/sci/ - Science & Math

https://spacenews.com/lower-space-company-price-tags-pave-the-way-to-more-acquisitions/

>“There were a lot of deals that we haven’t participated in over the last five years because the companies were overvalued,” said Megan Crawford, co-founder of venture capital firm SpaceFund.

>“I like to refer to this as the magic space sprinkles,” she said, “you add space, or AI, or blockchain to the name of your company and all of a sudden the valuation goes up by 100x.”

>She said this issue was compounded by a spurt of early-stage space companies that went public in recent years by merging with a special purpose acquisition company (SPAC), often with lofty business projections despite a lack of current revenues.

>Their high-profile valuations helped raise price tags across the rest of the industry, however, the vast majority of early-stage companies that merged with a SPAC have since significantly underperformed in the public market.

>“On the public side, I think there’s a lot of blowback from public equity investors about the newspace sector,” said Matt Kuta, chief operating officer at industry consolidator Voyager Space.

>He said “a lot of institutional investors have lost hundreds and hundreds of millions of dollars, and that then trickles down to the folks that are looking to allocate private capital.”

>The poor trading performance of space companies that went public via a SPAC, coupled with high inflation and other macroeconomic challenges, are weighing on valuations as investors become more conservative in general.

>The hype that had been inflating space valuations is “starting to fade,” Crawford said, “and we’re starting to see deals that are a lot more in line with what we think are the real valuations of a lot of these … companies that we think were highly over-valued over the last couple of years.”