America’s SPAC-Funded NewSpace Industry is Crashing Due to Gov’t Regs and High Capital Costs

An array of NewSpace companies were funded through billions raised through and venture financing and are at the cutting edge of providing new and cheaper space products. In the launch industry, these include ABL, Astra, Firefly, Relativity Space, , and Virgin Orbit are producing low-cost rockets. In the earth observation industry, Planet Labs competes with satellites from big defense contractors in photo-reconnaissance and Capella Space with a constellation that provides low-cost radar imaging. Axiom is building commercial space stations.

The exciting innovation, competition, expansion of the U.S. industrial base, deepening of and jobs these companies bring provides America the boost it needs to stay ahead of adversaries and bring down defense costs. That's the good news, reports Space News.

The bad news is that many of these companies are struggling for two key reasons. First, because of the high cost of capital due to rising interest rates, the decline of SPACs and the drying up of . Venture and other early-stage financing in the space industry dropped by 50% in 2022, according to venture firm Space Capital. The stock prices of many of the publicly traded NewSpace companies, a good measure of the health of the industry, have dropped from 75-95% by one index.

The second reason is government policies that raise costs for the industry and slow innovation. The space industry faces a myriad of federal agencies as well as state rules. To launch Starship, SpaceX needed permission from the Federal Administration, the Federal Communications Commission (FCC), The Environmental Protection Agency, the Fish and Wildlife Service and many others. Each of these agencies imposes burdensome and time-consuming regulations. Read more.

Source: America's SPAC-Funded NewSpace Industry is Crashing Due to Gov't Regs and High Capital Costs