by Connor Sattely
Six months into 2024, with just short of $4b in space-tech investments made so far this year, fascinating trends lead the way in VCs’ preference on space-tech investments.
SpaceWatch has covered every investment into space-tech by VCs this year, and you can catch up on those articles here – but in the meantime, here are 5 trends to be aware of in the space-tech investing world.
VC’s aren’t following the “Anderson grid” – they’re investing heavily in logistics and launch
About one year ago, in The Space Economy, Space Capital Managing Partner Chad Anderson gave us a handy 3×3 grid as an overview of the majority of investments into the space economy:
| GPS | GEOINT | SatCom | |
| Applications | Apps using GPS | Apps using GEOINT/EO | Apps using SatCom |
| Distribution | GPS data processing / distribution | GEOINT/EO data distribution / DevTools | SatCom distribution (gateways, antennas etc) |
| Infrastructure | GPS satellites / hardware | GEOINT/EO satellites / hardware | SatCom satellites / hardware |
89% of investments made between 2013-2022 fell within that 3×3 grid, Anderson claimed. An additional 10% into launch, and a measly 1% into emerging industries such as logistics, lunar, stations, and industrials.
How does that hold up for 2024?
Not well!
- Only 62.3% of VC investments fit in the above 3×3 grid;
- A healthy 20.5% went to launch;
- A whopping 17.2% went to emerging industries – lunar, station, logistics, stations – with the majority of this going to logistics.
So, what does this mean? There are a few interpretations:
“The grid is outdated” – Perhaps Anderson’s grid reflects more of where value in the space economy lay in the last decade, as opposed to where it lies now. The space economy is moving heavily towards launch and logistics, where prior the most predictable value lay in satellites. On the other hand: logistics generally deals with satellite management (which itself provides GPS, GEOINT, and SatCom). Perhaps the grid should be a 4×3, with logistics included. If this were the case, Anderson’s 2023 estimate is much more accurate (3% emerging, 76% satellite, 20% launch).
The space economy is moving heavily towards launch and logistics.
“VCs are behaving strangely” – most value still lies in satellites, so, VCs are taking big risks investing in markets with less value. On the other hand: what else is VC for than to take bets as to which technology can capture market share? The Power Law holds that 1-2 highly successful investments can return a fund with 35 investments. Hit a homerun on a logistics or launch leader 2-3 years before the market matures, and you’ll forget the 98% of misses you made along the way.
“It’s a methodology problem (blame the author!)” – SpaceWatch’s data gathering tilts this analysis towards launch and emerging industries, because we take a limited view as to what is space-tech. Is a ridesharing app like Uber space-tech, since it is a GPS-based application? We see it as a space-enabled startup, but not space-tech. After all, what startup isn’t a space-enabled startup? These GPS applications, if included in our analysis, would balloon significantly the portion of startups falling within Anderson’s grid.
We’re firmly in the “logistics” era of space-tech investments
It’s a common-sense thesis: the more stuff we launch into space, the more viable companies we’ll see helping us handle traffic, debris, and asset lifecycle.
And if you were a VC heading into 2024, you were keeping your eyes out on space-tech logistics companies.
Logistics companies – defined broadly as traffic management, space debris-related, or lifecycle management – secured 17 investments this year, an overwhelming majority of the “emerging industries” category that includes logistics but also lunar, stations, and industrials.
A few highlights:
- Kurs Orbital (Italy) closed a €3.7m round to grow their in-orbit satellite servicing offering from OTB Ventures, OTB Ventures, joined by Credo Ventures, Galaxia, Obloo Ventures, and others
- LeoLabs (USA) closed a $29m round to further develop their space debris tracking offering, led by GP Bullhound, 1941, and Dolby Family Ventures with participation from existing investors (including Space Capital).
“Industrials” is a longer-term play: a few big swings, low volume
A good VC asks: is this investment likely to return my fund during the lifetime of my fund? This requires a market that a company can enter and dominate during the next 6-10 years.
So far in 2024, VCs seem to be hesitant to place money on the space-based industrials market maturing this decade.
- Varda Space (USA): in-orbit pharmaceutical processing using unmanned, returnable capsules – raised $90m in a round led by Caffeinated Capital, with participation from Lux Capital, General Catalyst, Founders Fund and Khosla Ventures
- LambdaVision (USA), which seeks to manufacture artificial retinas in orbit, raised an undisclosed amount to bring it closer to clinical trials. The round was led by Aurelia Foundry Fund, a fund spun out of MIT, with participation by Boryung, a publicly listed Korean pharmaceutical company, and E2MC Ventures.
