Defense, space firms turn to SPACs as investor appetite soars

• President Trump proposed a sharp increase in 2027 defense spending with the national defense budget totaling approximately $750 billion, up from the prior enacted budget, driving sector momentum.
• Nine SPACs are currently seeking defense or space targets with about $2.35 billion held in trust, suggesting more deals could emerge in the near term.
• The Trump family has expanded ties to the sector, with Eric Trump investing in counter-drone company and drone maker, while Donald Trump Jr. has been involved in several defense and space investments.

Defense and Space Firms Accelerate SPAC Listings Amid Surging Investor Demand

Early-stage defense and space companies are increasingly pursuing public listings through SPAC mergers in 2026, leveraging flexible capital structures and faster market access during a period of heightened investor interest.

Key Figures and Trends

Six defense and space companies have announced SPAC mergers year-to-date, representing approximately 10% of all SPAC deals—double the three deals completed in all of 2025. Additionally, at least seven sector companies pursued traditional IPOs in 2026. Nine SPACs are currently seeking defense or space targets, holding roughly $2.35 billion in trust.

Notable Transactions

U.S. defense firm Ursa Major, which manufactures propulsion systems for missiles and rockets, agreed to a SPAC merger last month. CEO Chris Spagnoletti cited the need to scale production rapidly to meet customer demand without waiting for favorable IPO market windows. Quantum Space and Elroy Air also announced SPAC deals in June, with Elroy securing a multi-year U.S. Army contract for autonomous aircraft development.

Market Drivers

President Trump has proposed increasing the 2027 national defense budget, creating substantial growth opportunities. The evolving nature of warfare, particularly drone technology deployment in Ukraine and the Middle East, is benefiting newer defense startups. SpaceX's recent listing has amplified investor enthusiasm for the space sector. Sierra Space's valuation surged over 50% in three years, reaching significant levels in its March funding round.

Political Connections

The Trump family has expanded defense sector ties, with Eric Trump investing in counter-drone company and drone maker ventures, while Donald Trump Jr. has made several related investments.

Risks

Industry experts note that SPAC mergers offer flexibility but can result in shareholder dilution and face scrutiny concerns compared to traditional IPOs.