Europe's Capital Allocation Challenges Threaten Space Industry Growth

European space companies, facing a financial "valley of death" between technology development and commercial adoption, often have to look abroad for funding

Bogdan Gogulan, CEO of Luxembourg-based private equity company NewSpace resources, warns that Europe needs to do a better job of allocating resources for the space industry if it hopes to capitalize on the growing number of early-stage investments. Recent research from the European Space Policy Institute (ESPI) indicates that Europe has averaged 96 investment deals annually for space companies over the past three years, closely trailing the United States at 114 deals. However, the U.S. outpaces Europe significantly in investment volume, averaging 6.3 billion euros ($6.8 billion) compared to Europe's 1.4 billion euros.

This disparity is exacerbated by a negative fundraising outlook over the next 12 months, as expressed by more than 50% of venture capitalists surveyed by the European Investment Fund. While Europe’s fragmented market fosters technological development through numerous early grant programs, Gogulan highlights that this diversity creates substantial hurdles for more mature ventures.

European space companies, facing a financial "valley of death" between technology development and commercial adoption, often have to look abroad for funding. Even NewSpace Capital, which has backed Finnish Synthetic Aperture Radar operator Iceye and French satellite imagery analysis provider Kayrros, sources most of its funding from investors in the United States and the Middle East.

To ensure sustainable growth and competitiveness in the global space industry, Europe needs to refine its capital allocation strategies, particularly for growth-stage funding. Without these changes, European space ventures risk falling behind in the rapidly evolving space economy.