In a bold move that reflects shifting trends in investment, Katelin Holloway, a founding partner of venture firm Seven Seven Six, made a groundbreaking investment in Stoke Space—a company pioneering reusable launch technology. Back then, she admits, her team had no idea what they were diving into, saying, “We knew full well we were not the specialists.” Fast forward five years, and Holloway has expanded her portfolio to include Interlune, a company aiming to extract helium-3 from the moon for revolutionary applications in quantum computing and medical imaging.

This foray into space startups indicates a substantial transformation in the venture capital landscape, where investors with no aerospace expertise are increasingly backing space technologies. Recent data from PitchBook reveals global venture funding in space tech soared to an impressive $4.5 billion across 48 companies by July, eclipsing the $1 billion raised by space ventures just last year.

But what’s fueling this newfound interest? The dramatic reduction in launch costs, thanks in large part to pioneers like SpaceX, has opened the floodgates for founders creating businesses that leverage space data for practical solutions like climate monitoring and communications. Holloway expressed the sentiment perfectly on a recent podcast: “We are literally as a species sitting on the precipice of space becoming part of our day-to-day lives.”

Furthermore, geopolitical tensions have ignited a surge in defense-related space startups as the U.S. ramps up its investment in response to China’s advancing capabilities. Investors are more confident when they know the U.S. government can be a reliable customer, boosting the commercial viability of these ventures. Defense Secretary Pete Hegseth emphasized this need for space investment at a recent Air Force summit, highlighting space as the next critical frontier of warfare.

This year alone, several U.S. defense-focused space startups like True Anomaly and K2 Space have secured significant funding rounds, with True Anomaly raising a staggering $260 million and K2 Space bringing in $110 million to support government missions. Defense-related applications give these investments a level of credibility that reduces perceived risk.

Artificial intelligence further accelerates this momentum. Initiatives like Fire Sat—developed in partnership with Google—are introducing satellites specifically designed to detect wildfires from space. Similarly, Planet Labs' collaboration with Anthropic aims to leverage AI for enhanced Earth observation data analysis.

Even more astonishing is the shortened timeline investors are expecting for returns. Traditional space ventures often took decades to yield profits, but contemporary VC beliefs now lean towards achieving liquidity within the typical 10-year fund horizon. Holloway asserts, “We would not have made this investment if we did not think we could create outsized returns within 10 years.”

Public markets are actively responding to this new breed of space companies. Voyager, a space infrastructure firm, debuted on the New York Stock Exchange in June, initially soaring by 82%. Although its share price has since fluctuated, the buzz around space investments remains palpable.

For businesses like Interlune, potential exits could involve strategic buyouts by major aerospace or energy corporations, or even government acquisition due to the significant national security implications.

The convergence of accessible launch costs, increased defense spending, AI innovations, and a faster return timeline is redefining the space investing landscape. Holloway’s impressive journey—transitioning from a public school teacher to a unicorn-hunting venture capitalist—underscores the diverse skill sets now essential in the space sector. “At the end of the day, a company is a company,” she remarks, highlighting the value of operational expertise in navigating this complex frontier.

While it's yet to be seen whether this eclectic approach will succeed, the budding space economy presents untapped potential. As generalist investors like Holloway put their chips down, the sector is evolving from a niche pursuit to an intriguing new arena where operational skill trumps technical knowledge. The age of space investing is just beginning.