Tech Investors Double Down on AI, Commercial Space

Article By : George Leopold

Venture funding has resumed flowing into these two key technology sectors, which investors see as both the hottest and safest prospects...

Artificial intelligence and commercial space startups were among the sectors targeted most by aggressive technology investors during the second half of 2020.

The web site Buyshares.com reported just before the holidays that AI startups attracted $9.9 billion in venture funding over the last six months. The 15-percent annual jump represents a major turnaround for the AI sector after investments declined 30 percent year-on-year during the pandemic-ravaged first six months of 2020.

Investor enthusiasm in machine learning, natural language processing and computer vision developers may be tempered, however, by reports of steep losses among technology pioneers. DeepMind, the AI lab acquired by Google parent Alphabet in 2014, earlier this month reported a $649 million loss for 2019.

According to a filing with the U.K. Companies House, Alphabet also wrote off  $1.48 billion in debt associated with loan and interest repayments due from London-based DeepMind.

DeepMind acknowledged in the filing it would “continue to face risks and uncertainties, which may have a significant impact on its ability to achieve continued success within its market.”

Still, AI is emerging as a strategic technology with a growing list of chip makersintroducing AI-based processors for an expanding roster of consumer and industrial applications. For example, the Israeli-based startup Hailo completed a $60 million funding round earlier this year that will be used to ramp up AI chip production.

The way forward for commercial space startups looks even more promising. Most notably, Relativity Space notched among the largest single technology investments of 2020 when it closed a Series D round in November valued at $500 million. The round was led by Tiger Global Management.

The rocket company that uses 3D printing technology to fabricate components currently boasts a market valuation of about $2.3 billion.

The Los Angeles-based startup plans to launch its first 3D-printed Terran 1 rocket in 2021. It has logged a series launch services agreements while expanding its footprint at NASA facilities in Mississippi and Cape Canaveral as well as Vandenberg Air Force Base, Calif.

In early December, Relatively Space announced a NASA contract to demonstrate its ability to launch CubeSats into low-earth orbit aboard the Terran 1 booster. The NASA contract is the eighth on the startup’s launch manifest. It is also working with aerospace giant Lockheed Martin on a separate NASA contract designed to demonstrate in-orbit refueling capabilities.

Large investor bets on commercial space companies may also foreshadow a period of industry consolidation as upstarts like SpaceX and Relativity Space reduce the cost of launching payloads. For example, Lockheed Martin acquired propulsion specialist Aerojet Rocketdyne earlier this month for about $4.4 billion.

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