Space technology startups are being forced to limit their sky-high ambitions, as their venture-capital backers turn to safer bets due to the current economic turmoil, VC firm Space Capital said.
Decades-high inflation, rapidly rising interest rates and
the Ukraine war have roiled global financial markets, forcing investors to
evaluate their investment strategies and focus on companies with viable
products in the market.
Investments in space technology companies, which collect,
process and analyze space-related data, have fallen 80 percent in the third
quarter to about $1 billion from nearly $5 billion in the year-earlier period,
Space Capital said in a report.
"Venture Capitalists are refocusing on enterprise
software-as-a-service companies and away from deep tech companies that provide
solutions based on engineering innovation," New York-based Space Capital
said.
VC investment volume in space companies fell 44 percent,
compared with a broader market decline of 31 percent, it added.
VC firms "are looking to reduce their exposure to
capital intensive companies with low or long-term profitability models,"
Space Capital's managing partner, Chad Anderson, told Reuters.
"This is why space's infrastructure layer will be the
hardest hit during the economic downturn."
The downbeat sentiment has also hit publicly traded
"new space" companies such as Rocket Lab USA, Astra Space, Spire Global,
and Satellogic, whose shares have fallen between 49 percent and 92 percent.
Many investors who explored aerospace last year have backed
away, said William Kowalski, co-founder of Atomos Space, which makes spacecraft
that help satellites maneuver in space.
"Fundraising has been challenging, but it has allowed
more capital efficient companies to stand out," he said. © Reuters