It’s expected that both of these investments are likely long-term plays, indicated by the presence of investors who can wait 10-15 years for the market to develop.
We expect to see a few more investments in industrials before the end of the year: Seraphim’s Mission 13 accelerator, for instance, added an industrials-focused startup this year in Frontier Space (UK).
European space-tech startups are taking a larger-than-expected share of space-tech investment
McKinsey published this month the European Deep Tech Report, in which it expected European VCs to make “10-20%” of global investment in space-tech.
SpaceWatch tracks the domicile of the company receiving the investment, not the domicile of investor – the lines are a bit too blurred and investment sources are a bit too obscured to generate meaningful data about investor domicile.
European space-tech startups are outperforming estimates so far this year, raising (from both EU and non-EU VCs) almost $1b cumulatively, about 23% of the global total.
Viewed as a bloc, European space-tech startups are one of the major three recipients of VC funding:
- China: $1.54b, with 39.35% of the global total
- USA: $1.24b, with 31.7% of the global total
- Europe + UK + EEA: $900m, with 22.9% of the global total. (includes UK at $102m)
There’s a precipitous drop to fourth place: India, with $80m invested into Indian startups.
Adding a bit more nuance, and not treating the EU as one investment domicile (it’s not) reveals that the US and China stand alone at the top, France in a distant third ($239m) and Germany, Spain, Italy, UK, Finland, and India in the $80m-$160m range.
The EU’s biggest investments this year:
- Italy’s D-Orbit – space logistics and transportation – raised a $109m Series C from Marubeni Corporation, Avantgarde, and existing investors to expand its collaborations with governments and institutions.
- Finland’s ICEYE – synthetic aperture radar satellite ops for EO – raised a growth funding round of $93m, led by Finnish soverign wealth fund Solidium Oy.
Through a mix of public and private funding, China is pouring money into space infrastructure
Three of the four largest investments in 2024 belong to Chinese space-tech companies:
- Shanghai Yuanxin Satellite Technology Co, aka Shanghai Spacecom Satellite Technology, raised $932m (our Deal of the Month in February!) to fund its launch of satellites as part of China’s G60 low Earth orbit constellation of over 12,000 satellites.
- Beijing Tianbing Technology aka Space Pioneer raised $206m for its propulsion systems and vehicles.
- Mino Space, a commercial satellite system development and supplier, raised $137m.
So far in 2024, revisiting Anderson’s 3×3 grid, the overwhelming majority of Chinese space-tech receiving investment falls into two categories: infrastructure (whether GPS, GEOINT, or SatCom) and launch services. One notable exception is Beijing Aerospace Yuxing Technology, receiving $68m last month, which was the second-largest investment in space logistics technology this year after Italy’s D-Orbit at $109m.
VCs seem to be hesitant to place money on the space-based industrials market.
Since much of Chinese space-tech investment is invested through public-backed VCs, we expect investment to continue towards the end of the year as China deploys its G60 LEO constellation and invests heavily in SatCom and satellite internet.
Come for the 5 trends, stay for the bonus data!
Countries whose startups raised the most VCs (EU aggregated, incl. UK/EEA)
- China, $1.54b
- USA, $1.25b
- EU / UK / EEA, $900m
- India, $80m
- Japan, $59m
Countries whose startups raised the most funding (EU split)
- China, $1.54b
- USA, $1.25b
- France, $239m
- Germany, $159m
- Spain, $143m
- Italy, $118m
- UK, $102m
- Finland, $93m
- India, $80
- Japan, $59m
Revisit with us each month of space-tech investment, as it happened:
- January: 27 deals, $533m. Deal of the month (DotM): D-Orbit, Italy, €100m.
- February: 35 deals, $1.793b. DotM: Shanghai Spacecom Satellite Technology, China, $932m.
- March: 12 deals, $93.96m. DotM: Kurs Orbital, Italy, €3.7m.
- April: 26 deals, $472m. DotM: Varda Space, USA, $90m.
- May: 22 deals, $270m. DotM: Privateer, USA, $56.5m.
- June: 25 deals, $737.72m. DotM: This half-year retrospective.
SpaceWatch covers every VC investment into space-tech, every month. To check out this year’s monthly articles, visit https://spacewatch.global/space-economy/vc-column/.
Connor Sattely is an entrepreneur and startup advisor working in startup ecosystems all over the world since 2012. His monthly column for SpaceWatch.Global covers the world of venture capital in spacetech. Based in Amsterdam, he’s passionate about supporting startup founders as they grow and build their dream companies. He has launched startups in Switzerland, Uganda, and the Netherlands, and has advised founders in more than 50 countries. You can sometimes find him around Amsterdam playing the tenor saxophone with one of his bands.