Space investors value firms at defense multiples while the Pentagon buys through demonstration contracts

Bank of America Securities managing director Ron Epstein opened Silicon Valley Space Week on Oct. 27 with a chart showing Planet’s government work at 82% versus roughly 32% the company had sought at its SPAC initial public offering. He covers about 45 aerospace and defense companies and told the room that everybody is doing national security work. Planet said in its quarterly report on Sept. 3 that defense and intelligence accounted for about 70% of its revenue, that the business grew more than 90% year-on-year, and that total revenue rose 58% to $116 million.

Promus Ventures managing partner Mike Collett said on an investor panel that defense had lifted both earnings and multiples across the sector and that it is unfathomable to value a company with so much government revenue at the multiples seen across the market today. KippsDeSanto’s Karl Schmidt said during an investor panel at Silicon Valley Space Week that munitions deals were once priced at six to eight times EBITDA and that his firm had sold one for 50 times. The panel compared historical EBITDA pricing for munitions deals with the higher multiple his firm had just achieved on a sale.

Space Development Agency Director GP Sandhoo, who is also the Space Force’s portfolio acquisition executive for missile warning and tracking, said in his Oct. 28 keynote that a capability shown on orbit with one or two satellites at a c-plus, b-minus level is enough for the agency to go out and buy a plane or tranche of those. He advised companies that succeed build it, show it and then sell it, and said SDA keeps a standing broad agency announcement open where a white paper is all it takes to get an idea in front of the right people.

Last December, the Space Development Agency awarded Rocket Lab an $816 million prime contract. The deal calls for 18 satellites for the Tracking Layer Tranche 3 program.

One or two satellites on orbit serve as the demonstration level under SDA’s production bar, a mark most companies at Silicon Valley Space Week have yet to reach. Below that demonstration bar, the money looks like research rather than production revenue. Northrop Grumman fellow Andy Kwas framed the issue as technologies not ready for prime time, contrasting with Sandhoo’s production-ready standard for hardware on orbit. Moderating an Oct. 28 MilSat panel on warfighter-ready systems, he put the problem to U.S. Space Command chief scientist David Denhard and said that across the Department of War most emphasis is on low technology readiness levels 2, 3 and 4, not really ready for prime time.

Momentus Chairman and CEO John Rood said a roughly $2 million SBIR came through an AFRL and SpaceWERX maneuver competition for a recent rendezvous mission that used a NASA satellite as its target. He, a former Defense Department official, said the award mattered as proof to investors that the company had competed and won.

Rood said SBIRs and similar awards are insufficient to run even a small business, that a demonstration program is typically a one-off, and that every quarter is a survival quarter for tech companies until they are mature. Money spent on a demonstration in a commercial company depends on what comes next, particularly when jobs and the company’s existence are on the line.

Space Systems Command Commercial Space Office Director Col. Timothy Trimailo said on Oct. 28 that some companies in his pipeline want to skip steps and get a big program of record contract before they are ready, then struggle to execute. Trimailo described the procurement gap from the buyer’s side at the Space Force’s commercial office.

Breakwater Strategies founding partner Jen Ross said on the Oct. 29 Golden Dome panel that her clients’ technology remains on the program’s roadmap, but investors are cautious about the money. Momentus CEO John Rood said the government system is really optimized for large contractors while the engine for innovation is smaller businesses.

The Space Development Agency deployed and demonstrated experimental satellites under Tranche 0 in 2024, launched the first batch of Proliferated Warfighter Space Architecture Tranche 1 satellites in September 2025, and paused that effort since November because of technical issues found during on-orbit checks. SDA currently has responsibility for Tranche 1 and 2 Transport Layers of the architecture.

SDA awarded $3.5 billion in other transaction agreements to L3Harris Technologies, Lockheed Martin, Northrop Grumman and Rocket Lab USA for 72 satellites scheduled for launch in fiscal year 2029. Future tranches of the Tracking Layer will transition from SDA to PAE Missile Warning and Tracking.

