2021 has been a truly transformational year in Space.
Most of our predictions at the beginning of the year have come to fruition and we expect the key trends identified to drive the New Space Economy for years to come. First, private investment in Space in 2021 will again exceed last year’s record. During the first 9 months of this year alone, we saw $7.7 billion invested in Space, already outpacing 2020. And Q4 is expected to be another record quarter. To put things in perspective, this is more than three times the level of annual investment five years ago. Overall, there are more larger rounds of later-stage deals and a growing volume of early-stage seed and Series A transactions as investors seek to back emerging winners and new disruptive ideas.
In addition to a robust private financing environment, strong public market interest in Space has further enabled leading space startups to access large amounts of capital not previously available to them through an active Space SPAC (Space Purpose Acquisition Companies) IPO market. Lack of access to the public market had been a major impediment for longer term and capital-intensive space startups, but now investing in Space has gone mainstream and become more widely accepted by the investment community as a new and growing asset class. These new public space companies are leveraging their capital making acquisitions to accelerate their growth. While large defense primes and space incumbents have also been active in M&A to gear up for new competition and market expansion.
Seraphim Capital became the first Space focused Venture Capital Fund to go public in July this year, enabling public investors to tap into private space investments. At the same time, we saw the birth of Space Tourism with billionaire Sir Richard Branson and Jeff Bezos blasting off into space with Virgin Galactic and Blue Origin. SpaceX remains the most valuable space company, at $100 billion, and continues to generate excitement and headlines as it sets new records, dominating launch and leading Low-Earth Orbit satellite broadband.
As we also expected, momentum around Space Sustainability and Space for ESG/Climate accelerated during the year. The Russian anti-satellite test reinforced concerns about the growing risks of orbital debris and need for rules to govern and maintain a sustainable space. And Space has become indispensable in tackling climate change as space data can help us deliver better weather forecast, monitor and track change on earth, identify sources of pollution and more.
Finally, we are closing this extraordinary year in space with the successful launch of the James Web telescope, the largest and most powerful Space-based observatory ever launched, on Christmas Day. The mission of this international partnership between NASA, ESA and CSA is to further advance scientific research and discover the universe and search for life beyond Earth.
Below is a summary of our Space 2021 Year in Review: Stay tuned for our 2022 Space predictions.
- Space tech becomes mainstream; Year of Space IPOs via SPAC The trend of space startups going public via SPACs accelerated during the year, as we expected. An unprecedented number of space startups, including three of Seraphim’s portfolio companies ArQit, AST & Science and Spire, as well as Momentus, Astra, Spire, BlackSky, RocketLab, Redwire, Planet, Satellogic, Virgin Orbit and Terran Orbital have announced or completed SPAC IPOs since late last year, raising an estimated of more than $20B. Favorable macros, strong public interest in Space coupled with the company’s desire to rapidly access large pool of capital to accelerate their growth strategy all contributed to this SPAC boom. The proliferation of space stocks and ETFs (Exchange Traded Funds) demonstrates maturing of the Space Ecosystem. Space has become one of the hottest growth markets; Space is a multi-decade and multi-trillion transformational investment opportunity that is becoming commonly accepted by both public and private investors.
- Active M&A as corporates and startups gear up for strategic expansion. Large defense, space corporates and well-funded startups deployed their capital this year by acquiring technologies and capabilities to accelerate their growth. Companies are looking to scale their business through horizontal and vertical integration to expand their market. The proposed merger of two major satellite operators, Viasat and Inmarsat, if approved by, will reshape the satellite industry as traditional GEO and new LEO operators evaluate and execute strategic initiatives going forward. Defense primes have been gobbling up smallsat players to pursue mission critical US government LEO opportunities. BAE Systems wants to offer a compelling UK full life cycle satellite capability with its acquisition of In-Space Missions. General Atomics, maker of the Predator drone, acquired a small business, Tiger Innovations, to strengthen its satellite systems capabilities.
- Consolidation accelerates in Space transportation and smallsats. Given that Space companies that went public through SPACs have been mostly in infrastructure, launchers and constellations are two areas where emerging category leaders are deploying their cash to acquire technologies or customer base to move up the value chain and become fully integrated end-to-end solutions providers. For example, RocketLab has made three acquisitions over the last 18-months to expand outside of launch and become a fully integrated space services company. Planet, a leading Earth Observation company, acquired VanderSat to expand its data analytics product offerings for the agriculture market, while Spire Global bought ExactEarth, which provides complementary satellite ship tracking data to expand its customer and revenue base.
