Investors have pumped nearly $1 billion into aerospace start-ups this year

You guys like rockets?
You guys like rockets?
Image: AP Photo/Donna Blankinship
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A US space radar company raised $13 million. A Chinese satellite-maker garnered $22 million. A European rocket-builder took in $35 million. Heck, a plan to send a robot to the moon received a $5 million capital injection.

And that was just July.

Money is pouring into start-ups making spacecraft, aircraft, or building businesses around them; this year, financial data firm Preqin tracked venture investment totaling $927 million in the sector through July 26. It’s an industry dominated by enormous public conglomerates like Boeing or Airbus, but venture investors are increasingly ready to take the risk that a disruptive new entrant can out-hustle the big players.

Technological advances that make it cheaper than ever to design, test and build sophisticated hardware are part of the story—the same tools that make autonomous cars feasible for start-ups do the same for planes and spacecraft.

But the business models for aerospace companies, which traditionally rely on big government contracts or major global airlines as customers, are less clear. Some, like Elon Musk’s SpaceX, hope to compete directly with the establishment. Others, like earth imaging company Planet, are trying to create new markets for data collected in space. New “flying car” companies want you to live the 1960s vision of the future today.

The last time tech investors got excited about space, in the midst of the 1990s tech bubble, they got burned. Is this time different? Judging by the flow of capital, some investors think so.

The bulk of the new space companies are youthful and privately held, so it’s hard to say whether they will gain traction or sink into the mire. Some truly aspirational businesses, like the asteroid mining venture Planetary Resources, are having trouble plotting a path to profit. Others, like Swarm Technologies, have taken an Uber-like approach to regulators, and find themselves in limbo.

But that’s what makes venture capital venture capital: If their goals were easy, the rewards would be far smaller.

Still, the visionaries are interested: The chart above doesn’t reflect the investment of billions of dollars in the space firm Blue Origin by founder Jeff Bezos, the world’s richest human (on paper). If the commercial marketplace fails, the far-thinking entrepreneur could well sustain the private space industry himself.