Indian Space Tech Takes Off with Record Funding

Key Highlights:-

The Indian Space Tech startup ecosystem achieved a record-breaking funding of $126 million in 2023, marking a 7% increase from the $118 million raised in 2022 and a staggering 235% increase from $37.6 million in 2021.

- India now boasts over 100 space tech startups, with most being established in the last five years.

- Skyroot Aerospace emerged as the highest-funded startup with $99.8 million, followed by Pixxel at $71.7 million and Agnikul at $61.5 million.

- Bangalore leads as the top-funded city in India's space tech sector, followed by Hyderabad and Chennai.

- The top investors in this sector include Speciale Invest, Anicut Capital, and GrowX Ventures.

India’s Space Tech sector is experiencing remarkable growth, driven by substantial government investment. The recent Union Budget allocated INR 1000 Crore to support space technology startups, aiming to boost sector development and attract further investment. This initiative, along with the establishment of the Indian National Space Promotion and Authorization Centre (IN-SPACe) in 2022, is expected to drive significant innovation and growth. Tracxn’s Space Tech Geo Report 2024 provides comprehensive insights into the Space Tech sector in India, focusing on recent trends, funding dynamics, and key developments.

India’s Space Tech sector saw a record-breaking funding of $126 million in 2023, a 7% increase from 2022 and a 235% increase from 2021. Despite a global slowdown in funding, the Indian space tech sector has continued to thrive, driven by substantial government support and significant innovations.

India has emerged as a formidable player in the global space technology arena, with over 100 space tech startups, most of which were founded in the past five years. The Union Budget’s funding of INR 1000 Crore is expected to further boost the industry, attracting more entrepreneurship and investment in the coming months. Currently, India boasts 55 active space assets, including communication, meteorological, and earth observation satellites.

The Indian Space Tech sector's funding landscape is predominantly driven by early-stage investments. In 2023, early-stage rounds attracted $120 million of the total $126 million raised, reflecting a notable growth from $114 million in 2022. Seed-stage funding also saw a significant rise, growing from $4.3 million in 2022 to $5.3 million in 2023, marking a 24% increase. However, the ecosystem for private sector participation in Indian Space Tech startups has yet to experience late-stage funding.

Skyroot Aerospace is the highest-funded active space tech startup in India, with $99.8 million, followed by Pixxel at $71.7 million and Agnikul at $61.5 million. The top-funded business models in this space include Small Satellite Launch Vehicles, Satellite Imaging Services, and Satellite Communication Services. The Small Satellite Launch Vehicle segment has attracted $168 million to date, with Skyroot raising the highest funding in this category.

Despite the vibrant funding landscape, no acquisitions have been observed in 2024 to date. The only acquisition so far is the 2022 purchase of Prakshep, a satellite imagery provider for the agricultural industry, by Arya. Additionally, the sector has yet to witness the emergence of unicorns. MTAR and Ananth Technologies are the only public companies in this space.

Neha Singh, Co-Founder of Tracxn, commented on the report, saying, “India’s Space Tech sector is growing rapidly, thanks to strong government support and a dynamic startup scene. The significant funding and strategic investments we're seeing now are setting the stage for India to become a major player in the global space industry. Looking ahead, we expect the sector to attract even more investment, sparking more innovation. The combination of solid early-stage funding and supportive government policies will be key to driving this growth and establishing India as a leading center for space exploration and technology.”

The privatization of the space sector has catalyzed a multifold increase in activity. The International Astronautical Federation awarded India the prestigious World Space Award for its successful launch of Chandrayaan 3, which made history in 2023 as the first mission to achieve a soft landing on the moon's south pole. This landmark achievement has set a global standard for India’s potential and cost-effective engineering in the space tech industry.

Bangalore leads as the top-funded city in India's space tech sector, followed by Hyderabad and Chennai. Startups based in Bangalore have contributed to more than 55% of the total funding in this space, and it is also the city with the highest number of space tech startups. Among the top investors in the sector are Speciale Invest, Anicut Capital, and GrowX Ventures. Anicut Capital, LetsVenture, and Rosmerta Technologies have been the leading seed-stage investors over the last two years, while Ban Labs, Anicut Capital, and Artha Venture Fund have emerged as the top early-stage investors during the same period.

The evolution of the space industry highlights a global shift from government control to private-sector collaboration. The United States, a pioneer in privatizing its space industry with the 1984 Commercial Space Launch Act, has significantly benefited from private company contributions through NASA's Artemis program. Federal funding for NASA has consistently increased, with $24.8 billion allocated in the 2024 budget. In terms of geographic funding, the US remains a leader in space tech startup funding, although it has seen a decline from $5.5 billion in 2021 to $660 million in 2024.

Europe has seen increased funding in its space tech sector, with $407 million raised in 2024 to date, following a record $512 million in 2023. The UK, while experiencing fluctuations in funding, shows signs of recovery with $135 million raised in 2024 to date. Similarly, the UK has invested €50 million in its Positioning, Navigation, and Timing (PNT) sector since 2017, employing a hybrid model that leverages private technologies for space missions.

In recent years, the European Space Agency (ESA) has shifted to a competition-based model, inviting more private players to develop and launch space missions. This strategic shift aims to attract private investment and boost entrepreneurship in the region. Despite the existence of the ESA, countries like Germany, Italy, and France maintain their space research agencies, working in collaboration with the ESA. The ESA's budget for 2024 is $8.3 billion, a 10% increase from the previous year, with significant contributions from Germany, France, and Italy. A major portion of this budget is allocated to Earth Observation operations (30%), followed by space transportation and navigation.

India's Space Tech sector is rapidly growing, fueled by government support and a dynamic startup ecosystem. Significant funding and strategic investments are positioning India to become a major player in the global space industry, with expectations of attracting more investment and sparking further innovation.