Topline
Though 2022 was a year jam packed with cosmic milestones—including the first images from the James Webb Space Telescope, China expanding its space station, a mission to redirect an asteroid and NASA’s first steps to return humans to the moon—private investment in the sector slumped after a record-setting year, as investors cut back in the face of tough economic headwinds.
A SpaceX rocket carrying the company’s Crew Dragon spacecraft is launched on NASA’s SpaceX Crew-5 … [+]
Key Facts
Space companies received $20.1 billion of private investment in 2022, according to Space Capital’s report, down nearly 60% from 2021 when a record $47.4 billion was invested.
The downturn, which most affected late- and growth- stage companies, was indicative of the harsh economic environment of 2022, which saw rapid rate hikes, the looming specter of recession and disruption from the Covid-19 pandemic and war in Ukraine.
A total of $4.7 billion was invested in 85 companies in 2022’s fourth quarter, according to Space Capital’s report, a significant 159% jump from the previous quarter.
The year’s third quarter could mark a low point for the market, the report said, with the lowest investment in the space economy since 2013.
Elon Musk’s SpaceX defied the market downturn to raise $2 billion in capital in 2022, the company’s second largest annual raise and around 10% of all private investment that year.
Space Capital managing partner Chad Anderson told Forbes 2023 will likely “continue to be tough for space startups,” particularly those with dodgy business models or struggling with execution, but that companies with “good management and strong fundamentals will not only survive, but they will also thrive.”
Big Number
$272.3 billion. That’s the cumulative global private equity investment in the space economy since 2013, according to Space Capital. This money has been invested in 1,791 different companies.
What To Watch For
Without contest, the U.S. and China dominate the sector. Collectively, the two countries received three quarters of private equity investment, with U.S. firms pocketing nearly half of this, 46%, with 29% going to China. The investment gap between China and the U.S. is fast closing in several key sectors of the space economy and it’s possible Chinese companies could equal or surpass U.S. ones in the next few years, Space Capital said. Chinese space companies account for 35% of investments in the applications sector—which includes companies that rely on data from space-based assets like ride-hailing and delivery services to track location—compared to 41% for U.S. companies, the report said, largely driven by the country’s boom in e-commerce and location-based services.
Crucial Quote
“Over the coming year, U.S. government spending will be more important than ever for the space economy,” Anderson told Forbes. “Space companies with government and defense applications will be best positioned to weather the tougher economic climate,” Anderson said, especially with growing tensions with Russia and China that are unlikely to diminish anytime soon. Companies focusing on technologies that have proven their value and resilience in recent months, for example satellite imaging and communications used in Ukraine, are likely to benefit from these tensions. Government and business customers are “willing to pay for these services,” Andersen said.
Further Viewing
Further Reading
In Photos: What 2022 Looked Like From Space (Forbes)
Investors Poured Record $14.5 Billion Into Space Companies Including Elon Musk’s SpaceX In 2021 (Forbes)
