Space technology sector SPAC deals take off in first quarter

The space technology industry saw an acceleration in the number of announced mergers with special-purpose acquisition companies (SPACs) so far in 2021, with 11 space-related companies announcing they are coming to market via deals with ‘blank check’ vehicles. 

In total, the first quarter has seen US$7.2bn of intended funding for the space sector, compared to US$7.7bn for the whole of last year, according to research by , which managed the Seraphim SpaceTech Index.

Confirmed deals in the quarter included Rocket Lab USA announcing a merger with Vector Acquisition Corp (NASDAQ:VACQ) in a deal valuing the small rocket launch company at US$4.1bn; satellite group Spire Global combining with NavSight Holdings Inc (NYSE:NSH) in a deal valuing its at roughly US$1.6bn; and follow satellite operator BlackSky, which is reversing into Osprey Technology Acquisition Corp (NYSE:SFTW).

“It marks a ‘watershed moment’, and a belief that the transformative potential of SpaceTech is now becoming accepted within the investment community with SPACs as the main means of accelerating their ability to access the capital required to realise their visions,” said Seraphim.

Andrew Chanin, co-founder and CEO of ProcureAM, which launched the first space-focused ETF, agreed.

“The space industry has historically had difficulty raising capital. However, the space SPAC boom helps create a healthier funding environment for companies and brings heightened attention to the sector,” Chanin said.

Overall venture capital investment into the sector in the last year was 95% higher than in the 12 months prior to the COVID-19 pandemic, according to the analysis, when  () was one of the first SPAC mergers and the first space company.

Europe has continued to close the gap on North America in terms of average deal sizes, thanks to significant transactions including large deals such as for London-based OneWeb and Volocopter.

Venture investment in the space sector this year looks set to reach another record, with $2.7bn closed in the first quarter compared to $1.6bn in early 2020 and the third consecutive quarter where total investment has been above $2.5bn. 

“We believe ‘spacetech’ is at the nexus of mega-trends that will define societal change over forthcoming decades and has a unique role to play in addressing the world’s most pressing problems,” said James Bruegger, Seraphim’s chief investment officer. 

“Radical advances in the space sector mean a data and connectivity tsunami is about to transform the world as we know it, driving the next major paradigm shift in the global economy.”

Chanin said that while most of the companies going public are “very traditional space companies”, such as launch and satellite operators, he sees room for some other new categories to go public, such as manufacturing in space, and has mooted in the past the expectation of seeing space mining companies come to market.

He said recent interest in space ETFs is a positive indication the public market is “ready to take the space economy seriously in the way that it deserves”.

But looking forward, he said one potential hindrance of space SPAC deals going through may be government interference, with national security continuing to be a top priority among global superpowers.

Investing in the space sector

Investors wanting to invest in space companies can do so via an ETF, or directly via a small handful of space specialists or some larger aerospace and satellite companies.

The first specialist ETF was the  (), which floated in 2019, and it was recently joined by Cathie Wood’s ARK Space Exploration & Innovation ETF (BATS:ARKX). They have very different portfolios but some crossover in their holdings such as aerospace giant and software company Trimble. 

Elon…