Industry overview: spacetech
The spacetech industry is thriving. For decades, space innovation was dominated by governments and competition between countries, however, in more recent history, space is being increasingly commercialised. Innovative startups, companies, and investors have grown in the sector, allowing for a ‘New Space Economy’.
According to dealroom, the global space sector clocked in at more than $469 billion in 2021 – over two and a half times its 2005 value of $180 billion. Looking ahead, forecasts put its annual growth as high as 11% through to 2030.
As the industry is so fast-paced, as is the rate of innovation being seen in the space, there is so much potential. So what is the current state of spacetech, and what can be done to ensure this industry stays on this trajectory?
Spacetech
Before we begin, let’s define what is meant by spacetech.
The space sector is often divided into two different categories: Upstream and Downstream. Upstream activities focus on developing and providing space technology and infrastructure, including the manufacture of satellites and rockets, while Downstream activities focus on utilising space data and services, such as telecommunications and Earth observation.
Upstream space activities include:
- Research and development: applied research into space technology, and the development of new space systems and applications
- Space manufacturing: the manufacture of satellites, rockets, and any other space-bound hardware
- Launch services: the provision of transportation services of space hardware to orbit
- Ground systems: the development and operation of the ground infrastructure that supports space missions
Downstream activities include:
- Satellite communications: using satellite-based communication services for various applications, such as television broadcasting, telecommunications, and mobile phone networks
- Earth observation: the use of satellites to collect data about Earth (such as the surface and atmosphere) for weather forecasting, environmental monitoring, and resource management
- Navigation: using satellite systems, like GPS, to provide location and navigation information on Earth
- Space science: using space-based instruments to study the universe, which can provide new insights into the origin and evolution of the cosmos
Both types of activities are important in spacetech, but it is important to know the difference, and how they position themselves can impact startups working in the space.
Funding
Spacetech is an R&D and capital intense industry. To be able to even get to the point of sending something into space, a lot of money has to be poured into the development of the technology. This is where external funding comes in, as it can be almost impossible to bootstrap a spacetech startup.
According to PitchBook in June 2025, spacetech funding is looking to surpass 2024’s total. According to its data, VC investment in the spacetech sector had reached $3.3 billion by June, which sets to reverse 2024’s funding dip (which saw $6.6 billion invested in the sector for the entire year). However, an interesting statistic has risen out of this research, with the assumption that the deal count in 2025 could be lower than the previous year, as most capital in the space is going towards more mature startups. As of the 24th June 2025, late-stage deals accounted for 41.3% of spacetech VC deals, up from 39% in 2024. The market seems to be transitioning from taking risks on early-stage startups, to putting more money into the established businesses in the sector.
When it comes to how venture capital funding is being shared out amongst the countries, Space Capital has some statistics that paint an interesting picture. Since 2020, 62% of equity investment in the spacetech sector has gone towards companies in the USA, equalling to around $107 billion. The second most funded country in the space is China, totalling at around $22 billion, which takes 13% of the funding in the sector. After this, no other country tops taking 3% of the funding. Whilst billions are still being pumped into ecosystems around the world, it is very obvious where investors are setting their sights.
Spacetech and defence
I think it’s hard to discuss the spacetech sector without discussing its ever-growing intersection with defencetech.
Spacetech has swiftly cemented itself as a key element in today’s defence strategy. As geopolitical dynamics continue to evolve and calls for sovereign security intensify, spacetech offers a pathway to bolster defence positioning, assert strategic autonomy, and enhance resilience against an increasingly unpredictable threat landscape.
In one of the profile pieces in this issue, Neil Buchanan, Co-Founder and CEO, Lodestar, points out: “When you understand that whoever controls space controls Earth.” With this view, spacetech is becoming more important in a world where space is becoming a brand new war-fighting domain.
Looking at defence can be a strategic move for companies right now. With raised political tension, and conflicts around the world, money is being poured into the defence sector. And this isn’t just by venture capitalists. Government agencies are upping defence spending, and investing in the next wave of defencetech startups, which also includes grant funding being awarded. In 2024, global governmental expenditure on space programmes surged to $135 billion, up 10% from the year before, which is set to continue to grow. The primary driver of this extra spending was rising defence budgets.
When it currently looks like funding in spacetech is going more towards the established players, companies are starting to look at how their technology can be applied to defence in order to unlock this potential funding. Companies that once prioritised commercial applications for their space technology are making full pivots to defence. However, the current sweet spot looks like a balance between the two. With dual-use technology, startups can capitalise on defence and commercial budgets. Companies that maintain this balance benefit from multiple revenue streams, increased resilience to market fluctuations, and the flexibility to shift emphasis as commercial demand evolves.
The future of spacetech is looking truly bright. With startups democratising access to space, making it easier to get travel around, as well as creating space-based solar panels to power electricity on Earth, there is so much potential.
As the sector grows, and more space activity happens, life here on Earth will be so much more exciting.
This article originally appeared in the July/August 2025 issue of Startups Magazine. Click here to subscribe
