TAMPA, Fla. — The head of Luxembourg-based private equity firm NewSpace Capital warned that Europe needs to improve how it allocates capital to the space industry to avoid missing out on the fruits of increasing early-stage investment.
A recent study by the European Space Policy Institute (ESPI) found that the average number of investments in space-related companies in Europe over the past three years was 96 per year, not far behind the 114 in the United States.
However, the US was also driven by larger growth-stage funding rounds, with an average investment of 6.3 billion euros ($6.8 billion) compared with 1.4 billion euros in Europe.
More than 50% of venture capitalists surveyed by the European Investment Fund, the European Union’s lending arm, also have a negative outlook for fundraising over the next 12 months.
Europe’s fragmented market is well-suited to developing emerging technologies, with numerous early-stage grant programs, but Bogdan Gogran, CEO of NewSpace Capital, said the diversity poses a major obstacle for more mature ventures.
“It’s great for innovation,” he says, “but really bad for scaling.”
In comparison, the US is a much larger market and benefits from a more uniform regulatory framework, with everything regulated in one language.
While Europe is stepping up its support for early-stage ventures, these companies lack the growth capital they need to expand in the region, Gogran said.
“Essentially, Europe is becoming a victim of its own success,” he added.
Missed Opportunities
Goglan said European space companies had little choice but to look abroad to bridge the economic “valley of death” between technology development and commercial deployment.
Even NewSpace Capital, which has investments in Finnish synthetic aperture radar operator Iceye and French satellite imagery analytics provider Kayrros, has received most of its funding from investors in the United States and the Middle East.
“we [Europe] “We spend so much time, effort and energy on the most difficult parts of the journey,” Gogran continued, “and then just when we could be reaping the benefits, we give it away.”
He called on Europe’s largest financial 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 establish a dedicated funding route for growth-stage companies.
“It takes a village to raise a child,” Gogran said. “We need 20 foundations like ours.”
