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This article assesses Europe's current SpaceTech industry and evaluates its future chances of success, commercially and geopolitically. The conclusion is that the EU's commercial and technological sovereignty efforts in the field of space place it between being a key enabler, domestic champion or global leader in comparison to the US and China that are closer to either of the three possibilities. 

To arrive at this conclusion and scenario postulation, the article has two parts. First, it surveys the European SpaceTech ecosystem. Second, it presents a four scenario matrix and contextualises the first part alongside examples from the US and China. 

Overview

According to the European Investment Bank, the global space economy grew by 6.7 % on average per year between 2005 and 2017, almost twice the 3.5 % average yearly growth of the global economy. In April 2023, for the first time VC investment in the space sector in the EU surpassed that of the US.

This is an important one for two reasons. In the last 25 years and across almost all tech sectors – from e-commerce to frontier tech – US investments towered over those in the EU. Second, space is regarded as a sector where the EU wants to achieve technological sovereignty.

Technological sovereignty has been a sore spot ever since in 1968 the US refused to sell a supercomputer for the development of the French nuclear program – thereby initiating de Gaulle's Plan Calcul to modernise independently. To see an advancement towards this goal is a proxy for moving in the right direction – even if commercialisation of funded companies and technology adoption are yet to follow.

Ecosystem

Three areas inspired the influx of capital into European space companies; startup and investor ecosystem, innovation centres, and forward looking regulation. Innovation within the SpaceTech sector has two dimensions: upstream and downstream.

The European Space Policy defines upstream as the development of space infrastructure. This includes production of satellites and launchers and the R&D and deployment thereof. Downstream is the acquisition, curation and exploitation of data generated in/via space. 

Investors and Startups

The European Space Agency (ESA) and Deelroom track over 2000 startups and publicly listed companies innovating in the two dimensional upstream/downstream space sector. They also track the most active investors in the space.

Some of those are Seraphim (UK), Primo (IT), OTB Ventures (NL), Molten Ventures (IR and UK) and VSquared (DE). Alpine Space Ventures (DE) is the most recently launched fund and is headed by previous SpaceX employees. The list reveals fascinating use cases and below are some of the ones that caught my attention.

Some companies especially in Poland and Ireland are focusing on optimising earth-space communications; whether it is Thorium Space which improves throughput using scalable, active matrix antenna or Ubotica which optimises compression to send images to earth more efficiently.

This is an important enabler for the field of space communications in general as only last month NASA achieved a 200 GB/s laser speed data transmission milestone. Already at 200x faster than the quickest internet speeds (equivalent to transmitting 1,000 HD movies in a single 5 min pass above earth) in most cities, the achievement means more data can be communicated with earth thereby increasing the amount of discoveries and raising the overall fidelity of space to orbit communication, whether for machines or humans. 

Space debris is another innovation area. The latest ESA estimate from June 6th reports that there are 10,550 satellites orbiting earth and 1,000,000 objects ranging in size from 1 cm to 10 cm. Size is inconsequential and the smallest piece of space junk can hit an astronaut or a space shuttle like a bullet since it travels at 28,200 km per hour.

GMV Aerospace (ES) runs a round the clock satellite collision avoidance and the Dutch startup Ecosmic’s plug and play solution tackles the same issue via specialised software to help objects „stay in their lane“. ClearSpace, a Swiss company, with its Mission-1 will start removing unresponsive or derelict satellites from space following its launch into orbit in 2025.  

According to the team of Deloitte Space and Sifted, logistics and data produced from earth observation are further areas that space companies are pursuing. The Swiss Arviem offers real-time end-to-end cargo monitoring services thereby increasing the efficiency of the supply chain and accuracy of cargo carbon and finance reporting.

The Espoo based Iceye provides high resolution image capture. Tailored for insurance providers, their main customer is Swiss Re which uses the services to quickly access extent of damage (say during a flooding). This helps to speed up the claims process and removes the need to send a human observer to the accident site.

While the above picked out select use cases and companies, next focus will be on a few countries leading in SpaceTech in Europe. First, Luxembourg which is home to SES (the most profitable satellite company by revenue) and where SpaceTech makes up 2% of the GDP.

