The COVID-19 pandemic it may have rocked the global economy, but according to Spacefund's Meagan Crawford and Chris Moran with Lockheed Martin Ventures, it hasn't held back investments in space startups.
The space industry has experienced a honeymoon period with hundreds of startups popping up in the last 5-7 years after SpaceX's success.
Spacefund research conducted earlier this year found that there is almost no correlation between the global economy and the space industry, Crawford, a managing partner at VC firm, told TC Sessions on Thursday. : Space 2020. Crawford and Moran both agreed that interest and investment in space will increase as more startups have successful exits.
"We looked back historically over the past decade and a little more, and found that even during the 2008-2009 economic downturn, the space industry continued to grow 7 percent annually," Crawford said. , adding that they saw almost no correlation between the performance of the Global S&P 1200 and the space industry.
"I think a lot of this has to do with a large portion of the sector coming from government budgets, which provides a lot of stability even in difficult economic times, as well as the sector is in great demand and is going through such a high-growth phase in this moment that not even the pandemic could really slow it down, "he said.
Early-stage investments suffered earlier in the year, Moran noted after the event, but added it appeared to be temporary.
"Companies were circling around the wagons on their wallets, in-person incubation programs were stopped, so there were fewer early stage companies and less money for those companies," he said, adding that Pitchbook data confirmed. suspicions of LMVC and showed a 25% to 27% decline in company formation over that period.
Since September, LMVC has seen a spike in new companies. Meanwhile, incubators and accelerators have adapted to the restrictions of COVID-19, Zoom has made face-to-face encounters easy, and life "as usual" has started again, Moran added.
Releases drive investments
The space industry has experienced a honeymoon period with hundreds of startups popping up in the past five or seven years after SpaceX success. Moran said this period of unabashed growth will continue for a few years before shrinking.
"So like any industry in VC, you see a lot of people coming in and then, when business models collide and the need to generate sustainable businesses, there's a lot of sifting and narrowing of the field," Moran said. "We are probably still in that period of growth, but I imagine that in the next few years, we will start to see this screening and really focus on people who have a technology and business model that will be successful in the long term."
Right now, the entire sector is privately funded, said Moran, who predicted that investments will grow for some time as long as people see the industry's enthusiasm and promise. He added that easy access to public markets - especially increased mergers with special purpose acquisition companies - could bring even more money into the space.