Viable space business models solve government problems

The Dish

Investment in space in 2022 dropped 58% from a record $47.4 billion in 2021, causing space and connectivity stocks to plummet, but with stocks on the rise in 2024, commercial space firms want to capitalize.

Investors are drawn to the space market because they find it inspiring, but the pre-pandemic surge in space investment in 2020 was followed by a down cycle in 2022 caused in part by interest rate hikes, Kirk Konert, managing partner at Boca Raton, Fla.-based private equity firm AE Industrial Partners, tells Connectivity Business News in this episode of “The Dish” podcast.

“What happened was, you had a lot of new capital flow into the venture part of the space market and some of the growth stage in 2020 and 2021, maybe early 2022, when money was free and a lot of capital was available,” he says, adding that the trend also spanned other newer markets.

Konert tells CBN that it could be another decade before the private space sector’s potential materializes.

“I do think people overpromised on the commercial opportunity [in space],” he says.

With investment in space slowly picking up, now is the time for companies to be strategic with their business models, responding to existing customer needs, Konert tells CBN.

The most important customer is the public sector, he says.

“The biggest buyer of space assets and technologies is the U.S. government and foreign governments around the world,” he says. “To have a viable business model, you need to make sure that you’re solving their problems.”

Ultimately, commercial space is headed in a positive direction due to the high demand for data that only satellites can deliver, Konert says.

Applications for commercial satellite data, particularly in the national security sector, are putting institutional investors on notice, Konert says.

“Valuations might be different than they were a few years ago but there’s still some really interesting business models to fund,” he says.