In June, two astronauts were left stranded on the International Space Station after Boeing’s Starliner malfunctioned. The mission, which was supposed to last eight days, has been extended until February, when a SpaceX craft will bring the astronauts home.
It’s a dramatic saga in a dramatic market. The global space tech industry is projected to be worth an astronomical $1.1T by 2030, according to a Bank of America report.
M&A activity in the space remains strong, despite its continued descent from the peak seen in 2021.
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Source: Grata
Generally, the current space tech landscape is high-funding and high-cost, particularly for flashier segments like launch technology. But there’s also plenty of opportunity for high reward.
Satellite tech, for example, is a major driver of momentum in the industry, and demand is growing amid a range of global factors. Many countries are upping their spend on satellite-based imagery for intelligence and communications amid geopolitical tensions. Satellite tech also plays a key role in monitoring global emissions and climate change.
In this PE Playbook, the Grata team has put together the need-to-know trends for investors considering making moves in the space tech market, including:
- Industry fragmentation
- Which segments are raising the most VC funding
- Where M&A transactions are happening
The market map above is not intended to be an exhaustive representation of companies in the space.
Companies that provide services that fall into multiple segments are categorized in this report by their primary offering.
Industry Overview
Market Distribution
Geography
Source: Grata
The US leads the global space tech market with over 3,600 companies, including industry leaders SpaceX and Blue Origin. In recent years, the US has topped the list of global space tech investors in both the public and private realms. The country accounted for nearly 60% of the world’s space tech funding in 2021.
Historically, Texas, Florida, California, and Virginia have dominated the US space tech scene — but as industry stakeholders look to tap into more pools of skilled labor while minimizing operating costs, they’re turning to new frontiers.
Space tech companies are increasingly popping up in Massachusetts, for example, because of the state’s large population of STEM workers. Washington’s aviation industry is also a draw for space tech. Illinois is becoming another major contender due to its substantial tech sector and manufacturing industry. Additionally, Chicago is among the most affordable big cities in the country, drawing in skilled workers.
Ownership
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Source: Grata
While the number of public companies in the space tech industry is relatively small, they account for a whopping 85% of market share. Among them are Florida-based L3Harris Technologies, an aerospace and defense technology company with over 64K employees, and global satellite provider SES Satellites.
But there are still plenty of opportunities to be found for middle market investors. Currently, there are over 4,200 private companies operating in the space tech industry that could be ripe for acquisition.
Segment Distribution
Source: Grata
This report focuses on the following segments of the space tech industry. Grata users can see curated lists of some of the companies used to create each segment by clicking the links below.
- Satellite Management: This sector contains companies that provide products and services related to satellite operations, processing data and intel from satellites, managing satellite communications, and more.
- Space Launch: These companies focus on putting satellites and other spacecrafts into orbit. This segment includes companies working on commercializing space tourism.
- Satellite Manufacturing: Companies in this space produce satellites and related equipment.
- Ground Support Equipment: The companies in this market create and manage the equipment that supports aircraft operations before and after launches.
Public Comparables
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Source: Grata
As previously mentioned, space tech is an extremely high-cost industry. There’s equipment, fuel, maintenance and repairs, and infrastructure to account for — and that’s just the logistical stuff.
The cost of launching a small satellite into orbit has reportedly been on the decline thanks to huge developments in mass production and processing power, but the cheapest on record is a $60M launch by SpaceX.
Putting more advanced satellites in space can run over $400M, and launching a rocket can total an astronomical $2B.
So you can see where the negative average EBITDA margins come from.
Among these sectors, ground support equipment stands out as a much more stable bet. While it sees the least amount of mean revenue, it also sees much lower costs, driving its EBITDA multiples well above the industry averages.
The space is also seeing significant revenue growth. Demand for ground support equipment is on the rise as airports expand, air travel increases, and space exploration continues to grow and evolve.
