The perils of going public too early
During the heyday of the 2020-2022 SPAC investment bubble, more than a dozen space companies filed to go public, ranging from established players like Planet and Spire to early-stage, pre-revenue startups. Another half dozen space companies rode the same investment wave to a more traditional IPO. The surge in exit activity was a boon for VCs and early-stage investors, some of which were holding long-dated investments with lofty private market valuations. The SPAC vortex welcomed all comers.
But not all comers deserved to be public, and many have come to regret their decision. Fabien Jordan, the CEO of the Swiss Internet-of-Things company, Astrocast, framed the issue perfectly in an August 20 LinkedIn post, after his company delisted from the Euronext Growth Exchange almost three years to the date from when it went public.
“From a business maturity standpoint, it was too early to list the company as we were still in a pre-revenue phase, but it provided access to sorely needed capital,” he wrote. “Once the initial excitement of the public listing wore off in 2022, being public made it more difficult to access fresh capital.”
And the body count is growing. Astra, the flashy small launch provider that went public in July 2021 with a $2.1B valuation, delisted last month. That follows Virgin Orbit’s $3.7B flameout after 15 months as a public company. And just yesterday, German optical crosslink manufacturer Mynaric slashed its midpoint 2024 revenue guidance by 70%, raising liquidity concerns. Another half dozen space companies that went public since 2020 are trading at market capitalizations below $200M – most with diminishing cash reserves.
The moral of the story? Funding space startups, which are notoriously capital intensive with long development cycles, is a tricky business. And the consequences of choosing the wrong path can be fatal. On that point, it’s worth noting that two companies that cancelled their SPAC transactions in 2022, D-Orbit and Tomorrow.io, were subsequently able to raise a collective $194M via late-stage VC rounds.
SOURCE: https://x.com/strocast/status/1825980942059528312