The most recent quarterly report from specialist investor Space Capital shows that despite obvious impacts stemming from the current coronavirus pandemic, investment in general in space startups didn't suffer as much as some predicted -- and interest surged specifically in the "Applications" category they track, which monitors companies building software on the data layer enabled by in-space observation and communication assets.
Space Capital's Q2 report did report an 85% decline quarter-over-quarter versus Q1 in terms of infrastructure investment, which is a clear sign that investors have been wary of spending on big, expensive new companies actually building and launching space hardware. We saw the result of some of that retraction with mergers and bankruptcies, including the high-profile bankruptcy and subsequent sale of satellite constellation operator OneWeb.
The good news on the software layer is that the quarter saw $5.3 billion invested in these companies, including $4.5 billion in the U.S., according to the report. And VC funding overall is actually up 4% year-over-year for H1 2020 versus H1 2019, the firm notes -- though Q2 investment taken on its own is down 23% year-over-year relative to Q2 2019.
On the whole, the space sector saw $12.1 billion in equity-based investments to date in 2020, across 112 rounds, with early-stage investments totaling $303 million of that, across 67 rounds. The bulk of those were either seed or Series A investments.
It's worth noting that the Applications layer as tracked by Space Capital includes essentially any company that relies heavily on GPS and PNT-based navigation for their software, including large companies like Waymo that need that data to make their self-driving technology work.
GPS is unquestionably one of the largest and most successful space-based infrastructure investments that continues to bear considerable fruit, in terms of new businesses being built and legacy industries continuing to be updated and disrupted. Many in space investment are seeking a successor to GPS -- not necessarily in terms of its specific function, but definitely in terms of a space-based technology that has as broad and lasting impact.
You can read the full report from Space Capital below: