CONTRIBUTORS
James Cross, CFA
Co-Head of Private Investing
Ryan Biggs, CFA
Co-Head, Private Investing
Richard Herbert, CFA
Head of Investor Relations
Robert Stevenson, CFA
Co-Head of Private Investing
Dylan Serrentino-Mullins
Research Associate
Executive summary
- SpaceX is not the culmination of the space opportunity—it is the infrastructure unlock. Reusable launch transformed access to orbit from a scarce, bespoke event into recurring infrastructure, creating the conditions for a broader commercial space economy.
- Government procurement reform helped create the SpaceX success story, and the model is spreading. Early support from DARPA, the Air Force and NASA, combined with commercial-first contracting approaches, enabled SpaceX to develop technologies with both government and commercial applications. Today, agencies such as NASA and Space Force are increasingly institutionalizing that same approach, reinforcing the conditions that helped create the modern space economy.
- The modern space economy possesses several distinctive structural growth characteristics. Space is one of the few sectors where dual use is operationally real, benefits from a modernization-focused buyer in Space Force, is seeing commercial-first acquisition models spread, offers earlier international market access and provides multiple paths to scale and liquidity.
- Together, these characteristics support a compelling venture investment opportunity. A growing commercial market, expanding government demand, increasing public-market receptivity and durable bipartisan support have created a foundation that may support the next generation of venture-backed space companies.
The global space economy has compounded through every market cycle: independent estimates average roughly $570 billion for 2025—up from about $400 billion in 2020 and roughly $267 billion in 2010—growing at more than twice the pace of global GDP. Independent forecasts converge on a market that crosses the $1 trillion threshold by the early 2030s, with a blended trajectory of roughly $1.35 trillion by 2035.
Investor interest has grown alongside the market itself: venture investment in space companies reached roughly $10 billion in 2025 on a blended average of the major independent trackers—an all-time high on both the Seraphim and BryceTech indices—and the SpaceX IPO gave the sector the most-watched public debut in market history.
Yet focusing solely on SpaceX risks overlooking the broader story. In our view, SpaceX is not the culmination of the space opportunity; rather, it represents the infrastructure unlock that makes the next generation of venture-scale space companies possible.
Evaluating current space investment opportunities requires understanding the recent structural changes and the key characteristics that distinguish space from other areas of defense and emerging technology. We explore these points here and discuss the timely reasons we remain constructive on space as a venture investment segment.
Conclusion
The modern space economy emerged from a series of structural shifts that transformed access to orbit, changed how governments procure innovation and expanded the role of commercial providers across the sector. Today, space benefits from a combination of characteristics that are uncommon elsewhere in defense technology: authentic dual-use demand, supportive procurement dynamics, a modernization-focused customer base, international market opportunities and multiple pathways to scale and liquidity. We believe these factors create an especially favorable foundation for venture-backed space companies.
WHAT ARE THE RISKS?
All investments involve risks, including possible loss of principal.
Equity securities are subject to price fluctuation and possible loss of principal.
Companies in the infrastructure industry may be subject to a variety of factors, including high interest costs, high degrees of leverage, effects of economic slowdowns, increased competition, and impact resulting from government and regulatory policies and practices.
Investment strategies which incorporate the identification of thematic investment opportunities, and their performance, may be negatively impacted if the investment manager does not correctly identify such opportunities or if the theme develops in an unexpected manner. Focusing investments in information technology (IT) and technology-related industries carry much greater risks of adverse developments and price movements in such industries than a strategy that invests in a wider variety of industries.
SpaceX was chosen for this case study as it is the largest IPO in market history to-date.
Any companies and/or case studies referenced herein are used solely for illustrative purposes; any investment may or may not be currently held by any portfolio advised by Franklin Templeton. The information provided is not a recommendation or individual investment advice for any particular security, strategy, or investment product and is not an indication of the trading intent of any Franklin Templeton managed portfolio.
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