By Jaspreet Singh and Akash Sriram
(Reuters) – Global investments in space startups rose for the first time in more a than year in the third quarter as investors bet on companies with government contracts that are considered more immune to a turbulent economy, a report showed on Monday.
The July-September period, which analysts usually peg as a weak quarter, saw a 17% rise in funding to $3 billion for 103 companies, venture capital firm Space Capital said in the report. Investments had stayed flat in the second quarter following a months-long slump.
The upbeat figures could mean that investors are returning to startups that could tap government funding and develop tech crucial to space programs.
“It has long been the view that defense tech is a bad fit for venture dollars, but the challenging economic climate is proving that companies which can secure government contracts are best positioned to maintain growth,” Space Capital said.
The companies funded in the third quarter included Axiom Space which raised $350 million, and Sierra Space which saw an inflow of $290 million.
The infrastructure sector, which builds, launches and operates assets in space, has led the industry funding this year by garnering nearly three-fourths of the $11.6 billion in investments during the period, according to the report.
But prospects of a sustained sector recovery are clouded by rising interest rates and sticky inflation. The rocky stock market debuts of companies such as Birkenstock also showed that investor sentiment remains fragile.
“Despite continued headwinds in financial markets, the world is waking up to the importance of space-based technologies,” Space Capital said.
According to some investors, the sector would benefit from a rising adoption of new technology such as artificial intelligence tools that have helped geospatial companies analyze and interpret space-based images and data more effectively.
(Reporting by Jaspreet Singh and Akash Sriram in Bengaluru; Editing by Shilpi Majumdar)
