2024 has been a momentous year for SpaceTech. We’ve witnessed a series of watershed moments that point towards a number of exciting new directions that the industry is now expanding into. And crucially, it has principally been venture-backed companies that have been at the forefront of these achievements. Both SpaceX and AST SpaceMobile launched their first commercial satellites capable of connecting directly to smartphones, opening up the potential of any smartphone subscriber anywhere on the planet using satellite connectivity to reliably get online. Intuitive Machines became the first private company to successfully land on the Moon, whilst Varda completed the first earth return mission for its in-space manufacturing capsule. SpaceX has continued to dominate the headlines, completing a series of test flights for Starship as it readies for starting commercial operations, alongside the first private spacewalk on the Jared Isaacman-led Polaris Dawn mission.
Against the backdrop of heightened geopolitical tensions, governments around the world have turned to SpaceTech companies to provide sovereign capabilities for enhancing resilience against perceived threats both on Earth and in Space. The surge in demand for these SpaceTech companies has also been reflected in the investment market, with SpaceTech VC activity continuing to outstrip the wider market and record number of SpaceTech companies closing funding rounds over the last year.
As we look ahead of 2025, we expect it to be once again a stellar year for SpaceTech. Below are some of the key trends we predict will play a central role in the year ahead:
Trump & Musk to dominate the Space agenda
Space was at the forefront of Trump’s first administration that witnessed the establishment of the Artemis program, the re-launch of the National Space Council and the creation of the Space Force. Although we will have to wait for policy details, we expect Space to once again be central to Trump’s agenda, boosting demand for both incumbent space/defence primes and new market entrants alike. We also expect to see further sizeable increases in defence and space budgets from Europe/NATO members as a result of Trump’s re-election.
SpaceX stands to be a major beneficiary of Trump’s re-election given the key roles that both Elon Musk and Jared Isaacman are expected to play in the new administration. The tantalising prospect of Starship beginning commercial operations during 2025 could well lead to some huge contract awards as NASA potentially reorientates its plans for the Moon and beyond.
Space Race 2.0 Hots Up
Near-peer rivalry between the US and China will continue to drive both governmental and commercial markets. 2024 has seen a surge in large funding rounds in Chinese SpaceTech companies – primarily from Chinese government backed funds. This saw VC investment in the first half of 2024 into Chinese SpaceTech companies outstrip that of the US for the first time. In the face of China’s increasing assertiveness, we expect the US under the new Trump administration to respond in kind with a more aggressive push by the US government – and in particular the Department of Defence – to support the continued growth of the US SpaceTech ecosystem.
Direct-to-device ready for prime time
Following on from Apple’s recent $1.5bn investment in Globalstar to improve space-based communications for iPhones, we expect 2025 will be the year that direct-to-device satellite connectivity hits the mainstream. With SpaceX, AST Space Mobile, and Skylo all launching direct-to-device offerings in partnership with major telecoms operators and smartphone vendors, 2025 will be the year consumers start to understand the unique capabilities that direct-to-device satcoms offer. We expect to see all major consumer tech companies getting involved in this market – which holds the potential to bridge satcoms into the $trillion terrestrial telecoms market.
Public markets learn to love spacetech again
2024 has seen a significant recovery in the share prices of many SpaceTech companies that went public during the SPAC boom of 2021-22. Several of these companies – most notably Rocket Lab and AST Space Mobile – have now been propelled into the ranks of the most valuable SpaceTech companies in the world. Although we are not quite yet anticipating another surge in SpaceTech IPOs, we do expect investor sentiment to continue to recover during 2025, thanks to the growing importance of SpaceTech to defence, climate and Big Tech alike.
Private markets reaching for the stratosphere, but exits to remain rare
We expect 2025 will be another year of record-breaking investment activity in the private markets. More SpaceTech companies will raise VC funding than ever before. Although the heights of 2021 may not be quite surpassed, we do also expect to see the amount invested by VCs to grow substantially year-on-year. With ever more early-stage companies raising VC funding, 2025 will see whether growth and cross-over investors rediscover their appetite for SpaceTech.
Central to this will be the extent to which liquidity improves. Recent M&A activity has primarily been through the consolidation of incumbents looking to combat the threat posed by SpaceX. Sizeable exits / outcomes for VC-backed companies have to date been few and far between. Whilst we expect M&A to pick up in 2025 as defence primes (and potentially also Big Tech) look to bolster their space capabilities, we expect exit opportunities will remain muted, as the market waits for earlier cohorts of SpaceTech companies to hit the scale and profitability needed to catalyse both M&A and potential IPO opportunities.
