According to a recent report by Space Capital based in New York, private investment in space companies, especially from venture capital, exhibited signs of stabilization in the second quarter after experiencing steady declines over the past year.

The report focused on Q2 investment in the space industry and indicated that the market seems to be reaching a bottom.

Space Capital highlighted that growth-stage investments are surpassing late-stage investments, which suggests a healthy top-of-funnel economy within the sector.

Over the past year, investment in space companies had been continuously decreasing from its peak in 2021. This decline was driven by the macroeconomic impact of a tighter funding environment and rising interest rates. Many space companies have recently implemented layoffs and cost-cutting measures, and it is expected that mergers and acquisitions activity in the sector will increase as valuations decrease.

However, the Q2 report by Space Capital pointed to certain indicators that suggest the space market is approaching a bottom. One such indicator is the return of hiring for space-related jobs to levels seen in 2020.

Chad Anderson, the managing partner at Space Capital, stated in the report that the financial market reset has resulted in healthier market dynamics. This has allowed disciplined investors to identify opportunities and invest in high-quality companies at lower valuations.

In the second quarter, space infrastructure companies secured $4.9 billion in private investment, which includes the recent go-private sale of Maxar at an equity value of $4.1 billion.

Although the Maxar deal accounted for the majority of Q2 investment, Space Capital highlighted that growth-stage investments are surpassing late-stage investments. Raises in the growth-stage category made up 74% of total equity rounds, indicating a healthy top-of-funnel economy within the space sector.

The quarterly report by Space Capital categorizes investment in the industry into three technology categories: infrastructure, distribution, and application. Infrastructure encompasses traditional space companies involved in building rockets and satellites, among other activities.