Dear Mr Kocian, сan you provide an overview of the current landscape of the investment market in space technologies? How has it evolved over the past few years?

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Overall, venture-backed space companies are in a much different and more positive situation than they would be five or ten years ago. Space is now considered a legitimate part of VC investments, a much broader set of investors participate in space deals. The VCs are present from the angel to growth stage and the latter end is overall getting more liquid (via M&A often from defense primes but also other startups). The volume of inflows in the space industry multiplied several times over during the last decade - with the exact numbers largely depending on the methodology.

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For example, in Europe, the number of 100M+ space-focused VCs went from close to zero to around 5 in the last five years. I take it as a sign that institutional players (and governments) are willing to support venture-backed space startups. As noted in the next question, something has not been doing that well.

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What are some key trends you’ve observed in terms of investor interest and funding patterns within the space technology sector?

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I cannot go about without saying that the investment space landscape has been greatly influenced by the market downturn in 2022. While I think that some of the public figures about the space investment downturn aren’t well representative as they over-index growth stage funding in the applications sector, the effect has definitely been notable.

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I think the major change is the investor’s perception of risk. A combination of harsh solar radiation activity and an increase in the inherent cost of capital, investors recalibrate their risk appetite. Together with multiple cases of recent high-level satellite technology failures, startups have now a higher ground to stand up to.

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Space technologies encompass a wide range of areas, from satellite communication to exploration. Which specific segments of the space technology market are attracting the most investment and why?

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There are three large areas of space applications - GNSS, EO and Satcom. Historically, most of the investments flew into micro launchers, upstream EO mostly in the optical spectrum and some satellite connectivity segments. As space-focused funds raised larger funds and the traditional sectors became more crowded, investors naturally looked for novelty areas. A lot of the resources now flow into satellite software, space situational awareness and EO startups with new instruments and business models.

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Another area gaining much popularity is in-space infrastructure - preparing the base ground for other businesses to operate in beyond LEO - in GEO and Cislunar. As none of these are proven markets, I personally would assess this with a degree of caution.

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Space exploration is not really a valid revenue source - it is an addressable market for some venture-backed companies (satellite manufacturers /mission operators) but not a standalone business segment

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How can we attract more attention to cybersecurity challenges that meet the Space technologies sector, and what could you recommend to startups that develop cybersecurity solutions for SpaceTech?

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As mentioned, investors are now more risk-aware. Especially for startups targeting defense and intelligence customers, cybersecurity is a critical risk to be aware of - and going forward, it will be definitely an issue difficult to avoid during the Due Diligence.

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My understanding of space cybersecurity is not strong enough to give advice to anybody. From an investment perspective, I absolutely see the importance of space cybersecurity, but it is crucial for those startups to have a sensible plan on how to deliver a 10x return in 7 years. There are multiple startups addressing the need of space companies for cybersecurity solutions - I personally have yet to see a good way to respond to the VC formula. For startups, keeping the cybersecurity function in-house is definitely an alternative.

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_{Author: Nessa, Cyber Journalist}

_{Photo: Fillip Kocian/The Sign}