SpaceTech continued its momentum in Q3 2025, with a record-breaking $3.5B invested and a widening spread of deals beyond the usual giants. In our latest Seraphim Space Index webinar, host Leah Martin spoke with analyst Jeff Jiang about defence-driven demand, the rise of dual‑use startups, geographic shifts (US, Europe, China), and what segments, from direct‑to‑device to life sciences in microgravity, could power the next wave.
Transcript below.
Leah: Jeff, some really impressive findings from the report. It was recorded as $3.5 billion in SpaceTech investment. What do you think were the main drivers behind this growth compared to last quarter?
Jeff: The past couple of years have been kind of crazy for SpaceTech. In 2024 we hit a new record for total number of deals, around 600 and this quarter was the highest invested‑capital quarter yet. In 2024 we got $8.6 billion of total capital invested into space, and with this quarter included we’re already at $8.7. I think the year is going to end on a really nice high.
Jeff (cont.): In terms of drivers, the biggest is defence. The war in Ukraine, US–China dynamics, and programmes like the US “Golden Dome” are driving interest in defence, and space is a huge component of that. Governments are increasing both demand and spend for all things space.
Jeff (cont.): In the EU there’s been a budget increase focused on sovereignty and reducing dependence on external powers, with Germany leading with a pledged €35 billion for space‑related defence projects by 2030. NATO allies have pledged 5% of GDP on core defence requirements, and space is a big part of that. Beyond defence, general investor sentiment is strong, there’s a lot of appetite from private and public investors.
Jeff (cont.): We’re also seeing real demonstrations of commercial viability from big players. Across Europe, especially Germany, there were so many announcements around large defence spending that impacted companies
Leah: You also reported that historically funding was concentrated in larger players, like SpaceX, but now it’s spreading across smaller companies and a wider range of sectors. Can you explain?
Jeff: It’s good news to see more investment spread across companies rather than concentrated. More players means greater competition and innovation, leading to stronger startups. It’s great for customers, too, better prices, more choice, greater efficiency.
Jeff (cont.): From an investor perspective, I’m seeing money flow to up‑and‑comers, not just the big names, greater risk appetite, which is good. As one of the first SpaceTech VC funds, we historically worried SpaceX or OneWeb might soak up investment and government contracts. It’s good to see that’s not necessarily the case. Back in the day, “space is booming” often meant “SpaceX is booming.” Now we can say the whole space sector is booming.
Leah: How do you think SpaceTech compares to other sectors? We like to say SpaceTech will eventually be bigger than AI, what’s your take?
Jeff: There are similarities and differences. Both are in‑demand, with lots of investors jumping in, some not necessarily deep‑tech specialists. We’ve seen hardware startups we passed on as not physically feasible still get funding. There’s hype in both markets.
Jeff (cont.): Each has more developed areas. In space: Earth observation and satcoms are more mature than, say, the in‑space economy. In AI: NLP is more developed than physical automation like robotics. Investors are also backing “picks and shovels.” In AI, NVIDIA’s GPUs attract capital; in space, materials and components do, too.
Jeff (cont.): AI is a huge market, ccounting for a big share of capital in 2024, whereas SpaceTech is smaller. Space often sells to governments (B2G), with long procurement and development cycles. The flipside is more consistent revenue via multi‑year contracts. You need to be a patient investor. Anecdotally, our share price has been increasing for some time, showing investor demand for exposure to space and our portfolio.
Leah: Let’s talk geography. The biggest round this quarter was by Galactic Energy, a Chinese , at $336 million. Is that government‑backed?
Jeff: That one is more commercial. You’re not wrong to associate China’s space economy with the government, historically it’s been government‑backed. Up to 2014, essentially 100% of space activity was done by state‑owned companies. They’ve opened up more since, partly due to the US–China space race.
Jeff (cont.): China invests more long‑term with a clear vision of capabilities, aiming to be dominant in space. In the US, the government provides more contracts than direct investment; the private market is expected to fund early‑stage companies. In the EU, the play is sovereignty, replacing dependencies and plugging ecosystem gaps.
