Where is the Capital?
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If you're a space startup and are thinking through the capital raising dynamics of this market, read on...
Where is the Capital?
Despite the aerospace and defense industry's outperformance in public markets, the fundraising environment in venture remains tough. Investors may still be sitting on record levels of cash, but no one is in a rush to deploy.
That shouldn't come as too much of a surprise. Despite the industry's tailwinds, investors are taking this time to assess the damage of their existing portfolios and recalibrate their investment theses. Based on our conversations with many funds, LPs are also demanding a much a slower pace of investment...at least until there's more clarity on the broader macroeconomy (i.e. inflation and rates).
However, when you look under the hood the data is not all bad. We spent some time combing through the numbers and found a couple silver linings. The first is that the number of deals that have closed (248) may be down, but the amount of capital raised per deal is increasing. The companies that are getting funded are opting to raise more to extend runway as much as possible.
The second is that valuations of completed deals have actually increased significantly. Median post-money valuations have increased from $31.3M to $74.8M (+140%). It's entirely possible that founders are experiencing more dilution this year to get deals done, but the trend is still encouraging considering the direction of valuations in the broader tech industry.
Where to find capital
In addition to the fundraising data, we spent time looking at which investors are actively investing in space technology (according to Pitchbook). The below tables are not comprehensive and we're happy to share more data upon request.
Amongst space-focused funds, NY-based Space Capital takes the crown as most active with London-based Seraphim Capital not far behind. In the angel investor community, Dylan Taylor (CEO of Voyager), Marc Bell (CEO of Terran Orbital) and Sand Hill Angels are among the most active.
Tech Investors (with Space verticals)
Within the broader tech investor community, Alumni Ventures, Lux Capital (Shahin Farshchi), and Founders Fund (Scott Nolan & Delian Asparouhov) lead the way. Not on the list (due to deal count), but certainly deserve mentions:
- Bessemer Venture Partners (Tess Hatch): Rocket Lab and Spire Global
- NFX (Morgan Beller, Jamies Currier, and Gigi Levi-Weiss) has launched a space vertical with two announced investments so far: Stoke Space and Starfish
- Future Ventures (Steve Jurvetson): SpaceX and Planet – Steve was an early adopter of the commercial space thesis but for the time being has publicly expressed less of a desire to expand the portfolio
- Family office investors Hemisphere Ventures and Morgan Brook Capital have been actively investing in space for a number of years: Space Forge, Orbit Fab, Axiom Space, Leo Labs, Kepler Communication, and more
Accelerators / Incubators
Moving earlier in the lifecycle, the world of accelerators and incubators open to space startups has greatly expanded: European Space Agency's Business Incubation Center, Techstars, Y Combinator, and Starburst are among the biggest. Others worth highlighting include: PARSEC Accelerator, Syndicate 708, Seraphim Space Camp and the Catalyst Space Accelerator.
- Investment volume in space startups is down, but there's more to the market than meets the eye: deals sizes and valuations have increased considerably.
- There's a robust world of space investors out there. If you're actively fundraising or building a strategy, don't hesitate to reach out ([email protected]). We're a resource should you need it.