Written by Lucas Strange

Traditionally, initiatives in space were a state-only playground, with enormous costs and risks that have deterred private companies. However, due to major technological advancements, the landscape is changing as we see entrepreneurs pick up rockets as their new toys. This commercialisation of the space sector, where private players have an increasingly important role, has been dubbed “NewSpace”. The most notable endeavour that encapsulates this entrepreneurial spirit is Elon Musk’s SpaceX and the success of the reusable Falcon 9 rocket.

Due to the large and growing dependence on space technologies, data and services, the space industry has the potential to be a catalyst for large economic growth. Space ventures have attracted over €14.8 billion of investment since 2000, but the period 2011–2017 accounts for nearly two-thirds of the investments. Furthermore, Morgan Stanley value the space industry at $350 billion in 2020, and have estimated that this could go up to $1 trillion by 2040 (Morgan Stanely, 2020).

Space technologies, most notably satellites, support numerous EU policies and key political priorities, including migration, climate change, the Digital Single Market and sustainable management of natural resources. As space is no longer synonymous with government spending, these technologies are being accelerated by private companies to the benefit of Europe’s economy and society. An example is Airbus’ OneWeb, a project for global high-speed internet access consisting of 900 communication satellites (Airbus, n.d.).

Europe has historically been at the forefront of space exploration, investing massively in space infrastructures such as in the Copernicus and Galileo programmes, as well as being at the forefront of technologies beneficiary to the space industry (nanotechnology and optical communications).

However, this leadership has yet to translate into a competitive, commercial advantage within the space industry. As we are moving towards a NewSpace age, with the potential for vast economic growth and technological development, Europe needs to do more to drive its space companies forward.

The investment landscape today in NewSpace is suboptimal and poses a risk for the commercialisation of space technologies in Europe. In a report on the future of the space industry in Europe (De Concini & Toth, 2019), of the 40+ space companies from Europe that were interviewed, 62% indicated they had insufficient funding. Outlook from investors is even more pessimistic with 92% indicating a lack of funding for space companies within Europe.

The lack of private investment is a major shortfall. The less developed venture capital may be rooted in the risk-averse mindset of Europe’s investment culture; these early stage start-ups “require a high risk tolerance from their investors due to their opaqueness, limited track-record and a high degree of technological, regulatory or market risk” (De Concini & Toth, 2019, p.77). In addition, space companies require high upfront investments. European funds are considerably smaller than their US counterparts: €56 million on average compared with €156 million in the US (European Commission, 2018), resulting in a disadvantage in their ability to support space start-ups.

A further reason for lack of investment is the absence of finance specialists in the space industry. There are “plenty of engineers and scientists yet only a few teams with business backgrounds” (De Concini & Toth, 2019, p.74), resulting in poor business plans which deter investors.

Due to this lack of capital in European space companies, a “brain drain” is occurring where both talent and companies are leaving Europe to secure financing abroad; the US being the favoured destination with its required size of funding and risk appetite. Representatives from the space companies in the aforementioned report share a common outlook: “We are thinking that we should have moved to the US already”, “Our company has been approached by US and Asian capital and comes with a strategic network.”(De Concini & Toth, 2019, p.85)]

Not only does this loss of talent to the US pose a problem, but competition from the East is closing in fast. China now has over 100 private space companies, which received $600 million of funding in 2019; it is described as the “fastest growing commercial space industry” (Deville, 2018).

More needs to be done to draw investment towards this blossoming commercial space industry.

State driven initiatives to address the risk capital shortage in the space sector are a good start. In 2016, Luxembourg opened a €200 million  fund to entice companies focused on asteroid mining (De Selding, 2016), as well as creating a legal and regulatory framework recognizing that space resources can be owned by private companies; the second country to do so globally (Luxembourg Space Agency, 2019). Other European countries could follow suit not only to set up funds to support space companies, but also to set up legal frameworks for future NewSpace endeavours such as asteroid mining and space tourism 

The regulations, terms and conditions for investment are not standardised across the different Member States. A more unified set of regulations across the EU would help EU-wide venture capitalists to develop, which would be able to overcome the hurdle of the large upfront investments.

Japan has recognised the need to expand the commercial market share for its space industry. In March 2018, Japan launched a “Space Business Investment Matching Platform” called S-Matching. “S-Matching is a platform that facilitates matching between investors and companies in the space industry, with the aim of fostering the growth of space companies and technologies” (De Concini & Toth, 2019, p.104)]. The EU can follow suit and create its own platform to attract investors.

More risk-sharing solutions can be developed specifically targeting space. The EIB already successfully deploys schemes, such as the Risk Share Guarantee Facility, where the “EIB reimburses the financial institution for a portion of the principal losses incurred on a portfolio of SME loans, typically up to a maximum of 50%” (European Investment Bank, 2016). Further partnerships could specifically be explored for the space sector where risk mitigation is key for future investment.

The trend is clear- start-ups are going to be seen in space among governments. If we neglect the opportunity to develop an entrepreneurial space ecosystem in Europe, we risk losing out on the opportunity for economic growth and technological development as local space companies stagnate and move elsewhere. Europe’s presence in space is a symbol of its global importance. If we don’t catch up with the likes of the USA, China and Japan, seeking out more private investment, we may lose our place among the stars.


Airbus (n.d.), OneWeb Satellites constellation, Airbus Retrieved from: <https://www.airbus.com/space/telecommunications-satellites/oneweb-satellites-connection-for-people-all-over-the-globe.html>

De Concini, A. & Toth, J. (2019), The future of the European space sector, (pp.81) European Investment Bank, Retrieved from: <https://www.eib.org/attachments/thematic/future_of_european_space_sector_en.pdf>

De Selding, P. B. (2016), Luxembourg invests to become the ‘Silicon Valley of space resource mining’, Space News, Retrieved from:  <https://spacenews.com/luxembourg-invests-to-become-the-silicon-valley-of-space-resource-mining>

Deville, J. (2018), China’s New Space: a deep dive into the world’s fastest growing commercial space industry, The China Aerospace Blog,  Retrieved from: <https://china-aerospace.blog/2018/12/12/china-new-space-a-deep-dive-into-the-worlds-fastest-growing-commercial-space-industry/>

European Commission (2018), VentureEU: €2.1 billion to boost venture capital investment in Europe’s innovative start-ups, European Commission, Retrieved from: <https://ec.europa.eu/commission/presscorner/detail/en/IP_18_2763>

European Investment Bank (2016), EIB Support to the Financial Sector: Risk Sharing Guarantees, European Investment Bank, Retrieved from:  <https://www.eib.org/attachments/country/acp_fs_risk_sharing_guarantees_en.pdf>

Luxembourg Space Agency (2019), Spaceresources.lu Initiative, Luxembourg Space Agency Retrieved from: <https://space-agency.public.lu/en/space-resources/the-initiative.html>

Space: Investing in the Final Frontier. (2020). Retrieved from <https://www.morganstanley.com/ideas/investing-in-space>

Leave a Reply

Your email address will not be published. Required fields are marked *

You may also like