Throughout the COVID-19 epidemic, the space sector has proven robust, according to Alexandre Najjar, senior consultant at Euroconsult, who spoke on a side panel at the Small Satellite Conference on August 12. Startups faced hurdles due to facility closures and manufacturing disruptions due to the epidemic, but industry giants fared better.

Najjar, who edits Euroconsult’s yearly review on the small satellite industry, was concerned early in the epidemic that countries might abandon space programs in order to tackle healthcare and other problems. He was also concerned that the pandemic would impede startup growth, delaying income generating. Governments all across the world, on the other hand, have continued to expand expenditure on space endeavors.

“Government spending on space has been gradually increasing and is projected to continue expanding in the coming years, both on the defense and military as well as civilian sides,” Najjar added. Over the next ten years, government funding will account for more than 50% of the $54 billion smallsat market, according to Euroconsult. At the same period, private space investment is on the rise.

“We have already exceeded the level of investments in 2020; that was already a historic year,” Najjar remarked. “Despite the pandemic, we are already smashing records, which is extremely surprising.” According to Najjar, space firms have also disclosed “a higher-than-average amount of funding rounds in millions” in recent months.

Bharti Global, an Indian telecoms company, spent another $500 million in OneWeb, while Hanwha, a South Korean conglomerate, invested $300 million in the satellite broadband firm. Meanwhile, Relativity Space, a launch company, raised $650 million, while Climavision, a weather services company, came from stealth status with a $100 million investment. “They are not alone, and we have yet to see any signs of a slowdown,” Najjar added.

Other startups in the space business have declared plans to join with special purpose acquisition firms (SPACs). SPACs, according to Najjar, are “clearly altering the fundraising landscape.” “I would guess 90 percent of the latest SPACs concern smallsats or smallsat-related enterprises, allowing for some levels in millions of dollars again.”

This trend, while surprising, provides companies with an opportunity to collect large funds to design, develop, produce, and market hardware before they start generating revenue, according to Najjar. Investors should be careful of some of the latest revenue expectations for many SPACS, which he described as “quite excessively optimistic,” with future revenue projections “in the billions and billions of millions.” “The majority of them should be regarded with a grain of salt,” Najjar added. “Be cautious, and look at the business concepts to determine what they can accomplish.”

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