Space innovation no longer sits on the fringes of the economy. It now fuels defense, data, and strategic intelligence, capturing serious investor attention—even during periods of market instability. In the second quarter of 2025, space technology raised $7.8 billion from 113 enterprises.

Surprisingly, this didn’t involve a major deal from SpaceX, once the undisputed giant of the field. Instead, the surge came from diversified players—those building hardware, software, and scalable applications directly linked to real-world outcomes.

This shift shows that space exploration is no longer limited to rockets. It’s about systems delivering measurable value back on Earth.

Public Spending is Powering Private Momentum

A key driver behind this wave of investment is government backing. The United States has launched a $175 billion Golden Dome initiative, aiming to reinforce national security through satellite-based resilience. That enormous checkbook is now shaping where startups place their bets.

Private players know the stakes. While commercial space remains dynamic, few funding sources match the reliability and volume of defense contracts. Public sector interest provides long-term runway for companies designing systems that meet national security demands.

European governments are also accelerating their space ambitions. NATO member nations are pledging 5% of GDP toward defense. The European Union’s new Competitiveness Fund features space technology as a priority. Additionally, mergers like Eutelsat’s $1.8 billion rescue and the proposed $3.2 billion Intelsat-SES deal reveal how seriously the EU views sovereign space assets.

Yet, Europe’s capabilities still depend on imports. Nearly 80% of its hardware originates in the US, keeping American aerospace companies at the heart of the global supply chain.

Instagram | @guwahatiplus | The United States Golden Dome initiative helps turn public funding into private space momentum.

Building the Infrastructure Layer

The second quarter saw $3.2 billion invested in what’s known as the “picks and shovels” layer—companies producing satellites, propulsion, and launch platforms. That marked a 60% increase over the previous quarter, signaling that foundational systems are once again in high demand.

Key examples include:

1. Applied Intuition: Raised $600 million in a Series F
2. Impulse Space: Secured $300 million in a Series C round

Both companies support the Golden Dome's tendency for dual-purpose, AI-native solutions. These businesses aren’t speculative; they’re essential. Their platforms support surveillance, communication, and national defense systems that are already operational.

Series C valuations jumped by 30%, and average seed checks hit $8 million—evidence that venture firms are now prioritizing defense-aligned assets with scalable tech.

Although SpaceX remains a juggernaut with a projected $15.5 billion in 2025 revenue, its position no longer seems unshakable. With multiple Starship failures this year and increasing regulatory scrutiny, investors have started eyeing alternatives.

Companies in regions where SpaceX used to dominate accounted for eight of the ten biggest infrastructure agreements this quarter. That kind of competition benefits the broader space ecosystem and gives investors more options to diversify risk.

Where the Real Value Lies

While rockets get headlines, application-layer platforms are raking in revenue. These aren’t flashy launch vehicles—they’re defense-focused software systems that use satellite data to produce actionable intelligence.

This segment raised $4.4 billion last quarter, the second-highest showing in three years. A staggering 86% of those funds targeted geospatial intelligence (GEOINT). These platforms provide critical advantages in defense, agriculture, disaster response, and cybersecurity.

Top deals included:

1. Anduril: Closed a $2.5 billion Series G
2. Helsing (Europe): Attracted $683 million
3. Chaos (US): Raised $275 million

Application-layer companies often appeal more to public investors. Many already trade on major exchanges or are IPO-ready. With reduced exposure to hardware delays or technical launch risks, these firms deliver faster returns and higher scalability.

Exits Are Back—But Investors Are More Selective

Historically, the space sector’s growth story came with high risk. Out of 637 infrastructure startups funded at seed stage since 2009, only 14 reached Series E. That’s a survival rate of just 2%. Most falter at the Series C-to-D transition due to mounting technical and commercial challenges.

In contrast, software-driven space startups show stronger staying power. Two-thirds of companies that hit Series D successfully advanced to Series E. Application models scale faster, especially once product-market fit is validated. Q2 also saw a revival in liquidity. There were 20 notable exits worth $1.8 billion, including two IPOs and 18 acquisitions.

Among them:

1. Voyager Technologies debuted at 26x sales, surged 82% on opening day, then dipped due to a $66 million loss despite $144 million in revenue
2. CaoCao Mobility had a much lower 1.3x sales valuation and still struggled post-listing

Despite mixed performance, activity levels suggest confidence is returning. Firefly Aerospace has already filed for a Nasdaq IPO, while ICEYE and Sierra Space may follow. The trend toward mergers and acquisitions also shows strength, with 2025 expected to surpass last year’s M&A volume.

However, the market has shifted. Gone are the days of “growth at all costs.” Acquirers now demand financial discipline and demonstrable revenue traction before committing to deals.

What Investors Should Watch Next

Freepik | Investors follow space software firms as defense missions and margins drive bigger checks.

The next phase of growth won’t revolve solely around rocket launches. Instead, investor attention is shifting toward scalable returns based on grounded outcomes. Here’s what to monitor:

1. Defense-Focused Solutions Will Keep Dominating

Space companies aligned with government missions continue to secure larger, multi-year contracts. Their growth paths remain more stable, supported by national priorities.

2. Revenue and Efficiency Are King

Investors rewarded profitability and clarity. Startups with paths to sustainable margins—like Anduril and SandboxAQ—earned larger checks. Others faced hesitation.

3. Application-Based Startups Will Lead Public Growth

Software-driven platforms that make use of satellite data are accessible to a wider investor base. Their faster go-to-market timeline and proven scalability offer fewer obstacles than traditional hardware firms.

A New Frontier With Tangible Returns

The space economy has entered a defining chapter. More capital is flowing into startups that provide real, earth-based value using orbital data and infrastructure. With global governments increasing spending, scalable software platforms gaining traction, and private markets regaining confidence, the outlook remains strong.

The second quarter of 2025 proved one thing: future winners won’t just launch into space—they’ll deliver measurable outcomes down here, where impact matters most.