Shifting Landscape of Space Investment
Five years ago, Katelin Holloway, a founding partner at the venture firm Seven Seven Six, made what she describes as a “literal moon shot” investment. Reflecting on this bold move, she admits her team initially had “no clue” about the technology that rocket company Stoke Space was offering when they pitched their concept of reusable launch systems. “We knew full well we were not the specialist,” Holloway acknowledges.
Since that pivotal investment, Holloway has also ventured into Interlune, a company intent on extracting helium-3 from the moon for applications in quantum computing and medical imaging.
Wider Acceptance of Space Ventures
Holloway is acutely aware that her investments may be viewed with skepticism. Yet, her trajectory from being a space novice to a savvy investor mirrors a significant evolution in venture capital, where individuals without aerospace engineering backgrounds are increasingly supporting space technology startups. As of July, global venture capital investment in space technology amounted to $4.5 billion, distributed among 48 companies, marking more than a fourfold increase from what was raised in 2024, according to PitchBook.
Driving Factors Behind Investment Surge
Several factors are propelling this trend. A primary catalyst is the substantial reduction in launch costs by companies like SpaceX, which has made space more accessible for founders focusing on practical business applications. “We are literally as a species sitting on the precipice of space becoming part of our day-to-day lives,” Holloway remarked in a recent episode of TC’s StrictlyVC Download podcast, further emphasizing that “I truly do not think the world understands that or is ready for it.”
This shift has led investors to prioritize startups that harness space-based data and infrastructure for emerging applications, such as climate monitoring, intelligence gathering, and communications. Moreover, they are increasingly interested in areas like orbital logistics, in-space manufacturing, satellite servicing, and lunar infrastructure development. Companies like Interlune epitomize this burgeoning category, attracting interest at the intersection of space technology and climate solutions, where the goal is to avoid replicating Earth’s environmental errors.
Geopolitical Influences and Defense Spending
Geopolitical tensions, particularly around China’s advancing capabilities, have made defense-oriented space startups more appealing. Increased U.S. investment in these sectors is emerging as a response to global threats. Investors are generally cautious, but defense spending offers a stable customer base and validation for new technologies, enhancing the perceived commercial viability of space initiatives. At the Department of the Air Force Summit in March, Defense Secretary Pete Hegseth noted, “I feel like there’s no way to ignore the fact that the next and most important domain of warfare will be the space domain.”
This year has seen several U.S. defense-centric space startups secure significant funding rounds. True Anomaly, a developer of military-class orbital systems, announced a $260 million Series C funding led by Accel in July. Similarly, satellite manufacturer K2 Space is currently preparing for its inaugural government mission and recently closed a $110 million funding round co-led by Lightspeed Venture Capital and Altimeter Capital.
The defense aspect adds credibility to space investments that might otherwise be deemed too risky. Holloway points out that helium-3, which Interlune aims to harvest, has national security applications, including the detection of nuclear weapon movements.
AI and Rapidly Changing Timelines
Artificial intelligence is further accelerating the interest in space, particularly in the realms of geospatial analysis and intelligence. This was exemplified earlier in March when Fire Sat, a collaboration involving Google, Earth Fire Alliance, and Muon Space, launched the first satellite designed for wildfire detection. This project plans to deploy over 50 dedicated satellites for monitoring wildfires from space. Simultaneously, Planet Labs is working with Anthropic to analyze Earth observation data.
Shortened Investment Horizons
Remarkably, the timeline for returns on these investments has significantly shortened. While traditional space companies used to require decades for returns, contemporary VCs believe liquidity can be achieved within standard 10-year fund timelines. Holloway states, “Our fund model hasn’t changed, so we still have a 10-year horizon. We would not have made this investment if we did not think we could create outsized returns within 10 years.”
Although such timelines may appear ambitious, public markets are responding positively to emerging space businesses. Voyager, a space infrastructure company, debuted on the New York Stock Exchange in June with a market capitalization of $1.9 billion, and its shares surged 82% high on its first trading day. Karman Space & Defense, a 48-year-old manufacturer of space systems, also started off on a high note in February, with shares opening 30% above its listing price and further climbing nearly 60% since then.
Holloway envisions various exit strategies for Interlune, including potential acquisitions by aerospace and defense giants, or possibly even a government buyout, especially considering the national security implications tied to their operations.
Redefining Who Can Invest
All these converging influences—lower launch costs, increased defense expenditure, advancements in AI, and shortened timelines—are transforming the investment landscape in space. Holloway’s journey from a public school teacher, to a Pixar script supervisor, to Reddit’s VP of People & Culture, and eventually to a venture capitalist illustrates the diverse skills that are increasingly valuable in this sector. While she remains modest about her expertise in helium-3 extraction, her operational experience stands out.
“At the end of the day, a company is a company,” she notes. “If you’re bringing humans together to build something hard, you need someone with a background in building strong companies.”
Whether this evolving approach will yield results remains uncertain. The space economy largely remains unproven at scale, with many ambitious projects confronting technical and regulatory challenges unseen by traditional software startups. Nonetheless, as more generalist VCs follow in Holloway’s footsteps, space is transitioning from a niche market to a dynamic sector where possessing operational knowledge can be as crucial as traditional aerospace expertise.