Along with the Luxembourg government, the company Planetary Resources aims to mine asteroids. The small country is a pioneer in space exploration and innovation and already in 2016 established a €220 million fund dedicated for this purpose. 

The companies Mission Space and HydroSat gather data from space. The former zooms in on space weather conditions (geomagnetic storms magnetic waves, radiation from the sun) and sells that to the maritime, supply chain and gas sectors. The latter, on the other hand, uses data for precision farming and is able to tell from space whether fields are over or underwatered; therefore helping save more than 30% of otherwise impacted fields.

Lastly, Space Cargo and Maana Electric aim to be the utility companies in space. Building to provide round trip science mission of orbital experimentation, Space Cargo is worth mentioning not only because of their ambition to test in space but also because they are credited with space wine. Maana Electric is targeting earth, moon and Mars economies to be the energy company of space.

In other words, it aims to harness solar energy in space and deliver it where it’s needed most; akin to electric power transmission lines on earth. This is an ambitious mission considering that the Chinese Longi Green Energy Technology Company – which is the biggest silicon wafer (material is used in solarpanels) manufacturer in the world  – is its competitor and plans a gigawatt level system (to put it in context, that equal to half of the energy produced by the Hoover Dam or enough energy to power 100 million lamps) by 2050.

Germany is home to startups with heavy upfront capital requirements – and more upstream applications. The Exploration Company (German-French venture) is prototyping reusable rockets and aims to be the SpaceX of Europe. Isar Aerospace – with €330 million in funding -  is pioneering automated rocket production to lower the cost of satellite launch; while Polaris Raumflugzeuge builds reusable space planes and hypersonic transport planes. 

Rocket Factory Augsburg is also working on democratising access to space by launching small satellites and payloads of initially up to 1,350 kg into polar orbits. Yuri also offers to deliver payloads to space; however, for scientific purposes. Aimed at the pharma industry, the company offers a round ticket to conduct an experiment in space (where the benefits of the absence of gravity and different conditions to earth can speed up discovery) for €59,000.

Germany is also home to OroraTech which monitors forests around the world. According to the World Meteorological Organization, space data helps observe and monitor ca. 50 % of the 56 essential climate variables. This in turn helps keep humanity on track to stopping or reversing climate change.

When mentioning fledging national space industries, it is also important to mention Norway. Due to its history, Norway has had a difficult, but eventually successful and profitable, journey towards joining the ESA. Due to its geography, Andøya became one of the most frequently used launch sites under the NASA international programme outside of the US.

During the cold war and due to the country’s seclusion – it had to compete regionally among the Nordic countries as well as continentally in Europe for support for its space program. Today, a lot of innovation is corporate or government driven with several notable startups providing ground and satellite services which can be found here.  

The French SpaceTech ecosystem is also very vibrant. The Toulouse (home to Airbus) and Massy based ExoTrail offers simpler and more efficient satellite deployment and maintenance. Another company is Interstellar Labs. By 2025, it aims to operate mini green houses in low earth and eventually moon and one day Mars.

Similar to Arviem above, the French Unseen Labs offers precise ways to track vessels from space. The last French company to mention is ThrustMe. Their mission is to increase the life of satellites thereby making them more affordable and also reducing space debris.

Lastly, the UK SpaceTech scene. British startups have a versatile focus – starting with Matalysis. The company focuses on resource extraction from space and one of their milestones includes oxygen extraction which will prolong lunar missions and can be further broken down into oxygen and hydrogen and used as a propellant.

Two other companies to mention are Aqit and Satellite VU. The former started with the plan to build a quantum secure communication network using satellites (rivalling China’s 2020 secure satellite transmission announcement). However, Aqit pivoted away from quantum technology and is planning to develop encrypted communications using symmetric key cryptography.

Satellite VU’s tagline is „the world’s thermometer“. It does that by obtaining and maintaining comprehensive thermal data sets of fields, buildings and other objects with a heat signature. Monitoring of those has insurance, military as well as climate change monitoring applications. 

Innovation Clusters

Besides venture capital, which usually comes at a post idea stage, European SpaceTech companies owe much of their existence to governmental support. According to a November 2022 announcement by the ESA, more than 1,200 startups have been launched by the agency’s Business Incubation Centres (BIC).

