What is SpaceTech?
It is a collective term for technologies, companies and business models related to the exploration and commercial use of outer space. However, this category encompasses fundamentally different sectors with varying levels of maturity, risk, and potential returns.
The core of the industry is delivering cargo and people into orbit. The market is booming; whilst there were 60–80 successful launches per year globally in the 2010s, this figure exceeded 200 in 2023. SpaceX dominates in terms of volume, but Rocket Lab, ABL Space and RocketHorse are among the many companies filling the niche for small and medium-sized launch vehicles.
On the other hand, satellite communications and broadband internet are the most mature and commercially active segments. SpaceX’s Starlink already serves millions of customers in over 60 countries, while OneWeb, Amazon's Kuiper project, and other regional initiatives are shaping a competitive market. This is a thriving business that is already generating real revenue rather than being a technology of the future.
There is also Earth observation (EO), which uses satellites to image the Earth's surface in optical, infrared, and radar bands. This data is used to monitor agricultural land, track maritime transport, analyse climate change and support reconnaissance and emergency management activities. Planet Labs and Satellogic are public companies operating in this field. Demand for geospatial analytics is steadily growing from government and corporate clients.
Due to geopolitical tensions, space defence and intelligence are among the most heavily funded sectors. Private companies provide governments with secure communications, satellite intelligence, early warning systems, and cybersecurity for orbital infrastructure. The contracts are large, the terms are long, and the risks are lower than in the commercial sector.
Space tourism is a rapidly developing, albeit not yet mass-market, segment. Virgin Galactic and Blue Origin currently operate suborbital flights for paying passengers. Axiom Space organises missions to the ISS. Orbital tourism is the next step and is currently accessible only to the ultra-wealthy. However, the market is expanding, and prices are gradually falling.
The most futuristic sector is the in-space economy, which includes manufacturing materials in microgravity, building orbital data centres, and extracting resources from asteroids and the Moon. For now, this is mainly in the research and development stage, but the first commercial projects are already emerging.
Why does SpaceTech attract investors?
Over the past five years, the volume of private investment in SpaceTech has grown exponentially. This is no coincidence — the industry offers a unique combination of factors rarely found elsewhere.
Market scale. According to Morgan Stanley's estimates, the global space economy could exceed $1 trillion by 2040. Goldman Sachs’ more conservative forecasts suggest $800 billion. Even if the reality is less than these figures suggest, growth from the current $470 billion still represents a significant opportunity for early market entrants.
Technological shift: Thanks to SpaceX’s reusable rockets, the cost of launching one kilogram of cargo into low Earth orbit has fallen from $54,000 in the 1990s to around $2,700 today. Starship promises to reduce this figure further, to just a few hundred dollars. This means that hundreds of business models that were unviable at the old prices are now becoming realistic.
Diversification: SpaceTech has a low correlation with traditional financial markets. Satellite companies' revenue is not dependent on the stock market or consumer demand. Government contracts ensure a predictable cash flow, even during recessions. This makes the sector attractive for portfolio diversification, particularly in times of geopolitical instability.
Government demand: The US, China, the UAE, India, Japan, South Korea and the European Union are all increasing their space budgets and outsourcing more tasks to private contractors. NASA, the ESA and defence departments are stable customers with long-term contracts. For investors, the presence of government contracts in a company’s portfolio is a sign of reduced risk.
The platform effect. Space infrastructure is like the internet in the 1990s. Who could have imagined in 1995 that Uber, Airbnb or TikTok would emerge as products of internet infrastructure? Similarly, satellite internet, precise positioning and global Earth observation will provide the basis for industries that do not yet exist.
Key risks
Any objective discussion of SpaceTech should begin with an acknowledgement of the risks, rather than euphoria. Although the industry is appealing, it contains unique drawbacks of its own.
High entry costs
The minimum investment required in venture capital rounds for SpaceTech startups is typically of $25,000–$50,000 at the seed stage. Series A and subsequent rounds require $100,000 or more in funding. Specialised funds require investments of between $500,000 and $1,000,000. For most private investors, this level of investment is inaccessible without aggregated instruments, such as syndicates or retail platforms.
The public market offers a lower entry threshold, but also less potential. Many of the most interesting companies either remain private, such as SpaceX, or go public via a SPAC, which is often accompanied by inflated valuations and subsequent corrections. An investor who bought Virgin Galactic at the peak of the SPAC wave in 2021 lost over 90% of their capital.
Long-term investment horizons
SpaceTech is a 10–15-year endeavour, somewhat even longer. Developing a rocket engine, obtaining licences, the first commercial launch and reaching operational breakeven all take years. Most companies in the sector have not yet turned a profit and survive on new funding rounds or government funding.
