My impression is that when most people outside the industry hear the word “space” or think about “space investing,” it conjures up connotations of science, exploration, astronauts, and perhaps some Hollywood-style tweaked footage of alternate space shuttles.
But the reality is that space has been what the Defense Department calls a “warfighting domain” from the beginning: the first orbital rockets, satellites, and even the Apollo architecture were created by the military and its aerospace contractors. Less than five years old, the U.S. Space Command already has an annual budget larger than NASA’s. This is despite the fact that the latter is old enough to be the grandfather of the Space Force and enjoys the enviable status of being one of the most beloved federal agencies.
Even among NASA personnel, “combat flight hours logged” is listed on astronaut resumes as often as anything else.
Historically, the winners of the biggest defense contracts have been the winners of the biggest defense contracts for many years, and that remains true today: SpaceX has earned a coveted spot in the military for its roles, whether it’s launching rockets for the Space Force or building satellites for the NRO.
Top space companies derive significant, if not the majority, of their revenue from military contracts with the US and its allies, and these military space contracts are often a company’s “success” moment, as Rocket Lab CEO Peter Beck told me earlier this year when the company competed in the $10 billion PWSA Sweepstakes.
“This is exactly what [defense] “Prime … means one contract that doubles the company’s backlog overnight,” Beck told me at the time.
And the importance of military contracts is spreading further upstream, with venture capitalists more explicitly looking to startups that are winning and delivering on early military contracts.
Global conflicts such as Russia’s invasion of Ukraine and rising tensions between China and Taiwan further highlight how important space-based capabilities are to the world’s militaries, whether those of the United States or its adversaries.
So as you tuck into a hot dog tomorrow and watch your local fireworks, it’s worth remembering why what’s up in the sky is so important to what’s on the ground, including parts of space that might seem unrelated at first glance, like private space stations and returning to the moon.
Happy Independence Day!
