The US space industry has suffered a significant setback, as investments in the sector fell by 53% to $2.2 billion in the first quarter of 2023, the lowest funding quarter since 2015, Reuters reports.
The decline has left many space companies vulnerable, especially after the failure of Silicon Valley Bank, a major provider of venture debt.
Silicon Valley Bank Collapse Contributed to Decline
According to Space Capital's report, which followed 89 space companies, the failure of Silicon Valley Bank contributed to the current challenging market conditions.
Virgin Orbit Holdings Inc, founded by Richard Branson, has already filed for Chapter 11 after six years in the industry, indicating the significant challenges many companies in the sector face.
The report by Space Capital also highlighted the apparent "dichotomy between the winners and everyone else" in the rocket manufacturing industry.
According to the report, only two operational companies are among the 100+ launch companies that have raised $27 billion in funding over the last decade: SpaceX and Rocket Lab.
Investors Avoiding Risky Space Investments
Deutsche Bank analyst Edison Yu tells Reuters that the risk threshold for investing in space companies used to be much higher. However, given recent market uncertainty, investors may be less risk-loving, and space being a nascent sector, many are dialing back.
Read also: NASA's Multi-Million Neutral Buoyancy Lab Transformed Into Underwater Lunar Surface Replica: Why?
However, according to Space Capital, companies associated with the National Aeronautics and Space Administration's Artemis mission to the Moon are seeing increased interest.
According to Yu, the public institutional investment side is not particularly interested in the lunar economy. However, based on his conversations with companies, he believes there is a lot of potential in the lunar economy.
Reviving the US Space Industry
The current state of the US space industry is concerning, but the potential of emerging space-related industries cannot be overlooked. Despite the challenges, the Artemis Moon mission, which aims to send astronauts to the lunar surface by 2024, may provide a boost to the sector.
Just recently, European Commission shared plans to start negotiating with private American space companies like Elon Musk's SpaceX to launch the new Galileo satellites due to continuing delays in Europe's next-generation Ariane rocket system.
Politico reports that the Commission is planning to seek approval to negotiate "an ad-hoc security agreement" with the US for its rocket companies to "exceptionally launch Galileo satellites."
In related news, Elon Musk's SpaceX successfully launched its Starship rocket for the first time on Thursday, April 20, from the company's Boca Chica, Texas facility.
The Starship rocket is the largest and most powerful rocket ever built, standing 160 feet tall and weighing approximately 1,500 tons. It was intended to eventually transport humans and cargo to destinations such as the Moon and Mars, with a capacity of up to 100 people at a time.
Stay posted here at Tech Times for the latest updates on technology and more.
Related Article : [LOOK] NASA Debuts Sleek, Next-Gen Spacesuit for Spacewalking!
