Space Foundation’s Finance Forum sets the stage for growing investor interest in space

The global space industry is poised to advance with unprecedented accomplishments, but continued government support, sustained funding, regulatory revamping, and faster decision-making is essential to ensuring that success.

That was the shared assessment from International financiers, investors, CEOs of established and startup space companies, and venture capital space experts who attended the inaugural Innovate Space: Finance Forum in Miami in January.

Over the next four days, The Space Report will share select recorded sessions from the two-day conference. Compared to Space Foundation’s annual Space Symposium, which draws thousands of international attendees across, government, military, and commercial space to Colorado Springs each April, the Finance Forum connected select companies and investors and allowed them an opportunity to develop mutually beneficial partnerships, business deals, and public-private partnerships.

Space is at ‘a critical juncture’

Space Foundation CEO and retired Air Force Maj. Gen. Heather Pringle set the stage for the program by detailing industry achievements that are drawing investor interest and renewing public awareness in space:

• 92 countries operate satellites, including many new entrants from developing nations. Space is increasingly a driver of economic prosperity, technological innovation, and national security.
• The global space economy has shown a positive trajectory over the past two decades, reaching an all-time high of $570 billion in 2023, with a growth rate of 7.4%.
• Some projections suggest the space economy could reach a trillion dollars by the early 2030s.
• Commercial revenue accounted for $445 billion of that $570 billion, showing a continued shift from government programs to commercial.

“Now is the time to have these conversations,“ Pringle told attendees. “The crux of the matter is that the space ecosystem is at a critical juncture…There’s a big evolution that’s going to occur from what used to be a few government-dominated entities to a more diverse, robust commercial ecosystem, and that’s going to bring some challenges with it as well. It brings a high demand for hard-to-find funding, it requires new pathways for growth, and of course, it is going to require us to overcome some institutional and international policies and regulations as well.”

A maturing market helps pique investor interest

Hoyt Davidson is founder and managing partner of Near Earth and a Space Foundation board member, and he believes there are many good reasons to be optimistic about how space technology and investment could advance in the next year.

“There’s a lot of excitement out there, and it’s not irrational exuberance,” he said.

Cheaper access to space and technology development, both driven in part from greater international competition, are creating a market for space much like the dot com and internet phase of the late 1990s. Davidson at the time was a co-founder and managing director at Donaldson, Lufkin & Jenrette’s Space Finance Group, which raised more than $25 billion for satellite-related entities. He points out that while only 10-20% of those dot-com companies survived, they became some of the biggest companies in the world and brought great benefits through the internet.

The same is happening in space, he said.

“We’re starting to see the survivors become more evident,” he said. “The next tranche of investors who write the bigger checks are starting to focus on these winners, these survivors, and backing them and growing this new economy, and that’s very exciting.”

Advancements to change humanity

As some startups mature, they are diversifying their product offerings. Those companies and others are identifying niche opportunities to provide new space-related products and services. David Anderman, co-founder and general partner of Stellar Ventures, and former SpaceX legal counsel, predicts in the near future, space will change humanity with “a species-changing advancement.” Some advancements, while not species-changing, are beginning to emerge. Anderman cited the satellite direct-to-cell market as one example. With it, he said, “no one going to lay another under-sea-floor cable or another cell tower in Kansas.”

In a nod to that developing market, the Federal Communications Commission (FCC) in February opened discussions about auctioning radio frequencies for dedicated to the direct-to-device market. The FCC generated $90 billion in revenue from the last such auction.

As more investors see the maturation of space companies, they will bring more money to the market, which in turn, promises to lower the cost of doing business in space, many panelists agreed. Kyle Mounts, partner and chief investment officer at Aero X Ventures, cited an example in which his company helped Privateer buy Orbital Insight in April after raising $56.5 million. Privateer will combine its satellite-tracking software with Orbital’s self-service TerraScope Earth observation and logistics intelligence.

Not so long ago, Mounts explained, the average cost for a space-based image was about $1,200, but as launch costs fell and technology further developed, the cost of an image dropped to about $500. Within the next few years, he said, he expects an image will cost about $10 or $25.

On the cusp of life-changing microgravity research

At Redwire, scientists are growing heart and knee tissue in microgravity. The research promises to end the need for organ donation, Mike Gold, Redwire’s chief growth officer, said. Other microgravity research conducted with pharmaceutical companies such as Eli Lilly, and Bristol Myers Squibb is leading to new drug crystal development that could improve medications for heart disease, diabetes and obesity.

 “I think we are at an inflection point where the space industry and biotech and pharma are going to merge, revolutionizing both fields and creating something entirely new,” Gold said. “What we are seeing happen with biotech is nothing short of extraordinary.”

Space is still not without risk

Amid the excitement, a few notes of caution remain. Panelists also spoke to rising risk of orbital debris and more complex space situational awareness, the potential faltering should investor interest wane, global instability or an as-yet-unidentified “black swan” event, any of which could affect the growth of the space economy.

At an individual startup level, several panelist cited the need for government programs to assist a company past an initial development phase, where funding dries up and new investors are scarce. That “Valley of Death” dooms too many fledgling companies that might survive if funding and support were available over the life of a project.

Lee Rosen, a retired U.S. Air Force colonel who served with the National Reconnaissance Office, spent a decade at SpaceX and is co-founder and CEO of ThinkOrbital. Rosen describes the government’s approach as “spray and pray” and largely dependent on the survival of Small Business Innovation Research (SBIR) companies.

“It’s really tough sledding out there to understand what the government wants, and what the government needs” he said.

Rosen added his company is adapting to a strategy Anderman at Stellar Ventures recommends — to focus on the needs of the market, particularly government and national security  — and to keep looking for new investors.

‘No room for error’

Creating a sense of urgency for the industry is another issue. The United States must improve funding, streamline regulations and speed its processes. Blair Bigelow May, co-founder of Desert Legacy Capital and former vice president of corporate strategy at Bigelow Aerospace, offered a summation that captured many shared thoughts over the course of the finance forum.

“We are in a space race, we are in a critical resource race, we are in a nuclear energy race, and we are losing to China and to a lot of other countries,” she said. “….and I think that the decisions made over the next two to four years are going to literally shape the next century. The government has tremendous responsibility to handle this well. There is no room for error.”