$ 1.9 billion invested, led by SpaceX

Private investment in space companies reached $ 1.9 billion in the first quarter, according to a report Wednesday by new capital firm Space Capital.

“The trend toward larger bids in the final phase continued in the first quarter, with the first ten rounds accounting for 77% of total investment,” Space Capital managing partner Chad Anderson wrote in the report.

“In the initial phase, we see larger transaction sizes at higher valuations and at slower terms as capital investments drive to deploy the historical amounts of capital they raised in 2020,” he noted.

Space Capital’s quarterly report divides investment in industry into three technology categories.

The first, infrastructure, includes what many would consider space companies, such as companies that manufacture rockets and satellites.

The other two categories are application and distribution. The first includes space-dependent services, such as navigation or navigation, while the second represents terrestrial technologies that connect to space-based networks.

In total, Space Capital tracks 1,480 companies with a cumulative global equity investment of $ 186.7 billion since 2012 in its three categories.

The extensive analysis of space economics reflects Anderson’s underlying thesis and a phrase — increasingly repeated in the industry — that he coined to represent it: “In the same way that every business today is a technology company, every company of tomorrow will be a company space “.

Anderson believes investment in space infrastructure is “very likely” to exceed $ 10 billion this year, which would exceed $ 8.9 billion by 2020.

OneWeb, Amazon and Telesat’s satellite broadband communications efforts are expected to increase additional capital “for the rest of this year,” Anderson said.

He noted that Jeff Bezos has not yet “put any new cash into Blue Origin so far,” and that “SpaceX will need additional capital from Elon Musk as they continue to drive their big initiatives, Starlink and Starship.”

Anderson also said that investments in satellite companies, which account for about half of business activity in space infrastructure since 2012, directly affect the business application layer that Space Capital tracks.

“It’s all the data coming from the satellites that drive that $ 150 billion [total equity investment since 2012] in applications, ”Anderson said.

Space Capital is tracking eight space deals with SPACs, or special-purpose acquisition companies, that are expected to close and “have more exits along the way,” the report said.

Seven of these companies belong to the space infrastructure segment and, in total, the closure of the SPACs will add about $ 3 billion in cash to the companies ’balance sheets.

A special purpose acquisition company or SPAC is a target company that collects money from investors through an initial public offering and then uses the capital to buy a private company and make it public, usually within two years. .

“We welcome the access to additional capital that SPACs offer to infrastructure companies, but we are cautious that valuations and growth targets are beyond the reach of companies that do not have a defensible data angle.” , said Space Capital.

A defensible data angle means a company offers a service beyond rocket launch into orbit, Anderson said. He put Rocket Lab, which merges with SPAC Vector Acquisition, as an example. Last year, the company expanded its business to spacecraft systems services.

“We’ve seen SpaceX lead again this way. First they’re a launch business, but the main driver of their valuation is their satellite communications services business. [called Starlink], and so many other things they’re doing, ”Anderson said.

The PIPEs, or private investments in public capital, of these SPACs will also increase total investment in the second quarter, which Anderson says “will be massive.”

He believes there are three companies “very likely” to announce SPAC mergers in the coming months and expects about a dozen SPAC deals in the space for the year.