A long-exposure photograph shows the launch of the fourth mission of Firefly Aerospace's Alpha rocket from California's Vandenberg Space Force Base on Dec. 22, 2023.
Sean Parker / Firefly Aerospace
Investment in the space sector rebounded last year, approaching the 2021 record, according to a Tuesday report from New York-based Space Capital.
“Infrastructure investment remained strong, accounting for 70% of total investment in 2023 and hitting its second-highest annual record, driven by countercyclical revenues from government clients,” Space Capital Managing Partner, wrote in the report. Chad Anderson.
The company's fourth-quarter report found that space infrastructure companies generated $2.6 billion of private investment during the period. That brought the sector to a total investment of $12.5 billion by 2023, well above the $9.3 billion raised last year, but still below the $15.3 billion contributed during 2021.
Major increases during the fourth quarter included funding announced by space companies Firefly Aerospace, Ursa Major, D-Orbit, Stoke Space and True Anomaly.
The quarterly Space Capital report divides investment in the industry into three technology categories: infrastructure, distribution and application. Infrastructure includes what would commonly be considered space companies, such as companies that build rockets and satellites.
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Space infrastructure companies have weathered the recent recession. But Anderson also highlighted 2023 as “a year of consolidation,” with 39 M&A deals across the sector, such as Viasat acquisition of Inmarsat and L3Harris' purchase of Aerojet Rocketdyne.
“We expect to see even more in 2024. The prospect of falling interest rates is boosting equity valuations and improving [leveraged buyout] math, making M&A more likely in 2024,” Anderson told CNBC.
“In 2024, we expect VCs to be more selective with bookings, letting their low-growth companies run out of cash in favor of deploying into higher-growth prospects. While we expect to see a rebound in the number of deals and volume in the space capital markets, downgrades and write-downs will continue, and this will also lead to more failures and acquisitions,” Anderson added.
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