Investments and acquisitions take off in new spaces | Coie Perkins

This article is the first in a series from industry group Perkins Coie New Space on developments in the “new space” industry.

Charged with reducing the cost of accessing space, the “new space” industry has developed new and rapidly changing business models that have opened up new markets. He advanced technological innovations, including rapidly iterating technological optimizations for customer fit. These private operators are increasingly being backed by private investors, arrangements that are driving space investment in what has traditionally been a mostly government-backed industry. This update summarizes recent rapid growth in private investment in three key areas: venture capital investment, special purpose acquisition company (SPAC) trends, and acquisition activity. It also discusses the impact of financial market volatility on each of them at the start of 2022.

Venture capital investments

Venture capital (VC) investment in space-related startups is on the rise. From 2020 to 2021, venture capital funds have placed billions of dollars of capital into space startups, with investments ranging from small seed rounds to large, late-stage serial investments. the volume of reminders 2021 in each of the Seed, Series A, and Series B categories exceeded 2019 and 2020 annual volume. Satellite constellations and similar platform technology (such as HawkEye 360’s $145 million boost for scaling space radio frequency analysis) accounted for almost half of the year’s venture capital investments in the third quarter of 2021. However, their total share has slightly decreased in favor of the “construction” segment (manufacturing of satellites, propulsion, and associated subsystems) and the “launch” segment (launch, orbital deployment, and orbital transfer vehicles, such as Loft Orbital’s $140 million Series B for its platform designed to help launch and operation of satellites). Inter-satellite communications and space infrastructure also received particular attention, with Sierra Space raising a Series A round of $1.4 billion to fund the building blocks of its future commercial space station. This influx of capital has led to increased innovation and market momentum in the new space sector, which we expect to continue in the years to come.

PSPC

2021 stands out as the year when new space companies hit the public markets. The SPAC boom that marked the first half of the year has spread to the new space sector, with a significant number of space companies going public through SPAC mergers in 2021 and others announcing SPAC mergers that will have not yet been finalized. The newly listed companies fell into a wide range of subcategories, but the largest subcategories by value were clustered around launch (Astra, Archer Aviation, Rocket Lab and Virgin Orbit, among others) and observation and Earth analysis (Spire, BlackSky and Planet laboratories, among others).

While the resulting listed companies in many cases ended up trading below their de-SPAC value at the end of the year (some significantly), access to public markets is in itself a validation of the broad commercial interest in the opportunities that arise in the sector. Overall SPAC activity slowed with lower risk tolerance in the market and increased regulatory scrutiny of the United States Securities and Exchange Commission (SEC), and the new space industry is no exception.

Acquisitions—Strategic Expansion

Not surprisingly, the combination of strong venture capital inflows and access to public markets has increased acquisition activity in the new space industry. Incumbents and new entrants are beginning to acquire new and innovative technologies to accelerate growth and expand into new market segments.

Companies that went public as a result of PSPC mergers are already deploying funds in the sector. Virgin Orbit has launched a series of venture capital and growth investments These last months. Rocket Lab, primarily a launch operator, follows a vertical integration model by acquiring startups in the sector. These include Planetary Systems Corporation (satellite separation systems), Advanced Solutions, Inc. (flight software and guidance systems), and SolAero (solar power systems).

The incumbents are also taking bold steps. Viasat has announced plans to acquire Inmarsat in a $7.3 billion deal that brings together two major satellite operators with broad broadband and mobility portfolios.

Early 2022

Rising interest rates, high inflation and geopolitical concerns increased financial market volatility in the first quarter of 2022. These circumstances are expected to affect the above three areas. Venture capital investment has been steady so far, with ICEYE, which touts its satellite constellation’s ability to peer through cloud cover, raising $136 million in Series D funding. Xplore raises 16, $2 million in his final round for his space-as-a-service game. Some planned SPACs have faltered, with weather and climate security platform, Tomorrow.io, opting to remain private by ending its $1.2 billion SPAC merger, citing market conditions. Others, like satellite communications equipment maker SatixFy, have decided to make public via PSPC despite market uncertainty. Acquisitions were calmer.

Some hesitation is expected in these short-term investment areas with the rest of the market. As activity intensifies over time, expect acquisitions to play a larger role as funded startups prove their worth and larger players continue to seek vertical integration or horizontal overlaps. Several space companies that went public via de-SPAC transactions in 2020 and 2021 have continued to see share price declines in public markets. These could themselves become the target of acquisition activity in the coming months. Public listing via SPAC mergers is likely to be limited with the current market volatility and regulatory scrutiny, but it may continue to play a role in defining exit opportunities, especially for players with commercial traction .

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