WASHINGTON — Space industry executives and investors at a recent U.S. Chamber of Commerce event grappled with unanswered questions on the Pentagon’s plans to commercialize activities and increase its reliance on private-sector technologies.
Business leaders said they see bright spots in the defense market such as the Space Development Agency (SDA), which is buying hundreds of commercial satellites to build out a proliferated low Earth orbit constellation for military communication and missile tracking.
But financiers who back companies in the sector would like to see a more widespread DoD embrace of commercial space products and services. They see spurts of activity in the form of research grants and pilot programs but wonder if the Pentagon will use commercial services in a major way like NASA does with its space transportation and exploration programs.
Space venture investors and analysts speaking at the Feb. 23 Chamber event said the industry is perceiving some demand signals, but they would like for these signals to be amplified and transition into actionable commitments in the foreseeable future.
The new reality
Venture capitalists have traditionally preferred quick returns from rapid growth companies. But with today’s tough fundraising environment, VCs have come around to the reality that defense contracts offer a steady stream of business, even if the Pentagon’s deliberate timelines don’t match the VC mindset.
The DoD market is too big to ignore given tighter access to capital, said Andrey Yoffe, managing director of BMO Capital Markets.
“Everyone loves to bash the government but I think that in the last couple of years the narrative has changed,” Yoffe said. “The fact that we have so many new venture funds that are backing defense companies is incredible,” he added. “We’ve never had that before.”
Over the past year, said Yoffe, “the biggest issue that we saw was that the commercial markets…
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