Last year was “the most difficult investment environment since the Great Recession.” space capital said in its 2022 space investment report, the company was also optimistic, saying 2022 marked a return to “fundamentals.”
Space Capital released its fourth quarter 2022 report on January 19, reporting that total space investment in 2022 fell 58%. Overall, private market equity investments in space were $20.1 billion in 2022 compared to his $47.4 billion in 2021.
Space Capital’s evaluation includes a wide range of companies, including GPS-enabled companies that provide location-based services. A narrower focus on space infrastructure (the companies that build, operate, and launch satellites and spacecraft) shows the same trend. Private equity investment in space infrastructure is $6.3 billion in 2022, down 57% from $14.5 billion in 2021.
Space investment has been hit by rising interest rates, but Russia’s war in Ukraine underscores the importance of space data and capabilities, and NASA’s Artemis program is funding growth in lunar activities.
“Tight capital markets are emphasizing sound business models and earnings, including government contracts. And many major space companies are aggressively prioritizing those fundamentals.” Space Capital said.
The company found that late- and growth-stage companies were hit the hardest, but early-stage investments proved resilient.
Looking to 2023, Space Capital predicts it will be a tough year for startups, but “moving away from momentum investing and focusing more on fundamentals is an overwhelmingly positive development for the space economy.” The company claims
“Quality companies with product-market fit, positive unit economics and strong leadership will continue to be able to raise capital, but valuations will be closer to historical averages. With fewer jobs and a larger talent pool, we believe the next two years will be an attractive time to start and invest in space technology companies,” the report said.