In the last couple of days we’ve seen economic numbers released that would suggest the space economy is strong. As well, a new study out of the University of Ottawa’s Telfer School of Management focusses on entrepreneurship in the space industry.
The Global Space Economy continues to grow
The Space Foundation said in its Space Report that the global space economy grew in 2020 to US$447 billion from US$428 billion in 2019, a 4.4% increase. Taken in the context of a pandemic, the growth shows a resilient marketplace.
“‘The Space Report 2021 Q2’ found that in 2020, the global space economy rose to $447 billion, an increase of 4.4% from a revised 2019 total of $428 billion. This $447 billion space economy is 55% higher than a decade ago and part of a five-year trend of uninterrupted growth. Commercial space activity grew 6.6% to nearly $357 billion in 2020, still representing close to 80% of the total space economy. Global government space spending fell 1.2% in 2020 to $90.2 billion from a revised 2019 peak of $91.4 billion. Nearly 58% of this total was allocated to space activities by the U.S.”
“Globally, the top three investors in the global space economy remained the same in 2020: the United States, China and the European Space Agency. Collectively, these three entities constituted more than 81% of government space spending in 2020.”
“This year’s analysis also revealed notable shifts in the global space economy. Japan’s 3% space budget increase in 2020 played opposite Russia’s 37% reduction to make Japan the fourth-highest contributor to the global space economy. France increased its domestic funding by more than 40% in 2020, leapfrogging Germany and India to become the seventh-largest contributor to the global space economy in 2020 after Russia and the European Union. Lastly, Italy’s 37% budget reduction shifted its 2019 ranking of 11 down to 12 in 2020, beneath Canada.”
Investments fuel growth
Meanwhile Space Capital released its Q2 2021 Space Investment Quarterly and said “This was the largest quarter on record for space infrastructure investment, despite only two space company SPACs closing in Q2. With $4.5B of new capital, the Infrastructure stack is now on pace to beat the previous annual record year of $9.1B, set last year.”
Highlights from the quarter included:
- With another $9.9B invested into 138 space companies in Q2, there has now been $199.8B of equity investment into 1,553 unique companies in the space economy over the past 10 years.
- After four consecutive quarters of declining deal volume, Q2 was the fourth largest quarter on record for total investment in the space economy. The majority of investment dollars YTD have gone to Late Stage rounds, however 123 early stage rounds account for 53% of all rounds closed, representing nearly $1.0B of investment and a healthy front of the funnel.
- This was the largest quarter on record for space infrastructure investment, despite only two space company SPACs closing in Q2. With $4.5B of new capital, the Infrastructure stack is now on pace to beat the previous annual record year of $9.1B, set last year.
- Fourteen space company SPACs have been announced to-date, three of which have successfully merged, and two of which were announced in the first week of Q3. Ten of these SPAC mergers have targeted Infrastructure companies focused on small launch, satellite hardware, and in-space manufacturing. The 11 pending SPACs are expected to add an additional $8.3B to the target companies’ balance sheets in the second half of 2021, including $5.9B of equity investment through PIPEs.
Entrepreneurship in the space industry
Also released this week, is a new study conducted over 10 years on entrepreneurship in the space industry from the University of Ottawa’s Telfer School of Management. It’s worth reading.
The study titled Entrepreneurial space and the freedom for entrepreneurship: Institutional settings, policy, and action in the space industry “revealed that innovation only really takes off when policymakers, entrepreneurs and universities build alliances.” The study was published in the Strategic Entrepreneurship Journal. Of note, the study leans heavily on data collected from the European space sector.
Professor Wadid Lamine, an Associate Professor of Entrepreneurship at Telfer and lead author of the study said, “Research has shown that institutions alter as they adapt to shifts and change in the landscapes or may be altered as entrepreneurs push out the boundaries of the entrepreneurial space. Such changes represent a dynamic for entrepreneurial agency.”
“The study found institutional policies create significant barriers for starting a business in the downstream space sector, generating a restrictive climate that does little to encourage the creation or development of new companies.”
“In Europe, the highly regulated aerospace industry fosters a restrictive climate that does little to encourage the creation or development of new companies. French companies Airbus and Thales collaborate and compete strategically and with support of the government, but their competition discourages new entrepreneurs to enter the market.”