For a venture capitalist, this means capital is tied up with no exit until an IPO or an M&A deal. If liquidity is critical, SpaceTech is not the right fit. However, if you have a long-term perspective, the situation changes radically: a patient investor in SpaceX, for example, has earned far more over 12 years than would be possible with any index funds.
Regulatory and technical risks
Rockets do explode, and that’s no metaphor. Even SpaceX, the most reliable commercial operator in history, has experienced accidents and explosions involving its Starship during test flights. A single disaster could destroy cargo worth hundreds of millions of pounds and set the company back for years.
In addition to technical risks, there are regulatory ones. For example, obtaining a launch licence in the US can take years. After several delays due to regulatory procedures, SpaceX received permission for the first orbital launch of Starship only in 2022–2023. New entrants face the same barrier, but often lack the resources to overcome it.
There are also geopolitical risks. Sanctions could cut off access to components. Escalating disputes over orbital space between the US and China could alter the landscape for all players. Finally, a change of administration in the US traditionally affects space programmes and budgets.
How to invest in SpaceTech?
There are three main options, each with its own risk profile, minimum investment requirement and potential return. Your choice should depend on the size of your capital, your risk appetite and your industry expertise.
Direct investment in startups
This is the riskiest, but potentially most profitable, option. You invest in a specific company at an early stage — either the seed stage or Series A — and if the company subsequently goes public or is acquired by a strategic investor, your returns could range from 10x to 75x or more.
The truth is, though, that nine out of ten startups fail to make it this far. In SpaceTech, the dropout rate is even higher than in conventional tech venture capital due to technical complexity and lengthy development cycles. However, the companies that survive and reach the market generate unattainable returns in the public sector.
To access direct deals, you will require either a personal network of industry contacts, accredited investor status (in the US, this is in accordance with Regulation D) or membership of clubs and platforms that aggregate deals. Without these, early-stage rounds are inaccessible to most private individuals.
Venture capital funds and syndicates
These are the optimal structures for most private investors. Funds specialising in SpaceTech offer sectoral diversification, access to high-quality deals, and management by experienced teams.
Leading players include Space Capital (US, venture-focused), Seraphim Space (UK, the world’s largest specialised SpaceTech fund) and Bessemer Venture Partners (a general venture fund with an impressive SpaceTech track record). The minimum investment for most funds is $500,000.
Syndicates on platforms such as AngelList, Republic, and Wefunder enable you to participate in specific funding rounds alongside an experienced lead investor for as little as $1,000–5,000. This lowers the barrier to entry and provides access to deals that private investors alone cannot. The lead investor conducts due diligence and is responsible for ensuring the deal quality.
When choosing a fund or syndicate, key factors to look out for are the team’s track record (not promises, but realised exits), portfolio concentration (i.e. whether the fund is putting all its eggs in one basket), and fee structure (a 2% management fee and 20% carried interest is standard; anything higher is worth negotiating).
Public companies and ETFs
They offer the lowest entry threshold and maximum liquidity and are suitable for those who want exposure to a sector without tying up capital for years.
Examples of individual public companies include:
- Rocket Lab (RKLB): commercial launches and space systems.
- Iridium Communications (IRDM): satellite communications with a stable business.
- Maxar Technologies (before its acquisition in 2023): satellite imagery.
- Spire Global (SPIR): satellite data for maritime, aviation and meteorological analytics.
Among ETFs: ARKX from ARK Invest and UFO from Procure Space ETF — actively managed funds with holdings in aerospace companies; ROKT from SPDR, which is focused on the aerospace and defence industries. Please note that none of these ETFs is purely focused on SpaceTech, as a portion of their assets is always allocated to aviation or defence contractors.
Examples of successful investments in space technology
SpaceX is the clearest and most striking example. Founded in 2002, the company did not achieve its first successful orbital launch of the Falcon 1 until 2008, after three consecutive failures that nearly brought it to its knees. Elon Musk invested almost all the proceeds from the sale of PayPal into SpaceX.
Investors who participated in the Series C round in 2012 at a valuation of $2.4 billion now hold shares in a company valued at over $180 billion. This represents a more than 75-fold increase over 12 years. However, SpaceX has endured years of losses, technical glitches and uncertainty.
So, why did they succeed? They had a fundamental technological advantage (first-stage recovery), a strong team, and patience.
Planet Labs is an example of how a sound idea can overcome the challenges of the public market. It built the largest commercial Earth observation satellite constellation and went public via a SPAC in 2021, achieving a valuation of over $2 billion. Early venture capital investors realised significant profits. However, public investors who bought shares during or after the SPAC deal saw the price drop by more than 85% by 2023 due to inflated expectations and slow revenue growth.
The lesson here is that the timing of entry is critically important. Even the right company can be a bad investment if bought at the wrong time or price.
A private investor's strategy
Buying up anything and everything related to space haphazardly is the worst possible strategy. A systematic approach is required in SpaceTech, considering the investment horizon, the size of the capital and the willingness to understand the technological aspects.
