Europe’s space funding gap threatens the industry’s potential

TAMPA, Fla. — Europe needs to improve the way it allocates capital to the space industry to avoid losing the fruits of early-stage investment growth, the head of Luxembourg-based private equity firm NewSpace Capital has warned.

Research recently published by the European Space Policy Institute (ESPI) shows that Europe has completed an average of 96 investment deals per year for space companies over the past three years, not far behind the United States with 114 deals.

However, the United States also averaged €6.3 billion ($6.8 billion) in investment, fueled by the largest growth-stage financing rounds, compared to €1.4 billion for Europe.

More than 50% of venture capitalists surveyed by the European Investment Fund, which is part of the European Union’s lending arm, also expressed a negative outlook for fundraising over the next 12 months.

While Europe’s fragmented market lends itself to emerging technology development amid multiple early-stage grant programs, NewSpace Capital CEO Bogdan Gogulan said this diversity presents major obstacles for more mature ventures.

“It’s great for innovation,” he said. “What it’s really bad at is scaling.”

In comparison, the United States is a much larger market that benefits from a more cohesive regulatory framework – all in one language.

Although Europe has increased support for early-stage ventures, Gogulan said these businesses lack the growth capital needed to expand in the region.

“Essentially, Europe is becoming a victim of its own success,” he added.

Opportunities are missing

According to Gogulan, European space companies have little choice but to look abroad to bridge the financial “valley of death” between technology development and commercial adoption.

Even NewSpace Capital, which has invested in Finnish Synthetic Aperture Radar operator Iceye and French satellite imagery analysis provider Kayrros, gets most of its funding from investors in the United States and the Middle East.

“We [Europe] are spending a lot of time, effort and energy on the most difficult part of the journey,” continued Gogulan, “and when everything is ready to take advantage of it, we are giving it.

He called on Europe’s biggest asset managers and pension funds to allocate funds to the space industry.

NewSpace Capital is also in talks with the European Commission and regional investment banks to create a funding stream specifically for growth-stage companies.

“It takes a village to raise a child,” Gogulan said. “We need 20 funds like ours.”

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