This graphic from Space Angels, an angel and venture-capital fund, shows non-government equity investments in commercial space ventures between January and September 2017. Launchers scooped up 69% of the total, which from a return-on-capital perspective might be discouraging. But strip out Jeff Bezos’s investment in Blue Origin and investors’ Series H funding of SpaceX and the launcher financing drops to $139 million, or 18% of the total, with satellites at 68%. Credit: Space Angels

PARIS — The commercial space industry is likely to see a record number of investments — both entries and exits — in 2017, with the launch sector dominating the figures because of big-slash financings of Blue Origin and SpaceX, according to angel and venture-capital investor Space Angels.

A first look at the numbers suggests that investors have eyes only for rockets, which given the launch sector’s history of low returns would be a surprising development.

Take away Amazon founder and Blue Origin owner Jeff Bezos’s $941 million investment, and the $325 million Series H financing of SpaceX, and it becomes clear that most investors are aiming at more value-added niches, starting with satellite infrastructure.

The Bezos Blue Origin and SpaceX financings mask the increase in Series A and Series B deals, notably with venture-capital funds Sequoia, Bessemer and Promus backing of launch systems. Credit: Space Angels

Space Angels’ survey shows nearly 250 companies receiving non-government equity financing since 2009, taking in a total of $12 billion. Here too, a couple of large players, starting with SpaceX’s eight funding arounds, obscure the lower-level activity.

Well over half of that $12 billion were transactions involving U.S.-based companies. But Europe and Asia are emerging with their own equity transactions, even if most of them are relatively small — with the notable exception of OneWeb, whose legal residency is Britain’s Channel Islands.

One of the key features of the latest wave of commercial space investment is its low-cost, high-impact potential. Measuring numbers of satellites, or launches, or kilograms placed in orbit, or aggregate investment totals has less value at a time when a 200-satellite global narrowband voice-and-data constellation can be fielded for less than $200 million.

Whether all the deals above constitute commercial-space transactions is debatable. Like the pending Northrop Grumman purchase of Orbital ATK, the space component may or may not have been central to some of the transactions. Credit: Space Angels

It is also not clear what would happen to the commercial space investment climate in the event of a high-profile failure, even if its specific history has no relevance to the broader sector.

When several daring low-orbiting satellite constellations trying out new business models failed 15-20 years ago, the entire commercial space field suffered. Even now, large, well-established FSS operators say they still must include Satellite 101-type material in their investor presentations.

With angel investors and venture capital now doing much of heavy lifting for start-up space companies, there is hope that whatever the effect on the public equity markets, the smaller-scale investors will hold fast. They operate on the assumption that a large percent of their investments will return little or nothing, while a few will make the entire sector play worthwhile.

Space Angels found that since 2009, the number of venture-capital companies investing in the commercial space business has traced a roller-coaster pattern, zooming up until around 2013, then sharply down before a large increase in 2015 and 2016. Nearly 100 VC firms concluded at lease one transaction in 2015-16.

Space Angels’s own investments in the nine months ending Sept. 30, 2017, total 10 transactions, of which seven are disclosed here. Credit: Space Angles

As might be expected given its focus, Space Angels has lost none of its optimism and its market analysis makes no judgment on whether in launch vehicles, or Earth observation, or M2M/IoT applications there are signs of a bubble.

For its own portfolio, Space Angels says:

“We continue to see high-quality investment opportunities and expect to close the year completing a record number of investments.”

Peter B. de Selding on LinkedinPeter B. de Selding on Twitter
Peter B. de Selding
Peter B. de Selding

Peter de Selding is a Co-Founder and editor for SpaceIntelReport.com. He started SpaceIntelReport in 2017 after 26 years as the Paris Bureau Chief for SpaceNews where he covered the commercial satellite, launch and the international space businesses. He is widely considered the preeminent reporter in the space industry and is a must read for space executives. Follow Peter @pbdes


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