Private investment in space hardware surges 34-fold to $17 billion in 13 years

Global private investment in space hardware surged 34-fold over 13 years, rising from approximately $500 million in 2012 to $17 billion in 2025, as declining launch costs, growing defence expenditure and increasing private-sector participation accelerated the expansion of the space economy, according to research published by Social Capital.

The report, titled Deep Dive: Where Will Value Accrue In The Space Economy?, authored by investor Chamath Palihapitiya, found that investment in space hardware had increased more than 30-fold since 2012 even after excluding SpaceX, indicating that the expansion extended beyond a single company.

The research highlighted the growing role of private capital in an industry historically dependent on government funding, while cautioning that public-sector expenditure remained crucial to its commercial development.

𝗗𝗲𝗳𝗲𝗻𝗰𝗲 𝘀𝗽𝗲𝗻𝗱𝗶𝗻𝗴 𝗳𝘂𝗲𝗹𝘀 𝗴𝗿𝗼𝘄𝘁𝗵

The study identified rising defence expenditure as a major factor supporting investment in space infrastructure.

At the height of the Moon race in 1966, NASA accounted for 4.4 per cent of total US federal spending. Its share declined to 1.9 per cent in 1970 and further to 0.4 per cent by 2025.

However, the establishment of the United States Space Force in December 2019 created another major source of government demand for space infrastructure.

According to the research, the Space Force's budget surpassed NASA's by fiscal year 2023, while its regular budget request for FY2027 was three times NASA's, excluding an additional $12.1 billion in one-off funding.

The findings suggested that defence-related investment would continue supporting the development of satellite manufacturing, launch infrastructure and other space technologies.

𝗦𝗮𝘁𝗲𝗹𝗹𝗶𝘁𝗲 𝗺𝗮𝗸𝗲𝗿𝘀 𝗿𝗶𝘀𝗲 𝗻𝗲𝗮𝗿𝗹𝘆 𝘀𝗶𝘅𝗳𝗼𝗹𝗱

The research highlighted a substantial increase in the number of companies manufacturing satellites over the past two decades.

In 2000, 32 businesses manufactured satellites that were launched during the year. By 2025, the number had risen to 184, representing an increase of nearly six times.

The expansion coincided with a sharp reduction in the cost of accessing space.

According to the study, launch costs per kilogram declined approximately 25-fold between the Space Shuttle era and the introduction of SpaceX's Falcon 9 rocket.

Lower launch costs have enabled more companies to develop and deploy satellites, expanding participation in an industry previously dominated by government agencies and a limited number of aerospace manufacturers.

However, the report noted that declining launch costs had not translated into consistently lower prices for every customer.

It found that the cost of launching a small satellite through SpaceX's rideshare services was 27 per cent higher than in 2023.

𝗦𝗽𝗮𝗰𝗲 𝘀𝘁𝗼𝗰𝗸𝘀 𝗽𝗼𝘀𝘁 𝘀𝘁𝗲𝗲𝗽 𝗴𝗮𝗶𝗻𝘀

The research also examined the performance of publicly traded companies operating in the space industry.

An equally weighted basket of 10 space stocks, purchased on January 2, 2024, would have generated a cumulative return of 1,123 per cent by May 2026, increasing the investment's value to more than 12 times its original amount.

However, the report cautioned that rising stock valuations did not necessarily indicate equivalent growth in commercial revenues.

An examination of regulatory filings from seven companies that disclosed their customer revenue composition revealed that governments accounted for 56 per cent of their combined revenue in 2025.

The government-linked share increased to approximately 60 per cent when private customers receiving government funding were included.

The findings underscored the continuing importance of public expenditure in supporting companies that have attracted substantial private investment.

𝗦𝗽𝗮𝗰𝗲𝗫 𝗱𝗼𝗺𝗶𝗻𝗮𝘁𝗲𝘀 𝗺𝗶𝗹𝗶𝘁𝗮𝗿𝘆 𝘀𝗮𝘁𝗲𝗹𝗹𝗶𝘁𝗲𝘀

The research identified SpaceX as a major supplier of satellites for US military applications.

Of the 478 US military satellites launched since January 2024, SpaceX manufactured 340, accounting for approximately 71 per cent of the total.

The report also distinguished between announced government contract awards and actual revenue generation.

Citing Rocket Lab, it noted that an $816 million contract award should not be treated as equivalent to recognised revenue, as only 19.8 per cent of the award had been funded by the government as of May 2026.

This distinction was significant because contract announcements could create expectations of future earnings without immediately translating into revenue.

𝗖𝗼𝗺𝗺𝗲𝗿𝗰𝗶𝗮𝗹 𝗱𝗲𝗺𝗮𝗻𝗱 𝗿𝗲𝗺𝗮𝗶𝗻𝘀 𝘂𝗻𝗰𝗲𝗿𝘁𝗮𝗶𝗻

The study examined potential commercial opportunities in satellite-based data services and manufacturing products in orbit.

It cited an example in which monitoring 100 locations every week cost a customer $1 million annually, while the estimated value of the resulting data was only $50,000.

The mismatch highlighted the challenge of developing commercially viable applications even as technological capabilities improve.

The research also identified potential opportunities in orbital manufacturing, particularly for high-value pharmaceutical products.

It cited Keytruda, a pharmaceutical product valued in the study at more than $60 million per kilogram, as an illustration of the economic potential of manufacturing certain products in space.

However, the study did not establish that such manufacturing would necessarily become commercially profitable.

𝗜𝗻𝗱𝘂𝘀𝘁𝗿𝘆 𝗲𝗻𝘁𝗲𝗿𝘀 𝘀𝗲𝗰𝗼𝗻𝗱 𝗴𝗿𝗼𝘄𝘁𝗵 𝘀𝘁𝗮𝗴𝗲

The report outlined a four-stage framework for industries initially supported by government expenditure.

In the first stage, governments fund expensive technologies that are not yet commercially viable. Increased competition and declining production costs characterise the second stage, followed by the emergence of private demand as technologies become more affordable.

The final stage involves the development of broader commercial markets and supporting industrial ecosystems.

Social Capital placed the current space economy in the second stage, characterised by rising defence orders, expanding manufacturing capabilities and declining launch costs.

The research compared the industry's potential development with that of semiconductors, where government-backed investment eventually helped create a large commercial market.

It also cited the Concorde aircraft programme as an example of government-supported technology that failed to achieve widespread commercial scale.

The French and British governments spent approximately £1.134 billion developing the first four Concorde aircraft, but only 20 aircraft were ultimately manufactured.

The report concluded that the space industry's long-term commercial sustainability would depend on whether private demand could eventually reduce its reliance on government spending.

The central question, it suggested, was whether defence would remain the industry's principal customer or serve as the foundation for a much larger commercial space economy.