BICs form the largest network of space incubators in Europe and their two fold mandate is to support founders with business ideas related to space and to grow the cluster of space related early stage companies across Europe.

The support package rivals those of leading European government support schemes (but not necessarily that of private venture incubators) as entrepreneurs receive €50,000 in funding as well as two years of incubation, coaching and legal advice.

BICs are spread out in 80 locations across Europe (from Ringaskiddy, Ireland to Tromsø, Norway and Rzeszow, Poland) and they incubate close to 250 startups yearly. However, what the programs lack, as identified by and being looked into by ESA, is technical support. 

Φ-labNET, within the ESA, works on speeding up the commercialisation of space startups „ with the potential ability to disrupt and transform markets“. Combining academia, VCs, national space centres and industry, Φ-labs aim to cut time to market and commercial success by being a one stop shop. In addition to Φ-labs, the Horizon programs also help entrepreneurs at the initial idea to business plan stages. Once a product is marketable, the Copernicus Accelerator, VCs and once again the ESA come into play.

Other programs worth mentioning are InnovFin Space Equity Pilot where the European Investment Fund dedicated €300 million to support the innovation and growth of European smaller and medium-sized space technology.

The European Space University for Earth and Humanity or the UNIVERSEH program, a collaboration between Germany, France, Luxembourg, Sweden and Poland,  plans to train and create research opportunities for 130,000 students.

Individual countries and organisations have also committed significant funds dedicated partly to SpaceTech; such as Germany’s €10 billion Future Fund and NATO’s €1 billion Innovation Fund.

Regulation

This part is a little more difficult to cover on a supranational level as a lot of regulation is nascent (and in some cases national legislation moves faster than on the European level). It is also not to be confused with the EU’s Space Policy – which provides guidance on how to approach this transformative sector.

However, some regulatory achievements are worth mentioning – starting with the Space Strategy for Security and Defence. The strategy proposes to create an „EU Space Law to provide a common framework for security, safety, and sustainability in Space“. 

Space mining and orbital damages are some of the areas where EU regulation can step in. Luxembourg, in the meantime, became the second country in the world (after the US) to create a law outlining the steps for conducting such activities and what form companies engaged in such business can take. When it comes to intentional or unintentional collision in space, regulation – on a global as well as EU scale – is missing.

In February of this year the European Commission proposed a regulation for the Union Secure Connectivity Programme. Running in the years of 2023-2027, one of its planned outcomes is the IRIS2 program. The program has a €2.4 billion budget to launch Europe’s satellite constellation (similar to Starlink) by 2025.

In addition to commercial applications and eliminating „dead zones“ in Africa and under-serviced parts of Europe, the multi-orbital connectivity infrastructure and ultra-secure quantum grade communication will also have military applications and support natural disaster management. 

The Future of European SpaceTech

The ultimate aim of developing the space sector in Europe is to achieve the union’s digital sovereignty. A byproduct of the above analysis is to help predict how the sector will develop in the future and contribute to this goal. In other words, plotting technological sovereignty on one axis and commercial success on the other reveals four scenarios where the EU stands in comparison to other nations leading in space.

Global leader

This is the most favourable position European (or any global competitor) SpaceTech can find itself in. National companies will be relied on to carry out scientific, exploratory and potentially hospitality missions in space for other domestic consumers as well as the rest of the world and countries that don’t have independent space capabilities. Strong investment, talent development and intergovernmental procurement are key enablers here (similar to the NASA model from the fourth quarter of the 20th century).

Here, both upstream and downstream areas are owned and operated by European founded and based companies which license their findings to businesses or end users. Manufacturing, rare metals and production knowhow is all in the hands of national champions or are sourced in a sovereign way. With chip manufacturing and key technologies enabling the digital economy, China dominates the rare earth market. In space this could equal rocket manufacturing which is some of the reasons 3D manufacturing rockets offers a way out. In Germany this can be BigRep and in the US this is already Relativity Space. 

First mover advantage is as important as commercial moats and market share. Even though European companies are well funded and working towards mass market, several concepts are still a year or two away behind their American and Chinese counterparts. 

