Coronavirus Space

Trends in the space economy as well as investment

The space industry is still booming. 2020 can be remembered as a year of fresh beginnings. People and societies all over the planet were devastated by the COVID-19 epidemic. Still, we in the space, as well as geospatial industries, were lucky in that our sector was practically COVID-proof. In fairness, for certain businesses, the COVID-19 cloud had a silver lining. Central banks worldwide wisely poured money into their specific markets to shield economies from the shock of companies being halted (and in some instances, shut down) due to the pandemic. The money infusions lowered the still low cost of financing much further, as well as lower interest rates made capital more available.

Large transactions have defined the Space funding environment in recent years. In 2019, four businesses received 70% of the overall investment: OneWeb, SpaceX, Blue Origin, and Virgin Galactic.  Investors rejoiced as SpaceX hit successes in the Starlink as well as Starship segments, and the musketeers rejoiced as Tesla announced a profit in the year 2020 — the first year that either SpaceX or Tesla had reported a profit. Special Purpose Acquisition Companies (SPACs) are another point of interest in the space investment world.

A SPAC is a firm that raises money from an initial public offering (IPO) in order to buy another company. Fixed income portfolios seldom deliver competitive returns to investors in today’s capital markets because interest rates are too poor. As a consequence, SPACs are extremely popular right now. Virgin Galactic was the very first organization to utilize a SPAC, and Momentus, AST, Astra, and others have all followed suit. Furthermore, the launch division tends to be the most attractive to private equity as well as venture capital. In this sector, a host of small businesses have achieved new benchmarks. For example, Rocket Labs has had several milestones, and Astra and Relativity have had strong financial backing.

There has been an increase in the number of non-US space startups receiving funding. The Chinese space sector is particularly noteworthy. Last year, China deployed 39 rockets, compared to 25 for SpaceX. While this is an unreasonable analogy (SpaceX is a business, not a country), it does provide some insight into China’s rapid growth. While France and India have a longer history in the launch industry, China has spent billions in space and is making significant progress. On the other side, as business leaders pursue new skills and smaller firms continue to regain their feet, the low cost of capital, especially debt, may contribute to further restructuring. The incumbent telecommunications industry is ripe for mergers and acquisitions. Companies will buy other companies to expand their capabilities and expand into different industries.

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