Background

Globally, space and space-related technology continue to be dependent on government contracting, and it lacks institutional investment support. Deals that transition space companies from private investment to institutional investment are often focused on the financial aspects with little interest in the long-term future of the company and the individuals who work to deliver services and technology. The lack of diverse financial vehicles being applied to the space market, the lack of business strategy support to enable companies to manifest organic financial growth and sustainability, and the inability of space companies and government officials to communicate the value of space are all symptoms of an industry that is in need of a different approach.

The global space industry has the opportunity to expand exponentially, but it is limited by a lack of alignment among those who finance space, those who receive the financing, and those who support both sides of the transaction (government officials, consultants, advisors, etc.). Since the founding of Caelus Partners in 2016, our team has analyzed the global space investment environment and presented multiple essays on the subject, as part of our Community in Space™ campaign plan. We identified a need for a service provider that could link investors and companies together in a way that addresses the interests of both parties. Community in Space LLC is our answer to that need.

Three key observations about the space industry today guide our approach:
• Financing for the growth of the space industrial base is skewed by geopolitical interests, resulting in investment schemes that focus on outcomes that often do not benefit the space companies or the communities where they operate.
• The regulatory framework for space often hinders the transparency necessary to grow the industry through the development of an open market that is resilient and accessible to new players.
• There is a culture of arrogance about how to best deliver economic development at the regional level — companies and government agencies often assume that local communities will be on board with whatever space-related opportunities they are given, rather than engaging in dialogue to understand how the space industry could interact with local economic strengths and weaknesses.

The Opportunity

Despite the many challenges, the reality is that space is here to stay. The level of talent being attracted to develop hardware and software for space is more advanced than at any time in history. Financing for space, although often lacking in long-term strategy, is also here to stay. Regardless of location on Earth, spacefaring nations’ private and public financing vehicles recognize and invest in space. Non-spacefaring nations have recognized the need to partner with a spacefaring nation or develop a consortium approach to benefit from the applications that space has to offer. Even during economic and epidemiologic adversity of the COVID-19 pandemic, companies of all sizes are delivering some of the most incredible concepts — optical communications, artificial intelligence solutions, robotics and Environmental, Social, and Governance (ESG) applications.

Our Role

The steadily growing interest in space investment led to the development of the Procure Space ETF, a $120M fund (as of October 2021) that is the first and only pure-play space-focused ETF. To bring this product to market in 2019, our team had to define the concept of a “space company” for the SEC and investors because space companies are scattered across multiple market sectors such as telecommunications or aerospace and defense. The creation of this definition, and the subsequent demonstration of public market appetite for space, helped catalyze the growth of interest in space by SPACs in the US, resulting in multiple private space companies going public in 2021 with more on the way. Similar effects on capital formation can be seen in the United Kingdom, the Middle East, and in multiple US states where members of the Community in Space team have helped stakeholders articulate their interest in space and develop an investment strategy accordingly.

As of Q4 2021, the space market is at an inflection point — within the next 18 months, the space industrial base can exponentially grow in financial and economic relevance, or it can plateau to a point where consolidation and a focus on government support is the only sustainable form of value. At Community in Space LLC, we look to support the exponential growth of the market, not through valuation or investment schemes that benefit a very small group of entities, but in a way that enables a prosperous long-term future for space companies and the regional economies that support them.