Space race dollars slow, one year after Branson and Bezos launch


A year ago yesterday, many of us saw Richard Branson soar into space and then return safe and sound. Not only had he beaten Jeff Bezos to sub-orbit, but he seemed to be starting a new commercial space race.

Front flash: Space is in the news again, thanks to this stunning photo from NASA’s James Webb Telescope, but the industry risks losing last summer’s private capital momentum.

By the numbers: Space startups raised nearly $47 billion in 2021, including $14.5 billion in the fourth quarter, per Space Capital. They only got $7.2 billion in Q1 2022, with expectations that the Q2 figure will be significantly lower (despite an additional $1.7 billion for SpaceX).

Big picture: Some of the decrease is related to the overall decline of businesses, but the space presents specific challenges.

  • The first is that the Branson vs. Bezos robberies, while technologically remarkable and initially dramatic, have come to be seen primarily as billionaire ego trips. It also didn’t help that Branson’s company, Virgin Galactic, pushed back its commercial service launch to early 2023, sending its stock price lower after SPAC.
  • Another problem is that many space startups are designed to sell either to the small handful of big players (Lockheed, SpaceX, etc.) or to the large group of other space startups. This last part becomes problematic when startups try to conserve cash and could create a cascading effect that venture capitalist Anton Brevde says will cause a space bubble to burst.
  • Finally, space startups may struggle to control burn rates, regardless of the funding environment, given high hardware and R&D costs. This is a big problem when VCs hold their portfolio tighter, especially for speculative portfolio companies that aren’t close to monetization.

What they say : Miriam Kramer of Axios Space writes: “Parts of the industry expected to be hardest hit include those focused on far-flung concepts like asteroid mining and startups working on innovating new concepts. rockets.”

  • Mo Islam of Payload Space adds, “The businesses that can generate real paying customers today are the ones that have the best chance of navigating the fundraising vacuum we find ourselves in. If you fall into the business model of 2nd or 3rd order and you only have 12 to 18 months of trail, government contracts to bridge the gap with commercial orders will be critical.”

The bottom line: Venture capitalists are not giving up on the space race. But they walk instead of run.


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