Portfolio diversification
Firstly, diversification within the sector. It is unwise to put all your eggs in one basket, whether that be a single segment or a single company. A sensible allocation might look like this: 50–60% in public liquid instruments (e.g. ETFs and shares in public companies); 20–30% in syndicates or funds with access to private rounds; 10–20% in direct investments in specific startups — provided you have the expertise and network to evaluate deals.
Secondly, diversification across segments. Satellite communications, Earth observation (EO), defence, and launches have different growth drivers and risks. A portfolio combining several segments is less vulnerable to sectoral shocks.
Thirdly, consider the proportion of SpaceTech in your overall investment portfolio. For most private investors, this should be 5–15% of total assets. For those with an aggressive risk appetite, it can be as high as 20%. Any higher would mean excessive concentration in an industry with heightened volatility.
Assessing technological potential
Before investing in SpaceTech, whether privately or publicly, it is worth asking yourself a few key questions.
What specific problem is being solved? 'We're in the space business' is not an answer. 'We're reducing the cost of launching microsatellites thanks to our engine' – now that's something. A specific, measurable technological advantage is essential.
Who is the client, and has a contract been signed? A contract with NASA, the Ministry of Defence, or a commercial operator would be a much stronger signal than a projected TAM of $100 billion.
What is the team like, and do they have industry experience? Founders who have worked at SpaceX, Boeing or Airbus, or in the defence industry, are preferable to serial entrepreneurs without a technical background. In rocket engineering, startup culture doesn't work because physics doesn't forgive haste.
What runway do they have, and when is the next funding round? If the company spends its current funds before reaching the next technological milestone, it risks dilution or even bankruptcy.
A long-term approach
SpaceTech isn’t suitable for investors with weak nerves, who might be tempted to sell up at the first sign of trouble.
The ideal strategy for a private investor is to enter the market gradually and build their position as they gain a deeper understanding of the sector. The first step is to buy an ETF or shares in one or two well-researched public companies. Meanwhile, keep an eye on industry media such as SpaceNews, Payload Space and The Motley Fool’s SpaceTech coverage, subscribe to newsletters from specialist analysts and monitor deals on syndicated platforms, but don't commit to participating straight away.
After 12–18 months of this, you will have developed an intuition for evaluating deals that no analytical report can replace. This is a highly specialised sector, and the biggest mistakes are made by those who invest based on general enthusiasm without understanding the details.
Industry outlook
The next 10 years will determine the future structure of the space economy. Here are several key trends to watch out for:
Constellations of satellites: Starlink already has over 6,000 active satellites and continues to launch more, while Amazon's Kuiper project is deploying its first satellites. Regional projects in China, the European Union and India are creating a competitive global market for satellite internet services. This will lead to an increased demand for launches, satellite manufacturing, ground infrastructure, and communications-based services.
The lunar economy. NASA’s Artemis programme, China’s lunar programme and commercial lunar landers (e.g. Intuitive Machines and iSpace) are creating new opportunities for private contractors. Logistics, communications, navigation and supplying resources for lunar bases present specific business challenges that require commercial solutions right now.
Space defence. Geopolitical tensions — such as those between the US and China, and NATO and Russia — have turned orbit into a strategic arena. Sectors such as secure government communications, satellite intelligence and the cyber defence of orbital infrastructure are guaranteed state funding and long-term contracts. SpaceWERX (a division of the US Air Force) is engaging with small private companies.
Standardisation and cost reduction. SpaceX’s Starship promises to reduce the cost of launching cargo into orbit to just $100–200 per kilogram, making dozens of new business models viable.
Regulatory maturity. Currently, space law is a patchwork of 1960s conventions and national legislation that is failing to keep pace with reality. Over the next 5–7 years, a clearer international framework will likely emerge for resource ownership, orbital traffic, and liability for damage. This will reduce legal uncertainty and make the sector more attractive to conservative investors.
Conclusions: Should private investors consider SpaceTech?
Ultimately, humanity will continue to explore and commercialise outer space, and private capital will play a pivotal role in this endeavour. It is a sound investment, but requires patience, diversification, and the ability to handle the unexpected.
If you are a private investor with a 7–10-year time horizon, a tolerance for volatility, and an interest in understanding the technological and commercial aspects of the sector, you should allocate 5–15% of your portfolio to it. Start with publicly traded instruments, such as ETFs or shares in one or two companies that you have studied in detail. At the same time, immerse yourself in industry analysis and keep an eye on syndicated platforms.
Within a year or two, you will develop a level of understanding that most market participants lack. This will give you a key competitive advantage as a private investor in an industry where most decisions are made based on hype rather than analysis.
The space industry is no longer waiting – it is already open for business. For those willing to think decades ahead, this is one of the most exciting frontiers of the next generation.
