MOUNTAIN VIEW, Calif. — Space startups have long been urged not to try to complete directly with the industry’s current behemoth, SpaceX, but investors and others recommend new ventures not try to emulate its way of doing business as well.
SpaceX’s dominance in the launch market means there’s little room for new entrants, particularly given the track record other startups have had in the sector, said investors and startup executives during a panel at the Smallsat Symposium here Feb. 5.
“No offense to the 183 launch companies that I’m tracking on my website, but that’s not the future of the space industry,” said Meagan Crawford, founder and managing partner of SpaceFund, a venture capital fund that offers databases of companies in the launch industry and other sectors. “The question is, what’s being launched?”
Concerns about competing against SpaceX in launch or other areas are heightened now that the company’s founder and chief executive, Elon Musk, is playing a prominent role in the new Trump administration. “If I was an investor, I would be wary of any company that was going to be competitive with SpaceX,” said Christopher Thein, chief executive of EOI Space, an imaging company, “because it seems like there is a leaning that way for this administration.”
“Nobody’s going to be competitive with SpaceX anyway,” Crawford added.
The panel, though, said that even companies that are operating in different markets should avoid copying one of SpaceX’s hallmarks, its heavy use of vertical integration. While that approach has paid dividends in allowing SpaceX to control cost and performance, it’s not an easy model to follow.
“It sounds great, but you’re just adding to your capital needs,” said Noel Rimalovski, managing director of GH Partners. “If you are going for full vertical integration, you are basically consolidating all of the problems of the industry in your own house.”
To those who say it worked for SpaceX, he added, “my response would be, do you have infinite access to capital?”
“I think a lot of people fall into this trap of pointing to SpaceX and saying, well, SpaceX is far and away the most successful business in space, we should just do everything like they do,” said Ari Juster, chief operating officer of satellite servicing startup Starfish Space. “When you go for full vertical integration, the capital hill you have to climb even to get to a minimum capability that you can deploy in space is dramatic.”
Investment trends
There is room for companies to compete, if not head-to-head with SpaceX, then in adjacent areas. Juster pointed to Stoke Space, which raised $260 million in a Series C round in January to continue its work on a reusable launch vehicle. Its medium-class rocket, he argued, “targets a slightly different market than what SpaceX is focused on with some of their launch plans.”
That round is part of an upswing in interest in the industry, particularly for larger growth rounds. He said there was a period from late 2022 into 2024 where there were few such rounds “that didn’t have really weird terms attached to them or weren’t obvious bridge or down rounds.”
Muon Space raised $56.7 million in a Series B round in August 2024 to fund its work on smallsats for Earth observation and other applications. “It was pretty straightforward finding traction and getting to a term sheet in just over eight weeks,” said Greg Smirin, president of the company.
The challenges, he said, involved investors still “trying to make sense” of the industry and dealing with the aftermath of the previous investment cycle marked by companies going public through special purpose acquisition company (SPAC) mergers. “Our experience is that SPACs don’t help because it encourages companies that are pretty early on in their life to go public.”
Peter Beck, chief executive of Rocket Lab, said in a keynote at the conference the previous day that the earlier SPAC-fueled boom was good overall for the industry. The panel, though, had mixed feels about that wave.
“It’s always a bad thing when folks take in a ton of money — and a lot of times SPACs were raising hundreds of millions of dollars — and they don’t have much to show for it and investors got burned,” said Rimalovski. “Investors need to have a return on their capital to want to reinvest in the industry.”
“It’s very easy to say this was great for everybody when you’re looking back as you’re leading the pack,” Crawford said of Beck’s comments. However, she said the SPAC boom did help raise investor awareness of and interest in the industry, citing emergence of exchange-traded funds focused on space as well as discussion groups about space stocks.
“That didn’t exist five years ago, so this first blood in the water, if you will, has gotten the sharks to get a taste for space stocks,” she said. “That’s probably the biggest benefit that’s come out of it.”
She said she was looking forward to the planned initial public offering (IPO) of stock by Voyager Technologies, which confidentially filed paperwork with the Securities and Exchange Commission in January to go public. That could lead to other established companies to go public through that more traditional approach.
“That puts capital back into the venture funds that invested in them early,” she said, providing a return to the funds’ partners and encouraging them to invest more in new funds. “Now the next fund becomes larger, so the VC can go back and do those B and C rounds for more and more companies.”
