
SPAC and the Space Industry [Sep/2021]
Special-Purpose Acquisition Companies (SPACs) are publicly traded and seek funding to merge or acquire private companies who are willing to go public as well. “SPACs are shell companies with no operations that raise capital through an initial public offering (IPO) and then use the proceeds to fund one or more mergers that form the basis of the ongoing public entity” (Bain & Company, 2021).
Half of the newly listed US companies of 2020 opted against traditional IPOs and instead utilized a SPAC to go public (Harvard Business Review, 2021). According to Thomson Reuters, the amount of SPAC capital raised has reached more than $150 billion in 2020, over four times the previous annual record, set in 2019. This unprecedented trend is supported by the fast way liquidity is received when using SPACs, especially for start-ups and innovation companies. Latest data from 2021 showed companies from the automobiles, software and aerospace sectors to be primarily targeted by SPACs.
The recent increase of public interest in the space industry, driven by highly publicised successes of private and public players, has amplified the sector’s attractiveness even further: investors are tempted to invest in the uncertain SPACs with the hope to catch an early ticket for the next (publicly traded) SpaceX success story. In 2020, $5.1 billion of funds have been raised through SPAC deals according to BryceTech.
However, the SPAC trend raises a lot of controversy, highlighting the substantial risk it might pose, notably to the promising and strategically key ecosystem of innovative European space start-ups.
Firstly, high supply of funds into a relatively small market bear the risk of creating a bubble. Besides short-term losses, the reputation of the space industry can be damaged if investors’ expectations of high returns are not met. In particular, revenue projections are allowed in the SPAC process, which raises both criticism and the risk of speculation. Secondly, the recent trend in SPACs displays a field of investment that highly benefits sponsors and potentially enables companies to receive stock market funding in a faster way than with traditional IPOs. The global SPACs investment funds can therefore tempt European start-ups to follow the attractive funding possibilities into foreign nations and pose a strategic risk for the European autonomy in critical innovation areas.
-Davide Vittori, Claudio Loporcaro, Prof. Antonio Messeni Petruzzelli (ESA_Lab@PoliBa), How Special Purpose Acquisition Companies Are Changing The Space Sector, June 2021 (accessible here)
-Bain & Company, SPACs: Tapping an Evolving Opportunity, March 2021
-Harvard Business Review, SPACs: What You Need to Know, 2021
-Thomson Reuters, Global SPAC deal volumes this year surpass total for 2020, March 2021
-BryceTech, Start-Up Space, 2021
-How the rocket business launched a wave of blank check acquisitions, March 2021
-[in French] Les Echos, Contentieux, raids de vendeurs à découvert… Les SPAC attaqués de toute part, August 2021
-[in French] Challenges, Rocket Lab, Virgin Orbit...Le spatial américain s'enflamme pour les SPAC, September 2021
More articles of the category: Space Economy Articles
“International Space Station (ISS) Benefits for Humanity”; 2...
ESPI Space Venture 2022 – Investment in the European and Glo...
Upcoming in October 2023: First ever Edition of the annual E...
“Earth’s Orbits at Risk”, 2022 OECD report on the Economics...
Beyond Borders: Satellite Applications for Humanitarian Emer...
OECD Policy Paper: How the War in Ukraine is affecting Spac...
ESA Space Operations and Space Safety activities: supporting...
Seven Benefit Case Studies of ESA's Space Safety programme
ESA ARTES Partnership Projects, providing the satcom industr...
ESA Science Core Technology Development Success Story - Grou...
European Centre for Space Economy and Commerce (ECSECO) conc...
Europe decides to increase ESA’s budget by 17% compared to t...
The European Commission publishes the 2021 Edition of its Be...
OECD’s examination of Space Technology Transfers and their C...
PwC’s ‘Lunar market assessment: market trends and challenges...
Space-based Solar Power: Contributing to achieving Net Zero...
FutureEO, critical enabler of EO benefits for the European e...
ESA TIA ARTES programme’s continuous boost to the commercial...
Terrae Novae: from inspiring Europe’s generations to support...
Exploiting the remarkable potential of space technology tran...
Technology developments for ESA science missions empowering...
Space Economy activities to support ESA Council at Ministeri...
ESA Space Economy Team presents a paper on “Statistic and th...
ESA-Eurostat workshop on a European Space Economy Satellite...
European Centre for Space Economy and Commerce (ECSECO) offi...
European Centre for Space Economy and Commerce (ECSECO) pres...
ESPI Yearbook 2021 – Space Policies, Issues, and Trends of t...
ESA Science Core Technology Development Success Story - Broa...
ESA Science Core Technology Development Success Story - Game...
ESA Science Core Technology Development Success Story - Fost...
ESA Science Core Technology Development Success Story - Crit...
ESA Science Core Technology Development Success Story - Unri...
ESA Science Core Technology Development Success Story - Firs...
ESA Technology Transfer Success Story - Closing the loop: ho...
ESA Technology Transfer Success Story - The missing layer: h...
ESA Technology Transfer Success Story - Cities as Spaceships...
ESA Technology Transfer Success Story - Space-style control...
ESA Technology Transfer Success Story - Using space heritage...
ESA Technology Transfer Success Story - No such thing as a w...
