The state of European launch startup funding

Issue 39. Subscribers 986.

Firstly, a huge thank you to Orbex for sponsoring the final Europe in Space issue of 2022. Orbex is an innovative European orbital launch services company that is developing ‘Prime’, a two-stage launch vehicle powered by clean-burning biopropane capable of carrying 150 kg payloads to orbit. Orbex is also responsible for the construction and operation of the Sutherland Spaceport, located in the north of Scotland, after being granted a 50-year lease of the location.

The Orbex team would like to wish all Europe in Space newsletter subscribers season’s greetings and a happy and healthy New Year.

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The state of European launch startup funding

2022 has seen a marked decline in the total amount of funding attracted by European launch startups. The total funding raised by European launch startups went from €149 million in 2021 to just over €60 million in 2022, which is a reduction of around 60%. This figure does line up with the view from many analysts pointing to a difficult time ahead for space companies seeking new funding in the coming years.

However, when we break the funding received by European launch startups in 2022 down by country, things start to look a little different. Much of the reduction is due to Isar Aerospace failing to secure a new round of funding for the first year since its founding in 2018. Over the last three years, Isar has inflated the overall size of European launch startup funding, and the company’s absence in 2022 was noticeable. As a result, if you instead examine the funding on a per-country basis, it becomes clear that while launch startups from Spain and Germany have failed to secure more than €1 million in funding in 2022 combined, those from the United Kingdom and France saw a positive funding trend this year. This was largely thanks to the France 2030 awards (not included in my overall calculations as the exact award amounts were not released) and Latitude’s €10 million Series A in France and Orbex’s £40.4 Series C in the United Kingdom. Gravitilab from the UK also secured £400,000 from the UK Space Agency. However, as the company is exclusively developing suborbital launch vehicles, I have not included this funding in this particular breakdown.

Although this looks to be a grim outlook for both Spanish and German launch startups, it’s not that simple. PLD Space and Pangea Aerospace from Spain were founded in 2011 and 2018 respectively. HyImpulse, Rocket Factory Augsburg, and Isar Aerospace from Germany were all founded in 2018. All five companies have secured several rounds of funding and grants, which makes securing additional funding increasingly difficult without significant development progress to show for their efforts. Latitude, MaiaSpace, and HyPr Space are much younger companies being founded in 2019, 2022, and 2019 respectively with significantly more road to be taken on their respective journeys. This theory doesn’t really survive the UK, however, with Orbex having been founded in 2015 and being the only European launch startup to have secured a Series C funding round. SmallSpark from the UK also secured some funding in 2022 and was founded in 2018 around the same time as the three German launch startups. SmallSpark has, however, diversified its offering to include several non-launch-related products.

Sidereus Space Dynamics from Italy continues to be an outlier, being the only European launch startup developing an orbital launch vehicle outside of France, Germany, the United Kingdom, and Spain. The company did not secure any additional funding in 2022. However, with a relatively small staff complement of around 10 people, it is likely that the company still has several months of runway left thanks to the €1.5 million seed funding round it closed in late 2021.

The investors

Unsurprisingly, government agencies were the most prolific investors in European launch startups. The European Commission specifically has invested in at least five launch startups across 12 projects with awards ranging in value from €71,000 to €2.4 million. ESA has also invested in at least five launch startups as part of the agency’s various incubators and its Boost! programme. The UK Space Agency has provided funding and support to Skyrora, SmallSpark, Orbex, B2Space, and, interestingly, even HyImpulse from Germany.

Almost no non-governmental entity has opted to hedge their bets and back more than one launch startup. Venture Capital firm Primo Ventures from Italy is one of the rare few having backed both Pangea Aerospace from Spain and Sidereus Space Dynamics from Italy, both as part of their respective seed rounds which were closed in 2021.

The most common type of investor for European launch startups, other than government entities, is Venture Capital firms, which make up around 54% of all non-governmental investors. This is followed by angel investors at approximately 21% and corporations which make up about 13% of the total. It should, however, be noted that this is merely calculated on the total number of each type of investor and not how much each type of investor invested.

