MOUNTAIN VIEW, Calif. — The previous wave of investment in the space industry resulted in funding of “silly” ideas but was “fantastic” for the industry overall, the chief executive of Rocket Lab argues.
In a video keynote at the Smallsat Symposium here Feb. 4, Peter Beck defended the wave of deals in the industry that include companies going public through special purpose acquisition company (SPAC) mergers even though many of those companies have since faltered.
“The SPAC frenzy was a crazy, crazy time,” he said. “Truthfully, a lot of companies went public that just should not have.”
However, he argued that experience has been useful for the companies like Rocket Lab, which went public through a SPAC merger in 2021, that were able to make it through what he called “the great filter,” as well as for the industry as a whole. “That whole thing was crazy but actually fantastic for the space industry because it injected large amounts of capital into the industry.”
The same was true for the overall wave of investment that included venture investments in space startups. “A lot of private companies got funding for projects that I looked a bit cross-eyed at,” he recalled, “and large quantities of capital.”
“At the end of the day, you can look at it two ways. One is, what a waste of capital,” he said. “But, I generally believe that, even into silly ideas, great people were developed, some new technologies were developed. It wasn’t a total loss in most cases.”
“What you’ve ended up with is a much higher quality of company across the board, both public and private,” Beck concluded, adding that as investment is picking up again in space, “investors are far more discerning this time.”
Beck also in talk predicted consolidation for companies of all sizes in the space industry this year, but for different reasons. At one end, large “legacy players” in the industry will feel compelled to consolidate to remain competitive. “The environment of the space industry continues to move in a more commercial direction and a less government-subsidized approach, so to be competitive I think there will be some consolidation and some change within some of the larger legacy players.”
At the other end, small companies may feel the need to combine to fuel their growth. “If you’re a small company and someone turns up and gives you a giant order of some kind, it’s really hard to build the infrastructure to scale and scale quickly,” he said. “One of the ways that you can do that is to combine with a company that already has that scale and infrastructure and create value for both parties.”
Companies in the middle may also consolidate to move into the tier of large companies. “It’s always an option to combine a few mid-caps together to build something a little bit bigger and gain some efficiencies there.”
Beck did not say if Rocket Lab would be one of those companies looking to grow through acquisitions this year. Rocket Lab has bought several companies in the last few years to help it grow its space systems business, a process aided by going public. Those public markets have come to approve of that approach: Rocket Lab’s share price, which as recently as October remained below $10, closed Feb. 4 at $28.68.
“The great thing about public markets is that they’re very efficient,” Beck said. “If you do a good job, you get rewarded. If you don’t, you get penalized. You can’t make excuses in a boardroom. The public markets are pretty ruthless.”
