Ready to Launch: Investing in the Space Economy

Private rocket launches, established lunar bases and interplanetary travel once seemed like science fiction. Today, they’re edging closer to reality. With Artemis II capturing the world’s attention as the spacecraft circled the moon, public interest in space exploration appears to be higher than it’s been in years.

As more entrepreneurs set their sights on the skies, investors across the globe are finding more space-related opportunities to explore. Here’s a look at the current state of the space economy, some of the key players leading the charge and risks associated with investing in the expanding sector.

The growing space economy

Humans have been exploring the cosmos for decades, but the global space economy seems to be taking off like never before. The World Economic Forum estimates it’ll be worth an eye-popping US$1.8 trillion by 2035, nearly triple the US$630 billion it was worth in 2023.¹ Several factors are at play, including cheaper launch costs (which have fallen dramatically over the last two decades), more demand for AI-powered insights into space data and the need for greater satellite-driven connectivity. Private-sector investment in the space economy has also been surging, reaching €7 billion (C$11.3 billion) globally in 2024 – a 20-per-cent increase from the previous year, according to the European Space Agency.²

So, what makes up the space economy, exactly? You might be thinking of satellites, launchers and GPS, and while that’s part of it – these are considered “backbone” applications – the economy is broader than that. It also includes industries benefiting from these space technologies, such as digital communications (think the chips inside your smartphone) and consumer goods, where satellite networks are helping to improve logistics and transportation, enabling companies to generate more revenue.³

Who’s leading the space race?

As the space economy heats up, countries are stepping up their efforts to capture a bigger share of the market, and this could have ripple effects for investors. The U.S., China, Japan and Germany are leading players pouring billions of dollars into their space programs. Much of that funding goes directly to both public and private companies in the form of purchase agreements, defence contracts and grants. Meanwhile countries like the U.K., Norway, South Korea, the UAE, New Zealand and Australia are ramping up their investments in the sector for things like technological innovation and satellite launches.

Canada, whose space sector generated 25 per cent less revenue in 2024 than it did in 2014, is starting to increase its space investments, too. Canada’s total space-related spending reached $549 million in 2024. The country’s space budget is set to grow by 56 per cent over the next decade. The federal government has committed about $180 million to increasing launch capabilities, with two sites already under development in Atlantic Canada.⁴

The space industry used to be largely driven by government policies and was therefore fairly cyclical, but that’s quickly changing. While government still plays a big role, the increasing commercialization of the sector is marking a shift toward more consistent growth, which may be good news for investors.

Ways to gain exposure

While more space companies have gone public in recent years (you can track many of them on the S&P Kensho Space Index, which is up 123 per cent over the past 12 months, as of April 16), many of the major players remain privately held. This limits direct access for investors. Still, there are ways you could potentially gain exposure to the sector, both directly and indirectly.

One possible area to invest in is aerospace and defense (A&D), where many companies already have established space divisions. These businesses typically have diversified revenue streams, which can help reduce volatility that may come with investing in a company that’s only focused on space. Defence companies made up 53 per cent of all investment into space launches in 2024, according to one estimate.⁵

Smaller public companies focused on niches like small satellite launches or geospatial data services could also be an area to consider. Because of their singular focus, these firms might be more volatile but they might offer high growth potential if they take off.

Space-themed exchange-traded funds (ETFs) are also emerging as a way for investors to gain exposure to several companies at once. These funds often include a mix of satellite operators, launch providers, data analytics companies and aerospace and defence firms.⁶

Risks to consider

Despite the excitement surrounding the new space era, the industry is still developing. This makes it potentially risky for investors. While technological advancements and financial competitiveness are expected to drive growth, the sector could also face risks from geopolitical tensions, government red tape and shifting demand.

Another practical challenge is the cost of developing space technologies. While launches have gotten less expensive over time, building rockets, satellites and supporting infrastructure requires significant upfront capital, often with long development timelines and uncertain returns.⁷ Many projects (like Blue Origin’s New Shepard) take years to generate revenue, and some never reach commercial viability (like Orbital Sciences’ Taurus rocket, which had a string of high-profile launch failures).^8,9 In addition, launch failures can result in costly setbacks.¹⁰

While space may no longer be out of reach, investing in it still requires patience, discipline and an understanding that volatility may be a trade-off for potential long-term gains. Investors should remain focused on their goals, risk tolerance and time horizon when looking to the stars.