- SpaceX continues to dominate and lead LEO broadband deployment. SpaceX closed 2021 in a stronger position than ever and continues to dominate key segments of space from launch, broadband to human space flight and deep space exploration, with Morgan Stanley attributing broadband as the largest contributor to its $100 billion valuation. Starlink continues to lead the pack in LEO (Low Earth Orbit) after having deployed close to 1,800 satellites and signing up more than 100,000 subscribers. While Starlink has demonstrated traction for broadband connectivity in remote and rural areas, a key challenge to mass adoption remains the high cost of consumer terminals. The Starlink kit sells for $499, but it’s estimated to cost SpaceX even more at over $2,000. Closely behind the LEO broadband race is OneWeb, which emerged from bankruptcy with the business fully funded and having Eutelsat as a strategic investor. OneWeb has close to 400 satellites in orbit and plans to have full global coverage by the end of 2022. It’s planning commercial services in the Arctic region including Alaska, Canada and the UK.
- Space plays a key role in accelerating climate action, accountable ESG. The UN COP26 Climate Conference, growing investor and regulatory pressure coupled with extreme weather events wreaking havoc around the world all contributed to the sharp rise of ESG this year with a focus on Environment. Corporates are increasingly integrating climate into not just their systems and reporting, but also as part of their business strategy. A wide range of new space data and analytics companies are emerging providing new capabilities to help public and private institutions tackle the challenges of climate change. The mass corporate adoption of net zero targets and the push for standards and mandatory climate risk disclosure are just the beginning, implementation will require global monitoring at scale from satellites in space. AI/ML powered data analytics can deliver automated tools to identify, benchmark and measure their progress and enable transition to a carbon neutral future. Seraphim’s portfolio companies and Space Camp alums involved in ESG/Climate include Spire Global, ICEYE, SatelliteVu, PlanetWatchers, Bamboo, ConstellIR, Sust Global.
- Russian anti-satellite test alarms the world; Sustainable Space becomes top priority. The recent Russian anti-satellite weapon test generated thousands of pieces of debris in space, providing an alarming wake-up call to the world about the threat of irresponsible activities and space debris to security and future of the space economy. Space sustainability has become a top priority for governments and industry alike. Top space agencies, industry leaders have all spoken out about the risks of space debris to commercialization of LEO in an increasingly crowded orbit. The first US National Space Council under the Biden Administration has made promoting rules and norms to govern a sustainable space a top priority. A consortium of private companies recently created the Net Zero Space charter to reduce debris. At the same time, a huge technology milestone was achieved by Astroscale, a Seraphim’s portfolio company, successfully demonstrating the world’s first in-orbit debris removal. Other Seraphim’s portfolio companies involved in sustainable space include LeoLabs and D-Orbit.
- New era human space flight and deep space exploration. Space tourism became a reality this year as billionaire Richard Branson and Jeff Bezos blasted off into Space. NASA and SpaceX set a new record with four astronauts completing a six-month mission aboard the ISS, the longest ever. NASA also made history on Mars with the successfully landing of the Perseverance rover and collecting the first rock sample from Mars. The small Ingenuity Mars Helicopter took the first ever powered, controlled flight on the red planet. In addition, NASA has been preparing for Artemis launch to travel around the Moon in 2022, kicking off the ambitious project of returning people to the moon to establish a permanent presence. The agency and its international partners closed the year with a big bang, successfully launching the James Web telescope, the most powerful observatory ever launched into space.
- US government/DoD committed to supporting a robust private sector. The US government accelerated its private sector outreach and partnership efforts by putting commercial first amidst growing national security concerns. This means that the government would only build its own if its requirements cannot be met with commercial first, making a robust commercial sector a Strategic National Priority. A good example of this major shift is the upcoming NRO electrical optical remote sensing commercial solicitation, and as it considers other sensor modalities like Synthetic Aperture Radar (SAR), RF (Radio Frequency) and Hyperspectral. The DoD’s pivot to launch its own low-cost satellites in LEO this year for advanced capabilities such as missile tracking, secure communications, GPS augmentation, is positive for the commercial ecosystem. In addition, DoD represents a multi-billion satcom opportunity in the coming years as it is planning to leverage complementary commercial LEO satcom capacity.
- Satcom players gearing up for new competition and new markets. Incumbent GEO satellite operators and new LEO players are pursuing different strategies but gearing up for a new world as massive new capacity are coming online with High Throughput GEO satellites and new LEO constellations in the coming year. Some are aiming to close the digital divide by delivering low-cost satellite broadband to the half of the world’s population currently without out access, while others are positioning themselves for mobility and a bigger piece of the multi-trillion-dollar global telecom services/5G market. Satcom has been the connectivity of last resort in the past due to cost and latency and accounts for less than 1% of the global telco market. Tech innovations have made satellites offerings more compelling. Satellite operators are extending broadband connectivity to areas previously without coverage, leveraging cloud, edge computing and hybrid multi-orbit networks as part of their growth strategies.