Is the space tech bubble bursting? That’s the wrong way to think about it

Fomenting the perception of an economic bubble and subsequently spurring its collapse can be a seductive sport in the financial world.

2021 was a record-breaking year in the aerospace industry, with over $10 billion invested from private-sector funding. Predictably, several voices are now crowding in to claim some credit of wisdom or foresight as they declare the space industry is the latest bubble–too big, too fast, and on the brink of bursting. This belief is misguided–and it underestimates one of the most robust industries of all time.

Today, the aerospace industry is in a formative phase. In addition to security and IP boundaries, the space industry requires government space agencies and venture capital to make building-block investments in sensing, defense, advanced connectivity, and ESG priorities.

Other investments, like space tourism and deep-space habitats, we would distinguish as less essential right now for human survival and the future of our planet. These other, not-right-now investments are larger, more complex endeavors that can ultimately evolve from the essential work being built out now.

Much attention is drawn to those later-stage developments by those foretelling a space bubble collapse. Meanwhile, government spending that supports essential building-block investments is being omitted. With some 70 national space agencies spending $92 billion in 2021, more countries are investing in aerospace capabilities than ever before–a trend that only continues to accelerate.

Gone are the days when the government developed and owned the best technology. In recent years, funding vehicles and commercialization branches have been established across a wide swath of government agencies. Their main purpose? Engage with the private sector outside of prime contractors.

Space startups are improving legacy technologies or building novel business models that unlock new approaches to mission planning and space operations. Space comprises a web of interdependent technologies that no single company can wrangle. In aerospace, collaboration is essential for generating sustainable value.

From the outside, these startups may seem opaque and unaccountable, but they are key to the industry’s survival. The companies that imploded in the dot-com bubble lacked underlying value. However, the fast-emerging aerospace economy comprises many collaborative players who create real products and tangible services to address extreme environments…