For downstream applications China’s Spacial Information Corridor (SIC) might be posed to take global market share. Part of the Belt and Road Initiative (BRI), SIC is a network of communication, navigation and remote sensing satellites that will provide services to and connect 149 participating countries.

Besides the gravitational pull of China’s geopolitics, the country’s cheap manufacturing promise and a trained work and science force increase its potential for being relied on by other countries and companies. 

Europe has multiple BICs as well as the plan to build the continent’s largest satellite manufacturing plant in Charleroi, Belgium. China, on the other hand, also has several industrial clusters including the Changguang Aerospace Information Industry Park, and centres in Chongqing, Shenzhen and Changsha. The Chinese firm i-Space is building the country’s Exploration Company or SpaceX. 

Key enabler 

If upstream and downstream applications are compared to classical digital economy sector components, then sovereignty in the digital economy would mean absolute vertical independence (see diagram) covering hardware (microprocessors and communication towers) to OS and browsers topped by mobile apps and AI processing. 

In the absence of total technological sovereignty, controlling certain parts of that stack can be the second best option. Similar logic flies in space. Before the funding milestone mentioned at the start of the article, European companies were not as well funded as American ones. Therefor,e a strategy that some countries have applied is to be a key enabler (or in other words a choke point). 

Focusing not on large industries but being a champion in their field, the Irish Lios develops acoustic material to protect the interior of rockets from vibrations on the journey into orbit. Several other companies mentioned above also pioneer solutions in their fields of expertise. 

While the ecosystem part of the article might read like European SpaceTech has a bright future either as a leader or enabler, some of the people closest to it believe otherwise. In March of this year, the Chair of European Parliament’s Sky and Space Intergroup – along with a colleague – wrote that „Europe is about to lose its place as a space power“.

The argument is that the quantity of American led SpaceX launches is 30 times higher of ESA led ones and that the main launch vehicle of the EU (Ariane programme) will be phased out very soon without a viable domestic alternative.

The result is relying on American technology for European achievements; whether as in the past for launching a French military and surveillance satellite or for a scientific research probe aimed to find dark matter (scheduled for July 1st). 

Domestic champion

High on the technology control axis but low on the global commercial success one are domestic champions. Operating in this area means that there are a number of well funded and perhaps publicly listed companies with global renown – but not market share. Examples of this from the digital economy are Ericsson and Nokia which lost several contracts in the 5G race to the Chinese Huawei. 

If the European SpaceTech sector finds itself here, then Europe will still be in control of the data and key applications as with Galileo and Copernicus. However, there will not be a European space Google.

According to the European Investment Bank, „one of the reasons for this dissonance between European innovation and competitive advantages is the lack of upstream activities in Europe, as US firms dominate the upstream sector. European technology leaders are not active enough in space themselves, and the technology transfer is not effective enough“.

Looking at other countries, the reputation of Chinese business practices might slow down the proliferation of its SpaceTech. The American Institute for Defence Analyses released its evolution of the Chinese SpaceTech sector. Read cautiously, it foresees reputation as a blocker the Chinese space industry might run into on the way to mass market commercialisation. 

In other words, Chinese space technology might not be adopted outside of local and national government agencies and companies, with potentially a handful of regional applications by its allies.

However, the experience of 5G has proven that if European companies don’t price their solutions competitively – countries will opt for technology access over technological sovereignty.

Unrealized potential 

This scenario is characterised by failure of European SpaceTech technologies to be significantly adopted internationally and domestically. Here other space nations will have to step in to support scientific, military and commercial applications of space in EU’s affairs. 

Arriving at this stage will require a lot of mistakes; however, as with the above parallels, examples from the Web2 era abound. As a response to AWS and Azure, the French government launched Andromède Cloud.

The project was subsequently shut down and non EU cloud providers still maintain majority market share in Europe, and are being used by both government agencies and other businesses. 

Scenarios outlined, I believe we are equidistant from being a global leader, a key enabler and a domestic champion. The first is favoured and the arbiter will be encouraging domestic consumers (governments, industries and startups), world class talent and innovation schemes to choose and promote rewarding, home grown produce.

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