Emboldened by SpaceX, Investors Are Piling Into All Things Space－By Micah Maidenberg, WSJ

It isn’t just SpaceX.

Encouraged by the Elon Musk -led company’s successes—and steadily climbing valuation —venture capitalists and private-market investors are stepping up bets on space startups, hoping to find the next breakout stars.

Venture funding for U.S. space-technology firms excluding SpaceX shot up to $7.1 billion in 2025 from $2.5 billion a year earlier, according to data provider PitchBook. Last year’s haul was the strongest since companies raised almost $4 billion in 2021.

More investments have rolled in this year. Observable Space, focused on laser communications and sensing, recently raised $90 million. Ground-system startup Northwood Space pulled in $100 million and CesiumAstro, a maker of space systems and electronics, recorded $470 million in equity and financing.

“There’s just so much more you can do from space,” said John Gedmark , chief executive of Astranis, a maker of smaller satellites orbiting more than 22,000 miles from Earth.

The company recently raised capital from Franklin Templeton and others. “Investors are finding there are real business models in space and money to be made,” Gedmark said.

Last week, public-market investors poured $75 billion into Musk’s space-and-artificial-intelligence enterprise in a record-setting initial public offering , a stunning milestone for a company that almost went out of business during its early years.

SpaceX’s IPO also sealed a victory for the company’s long-term shareholders, who believed in ideas that once sounded more like science fiction but now have come to pass, including building a fleet of roughly 10,000 satellites.

“Space was getting pretty hot, even before the SpaceX IPO was announced, but I think it just got supercharged,” said Tom Mueller, a former top SpaceX executive who recently raised $500 million for the in-space mobility company he founded, Impulse Space.

Delivery to orbit

Andrew Rush is CEO of Star Catcher Industries, a startup focused on developing a power grid in orbit. He said that many big venture investors in the past wouldn’t touch space-related deals unless a company was led by someone like Musk, who had generated returns in the past.

That has changed because the space sector has demonstrated it can deliver, according to Rush, whose company also recently landed new capital.

The flurry of deals comes with risks that are heightened by the challenges of building devices capable of operating in orbit. Space is a harsh environment where the margins between success and failure are thin.

While sector giants such as SpaceX and Jeff Bezos’ Blue Origin can survive a big setback—Blue Origin currently is racing to rebuild a Florida launchpad wrecked by an explosion —smaller startups often can’t.

As with all early-stage investing, some startups won’t make it, investors say. And the far-out business models that a number of companies are pursuing are still going to be too far out for many.

“I do think it helps to be in this current moment as a mature company,” said Delian Asparouhov , a Founders Fund partner who co-founded Varda Space Industries , which conducts pharmaceutical experiments in company spacecraft sent to low-Earth orbit.

“People can go look at a lunar hotel but there’s no revenue, there’s no path to revenue,” Asparouhov said in a recent interview.

Calculated risk

Investors have been burned before with space-related companies. In 2021, a number of space-related firms raised capital and went public by merging with so-called blank-check companies but performed poorly.

Virgin Orbit, which used a plane to launch satellites, went public in such a deal in 2021. Less than a year and a half later, the company filed for bankruptcy and then shut down.

Investors and executives at many space startups say they are pairing real demand with calculated bets on developing technology. A target customer for many is the Pentagon, which might be in line for a historic budget increase that would shower space programs with billions of dollars in new funding.

Startup K2 Space, which is building powerful satellites that can weigh roughly 2 tons, has built fundraising momentum by showing traction among commercial and government customers, said CEO Karan Kunjur. It had $500 million in signed contracts across those clients at the end of last year and aims to build even more powerful satellites for communications, military applications and other purposes.

A former consultant, Kunjur co-founded K2 with his brother Neel, who spent more than five years working on SpaceX’s Dragon spacecraft earlier in his career.

Neel Kunjur isn’t the only former SpaceX employee taking a crack at a startup. Engineers and executives who cut their teeth at the Musk-led powerhouse have been fanning out over the past few years as space-industry founders and investors.

SpaceX’s IPO is expected to prompt newly wealthy staffers there to make similar leaps, former employees said.