Space – The Opportunity


For the first time in history, space is economically accessible to commercial industries.  Private investment in space technologies over the last 15 years has led to a new wave of excitement and opportunity in the last frontier. Reduced launch costs from reusable rockets, combined with increasing payloads of small satellites, have enabled growth in sectors such as satellite communications and geospatial intelligence. These technologies leverage cloud computing and AI to handle large quantities of data and drive insights previously un-captured. They will pave the way for more innovation in areas such as in-space manufacturing, space infrastructure, and space tourism, all of which are primed for growth over the coming decade.

Market Size and Verticals

The space tech industry spans terrestrial, orbital, and exploratory domains, making up a ~$217 billion market in 2021, that is projected to reach ~$321 billion in size by 2025, representing a 4-year CAGR of 11%. There are over 629 companies in the industry, with VC playing a big role, investing ~$31 billion since 2005 ¹ .   

One of the largest sub-verticals in the space tech industry is commercial space launch. The global space launch services market size was ~$9.8 billion in 2019 and is projected to reach $32.41 billion by 2027, growing at a 7-year CAGR of 15.7% ² . SpaceX dominates the commercial launch market, with ~65% of the global market (~$7 billion), although we foresee this market share shrinking with more competition entering the market as launch costs are reduced. 

The two major areas of focus for the space tech industry revolve around terrestrial and orbital use-cases.  Satellite communications, including IoT, Telecoms, Satellite Internet, and Ground Stations, represent a significant portion of the terrestrial use cases, with analysts projecting a total of 15,000 satellites in orbit by 2028³. Geospatial intelligence services, including geospatial analytics, Earth monitoring, and satellite imagery, also leverage satellites for Earth intelligence. Commercial space launch is the other primary sub-vertical for terrestrial use and includes primarily launch providers and rocketry hardware companies. In the orbital realm, in-space manufacturing, space infrastructure, and space tourism comprise most of the private investment, along with satellite manufacturing and propulsion.

Industry Growth Drivers, VC Activity, and Forecast

The successful launch and return of the SpaceX Falcon 9 rocket, the world’s first reusable orbital rocket, in 2010 marked the advent of a drastic reduction in satellite launch costs. Never before has it been cheaper to send rockets and satellites into space. Simultaneously, the payloads that these satellites can handle have increased, resulting in high demand for rocket launches, and thus, a very crowded rocket launch market. Reusable rocket technology unlocks the rest of the space economy.

Along with the recent explosion of private investment, government investment in Space has increased, with the U.S. and China as the frontrunners in this 21st Century space race. Furthermore, SPAC funding opened the financing floodgates to space startups, with the average space SPAC having a $1.8B enterprise value at the time of the IPO. This has been a popular way for space companies to access a larger pool of capital, with companies like Astra, Terran Orbital, and Virgin Galactic all going public via SPAC. The SPAC market, including space companies, has faced a significant downturn over the last year with many companies trading at a fraction of their original deSPAC price. Pitchbook’s deSPAC Index has posted a decline of ~48% since 2018, as well as a ~36% drop from the beginning of 2022 through March 15, 2022. This compares to the S&P 500’s ~59% gain since 2018 and only a ~11% decline 2022 YTD through March 15, 2022⁵.  

We believe this represents a potentially attractive buying opportunity in deSPAC space companies that have seen their valuations slashed as a result of broader macro forces and market challenges.

Geospatial intelligence has become an important industry growth driver due to national security and commercial opportunities available with satellite technology. Satellites can leverage cloud infrastructure and AI by beaming data to ground station networks connected to vast data centers. This allows for faster processing and higher-order insights than previously possible and has tangible implications on several industries, including agriculture and real estate, among others. It is also creating viability into the economics and reach of satellite internet, such as Starlink and OneWeb. 

Elsewhere in the space economy, in-space manufacturing is providing the gateway to a larger space infrastructure. Companies are using the microgravity conditions of space to produce materials and products that have unique characteristics, such as fiber optic cables or compound semiconductors. Using reusable rockets, these materials can be brought back to Earth for terrestrial use. Going forward, they can also be used to build out more advanced space infrastructure such as more-complex habitats, satellites, and mining facilities.