Space Development Agency Director Gurpartap “GP” Sandhoo was appointed as portfolio acquisition executive for missile warning and tracking in May. The chairman’s mark on the draft National Defense Authorization Act for fiscal 2027 includes language that would eliminate the Space Development Agency and Space RCO and transfer their authorities and programs to the new portfolio acquisition executives. The House Armed Services Committee started work on dissolving the two agencies, which were established in 2018 and 2019 respectively to accelerate emerging space capabilities. Some SDA projects are being transferred to the new PAEs while the agency’s fate remains uncertain.

Under War Secretary Pete Hegseth’s 2025 Acquisition Transformation Strategy, the Space Force replaced program executive offices with nine portfolio acquisition executives to accelerate capability delivery. The Space Force announced six PAE offices under the Acquisition Transformation Strategy, including Missile Warning and Tracking. Air Force Secretary Troy Meink said the move gives PAEs the authority to make decisions quickly after streamlining oversight, speaking at the Space Force Association’s Spacepower Conference in December.

Sandhoo said command of the Transport Layer of the Proliferated Warfighter Space Architecture will transition to the PAE for Space-Based Sensing and Targeting, and that the Transport Layer will become part of the Space Data Network linking communication constellations. Future tranches of the Tracking Layer will move from SDA to PAE Missile Warning and Tracking along with Next-Generation Overhead Persistent Infrared, a four-satellite constellation in geosynchronous and polar orbit to replace the Space-Based Infrared System, and the ten-satellite Resilient Missile Warning and Tracking Medium Earth Orbit constellation.

Under Secretary of War for Acquisition and Sustainment Michael Duffey expects the portfolio acquisition executive structure to reach full operational capability by Nov. 27. The chief of contracts at each portfolio acquisition executive office will have 89 percent authority over contracts, and the PAEs will chair capability trade councils under each portfolio that include warfighters representing operations, testing and intelligence communities. Tom Ainsworth explained the approach was based on models including the Space Development Agency, National Reconnaissance Office and Space Rapid Capabilities Office, and Ainsworth will deliver a keynote at the 2026 Air and Space Summit on July 30.

Maj. Gen. Stephen Purdy, the military deputy for space acquisition in the Department of the Air Force, oversees more than $24 billion in research and development spending and said the Pentagon is more interested in startups building new space sensors and payloads than adding another rocket company. He made the remarks at a space finance conference in Dallas and said the Space Force is more interested in high-volume production than developing the latest technologies.

Purdy said the United States is on a path for mass-produced launch and that payloads at mass-produced affordability and scale are the key element, with missions needing to leave the door in one week rather than two to three years. He told Ars Technica that payloads are “the last frontier” for scaling space missions and that commercial industry has the communications piece down while the military still struggles elsewhere.

Since 2020, SpaceWERX has awarded 23 Strategic Funding Increases to commercial space startups developing sensors, software, satellite components, spacecraft buses and orbital transfer vehicles, including one to ABL Space Systems, which has since exited the space launch market. SpaceWERX is the Space Force’s commercial innovation program, and its record aligns with the history of supporting small startups.

Defense Secretary Pete Hegseth called for a new era of American space dominance in a Feb. 2 speech to Blue Origin employees at the company’s Rocket Factory in Merritt Island, Florida. He said he does not mind people making money but that the bar needs to be raised, as part of his Arsenal of Freedom tour.

American Enterprise Institute senior fellow Todd Harrison said folks across government are increasingly concerned about SpaceX’s dominance in launch and satellite production and that visiting Blue Origin highlights the desire for other sources in space. He said the Defense Department’s acquisition approach aims not to get locked into a single source.

Hegseth visited SpaceX in January and Rocket Lab the prior month while in California, and Blue Origin’s New Glenn rocket is in the process of being certified for National Security Space Launch missions. SpaceX and United Launch Alliance, a joint Boeing-Lockheed Martin venture, are currently the military and intelligence community’s go-to providers for National Security Space Launch.

Hegseth said the Space Force was established in 2019 as the sixth branch of the U.S. military during Trump’s first term, and that Trump signed a Dec. 18 executive order on Ensuring American Space Superiority. The White House did not reestablish the National Space Council, which had been led by Vice President Mike Pence in Trump’s first term.