A thoughtful article by Sinead O'Sullivan in the FT today considers the call by Joseph Aschbacher from the European Space Agency (ESA) to outsource innovation to the private sector through adopting a Nasa-style model in which the ESA buys defined services instead of managing the development of systems that are then marketed by the private sector.
SpaceX, which has raised $10bn capital, is the poster-child of the US model working. Elon started out with an initial seed investment of about $100mn which the FT rightly points out is the size of the average European VC fund.
Seraphim Space Investment Trust PLC, a permanent capital vehicle listed on the London Stock Market, is currently the only established public vehicle addressing this massive opportunity in Europe. SSIT has been a catalytic investor in a range of emerging space category leaders such as Iceye, Arqit and D-Orbit.
Europe does indeed need to develop further funding mechanisms, but in the meantime there is growing evidence that sovereign wealth funds are stepping into the breach. Over the next 12-24 we expect to see several giant commercial space projects, seeded with sums well in excess $100m, backing teams with enormous ambition. Top of the list are various projects focused on harnessing space energy, solar farms in space aiming to deliver clean energy to planet earth.
Despite the funding challenges we are predicting some exciting mega-deals which will drive investor interest in the space domain.
The current structures for early-stage financing, regardless of how well they have worked in the US, are not working in Europe. Yet innovative financing structures such as long-term, permanent capital holding companies are deemed too risky for family offices and pension funds. If Europe is serious about establishing space sovereignty — and there is widespread agreement that it must do so — then it is time to think hard about the funding mechanisms that will make it possible.
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