ESA Technology Transfer Success Story - Powering a village f...
ESA Technology Transfer Success Story - Space at home: using...
ESA Technology Transfer Success Story - Landing zone assessm...
ESA Technology Transfer Success Story - Uncovering the secre...
ESA Technology Transfer Success Story - From space debris to...
ESA Technology Transfer Success Story - Dry electrodes to mo...
ESA Technology Transfer Success Story - A new perspective: s...
Eurospace releases its annual Facts & Figures Report: The Eu...
ESPI Space Venture 2021 – Entrepreneurship and Investment in...
ECSECO open for membership registration on its official webs...
OECD's analysis of the impacts of Covid-19 on the Space indu...
Post-crisis scenarios for the space industry
Resilience of the space sector to the Covid-19 crisis
China’s Space Sector: Commercialisation with Chinese Charact...
The socio-economic value of satellite Earth observations: hu...
ESA Centre to develop Europe’s Space Economy and promote com...
The OECD Space Forum launches second phase of research oppor...
EARSC showcasing Copernicus uses for Environmental Complianc...
The OECD’s stand of “What is Impact Assessment”
Creation of the European Centre for Space Economy and Commer...
Value created by ESA's Space Systems for Safety and Security...
A closer look at the European Commission’s Guide to Cost-Ben...
EUSPA publishes EO and GNSS Market Report 2022
BEA’s “Estimating the United States Space Economy Using Inpu...
A closer look at the latest Earth Observation Services Indus...
ESPI Yearbook 2020 – Monitoring the development of the Europ...
EARSC workshop showcasing 24 Copernicus Sentinel value case...
G20 Space Economy Leaders Meeting 2021
ESA joins the Universeh inaugural conference to address the...
OECD’s approach to space sustainability and the economics of...
ESA announces winners of the Global Space Markets Challenge
Global Space Markets Challenge: Longlists announced
Top 12 companies selected in Global Space Markets Challenge
The Size & Health of the UK Space industry in 2019
Global Space Markets Challenge Competition
Copernicus Sentinel data supporting the pulp and paper indus...
Entrepreneurship and private investment trends in the Europe...
Metalysis–ESA Grand Challenge: team Malt wins first phase
Space Architecture: Economic impacts, future developments an...
ESA_Lab@UCLan: Assessing the public value of ESA programmes
ESA_Lab@Kozminski: A new bird in the nest of ESA_Lab
Call for participants: OECD's initiative on the value and su...
Financing SMEs: options for SMEs and Midcaps in Europe
Copernicus Sentinel Data supporting wine making in France
ESA_Lab@PoliBa: De’ remi facemmo ali
OECD’s analysis of the impacts of Covid-19 on the space indu...
Financing space: options for SMEs and midcaps in Europe
Discussing impact assessment of Big Science projects during...
ESA and Metalysis Organised the First Grand Challenge Midter...
Why it is important to keep investing in space during and af...
The benefits of Copernicus’ Sentinel data to society, enviro...
Join the First Online Global Space Economic Workshop
Join the Third Online Global Space Economic Workshop
Join the Second Online Global Space Economic Workshop
Watch again the GSEW Online
A closer look at OECD’s methodology for assessing the scient...
Non-space business? We want to hear from you
Discussing solutions at the Global Space Economic Workshop
The Covid Crisis: for European SMEs, this could be a breakth...
Value created by ESA's Clean Space Initiative
Value created by ESA's Ground Systems Engineering and Operat...
Value created by ESA Science Programme
Value created by ESA's Future Earth Observation Pillar
Value created by ESA Telecommunication Partnership Projects
ESA and Metalysis decide to suspend temporarily the Grand Ch...
Two Teams Competing for a Half-million Prize
Watch again the GSEF 19
Interview with Eric Morel de Westgaver on Europe's space eco...
Global Space Economic Forum: Space Creates Value
ESA at the New Space Economy European Expoforum
Kick off of Metalysis – ESA Grand Challenge: the Race to Min...
ESA Grand Challenge rewards solutions to complex problems
Advancing the understanding and measurement of the societal...
ESA Space Economy Brochure
The socio-economic impact of space activities
ESA at the New Space Economy European Expoforum
Space cybersecurity for smart cities
Setting the stage
Compete in a lunar economy
Last chance to join the competition
Interview with Giulia Pastorella on cybersecurity
Interview with Guglielmo Baeli on the oil and gas sector
Interview with Vincent Bastide on construction
Global Space Economic Workshop
Global Space Economic Workshop
Building cybersecurity at the Global Space Economic Workshop
ESA announces first Global Space Economic Forum
Welcome to the Global Space Economic Workshop
ESA Global Space Economic Forum
What is the Space Economy?
Measuring the Space Economy
Creating value
Challenges of future urban settlements on the Moon and Mars
Building and powering by disruptive innovation
Space workshops to power urban innovation
ESA at Station F: looking for applications to the first Gran...
Game changers for the ESA Grand Challenge
The Moon Race: Pioneering Sustainable Lunar Exploration
Metalysis–ESA Grand Challenge launched
A community of innovation at the Farnborough Airshow and ESA
Join us at Le Bourget to discuss space for commercial purpos...
Fuel the future by joining the Innovation Exchange