Space VC Fundraising in 2024: A slow but steady rebound

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Despite a difficult macro environment, the space venture capital (VC) sector continues to see capital inflows in 2024. While the overall VC fundraising landscape remains challenging, space-focused funds and those with significant space sector exposure continue to raise with many notable public announcements already in the year to date.

According to the Space Impulse Market Intelligence Platform, around $12 billion was invested in the global space economy in 2023, a 25% drop from 2022 and a significant decrease from the $21 billion peak in 2021 as higher interest rates reduced investor risk appetite. However, in Q1 2024, there was a slight uptick in general VC fundraising, with around 100 new VC funds established, reportedly raising $9.3 billion. This signals a slight improvement in overall VC funding conditions as inflation gets tamed and interest rates stabilize.

Several prominent space investment firms have capitalized on the upswing by announcing new fund closes in 2024, as reported by the Space Impulse Market Intelligence Platform:

Space VC Fundraises in 2024.
Space-Focused VC Fundraises in 2024. Source: Space Impulse Market Intelligence Platform

Space.VC

The micro-fund, led by Jonathan Lacoste closed a $20 million Fund II to make 15-16 investments of $500,000-$1 million in frontier tech founders. This is a significant increase from Fund I, which closed at $3 million.

Seraphim Space

The leading UK space tech investor announced the formal launch of its most recent venture capital fund, Seraphim Space Ventures II. The size of the fund was not publicly disclosed, but market rumours have it that the first close came in lower than the initial target of $100m, and a significant number of assets have been rolled to the new fund.

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SPARX Group

The Japanese firm established the “Space Frontiers Second Fund” which has already garnered support from seven Japanese LPs, including Toyota, MUFG Bank, Mitsubishi, Mizuho, Sumitomo and the Japanese Development Bank. The fund boasts a capital backing of approximately $70 million.

American Dynamism

Andreessen Horowitz’s fund recently announced $7.2 billion in funding, with $600 million being allocated to the American Dynamism fund. This fund will back frontier tech firms, including those in the space sector. The firm has previously invested in and tends to focus on Space companies with at least a software component.

Toyota Ventures

The early-stage venture capital arm of Toyota, launched two $150 million funds to expand its investments in startups developing disruptive technologies and business models at the forefront of innovation. The addition of the new funds, Toyota Ventures Frontier Fund II (TVFF II) and Toyota Ventures Climate Fund II (TVCF II), brings the firm’s total assets under management to over $800 million.

OTB Ventures

The Amsterdam-based firm closed a €170 million fund to fuel European deeptech innovation. The dedicated Deep-Tech fund, which is the largest VC with roots in Central Eastern Europe, will invest in four core verticals across Europe; SpaceTech, Enterprise Automation & AI, Cybersecurity and FinTech Infrastructure.

Alpine Space Ventures

The prominent VC fund that focuses on early-stage investments in the space sector announced a €10 million investment from the NATO Innovation Fund (NIF). The strategic fund-of-fund investment will boost Alpine Space Ventures’ ability to back the development and deployment of innovative space technologies, reinforcing Europe’s security and resilience capabilities in both government and commercial sectors.

Stifel and ASTRO America

Stifel Financial, through its subsidiary North Atlantic Capital, and ASTRO America have jointly launched a pioneering private equity fund under the DoD and Small Business Administration’s Critical Technologies Initiative. This initiative aims to attract private capital to critical defense technologies like additive manufacturing. The Stifel-Astro America fund is the first of several expected funds financed by the Office of Strategic Capital. It allows participants to borrow up to $2 in government-supported loans for every $1 of equity raised, capped at $175 million.

Expansion Aerospace Ventures

The European venture capital fund announced that it had raised a first close at €100 million, with an ultimate target of €300 million. The fund was launched to support European New Space and New Air Mobility companies from seed rounds up to Series A and B funding rounds.

The continued fundraising efforts show steady investor interest in the burgeoning space industry, despite lingering economic headwinds. However, challenges remain around the industry’s image (not helped by the poor performance of Space SPACs) and inflated valuations from insider-led rounds. While a full rebound may not be imminent, experts agree the conditions are improving for a cautious recovery in space investment this year.

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