Funding for space start-ups zooms

The race for space has got real, and it is attracting funding like never before.

In 2022 so far, funding to private players in the space sector has jumped a whopping 61.5 per cent — soaring to $108.52 million compared to $67.2 million in 2021.

Propelling it is the government’s decision to open up the space sector to private players and the work done by companies like Skyroot Aerospace, the Hyderabad-based start-up behind the launch of India’s first privately developed rocket on November 18.

According to data shared by the Indian Space Association (ISpA), of the $245.35 million that the sector has received in the last seven years, $198.22 million came post-2020.

Space, the final frontier, was opened to private players in June that year.

India currently has 104 space start-ups and 368 space tech companies, according to official data.

The companies that drew funds this year include Skyroot Aerospace, which raised $51 million in September; Agnikul ($20 million in November); Bellatrix ($8 million from BASF in June); Pixxel ($25 million in March); and Digantara ($60,000 in August).

In 2020, the sector had drawn $22.5 million.

And between 2016 and 2019, the funding ranged from $2 million to about $6 million, though it did hit $36 million in 2017.

“In the last three to four years, the sector has seen an investment of over $200 million.

"The Skyroot launch is just the beginning of the success of these companies,” says A K Bhatt, director general, ISpA.

Other than Skyroot, space start-ups that have tasted success include Digantara, Dhruva Space and Pixxel. Digantara launched the world's smallest digital space weather sensor in June; Dhruva Space tested its space orbital deployer; and Pixxel launched its first satellite, part of its 36-satellite planned constellation, aboard a SpaceX Falcon 9 rideshare mission in April.

Those who have already raised money are also looking for more funding.

“We recently had a very large funding of $51 million, the largest round in the space sector in the country,” says Pawan Kumar Chandana, co-founder of Skyroot Aerospace.

“We will start raising more funds soon as well for future requirements.

"As a company, we will always look for potential investors.

"We are planning to spend around Rs 200-300 crore in the next couple of years.”

Skyroot has got a total funding of $68 million so far — including $17 million raised through a seed round, Series A and a bridge round, and $51 million in a Series B round led by Singapore sovereign investor GIC in September this year.

“Two years ago, companies were barely able to raise a few million dollars.

"Now there are at least four companies having raised more than $10 million.

"With Pixxel’s Series A of $27 million raised earlier this year to Skyroot’s recent $51 million Series B, growth funding has also started to come in rapidly," says Awais Ahmed, chief executive officer, Pixxel.

“There still remains a lack of viable late stage growth and private equity options.

"Enabling easy FDI into space will play a crucial role in enabling continued investment into space, which is a critical cog in India’s geopolitical ambitions,” Ahmed adds.

Another rocket-maker, Chennai-headquartered Agnikul Cosmos, has raised $20 million in its ongoing Series B round from Silicon Valley-based venture capital (VC) firm and existing investor Rocketship.

“Investor interest will only increase since the space market in India is set to touch $13 billion by 2025, from around $9.6 billion now,” says ISpA director general Bhatt.

“There’s huge potential for these start-ups.”

According to a report by ISpA and EY, “Improved investment friendly policies and guidelines would make it lucrative for private funding agencies and VCs to pump in funds to bring scalability and growth.”

The report indicates that some 39 per cent of space start-ups are in satellite/spacecraft subsystems segments, followed by 32 per cent in satellite applications, 11 per cent in education and 7 per cent for launch vehicles.