Investment across space tech grew 29% in 2018

Investment across space tech grew by 29% to $3.25bn in 2018 and was divided between 182 companies, across the six different parts of the ecosystem, according to research by Seraphim Capital.

Seraphim’s latest Space Index, detailing global investment into the Space-tech ecosystem in 2018, shows the growing appetite for space tech by venture capital investor across the globe.

The six different parts of the ecosystem were identified as being: build ($236m); launch ($1.3bn); products ($477m); data ($845m); downlink ($110m); and analysis ($275m).

Mark Boggett, MD at Seraphim Capital and CEO of the Seraphim Space Fund, said: “The Index reported that 182 companies were venture financed during 2018 versus 131 in 2017. The growth was fuelled by investment into earlier stage investments versus the top five companies funded which accounted for $1bn in both 2018 and 2017.

“Whilst SpaceX generates most of the press coverage it accounted for just 15% of total investment in 2018 ($487m) versus 18% in 2017 ($450m). This points to a thriving wider ecosystem beyond launch technology that’s helping to transform earthbound industries.”

Sectors

The index, which identifies average investment round sizes for each sub-sector, revealed that US companies continue to access materially larger rounds increasingly across Seed, Series A and Series B. The only sub-sector to buck this trend was Build (space hardware, software and engineering, materials, energy and robotics).

Investment into Japanese companies was flat year-on-year at $104m but European companies improved their global share of investment from 13% to 18% over the period.

Launch

Overall investment in the sector is still driven by Launch which accounted for 39% of total investment ($1.3bn). The number of companies funded was broadly flat 19 versus 17 in 2017 with investment into growth rounds (B series and later) accounting for $1.1bn versus $640m the previous year, displaying a maturing of the sector.

In 2018 small sat dedicated launchers such as Rocket Lab ($140m) and Vector ($70m) raised substantial rounds and in the case of the former commenced commercial operations. Investment outside of US launch businesses gathered momentum with Landspace ($43m) and OneSpace ($44m) in China.

Build

Activity related to Build (e.g. sensors, electronics, battery) was flat on the year at $236m vs $262m across 28 companies respectively. Growth investment (B series and later) was flat at $154m versus $141m. However, European investment escalated to 36% of the total versus just 4% previously. Key investments in the year included Reaction Engines ($37m) and Oxford Space Systems ($8m) in the UK, as well as Apollo Fusion ($10m) in the US.

Investment in satellite constellations and airborne platforms for collecting and disseminating Data rose by 27% to $845m across 51 companies. Investment in growth companies (B series and later) soared by 52% to $444m in this maturing subsector including companies such as Cloud Constellation ($100m).

The uplift was largely driven by US investment up from 44% to 65% of the subsector. Notable transactions outside the US included the likes of Iceye ($34m, Finland) and Axelspace ($23m, Japan).

Downlink

Downlink represents the companies communicating data from these platforms back to the ground stations. Despite being an important element of the supply chain, overall investment was down to $110m from $127m a year earlier. Whereas 2017 saw a large investment into antenna company Kymeta ($74m series E), 2018 investment was focused more on earlier stage with only $34m invested in growth stage businesses.

European companies in this sector accounted for 47% of total investment, including companies such as Goonhilly Earth Stations ($32m).  Seraphim believes a surge of interest in quantum cryptography technologies will drive investment in this subsector going forwards.

Analysis

Investors piled into Analysis companies in 2017, according to Seraphim, backing companies to manipulate large unstructured datasets supporting emerging leaders such as Orbital Insights ($50m) and Mapbox ($164m) whereas in 2018 ‘mega-rounds’ were not a feature of this subsector. Consequently, investment fell from $410m to $275m.

Within this only $165m was invested in growth during 2018 versus $384m a year earlier. Notable investments included Taranis ($20m) and Ursa Space ($6m).

Products

Companies with products harnessing space data fused with terrestrial data to provide location and tracking, monitoring and insights, mapping and data platforms, witnessed this subsector growing four-fold during 2018 largely driven by a ferocious appetite from the venture community for AI-related investments.

The types of earlier stage companies accessing capital included Windward ($17m) and Streetbees ($12m).