WASHINGTON — Attracting and retaining talent is becoming a bigger concern for the space industry than securing investments, according to early-stage space investors speaking at the Satellite 2022 trade show here.
There are currently about 200,000 job openings in the aerospace sector, according to Michael Mealing, general partner at space investor Starbridge Venture Capital.
“Across the entire sector, the ability to find talent is probably much more important to the ability of companies to deliver than the rest of the economy — what’s going on geopolitically [and the] financial situation,” Mealing said.
He told conference delegates that space companies are being forced to search non-traditional sources for talent, including companies with early retirement programs.
“You’re getting people coming back to this sector who are in their 70s,” he said, while companies are also doubling down on internship programs on the other side of the age spectrum.
“People are just getting creative [and] getting outside of their comfort zones,” he said.
He added that some companies outsourced engineering “to places like Ukraine where they can find new people. That comes with risks, as we’re already seeing.”
Hiring more internationally, leveraging the trend toward remote working following the pandemic, is another route space companies are taking to tackle workforce shortages, said Seraphim Capital CEO Mark Boggett.
“It remains to seen how they’re going to cope with such an internationally distributed workforce when the world comes back to [normality] again,” Boggett added.
Half of Seraphim’s portfolio companies sell to the defense market, Boggett said, and have seen “very significant engagement with customers” in the last quarter amid Russia’s war in Ukraine.
“A number of companies have hit their annual budgets already for the year,” he said.
These companies are trying to hire staff to grow and are “now hitting capacity constraints” to serve this growing demand, according to Boggett.
Emerging funding needs
However, an uptick in demand from defense customers for imagery and other satellite services related to the conflict in Eastern Europe is not reflected in the share prices of space companies that have recently gone public.
The majority of space companies that used mergers with special purpose acquisition companies, or SPACs, to list on public stock exchanges in 2021 continue to trade below their initial listing price despite gains elsewhere in the defense sector.
Michael Collett, managing partner at Promus Ventures, said the ability of a space company to work through workforce, supply chain and other challenges facing the sector will ultimately drive up valuations.
“Execution is always the way out of the bag,” Collett said.
This will be important to get on top of as 50-75% of recently listed space companies will need to return to the financial markets in the next couple of years to raise more funds, noted Phillip Ingle, managing director of Morgan Stanley’s investment banking division.
“In the environment we’re in now, seeing who’s successful and who’s not is [ultimately going to determine] which businesses are successful,” he said.
Companies searching for financing with lower valuations could also see them become targets of acquisitions.
