On the surface, spacetech looks like a reasonably stable area for startup funding.
Global investment has held steady at more than $6 billion annually for the past two years, with 2025 on track to deliver similar results. Funding recipients reliably include a mix of defense tech, satellite and rocket developers, and startups finding innovative use cases for geospatial data.
But while the numbers might not be shifting dramatically, investor priorities tell a different story.
Shifting priorities
Trump administration tariffs and shifting international alignments, the rise of geospatial AI, and heightened public market volatility are all driving factors reshaping spacetech-related startup funding this year, per a new report from venture firm Space Capital.
So far, current events haven’t demonstrably dampened enthusiasm around the space.
“Anecdotally, with over a decade of experience investing in this category, I can say with confidence that we have never seen stronger investor demand,” said Chad Anderson, Space Capital’s managing partner.
However, investors are changing some of the criteria they employ in funding decisions.
On the geopolitical front, Space Capital points to growing concerns around China’s advancing space capabilities and missile technology as a factor driving defense tech investment elsewhere. Fractured relations between the U.S. and long-time European allies also prompted Europe to respond with the ReArm Europe plan, potentially putting up to $870 billion into more defense-related spending.
Investor attitudes are also shifting toward SpaceX, once seen as indomitable but now facing a slew of launch competitors. At the same time, the company’s global Starlink deals are coming under pressure due to backlash against Elon Musk’s political activities.
Where Q1 funding went
As we look back at the first quarter, meanwhile, it’s clear investor appetites for spacetech deals remain healthy, with at least four rounds exceeding $100 million.
The largest Q1 deal was a $260 million January Series C for Kent, Washington-based Stoke Space, a developer of reusable rockets. To date, the 6-year-old company has raised more than $436 million in venture funding.
Another big round went to Loft Orbital, a San Francisco-based startup that leases space on its satellites. It raised a $170 million Series C in January led by Axial Partners and Tikehau Capital. And Torrance, California-based K2 Space was a successful fundraiser as well, securing $110 million in a February Series B to scale its satellite manufacturing.
Overall, Q1 was in the middle for total funding across the past five quarters, as charted below. Deal counts were down some, but also close to recent quarterly levels.
AI?
Going forward, per Space Capital, we can expect to see more investment at the intersection of spacetech and AI.
The firm points to Niantic’s recent launch of the Niantic Spatial platform as an indicator of growing interest in blending spatial intelligence with immersive AR. Niantic sold its gaming business to Scopely earlier this year and put the remaining assets into a geospatial AI startup led by longtime CEO John Hanke.
One of the more urgent use cases came in the form of a partnership between satellite startup Muon Space and the Earth Fire Alliance to launch FireSat, a satellite constellation built to address global wildfire risks using AI. Muon successfully launched the first satellite in the constellation in March.
Earth imaging satellite operator Planet Labs also moved deeper into AI territory last month through a partnership with Anthropic. The agreement calls for using Anthropic’s Claude platform to analyze geospatial data.
Public market volatility
Venture investors’ enthusiasm, however, is also butting up against the unpleasant reality of falling stock prices. While markets rebounded some this week following reductions in planned tariffs, they’re still down from recent highs.
Spacetech has not been immune. After a runup late last year, shares of leading companies in the space have fallen sharply in recent weeks, as have major U.S. defense contractors like Lockheed Martin.
But while public markets remain jittery, it’s worth remembering that startup investment has always been an optimist’s game. And although exits may be tempered for now, well-funded startups still have time and capital to wait out the cycle.
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Illustration: Dom Guzman
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