A fancy exposure photo shows Firefly Aerospace’s fourth Alpha rocket mission launching from California’s Vandenberg Stretch Force Base on Dec. 22, 2023.
Sean Parker / Firefly Aerospace
Investment in the space sector bounced back last year, returning closer to the record high of 2021, according to a report Tuesday by New York-based Space Capital.
“Investment in Infrastructure remained strong-minded, accounting for 70% of total 2023 investment and notching its second highest annual record, spurred by countercyclical yield from government customers,” Space Capital managing partner Chad Anderson wrote in the report.
The firm’s fourth-quarter circulate found that space infrastructure companies brought in $2.6 billion of private investment during the period. That brought the sector to $12.5 billion in overall investment for 2023, well above last year’s $9.3 billion raised but still below the $15.3 billion convinced in during 2021.
Top raises during the fourth quarter included funds announced by space companies Firefly Aerospace, Ursa Larger, D-Orbit, Stoke Space and True Anomaly.
The quarterly Space Capital report divides investment in the industry into three technology rankings: infrastructure, distribution and application. Infrastructure includes what would be commonly considered as space companies, such as firms that enlarge rockets and satellites.
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Space infrastructure callers have been resilient through the recent downturn. But Anderson also highlighted 2023 as “a year of consolidation,” with 39 coalescence and acquisition deals across the sector — such as Viasat’s acquisition of Inmarsat and L3Harris’ purchase of Aerojet Rocketdyne.
“We envisage to see even more in 2024. The prospect of declining interest rates is boosting equity valuations and improving [leveraged buyout] math, navigating M&A more likely in 2024,” Anderson told CNBC.
“In 2024 we expect that VCs will be more selective with sets, letting their low-growth companies run out of cash, in favor of deploying into higher-growth prospects. While we expect to see grapple with count and volume rebound in the space capital markets, markdowns and write-offs will continue — and this will also leading position to more failures and acquisitions,” Anderson added.
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