Starburst Insights Reveals New Era in Aerospace as Start-ups Close $551M in Venture Capital in the First Quarter of 2017
"Expect more unicorns as the next generation of Elon Musks gains traction," says Starburst CEO Francois Chopard
LOS ANGELES, Calif. - September 28, 2017 - A new report released today from Starburst Insights, the investment briefing and report service from the leading global aerospace and aviation incubator, reveals that venture capital investments in aerospace, space, and defense start-ups equated to $551 million in the first quarter of 2017 alone, with 26 investments made. Notable trends highlighted in the report include the increasing diversity of deal origins and the shift from west to east, Starburst reveals, as a previously dominant U.S. investor base is joined by new capital and interest from countries like Israel, China, and Singapore. Additionally, the report finds that the increased number of investments, with smaller individual deals, signals a shift to less-capital intensive business opportunities, and reduced barriers for new entries. Starburst expects 2017 to meet or exceed 2015 levels, which topped out at $1.7B. An Executive Summary of the report is available for free download on the Starburst Accelerator site.
As investment shifts from west to east, start-ups target next level supply chain innovations
Following in the footsteps of high profile pioneers like Jeff Bezos' Blue Origin, Richard Branson's Virgin Galactic, and Elon Musk's SpaceX, the next generation of aerospace start-ups is seeing as much as a 250 percent spike in venture capital investment over the last year, enabling new companies to build on the innovation spurred by governments and large corporate incumbents. But if the first wave of investment focused primarily on rockets, satellites and launchers, new investment is giving rise to an even wider range of innovators that will create and build not just the vehicles, but the foundational enabling technologies for this new era of aviation and aerospace, including new materials, distributed energy generation sources, autonomous technologies and increased levels of communication and control.
350% spike in Series B activity indicates start-ups are exceeding investor expectations
Notably in 1Q17, Series A rounds saw an average size of $10M and received a total investment of $97.2M. Series B funding, however, saw a 350 percent increase over 2016 at $325M and a median round of $20M indicating a sector-wide maturity, with aerospace now considered a strong business proposition for venture capital. Starburst expects 2017 to see a larger number of smaller deals, demonstrating lower entry barriers, a trend the firm forecasts will continue beyond this year, as the growing ease of accessing space continues to support modern economic needs.
This report, Industry Analysis and Trend Assessment of Early Stage Aerospace, Space, and Defense Investments, marks the second in an ongoing series of Starburst's regular research and analysis, examining key trends in relevant aerospace, aviation, and defense sectors and technologies. In addition to its wide-ranging expertise and thought leadership, the incubator works directly with 2000+ early stage Series A-B technology companies in its six offices worldwide, providing them with services including financial support, strategy consulting, and ecosystem synergies, bringing together key stakeholders to advance the future of the aerospace industry.
"While commercial entities like SpaceX are already capturing the public imagination, the next phase of the space race will be led by smaller private companies," said François Chopard, CEO and co-founder of Starburst Accelerator. "In the funding gap created by reduced government spending on NASA, start-ups are finding traction with an increasingly vast and global venture capital base. We expect that trend to continue, with government and traditional corporations racing to keep up with unicorns' innovations in mini launchers, drone control chips, plastics intended for space manufacturing, distributed energy generation for remote autonomous aviation recharging, and metals from asteroid mining, and much more."