New Delhi [India], November 4 (ANI): Global private investment in space hardware surged from approximately USD 500 million in 2012 to USD 17 billion in 2025, marking a 34-fold increase, as falling launch costs, rising defence expenditure and growing commercial participation accelerate the development of the space economy, according to a research report published by Social Capital.
The research, titled “Deep Dive: Where Will Value Accrue In The Space Economy?”, authored by investor Chamath Palihapitiya, highlighted that investment in space hardware has increased more than 30-fold since 2012, even excluding SpaceX.
“In 2012, private investors put about $0.5B into space hardware. In 2025, they put in about $17B,” the research noted.
The report highlighted that government expenditure, particularly defence-related spending, continues to play a critical role in driving the industry’s expansion, despite increasing private-sector participation.
According to the research, the US National Aeronautics and Space Administration (NASA) accounted for 4.4 per cent of total federal spending in 1966, during the peak of the Moon race. Its share declined to 1.9 per cent four years later and further to 0.4 per cent by 2025.
However, the establishment of the United States Space Force in December 2019 has introduced another major source of government demand for space infrastructure.
The research noted that the Space Force’s budget had surpassed NASA’s by fiscal year 2023, while its regular budget request for FY2027 was three times that of NASA, excluding an additional USD 12.1 billion in one-off funding.
Highlighting expectations of sustained defence expenditure, the research quoted an expert as saying, “I just don’t see how the defense spend on space is going to stop.”
The number of companies manufacturing satellites has also increased substantially over the past two decades.
According to the findings, 32 businesses manufactured satellites that were launched in 2000, compared with 184 businesses in 2025, representing an increase of nearly six times.
The research attributed part of this expansion to the sharp reduction in the cost of accessing space.
It noted that launch costs per kilogram have declined approximately 25-fold between the Space Shuttle era and SpaceX’s Falcon 9 rocket.
However, the report also highlighted that lower launch costs have not necessarily translated into continuously declining prices for all customers.
According to the research, the cost of launching a small satellite through SpaceX’s rideshare services was 27 per cent higher than in 2023.
On the investment front, the research examined the performance of a basket of 10 equally weighted publicly traded space companies.
It found that an investment in this basket on January 2, 2024, would have generated a cumulative return of 1,123 per cent by May 2026, taking its value to more than 12 times the initial investment.
However, the research cautioned that rising stock valuations do not necessarily reflect equivalent growth in commercial revenues.
An analysis of regulatory filings from seven companies that disclosed their customer revenue composition showed 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 also included.
The findings indicated that public-sector expenditure remains a major driver of revenue generation for several listed space companies.
The research also highlighted SpaceX’s significant role in supplying satellites for US military applications.
According to the findings, SpaceX manufactured 340 of the 478 US military satellites launched since January 2024, accounting for approximately 71 per cent of the total.
The report further examined the difference between announced government contract awards and actual revenue generation.
Citing Rocket Lab as an example, it noted that an USD 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.
The research also examined the economics of satellite-based data services, highlighting an example in which monitoring 100 locations per week cost a customer USD 1 million annually, while the estimated value of the data was only USD 50,000.
It further identified potential opportunities in manufacturing products in orbit, citing the high commercial value of pharmaceutical products such as Keytruda, which the research valued at more than USD 60 million per kilogram.
Assessing the broader development of the space industry, the report outlined a four-stage framework for industries initially supported by government expenditure.
Under this framework, governments initially fund expensive technologies, followed by increased competition and falling production costs. Commercial demand subsequently emerges when prices become affordable for private customers, eventually supporting the development of new businesses and industrial ecosystems.
The research placed the current space economy in the second stage, characterised by increasing defence orders, expanding manufacturing capabilities and declining launch costs.
“The space economy today is in the second stage: defence orders are rising and launch keeps getting cheaper,” the report stated.
However, it emphasised that the industry’s long-term commercial sustainability would depend on whether private-sector demand could eventually reduce its dependence on government expenditure.
Drawing comparisons with the semiconductor industry, the research noted that government-backed industries can develop into large commercial markets when falling costs enable broader adoption.
It also cited the Concorde aircraft programme as an example of a government-supported technology that failed to achieve widespread commercial scale.
The French and British governments funded approximately GBP 1.134 billion in development costs for the first four Concorde aircraft, but only 20 aircraft were ultimately manufactured.
Highlighting the central question facing the industry, the research stated, “Is defence just the first customer for space, or the permanent one?”
The report suggested that the answer would determine whether the space economy follows the commercial expansion trajectory of the semiconductor industry or remains heavily dependent on government-backed demand. (ANI)
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