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- Investment in the space sector rebounded last year, with $12.5 billion raised in 2023, according to a Tuesday report from New York-based Space Capital.
- That’s significantly higher than the $9.3 billion raised last year, but still short of the $15.3 billion raised in 2021’s record space investment.
- While space infrastructure companies have shown resilience during the recent economic downturn, Space Capital’s report also highlights that 2023 will be the “year of consolidation” with 39 M&A deals.
Investment in the space sector rebounded last year and neared record highs in 2021, New York-based Space Capital said in a Tuesday report.
“Infrastructure investment remains strong, accounting for 70% of total investment in 2023, driven by counter-cyclical revenues from government clients,” Space Capital managing partner Chad Anderson said in a report. “This is the highest annual record.”
During the same period, space infrastructure companies brought in $2.6 billion in private investment, according to the company’s fourth quarter report. This brings total investment in the sector to $12.5 billion in 2023, well above the $9.3 billion raised last year, but still below the $15.3 billion raised in 2021.
Top raises in the fourth quarter included funding announced by space companies Firefly Aerospace, Ursa Major, D-Orbit, Stoke Space and True Anomaly.
The quarterly Space Capital report breaks down industry investments into three technology categories: infrastructure, distribution, and applications. Infrastructure includes what is commonly thought of as space companies, such as companies that manufacture rockets and satellites.
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Space infrastructure companies have shown resilience during the recent economic downturn. But Anderson also highlighted that 2023 is the “year of consolidation,” with 39 merger and acquisition deals across the sector, including Viasat’s acquisition of Inmarsat and L3Harris’ acquisition of Aerojet Rocketdyne.
“We expect it to rise further in 2024. The prospect of lower interest rates is pushing up stock valuations and stock prices are improving.” [leveraged buyout] “The math is that M&A is more likely in 2024,” Anderson told CNBC.
“In 2024, we expect venture capitalists to become more selective with their funding, draining funds from low-growth companies in favor of higher-growth businesses. “We expect deal numbers and volumes to recover in the space capital markets. We will continue to see discounts and write-offs, which will lead to further failures and acquisitions,” Anderson added.
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