US space industry funding drops 53% in Q1, hitting 8-year low — report
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FILE PHOTO: A view of the SpaceX Starship on its Boca Chica launchpad following a postponement in its launch date due to a frozen valve, after the U.S. Federal Aviation Administration granted a long-awaited license allowing Elon Musk’s SpaceX to launch th
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By Akash Sriram and Tanya Jain
(Reuters) -Investments in the U.S. space industry dropped 53% to $2.2 billion in the three months ending March, a report said, with high interest rates and challenging market conditions making it the lowest-funded quarter the sector has seen since 2015.
The steep drop in fresh capital has left many companies in a vulnerable state, while the failure of Silicon Valley Bank, a leading provider of venture debt, has added to the challenge, a report by venture capital (VC) firm Space Capital said on Thursday.
Space Capital’s report, coming on the heels of a Chapter 11 filing from Richard Branson’s Virgin Orbit Holdings Inc, tracked 89 companies active in the sector.
«Of the 100+ launch companies that collectively raised $27 billion over the last decade, there are currently only two that are operational: SpaceX and Rocket Lab,» the report said, adding that there was a visible «dichotomy between the winners and everyone else» in the rocket manufacturing sector.
The risk threshold to invest in space companies was much higher earlier, but given recent market uncertainty, investors may not be as risk-loving and space being a nascent sector, many are dialing back, Deutsche Bank (ETR:DBKGn) analyst Edison Yu told Reuters separately.
However, Space Capital added that companies in emerging industries, like those associated with the National Aeronautics and Space Administration’s Artemis mission to the Moon are seeing an increased interest.
«From the public institutional investment side, there is not really much interest in the lunar economy…… that said, personally based on my conversations with companies, I believe there is actually a lot of potential in the lunar economy,» Yu said.