Leah: Our defence white paper from earlier this year showed the number of satellites the US and China put into space compared to Europe was striking. Would you say China is where the US was four to five years ago?
Jeff: The US likely still has a slight lead, but China is definitely catching up, fewer deals, higher value.
Leah: We’ve got a question: what’s your opinion on the AI bubble bursting?
Jeff: The AI market is frothy. We’re seeing companies with little to show raising at $30–40 million valuations. There are overvalued opportunities, and you see that in public markets as well. Some investors are shorting tech indices they view as overvalued. I expect a pullback at some point. Space shows similar patterns at times, with external investors who may not fully grasp feasibility writing checks. That said, many VCs are chasing the same deals; we believe overlooked, credible founders are still raising at reasonable valuations, it’s our job to find them.
Jeff (cont.): Seraphim sees over 75% of global SpaceTech deal flow, so the opportunities are there. On defence: increased spending lets companies win big government contracts now, and when conflicts end they can lean back into commercial roots supporting climate, sustainability iniatitivies, and more.
Leah: Let’s talk public companies, Planet Labs, Rocket Lab, AST, for example. What’s your view of public markets right now?
Jeff: Public markets have been coming back to space. There were three IPOs this year, Karman earlier, Voyager, and this quarter Firefly and they debuted above their listing price. Appetite for SpaceTech seems strong.
Jeff (cont.): Rocket Lab and AST had great share runs this quarter. Investors now want fundamentals, not just a cool story. Rocket Lab recorded record revenues in Q2; we’re still awaiting their Q3 numbers. Planet Labs is seeing strong demand. AST announced a partnership with Verizon to provide direct‑to‑device services starting in 2026, which helped the stock. In DOD, SpaceX’s Starlink acquired EchoStar spectrum this quarter to build DOD capabilities. Investors see huge revenue opportunities in the space.
Leah: So is the IPO market back open for business?
Jeff: Maybe not wide open, but there are cracks opening. I’m excited to see who goes public in Q4 and next year.
Leah: Which segments will drive growth next? We’ve covered defence, anything else?
Jeff: Defence and dual‑use companies in the short term. Also satellite networks, especially direct‑to‑device, there’s a lot of activity and opportunity.
Leah: What’s under the radar now that could be big later?
Jeff: Life sciences in space. The economy and tech are still developing, but microgravity enables drug discovery and development results you can’t replicate on Earth. That could have huge impacts on human health.
Leah: Science fiction turning into science fact!
Leah: Can you share companies, inside or outside our portfolio that are benefiting from dual‑use capability?
Jeff: In our portfolio, ICEYE is benefiting from increased defence demand, working with national defence forces to provide insights. Outside our portfolio, companies like Hadrian or Hermeus are providing key capabilities for the US government.
Jeff (cont.): A large percentage of our portfolio is US‑based. We’re seeing companies that were commercial‑first return with decks that are now defence‑focused. It shows how aligned many SpaceTech offerings are with defence demand. Market size slides that once put defence second now make it the main market.
Leah: Finally, for investors and stakeholders watching, what are your key takeaways from the report? What should new investors looking at SpaceTech focus on?
Jeff: Short term, defence is the biggest driver; the market is growing. If you’re looking at hard tech, do deeper technical diligence, don’t invest in something physically infeasible. Watch go‑to‑market: governments say they have money, but procurement is slow, and if you’re not from the right country you might be locked out. Look for teams that can navigate these challenges and keep an eye on life sciences.
Leah: Amazing. Thanks, Jeff. And thanks to everyone watching. We hope this gave you a picture of the incredible movement in the industry. Keep an eye out for the next index and our socials, the news across our portfolio is huge. If you’ve got more questions for Jeff, post them on our LinkedIn and he’ll jump in post‑live.
Q3 2025 underscores a pivotal point for SpaceTech: record funding, broader participation, and real demand from defence and commercial buyers. Whether you’re here for satellite networks, dual‑use software‑plus‑hardware, or the frontier of microgravity life sciences, the signals are clear, momentum is building. Watch the embedded webinar for the full discussion, and subscribe to catch the next Seraphim Space Index update.
