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SpaceTech Investment Trends: An Interview with Filip Kocian, Consultant in the space sector, early-stage investor at Golem Ventures Space

About Filip Kocian

Filip Kocian boasts nearly 5 years of experience in the space sector. He is recognized for authoring the annual Space Funding Dynamics Report and serves as an investor at Golem Ventures Space. His primary interest lies in financial tools for space companies and investing in space applications for large terrestrial markets.

September 16, 2023

Dear Mr Kocian, сan you provide an overview of the current landscape of the investment market in space technologies? How has it evolved over the past few years?

Overall, venture-backed space companies are in a much different and more positive situation than they would be five or ten years ago. Space is now considered a legitimate part of VC investments, a much broader set of investors participate in space deals. The VCs are present from the angel to growth stage and the latter end is overall getting more liquid (via M&A often from defense primes but also other startups). The volume of inflows in the space industry multiplied several times over during the last decade - with the exact numbers largely depending on the methodology.

For example, in Europe, the number of 100M+ space-focused VCs went from close to zero to around 5 in the last five years. I take it as a sign that institutional players (and governments) are willing to support venture-backed space startups. As noted in the next question, something has not been doing that well.

What are some key trends you’ve observed in terms of investor interest and funding patterns within the space technology sector?

I cannot go about without saying that the investment space landscape has been greatly influenced by the market downturn in 2022. While I think that some of the public figures about the space investment downturn aren’t well representative as they over-index growth stage funding in the applications sector, the effect has definitely been notable.

I think the major change is the investor’s perception of risk. A combination of harsh solar radiation activity and an increase in the inherent cost of capital, investors recalibrate their risk appetite. Together with multiple cases of recent high-level satellite technology failures, startups have now a higher ground to stand up to.

Space technologies encompass a wide range of areas, from satellite communication to exploration. Which specific segments of the space technology market are attracting the most investment and why?

There are three large areas of space applications - GNSS, EO and Satcom. Historically, most of the investments flew into micro launchers, upstream EO mostly in the optical spectrum and some satellite connectivity segments. As space-focused funds raised larger funds and the traditional sectors became more crowded, investors naturally looked for novelty areas. A lot of the resources now flow into satellite software, space situational awareness and EO startups with new instruments and business models.

Another area gaining much popularity is in-space infrastructure - preparing the base ground for other businesses to operate in beyond LEO - in GEO and Cislunar. As none of these are proven markets, I personally would assess this with a degree of caution.

Space exploration is not really a valid revenue source - it is an addressable market for some venture-backed companies (satellite manufacturers /mission operators) but not a standalone business segment

How can we attract more attention to cybersecurity challenges that meet the Space technologies sector, and what could you recommend to startups that develop cybersecurity solutions for SpaceTech?

As mentioned, investors are now more risk-aware. Especially for startups targeting defense and intelligence customers, cybersecurity is a critical risk to be aware of - and going forward, it will be definitely an issue difficult to avoid during the Due Diligence.

My understanding of space cybersecurity is not strong enough to give advice to anybody. From an investment perspective, I absolutely see the importance of space cybersecurity, but it is crucial for those startups to have a sensible plan on how to deliver a 10x return in 7 years. There are multiple startups addressing the need of space companies for cybersecurity solutions - I personally have yet to see a good way to respond to the VC formula. For startups, keeping the cybersecurity function in-house is definitely an alternative.

Author: Nessa, Cyber Journalist

Photo: Fillip Kocian/The Sign

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