Due to the present economic upheaval, venture capitalists are turning to safer investments, forcing space technology entrepreneurs to scale back their lofty goals, according to VC company Space Capital. Investors have been forced to reassess their investment strategy and concentrate on businesses with marketable products due to decades-high inflation, quickly rising interest rates and the conflict in Ukraine.
According to a report by Space Capital, investments in space technology firms that gather, process, and analyze data related to space fell by 80% in the third quarter to just over $1 billion (roughly Rs. 8,200 crores) from nearly $5 billion (roughly Rs. 41,200 core) in the same period the previous year.
“Venture capitalists are shifting their attention back to businesses that offer enterprise software as a service and away from deep tech businesses that offer solutions.” New York-based Space Capital said.
According to the report, VC investment volume in space enterprises decreased by 44% while the overall market declined by 31%.
According to managing partner of Space Capital Chad Anderson, VC firms “are aiming to limit their exposure to capital-intensive startups with low or long-term profitability models.”
“For this reason, the infrastructural layer of space will take the brunt of the economic crisis.”
Publicly traded “new space” businesses, including Rocket Lab USA, Astra Space, Spire Global, and Satellogic, have all seen share prices drop by between 49 and 92 percent due to the negative attitude.
William Kowalski, co-founder of Atomos Space, a company that develops spacecraft that aid satellites in space navigation, claimed that many investors who looked into the aerospace sector last year had pulled back.
He added that it has been difficult to raise money, but it has helped capital-efficient enterprises stand out.