Investors invested $2.5 billion in the companies

Private investment in space companies declined in the second quarter due to broader economic and market headwinds, but was partially rescued by Elon Musk’s SpaceX funding round, according to report Thursday New York-based Space Capital.

Space infrastructure companies raised $2.5 billion in private investment in the second quarter, including SpaceX’s recent $1.7 billion, the bulk of the total. The quarterly figure represents a 45% drop from the same period in 2021, a record year for space investment.

Space companies, especially those that have recently gone public, have had a rocky first half of the year as investors turned to technology and growth stocks. The space economy has not been immune to rising interest rates, inflation, or supply chain disruptions.

According to the report, capital has also largely been left out — at least temporarily.

“While we believe the macro environment will continue to pose a hurdle for some space companies, we do not believe the space economy is at risk,” Space Capital Managing Partner Chad Anderson wrote in the report.

“Space technology is the next generation of digital infrastructure, the ‘invisible foundation’ that holds our global economy together,” Anderson said.

Satellite technologies such as imaging and communications account for about 90% of total annual investment in the space economy and “already play a critical role in most major industries,” Anderson writes. The remaining 10% is poured into companies that make equipment such as rockets and spacecraft.

In total, Space Capital tracks 1,727 companies that have raised $264 billion in global equity investments since 2012.

The report also highlights that investments in “emerging industries” consisting of companies operating in orbital stations and industrial plants, space logistics and lunar services have shown “steady growth over the past decade”, raising $2.7 billion over the period.

While the subsector remains in its infancy, SpaceX’s planned giant Starship rocket represents a key tool for Emerging Industries companies that could further reduce the cost of orbit, according to the report.

Crucially, SpaceX continues to “challenge the consensus,” Anderson wrote in the report, and should be able to raise large amounts of funding going forward, “despite current market conditions,” which will drive the nascent Emerging Industries subsector.

“Just like a Falcon 9 [rocket] did 10 years ago, Starship will further reduce the cost of launching into orbit,” Anderson wrote.