The secular growth tailwinds in the space industry have attracted significant VC activity in recent years. Cumulative deal value was ~$7.9 billion in 2021, up from $500 million in 2016, representing a 5-year CAGR in VC funding of ~74%. While deal value has increased, the total number of deals has stayed relatively flat since 2019. This suggests that the average deal size has increased, with funding gravitating towards the most promising space startups. 

Over the next five years, we expect to see the most activity in ride-sharing satellite launches and reusable rockets, which are becoming increasingly crowded spaces. Alternatively, we see in-space manufacturing, autonomous space robots, commercial space stations, space tourism, asteroid mining, and lunar / Mars bases as the next wave of space innovation that will take place and drive growth in the industry longer term. In the public markets, space tech companies such as Rocket Lab, Redwire, Astra, BlackSky, Spire, and Momentus, are working diligently to meet their revenue targets over the next five years. These companies are primarily focused on building out access to space via reusable rockets and satellite technology. Valuations of these public companies have come down with recent market activity, some trading at a >80% discount to their IPO price, which could make an attractive entry point for many of these firms assuming longer-term investment time horizons are considered.

Where is DCA focusing its investment in the space economy?

DCA is focused on finding opportunities in less saturated areas of the market that appear poised for rapid growth over the next 5-10 years. In the short term, we see in-space manufacturing and space infrastructure as two sub-verticals on the precipice of unlocking new commercial opportunities. Space provides a unique manufacturing environment that is not possible on Earth. Space conditions such as microgravity, vacuum, unlimited solar power, and extreme temperatures allow for new technologies to be developed that can have commercial implications on Earth and in space. More advanced semiconductors, composites, alloys, and fiber optic cables are just some of the materials that are currently being tested for in-space manufacturing. Pharmaceuticals / drug development is another area we see as having big potential. 

In-space manufacturing is also helping build out the other sub-vertical we believe is set to grow rapidly: space infrastructure. Raw materials and parts can be shipped into space and then constructed in orbit, enabling the production of larger and more complex machines than could have been sent up pre-constructed. This is called the “space-for-space” economy. Companies are already utilizing this technology to help maintain various satellites in orbit, including the International Space Station. 

In the future, we see space infrastructure as the catalyst for more experimental space applications, such as space tourism, mining, and colonization. While we believe in-space manufacturing and space infrastructure represent the most attractive near-term opportunities, we continue to monitor the rocket and satellite sub-verticals, which are the most advanced, but also crowded, sub-verticals to date.

On a longer time horizon, we are interested in space tourism, lunar / Mars surface exploration and discovery, and space mining. While these industries are still early in their development, we anticipate cheaper launch solutions, commercial space stations, and lunar / Mars bases will help fuel their growth. Public companies such as Virgin Galactic (SPCE), Maxar (MAXR), and Boeing (BA), alongside private companies such as Blue Origin, Axiom Space, and SpaceX, are helping produce the next generation of space technologies across these sub-verticals. These are just a handful of the types of companies that DCA is monitoring. We invite you to reach out to us as we look to capitalize on the space industry tailwinds we expect to see over the coming years.


¹Pitchbook Report: “Space Tech Vertical Snapshot”
² ³
⁴ ⁵ ⁶Pitchbook Report: “Space Tech Vertical Snapshot” and

*One of DCA’s guiding principles is that we will communicate with our investors and prospective investors as candidly as possible because we believe investors and prospective investors benefit from understanding our investment philosophy and approach. Our views and opinions regarding the prospects of investments and/or the economy are forward looking statements as defined under the U.S. federal securities laws, which may or may not be accurate and may be materially different over future periods. Generally, the words “believe,” “expect,” “intend,” “estimate,” “anticipate,” “project,” “will,” “may,” “should,” “plan,” or the negative of such terms and similar expressions identify forward looking statements. Forward looking statements are subject to certain risks and uncertainties that could cause actual results to materially differ from an investor’s historical experience and current expectations or projections indicated in any forward looking statements. These risks include, but are not limited to, equity securities risk, corporate bonds risk, credit risk, interest rate risk, leverage and borrowing risk, additional risks of certain investments, management risk, and other risks. We disclaim any obligation to update or alter any forward looking statements, whether as a result of new information, future events, or otherwise. You should not place undue reliance on forward looking statements, which speak only as of the date they are made.

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