we expect to see further validation of the commercialization of Low-Earth Orbit, with SpaceX leading the pack of mega-broadband constellations. Moreover, companies like SpaceX and Rocket Labs have made launches more affordable and available. As more smallsat constellations become operational, they will deliver more frequent and diverse datasets from Space to support higher value analytics/insights.
Secondly, government support for Space is likely to remain strong, with more national Space programs. The US government’s spending will continue to lead, driven by national security priority and economic interests. The new Biden administration will likely accelerate use of Space to combat Climate Change. The trend of using satellite data and analytics to independently monitor and manage the risk of Climate Change will accelerate in the coming year, with strong public and private sector interest and more frequent and intense natural disasters.
Lastly, we are likely to see several Space companies going public through Special Purpose Acquisition Companies (SPACs) in the coming year. A SPAC is a company that raises capital through an IPO to acquire another company. Going public via a SPAC merger allows the company to fast-track access to equity funding. Two Space startups — Momentus and Seraphim portfolio company AST & Science — have announced their merger with SPACs, each valued at over USD 1 billion. We expect to see more SPAC activities in 2021, with low interest rate and high investor interest.