« Back to Annual Report for Fiscal Year 2022
LEO Economic Development: Investor Network and Capital Connections
NASANational Aeronautics and Space Administration Image: JSC2021E037283 - Nanofluidic Implant Communication Experiment (NICE) (Faraday-NICE) aims to develop an implantable drug delivery system that allows for remote control and modulation of the release of therapeutics over weeks to months. In this investigation, fully assembled implantable devices are tested for remote communication capabilities from Earth to the International Space Station (ISSInternational Space Station). This investigation aims to verify that 100% of the communications between controller and implant is achieved and maintained on ISS. Implants are immersed in saline solution, a surrogate of physiological conditions, then placed and sealed in 15 ml containers. The tubes are mounted within the ProxOpS Faraday experimental box.
LEO Economic Development: Investor Network and Capital Connections
This was a record year in terms of post-flight capital raised by companies conducting research and technology development through the ISS National Lab. The FY22 total funding raised postflight by startups with ISS National Lab flight projects amounted to $658 million, and all-time cumulative funding amount reached more than $1.8 billion. Including companies that have been awarded a flight project that has not yet flown to the ISS, the respective totals amount to $714 million for FY22 and close to $2 billion for the all-time cumulative total.
This year included several capital-raising successes by companies that have flown projects through the ISS National Lab, ranging from public market entry by Planet to earlier-stage financial and strategic capital access by Apogeo Space (formerly GP Advanced Projects), Hedron Space, Kernal Biologics, Lynk, Lonestar, NSLComm, Optisys, SatRevolution, and several others.
The ISS National Lab’s investor engagement continued to expand during FY22, despite the challenging market conditions. The ISS National Lab’s investor network has grown to include 278 venture capital, private equity, corporate, angel, and other financial investors. To date, CASIS(Abbreviation: CASIS™) The nonprofit organization that manages the ISS National Lab, which receives at least 50 percent of the U.S. research allocation on the International Space Station to facilitate research that benefits humanity (NASA manages the other 50% and focuses on research for space exploration purposes). has facilitated more than 1,200 capital introductions between startups and investors in the ISS National Lab network, with FY22 being one of the most active years of such activity. The ISS National Lab’s investor ecosystem remains a source of capital connections and possible funding for early-stage companies planning studies on the ISS.
This year, the ISS National Lab held its seventh annual investor event, showcasing nine promising startups across remote sensing, materials processing, orbital logistics and services, data processing and computing, and R&D instrumentation sectors. All these companies have either flown or are looking to fly their technology and research to the ISS.
Industry Context
Macroeconomic and geopolitical conditions changed significantly during the fiscal year. The first quarter of FY22 still benefited from favorable public and private market conditions, but capital access tightened significantly as the calendar year 2022 unfolded. Per Pitchbook and NVCA’s reported quarterly data, the overall U.S. venture capital investment activity peaked in the December 2021 quarter. During the third quarter of 2022, this investment activity declined 40 percent quarter-over-quarter and 52 percent year-over-year. Space startups saw similar trends. Per Space Capital data, the space economy funding for infrastructure and distribution segment startups declined 41 percent year-over-year in the September quarter, and, if we look at the funding data excluding funding to some of the more established companies, as well as 2021 Special Purpose Acquisition Company (SPAC) transactions, then conditions were softer with third quarter 2022 totals down 59 percent from year-ago levels.
The Federal Reserve’s sizable interest rate hikes to fight inflation have raised the cost of capital for investors, making delayed payout and higher-risk businesses more expensive to fund. From the investor dialogue within the ISS National Lab ecosystem, there is continued interest and willingness to assess new investment opportunities; however, the investment criteria have tightened significantly. The prospects of broadly slower economic growth have affected the pace of private-sector technology adoption. While there clearly is “dry powder” from recent years’ venture capital and private equity fund capital raising activity, these is no rush of deployment in the current environment where pricing has yet to bottom. Strategic investors remain engaged, and in some cases are increasing commitment levels, but the actual deployment of capital is likely to be driven by the merits of specific innovation rather than by overall lower market valuation levels. Under the current economic conditions, unlocking and scaling sizable commercial markets for several less-mature space applications may see some delays and may require near-term support from the government and defense sectors to sustain and spur innovation.