Private Comparables
Source: Grata
That’s not to say it’s impossible to make money investing in the flashier sectors like launch tech. The private space launch sector is a venture capital magnet (as we cover in a later section), and it sees the highest average revenue of the segments analyzed in this report. However, it’s also relatively small. There are under 700 space launch companies in operation today. Of those, 241 are privately owned, and they account for just 7% of industry share. Meanwhile, Boeing alone controls nearly one third of the space.
Source: Grata
Investors would likely be better served by turning their sights on more fragmented segments that have greater opportunities to establish leadership.
Satellite management, for example, is the niche of the private space tech industry with steady demand, significant growth, and little capital raised. Investments in the market could be especially powerful if combined with satellite manufacturing acquisitions.
VC & Growth Comparables
Source: Grata
While funding has dipped from the $21B high seen in 2021, VCs continue to pour money into space tech companies. In August alone, venture capitalists invested well over $100M in the space.
Because of the nascent nature of much of the tech, the majority of recent VC rounds were at the Pre-Seed, Seed, and Series A stages.
Notable Acquisitions
Source: Grata
M&A activity in the space has also declined from 2021’s high, but it remains elevated compared to pre-pandemic levels.
Most of the recent acquisitions were concentrated in the satellite management and manufacturing sectors.
Satellite Management: Arcfield Acquires Orion Space Solutions
In November, space research and technology company Arcfield completed its acquisition of Orion Space Solutions for an undisclosed amount. Orion offers a range of small satellite services, including manufacturing, mission design, planning, testing, operations, and more.
Arcfield reported that the deal would bolster its “space exploration and hypersonic detection and tracking capabilities” for the Department of Defense and Intelligence Community.
If you’re an investor interested in companies similar to Orion Space Solutions, try these:
KSAT Acquires Vake
Kongsberg Satellite Services (KSAT) acquired a 70% majority stake in Vake, a Norway-based startup that provides satellite services for maritime operations. KSAT was particularly interested in Vake’s AI and machine learning capabilities, and how they might be applied to challenges in maritime domain awareness, offshore asset protection, and tracking shipping activity.
If you’re an investor interested in companies similar to Vake, try these:
SES Satellites Acquires Intelsat
SES Satellites announced its $3.2B acquisition of Intelsat, a satellite communications company, in April. Intelsat said the move would “create a stronger multi-orbit operator” by increasing coverage, expanding product offerings, and making the organization more resilient.
If you’re an investor interested in companies similar to Intelsat, try these:
Satellite Manufacturing: Gilat Satellite Networks Acquires Stellar Blu Solutions
Global satellite networking technology company Gilat acquired Stellar Blu Solutions for $245M in June. Stellar Blu provides satellite communications tech for the aviation industry. Gilat reported the deal would position the company as a leader in the in-flight connectivity space.
If you’re an investor interested in companies like STELLAR Blu Solutions, try these:
Lockheed Martin Acquires Terran Orbital Corporation
Global defense leader Lockheed Martin announced last month its intent to acquire Terran Orbital, which provides satellite solutions for the aerospace and defense industries, for $450M. The companies had partnered on multiple successful missions over the course of seven years prior to the deal.
If you’re an investor interested in companies similar to Terran Orbital, try these:
Space Launch: Boeing Acquires Spirit Aerosystems
In July, space launch leader Boeing entered a definitive agreement to acquire Spirit Aerosystems in an all-stock merger valued at $8.3B. Spirit Aerosystems manufactures and supplies aerostructures for commercial and defense aircrafts.
Dave Calhoun, Boeing President and CEO, said, "By reintegrating Spirit, we can fully align our commercial production systems, including our Safety and Quality Management Systems, and our workforce to the same priorities, incentives and outcomes – centered on safety and quality."
If you’re an investor interested in companies similar to Spirit Aerosystems, try these:
Get the Most Out of the Playbook
If you’re an investor interested in making moves in the space tech industry, Grata can help you put the insights in this article into action.
From in-depth market research to sourcing to pipeline management and relationship nurturing, Grata’s end-to-end dealmaking platform streamlines your workflows so that you can close more deals.
Schedule a demo today to get started.
