Early-stage defense and space companies are increasingly going public through mergers with special purpose acquisition companies this year, drawn by faster access to capital and rising investor interest in the sector.
SPAC mergers, in which a listed shell firm merges with a private company to take it public, let companies negotiate valuations privately and secure financing before listing. That gives them more certainty over fundraising and less reliance on favorable market timing than a traditional initial public offering.
Six defense, space or satellite-related companies have announced SPAC mergers so far this year, about 10% of all such deals, up from three in all of 2025, according to SPACInsider data. At least seven other defense and space firms have gone public through conventional IPOs in 2026, LSEG data show.
U.S. propulsion firm Ursa Major, which develops systems for missiles and rockets, agreed to a $2.3-billion SPAC deal last month. Chief Executive Chris Spagnoletti said customer demand was outpacing supply and the deal would provide capital to close that gap.
“A traditional IPO would have meant taking our timing from the market rather than from our customers, and we didn’t want the schedule set by whatever next year’s window looks like for defense,” Spagnoletti said. “Public market capital lets us expand domestic production at the moment customers are asking for more capacity, more speed and better pricing.”
Space has emerged as a leading pick, driven by rising government and commercial spending on satellite networks and communications. The planned listing of Elon Musk’s SpaceX has added to interest, while hypersonic flight company Stratolaunch is preparing for an IPO. In the private market, Sierra Space‘s valuation rose more than 50% over three years to $8 billion in its March funding round.
National security spending is part of the backdrop. President Donald Trump has proposed a national defense budget of about $1.5 trillion for 2027, up from the enacted $901 billion in 2026, as the administration works to replenish stockpiles depleted by arms shipments to allies and munitions used in the Iran conflict. The push to accelerate weapons output has widened openings for newer entrants.
The changing nature of warfare has also created room for startups, with drones playing a growing role in conflicts in Ukraine and the Middle East. The sector carries political connections: Eric Trump is an investor in counter-drone company Space-Eyes, which has agreed to a SPAC deal, and has backed drone maker XTEND, while Donald Trump Jr. has been involved in several defense and space investments.
Nine SPACs are currently seeking defense or space targets, with about $2.35 billion held in trust, SPACInsider CEO Kristi Marvin said. Quantum Space and Elroy Air both announced SPAC deals in June.