Five years ago, investor Katelin Holloway made what she refers to as a “literal moon shot” investment. As a founding partner of the venture capital firm Seven Seven Six, Holloway candidly admits that she and her team had “no clue” about the technology being pitched by the rocket company Stoke Space, which specializes in reusable launch technology. “We knew full well we were not the specialists,” she reflects. Since that pivotal moment, Holloway has expanded her portfolio to include investments in Interlune, a company with ambitious plans to harvest helium-3 from the Moon for applications in quantum computing and medical imaging.
Holloway is acutely aware of the skepticism that these groundbreaking investments may provoke. Nevertheless, her evolution from a space novice to a savvy investor mirrors a significant transformation within the venture capital landscape. Increasingly, venture capitalists without formal aerospace engineering backgrounds are stepping into the realm of space startups. According to data from PitchBook, global venture investment in space technology skyrocketed to $4.5 billion across 48 companies by July, a figure that is more than four times what space startups attracted in 2024.
So, what’s fueling this surge? A key factor is the drastic reduction in launch costs, pioneered by companies like SpaceX, which have made space more accessible to entrepreneurs with applications-focused business models. “We are literally as a species sitting on the precipice of space becoming part of our day-to-day lives,” Holloway shared during a recent episode of TC’s StrictlyVC Download podcast. She believes that the world is not yet fully aware or prepared for this impending reality.
This newfound accessibility has prompted VCs to shift their focus from traditional rocket manufacturing to startups that leverage space-based data and infrastructure for innovative applications. These include areas such as climate monitoring, intelligence gathering, and communications. Additionally, investors are increasingly interested in sectors like orbital logistics, in-space manufacturing, satellite servicing, and lunar infrastructure development.
Companies like Interlune epitomize this new investment category. For investors like Holloway, the allure often lies at the intersection of space tech and climate tech, targeting startups that aim to avoid replicating Earth's environmental mistakes in the cosmos. Furthermore, geopolitical tensions are also making defense-related space startups increasingly attractive. The rapid advancement of China's space capabilities has led to heightened U.S. investments in this sector.
Venture capitalists tend to be cautious, and defense spending provides a reliable customer base, giving them greater confidence in the commercial viability of emerging space technologies. At the recent Department of the Air Force Summit, Defense Secretary Pete Hegseth emphasized, “I feel like there’s no way to ignore the fact that the next and most important domain of warfare will be the space domain.”
This year has seen numerous U.S. defense-oriented space startups successfully close significant funding rounds. For instance, True Anomaly, a developer of military-class orbital systems, announced a $260 million Series C funding led by Accel in July. Meanwhile, K2 Space, a satellite manufacturer, is currently working on its first government mission and recently raised $110 million, co-led by Lightspeed Venture Capital and Altimeter Capital.
The defense aspect adds a layer of appeal to space investments that may otherwise seem too risky. Holloway notes that helium-3, which Interlune plans to harvest, has national security applications, including the ability to detect nuclear weapon movements.
Moreover, advancements in artificial intelligence are generating further momentum in the space sector, particularly at the intersection of geospatial analytics and intelligence. A notable example occurred in March when the first satellite launched from Fire Sat, a collaboration between Google, the nonprofit Earth Fire Alliance, and satellite manufacturer Muon Space, aimed at detecting wildfires from orbit. This initiative plans to deploy over 50 satellites specifically designed for wildfire detection.
Additionally, Planet Labs, an earth imaging operator, has partnered with Anthropic to analyze Earth observation data, further illustrating the growing convergence of AI and space technology.
Interestingly, the timeline for returns on these investments has significantly shortened. Traditional space companies often required decades to yield returns, but today’s VCs believe they can achieve liquidity within standard 10-year fund horizons. “Our fund model hasn’t changed, so we still have a 10-year horizon,” Holloway explains. “We would not have made this investment if we did not think we could create outsized returns within 10 years.”
This ambitious timeline is beginning to resonate with public markets. For instance, Voyager, a space infrastructure company, went public in June with a market cap of $1.9 billion, closing its first day up 82% from its IPO price, despite experiencing a subsequent decline of roughly 45%. Similarly, Karman Space & Defense, a 48-year-old space systems manufacturer, opened 30% above its listing price in February and has seen its shares rise nearly 60% since then.
For Interlune, Holloway envisions potential exits through strategic acquisitions by aerospace or defense giants, energy company purchases, or even government buyouts due to the described national security implications. The convergence of factors such as cheaper launch costs, increased defense spending, AI applications, and compressed timelines for returns are reshaping who can invest in space.
Holloway’s diverse background—from public school teacher to Pixar script supervisor, and from Reddit's VP of People & Culture to venture capitalist—underscores the varied skill sets these companies now require. While she may be modest about her understanding of helium-3 harvesting physics, her operational expertise is undeniable. “At the end of the day, a company is a company,” she asserts. “If you’re bringing humans together to build something hard, you need someone with a background in building strong companies.”
Whether this approach will yield successful outcomes remains uncertain. The space economy still faces numerous technical and regulatory challenges that more traditional software startups have rarely encountered. However, as more generalist VCs like Holloway place their bets, the narrative is shifting. Space is beginning to lose its reputation as a specialized niche and is emerging as another vibrant sector, where operational know-how can be just as crucial as technical expertise.
