When Lisa Rich held a call with investors in March to raise funds for Aurvandil Acquisition, a company that acquires startups focused on space technology, her goal was to bring in a few million. dollars.
Ms. Rich, a member of the board of directors of Aurvandil, almost reached her goal within an hour.
“That didn’t happen,” she said, laughing.
Richard Branson is scheduled to fly into space on Sunday, aboard a ship built by his company Virgin Galactic. Jeff Bezos, who stepped down as Amazon’s chief executive on Monday, will board the spacecraft about a week later, in a spacecraft built by his company Blue Origin. And Elon Musk’s company SpaceX has made a deal with the National Aeronautics and Space Administration to send Americans to the moon. But tycoons aren’t the only ones who can look up at the sky.
Investors are pouring more money than ever into space technology. According to space analytics firm BryceTech, space startups raised more than $7 billion in 2020, double the amount just two years earlier. That trend is continuing this year, said Carissa Christensen, chief executive officer of BryceTech.
The biggest deals will come to companies launching rockets into space, like SpaceX and Relativity Space, which announced new $650 million in funding last month, a day after Mr. Bezos announced he would fly into space. pillar.
But startups in every sector of the space industry – including satellite launch and communications, human life support, supply chains and energy – have attracted the attention of investors. fourth. 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 it,” said Gabe Dominocielo, co-founder of Umbra, a startup that develops satellites designed to take pictures regardless of weather or light conditions. this. “Since last year, the number of calls that I have received – as a startup, typically, a startup calls an investor. Now it is quite the opposite.”
Many executives, analysts and investors say the boom has been driven in part by advances that have given private companies – not just nations – the ability to develop aerospace technology. cylinder and launch the product into space.
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 analytics powered by machine learning, artificial intelligence and cloud computing has increased demand for the data satellites produce.
“You can do so much more with a smaller satellite and launch many more of them,” says Mike Safyan, vice president of Planet. can’t be done if you’re just building a satellite the size of a school bus with very expensive space-specific technology. “
In addition, satellite companies can now pay to have their technology put on a rocket, significantly reducing their economic barriers. For example, if a rocket has a capacity of 500 kilograms and a primary payload of 300 kilograms, another company might use 200 kilograms.
Astra, a startup founded in 2016, wants to make space travel even easier by offering smaller, more frequent launches – positioning itself as a building block of the space industry. similar to the role of cloud computing in supporting web startups. The company is competing in the small launch market with other and older startups like Rocket Lab, but hopes to stand out by aiming for smaller and cheaper launches. Astra has scheduled its first launch with payload this summer and has 50 launches under contract, including for Planet and NASA.
Chris said: “Astra is there to fill this void in the market where you have hundreds of companies like that, they all have new technology developing and you don’t want to wait until next year when SpaceX can bring it up. you go there. Kemp, chief executive officer of Astra. “Even if it’s free, even if SpaceX pays me to wait a year, the value of being able to go to space next month is incredibly valuable to a startup burning through millions of dollars. la every month.”
“The ability to reuse something and make it consistent and reliable is a transformative factor in the space industry,” said Rich, who is also the founder of Hemisphere Ventures, which invested in space companies since 2014, said officer of Xplore, an orbital mission design company.
The latest wave of deals has also been fueled in part by a slew of special-purpose acquisitions like Rich’s Aurvandil. The sole purpose of these publicly traded shell companies, known as SPACs, is to purchase one or more private companies. They have been one of the hottest trends in the financial world over the past year.
From a startup’s perspective, merging with SPAC is an effective way to raise big money at an earlier stage. It also changes the calculation for investors.
In the past, some investors shunned space startups because technology often takes longer than software, like social media services or apps, to develop and generate revenue.
“If you’re in a software company and you deploy an application and it doesn’t work, you just create a new application. Umbra’s Dominocielo said that failure could take a month or two. “If you have a satellite, you’re just spending millions of dollars, and if that satellite fails, you’ve lost years.”
But SPACs allow companies to list shares to the public earlier than a traditional initial public offering, giving investors the opportunity to make money much sooner. The value of a public company is often based in part on growth forecasts rather than actual sales.
Nine companies in the space industry have announced plans to merge SPAC, including six by 2021. Astra is one of six. The merger with Holicity would bring Astra about $489 million in cash, allowing it to expand fast enough to meet demand that Mr Kemp called “completely insatiable”.
“When you get to the point where you need half a billion dollars in capital to build a rocket factory, then you have to go public because you’re beyond the venture capital stage,” he said. “That’s where SPAC really works.”
Astra began the merger process in December and listed on Nasdaq last week.
In total, $3.9 billion has been raised through nine SPAC deals and the companies have a combined enterprise value of $20 billion, according to BryceTech’s Christensen.
Investors, founders, and analysts expect the space industry to continue to expand rapidly. Morgan Stanley estimates that space will be a $1 trillion industry by 2040, up from $350 billion in 2020.
Christensen said an increase in government contracts, both for research missions like NASA’s Artemis moon program and for military and defense purposes like the Space Force, is expected to continue to promote the development of the industry. Others see commercial spaceflight as the “railway” that will catalyze mass approach to the final frontier.
“Everybody is waiting to see if Elon can pull Starship,” said Rick Tumlinson, a founding partner of SpaceFund, a venture firm. “And then there’s going to be a lag when he actually starts flying, when people get the business and the things they want to fly together and the funding, so I would say there’s going to be a bump. This touch occurred for three years. “
“It was like a week before the Internet for us,” he said.