Strong US defense spending draws investors to space startups, report says

Yahoo

14-07-2025

By Jaspreet Singh and Akash Sriram
(Reuters) -Space startups continued to draw investor dollars in the April-June period, making it the second strongest quarter on record for funding, as increased U.S. defense spending is expected to boost the sector's prospects, an industry report showed on Monday.
Global investments in startups, ranging from early stage to growth stage, surged to $3.1 billion in the quarter ended June 30 from $2 billion in the first three months of the year, according to VC firm Seraphim Space's report.
Notably, Series B and C funding rounds accounted for a record 65% of total investment, signaling strong investor conviction in scaling early-growth space ventures.
Concerns over potential spending cuts under the Trump administration have done little to dampen funding momentum, as major defense initiatives - most notably the Golden Dome missile defense program - fuel investment and bolster optimism across the sector.
"Given today's geopolitical climate, the pull from defense is strong, and founders are responding," Seraphim Space investment analyst Lucas Bishop said.
Much of this momentum is being driven by capital-intensive areas such as rocket launches, space infrastructure, and satellite manufacturing and operations, Seraphim Space said in its report.
The $175 billion Golden Dome missile defense shield initiative by the U.S. also drove investor optimism in the space sector, spurring new deals and partnerships among leading companies, according to the report.
"More investors now see national security as a viable end market, with government customers offering early adoption pathways, non-dilutive funding, and R&D support - advantages rarely found in commercial markets," Seraphim Space's Bishop said.
Globally, the number of deals in the second quarter grew about 36% to 171, compared with the first quarter, the report showed.
U.S.-based Impulse Space, which designs, manufactures, and operates in‑space transportation vehicles, raised $300 million in a Series C round, making it the biggest deal of the second quarter.