The space industry, like many others, has been significantly affected by the Covid-19 pandemic and it is difficult to overstate its worldwide impact. What does this mean for the state of the ground segment sector? The availability of capital and the ability to work, collaborate and travel freely around the world have been curtailed, in some cases severely, but is there a silver lining on the horizon?
The two most recent economic disruptions, the dotcom bust and the global financial crisis, taught us that some behaviours are predictable during a financial downturn. For example, investors, particularly venture capitalists, may pull back from making new investments and reserve cash for the strongest companies in their existing portfolios, because it may take these companies longer to reach a successful ‘exit’. Financial investors are primarily interested in achieving return on capital, and the mission of the space entrepreneur is a distant second priority.
Compounding this challenge, existing space investors have received limited returns from the billions of dollars invested in the industry over the past decade. As a result, raising capital for space activities will be more challenging for the foreseeable future, especially for capital-intensive endeavours. Moreover, if pre-revenue or capital-intensive companies have not recently raised funds, they may be expected to experience significant challenges as the consequences of the pandemic play out.
