Space investments become mainstream as VCS abandons rocket science requirements

Five years ago, investor Katelin Holloway created what she called “literal moonshot” investments. The founding partner of generalist venture Seven Seven Six admits that she and her team were talking about when Rocket Company Stoke Space promoted the company with reusable launch technology as “no clue.” “We knew well enough that we weren’t experts,” she says.

Since then, Holloway has also invested in Interlune, a company that plans to harvest Helium-3 from the moon and sell it to the planet for quantum computing and medical imaging applications.

Holloway is well aware of the skepticism these bets may attract. At the same time, her journey from space beginners to investors reflects the broader changes in venture capital as VCS without aerospace engineering becomes more and more backspace startups. In fact, according to Pitchbook, global venture investments in space technology had reached $4.5 billion in July across 48 companies. That’s more than four times the amount that space startups attracted in 2024.

What is this trend? For starters, SpaceX and other companies have significantly reduced launch costs, allowing founders with an application-focused business model to access the space. “We’re literally part of our daily lives as species sitting on the cliffs of space,” Holloway told the editor in a recent episode of TC’s StrictlyVC Download Podcast. “And I don’t really think the world understands it or is ready for it.”

This allowed VCs to see past companies building rockets on startups that use space-based data and infrastructure for new applications such as climate surveillance, intelligence gathering, and communications. They also bet on orbital logistics, spatial manufacturing, satellite services, and lunar infrastructure development. Companies like Interlune represent this new category. For investors like Holloway, this appeal is often at the intersection of “Space Tech Meets Climate Technology.” This means a startup that wants to avoid repeating the Earth’s environment mistakes in space. ”

Geopolitical tensions make defense-related space startups attractive as China’s rapidly moving forward space capabilities drive increasing US investment. VCs may be nervous, and defense spending is to provide customer base and validation of emerging technologies by knowing the US government, giving great confidence in the commercial viability of space ventures. At the Air Force Summit Bureau in March, Defense Secretary Pete Hegses said, “I feel there is no way to ignore the fact that the next important territory of war will become the space territory.”

This year’s US defense-centric startups, including military-class orbital systems developer True Anomaly, who announced the $260 million Series C, led by Accel in July, have shut down a considerable round this year. Satellite maker K2 Space is currently working on its first government mission, with Lightspeed Venture Capital and Altimeter Capital jointly closing a $110 million round in February. Defense angle adds Sheen to your space investment. In fact, Holloway points out that Helium-3, the gas that Interlune plans to harvest, also has national security applications, including detecting nuclear weapons movements.

AI is creating even more momentum, including the intersection of geospatial analysis and intelligence. For example, in March, the first satellite launched by Fire SAT, a partnership between Google, the non-profit Earth Fire Alliance, and the Satellite Builder Muon Space, is the satellite builder Muon Space, designed to detect wildfires from orbit. The collaboration, announced last year, plans to deploy more than 50 satellites specifically constructed for wildfire detection. Earth imaging operator Planet Labs has partnered with humanity to analyze Earth observation data.

Perhaps most notably, the timetables for returns for these investments have been reduced to a surprising degree. While traditional space companies have taken decades to generate returns, today’s VCs believe liquidity can be achieved with a standard 10-year fund vision. “Our fund model hasn’t changed, so there’s still a 10-year horizon,” explains Holloway. “If I hadn’t thought I could create an oversized return within 10 years, I wouldn’t have made this investment.”

This kind of schedule sounds ambitious, but the open market certainly appears to be embracing these new space companies. New York-listed space infrastructure company Voyager in June went public at a market capitalization of $1.9 billion, up 82% from the IPO price on the first day. (Its stock fell by about 45%.) 48 years ago, space systems maker Karman Space & Defense surpassed its listing price by 30% in February. (The stock has since grown by nearly 60%.)

In the case of Interlune, Holloway envisions potential exits including strategic acquisitions by aerospace or defense giants, buying energy companies, and even government acquisitions in light of the national security impacts she describes.

All of these convergence forces change the way cheaper launches, defense spending, AI applications, and returns compression timelines – can invest in space. The Holloway Background – From public school teachers to Pixar script supervisors to Reddit people and culture vice presidents to venture capitalists, it highlights the broader skill sets these companies actually need. When it comes to helium-3 harvest physics, she is self-effective, but she brings operational chops.

“At the end of the day, a company is a company,” she says. “If you’re trying to bring together people and do something, you need someone with a background in building a powerful company.”

It remains to be seen whether the approach will pay off. The space economy remains untested on a large scale. Many of these ambitious ventures face technical and regulatory hurdles that more traditional software startups have never encountered. However, as generalist VCs like Holloway make bets, space is beginning to look less like a professional niche, and you don’t have to be a rocket scientist if you have operational know-how.