Op-ed | Blank checks c/o the stars: Market analysis given short shrift as companies cash in on SPAC spree
This time, there’s no moon-or-bust crash program driving the influx of capital. Instead, we are seeing a rush to write blank checks without detailed consideration for what commercial enterprises worldwide value most: the market.
Overnight, or so it seems, space has become “red-hot,” facilitating new financing and exit options for space entrepreneurs and investors. A frequent question is whether this change in market sentiment is a flash in the pan or the beginning of a new, sustainable era?
The urge for exploration and human curiosity combined with an enthusiasm for space will create a large market of public space investors, helping provide the capital fuel for an innovative and growing private space industry.
The merger of in-space transportation company Momentus with a special-purpose acquisition corporation (SPAC) could encourage other space startups seeking large amounts of capital to follow its lead.
Space startups are becoming more acquainted with the U.S. government as a customer and an investor, though the pathways to both remain difficult, a panel of experts said Jan. 14.
In December, Cloud Constellation was finalizing receipt of a $100 million investment that would help the startup deploy a ring of secure data-storage satellites in low Earth orbit. By spring, Cloud Constellation had walked away from the deal, citing a review by the Committee on Foreign Investment in the United States, or CFIUS, as one of the reasons.
The U.S. Treasury Department hasn’t issued final regulations implementing the 2018 Foreign Investment Risk Review Modernization Act, but space industry entrepreneurs already feel the law’s effect.
Virgin Galactic’s merger with a publicly-traded investment company is likely a one-off event based on the company and people involved, and not a sign of more fundamental changes in the industry, investors argue.
Space industry startups used to clamor for public attention. Now, many spend years in stealth mode refusing to disclose even the broad outlines of their plans.
Space startups seeking funding should stay away from increasingly overcrowded parts of the market and instead seek more novel approaches that could offer much bigger returns.
Perhaps the strongest sign to date that the space industry is in some kind of bubble is the creation of Hypergiant Galactic Systems.
Investors continue to fund space startups at an accelerating rate, according to two firms that track activity in the sector.
It should be no surprise that space startups are aggressively pursued by global investors. Properly valuing potential foreign investments requires parsing more than exchange rates.