Who’s Investing in China’s NewSpace? FutureAerospace Provides Some Answers in Latest Report

Note: the figures in this blog post come from FutureAerospace’s latest Commercial Space Investment Race report. In this article I have translated and commented on them. Original report in Mandarin is readily available on the web, for example at [1] or [2].

Yes, China’s NewSpace is growing. But Who is Backing Them?

Space industry observers are generally aware that a very significant amount of investment has been pouring into China’s New Space, which consists currently of anything between 50 to 100 companies depending on the definition of “NewSpace”. In 2018 alone, 2.1 billion RMB was invested in space startups. But where is this capital coming from? Which VCs are the backbone of China’s NewSpace investors?

FutureAerospace, a Beijing-based investor and consultancy, recently published its Commercial Space Investment Race report, giving some answers to the aforementioned questions. Below are the main highlights, that I have translated and commented.

1) An Ever-increasing Number of Investors in China’s Space Sector

featured invest image

According to the report, 161 rounds of investment in China’s commercial space sector have taken place between 2015 and July 2019. Investment has come from 218 different companies, which gives us an average of 1,35 operations in the space sector per investment firm.

This low average shows a seemingly low level of specialization in space among the investors, which may have done a “one-shot” investment as an extension of their initial investment scope (such as investing in an IoT constellation for a VC focusing on IoT, smart agriculture, industry 4.0…). Another potential explanation could be the strong presence of local government-linked entities, investing in the one or two local space startups to provide financial support. This could be the case in secondary NewSpace hubs like Changsha, Wuhan, Chengdu, etc.

On the other hand, there are several very active VC companies, which have initiated between 3 and 8 different investments into NewSpace startups. Among these VC companies are highly respected players such as Matrix Capital China, Shunwei Capital and Shenzhen Capital. There are 18 venture capital firms that are at 3 investments or above, and it can be observed that a majority are private, (initially) tech-oriented VC companies which provide strong experience in growing and scaling.
The corollary is that the remaining 200 investors are at 2 investments or lower. While the top 18 investors tend to highlight the “private capital”, “tech” image of China’s NewSpace, the other 200 could very well be state-sponsored, one-shot investors. More study on this question has to be done before coming up with any further conclusion.

most active investors in china newspace

2) A Growing Interest from Investors for Commercial Space

FutureAerospace’s report also provided the number of investors in space per year between 2015 and 2018. Unsurprisingly, it is a steady increase, with a notable +75% jump between 2015/2016, and 2017/2018. This growing confidence from investors into the space sector was also noted during China Space Day 2019.

Chinese Companies investing in space per year chart

3) Where are these Investments going on the Industry Value Chain?

From the data available, satellite manufacturing has attracted the most investment in terms of investment rounds (52). Close behind are Satellite Applications, in other words the downstream of the value chain, at 51 rounds. Remote sensing is the most popular subsection (24) , behind Satcom (17). The activities linked to satellite launching has also attracted significant investment rounds (36), in accordance with the high number of private launcher companies that have been observed over the past year.

What the FutureAerospace does not mention is the classification based on the amounts raised, rather than the number of rounds. The absence of this information is not entirely unexpected, as startups don’t necessarily make public the amounts raised. FutureAerospace however indicates that “conservative estimates” put the total amount of capital raised between 2015 and July 2019 at at least 10 billion RMB, in other words approximately 1.42 billion USD.

Investment Operations in China's NewSpace

References

[1] 商业航天投资赛道布局报告, 36kr, 16 August 2019
[2] “商业航天投资赛道布局报告” 发布 , 际商业航天, 16 August 2019

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s