When it comes to the most common country of origin for non-governmental European launch startup investors, Spain is Mecca, with around 24% of all entities coming from the country. The United Kingdom is the next most common location for launch startup investors with approximately 17% followed by Germany and then France.

Funding rounds

As I noted earlier, Orbex closed a Series C funding round in 2022 becoming the first European launch startup to do so. Orbex, Isar, and PLD Space have each closed a Series B round, with Isar and PLD Space closing two each. The most significant share of European launch startup funding has originated from Series B funding, accounting for just over 50% of all funding raised since 2013. This, however, doesn’t take into account companies that have come and gone over the last decade.

Grants only accounted for 6.3% of total funding but made up the majority of individual awards with a total of 29 grants being awarded to European launch startups. These grants were awarded from various government agencies across Europe, with the European Commission, the European Space Agency, and the UK Space Agency accounting for a majority of the total number of grants.

Road to the launchpad

The two years between 2023 and 2024 are likely to be a defining period for the European launch. It will see the introduction of Ariane 6 and for Vega C a shift from a Ukrainian-built upper stage engine to one developed and built by Avio. It will also see the attempted introduction of no fewer than five new vehicles from European launch startups including Rocket Factory Augsburg, HyImpulse, Isar Aerospace, Orbex, and Skyrora. B2Space, Latitude, PLD Space, and SmallSpark have all projected a maiden launch in 2024 bringing the total number of new vehicles at the close of 2024 to eight, which doesn’t include the suborbital vehicle’s from PLD Space and HyImpulse.

All eight companies do, however, have a long journey ahead of them. Skyrora is currently the only company to have completed an integrated stage test, with a test firing of a Skyrora XL second stage in August. However, a failure of its Skylark L and the subsequent investigation to determine the cause has definitely slowed the company’s momentum. That’s not to mention the company losing COO Lee Rosen who departed after less than a year with the company, taking his more than a decade of launch operations experience with him.

RFA ticked off some vital engine testing in 2022 and has mated an RFA ONE second stage to a test stand for an integrated test campaign which the company had hoped to complete before the end of the year. However, a source familiar with the company’s testing operations has told me that it had to be delayed due, in part, to cold weather at the testing site in Sweden. The company has outlined an ambitious testing campaign that would result in a late 2023 maiden flight of RFA ONE, but it will probably be a small miracle if they manage to pull it off without the hint of a hiccup, which the eagle-eyed among you will realize has already occurred with the delayed second stage test. The second stage test will also be a key milestone for RFA as the company intends to use the same stage for the maiden flight. This would mean that any kind of failure would severely impact a late 2023 debut.

Orbex has conducted several tests of its first and second stage engines and unveiled a fully-stacked prototype of its Prime vehicle in May. However, the company still needs to begin and complete integrated test fire campaigns for its first and second stages. And that’s not even mentioning the work that needs to be done to complete the company’s new launch facility which it will be endeavoring to do itself with assistance from partner and investor Jacobs.

Despite having a staff complement of more than 250 people, the largest of any European launch startup, and funding totaling more than €170 million, more than any European launch startup, Isar is yet to test fire its Aquila rocket engine. The company has, however, conducted component-level testing of the engine on a rural property in the Kohlberg district of Reischach, Germany. According to a source with knowledge of the agreement in question, Isar is approaching an investor milestone requiring the company to have completed a test firing of its engine. The company is reportedly also on the hunt for even more funding hiring David Kownator as CFO in October to head up the company’s funding efforts. 

HyImpulse is working towards launching its suborbital SR75 launch vehicle in the first quarter of 2023 after giving the public a first look at the vehicle fully stacked back in March. Although some of the technology will be transferable, the orbital SR1 vehicle will utilize a larger hybrid motor for its first and second stages. With a staff complement of around 50 people, it’s difficult to see how the company has the capacity to effectively be working on two vehicles at once. The company did, however, end off the year on a high note securing £399,000 in funding from the UK Space Agency to test its hybrid motors.

And that’s just a brief examination of the companies projected to launch a maiden flight of their respective vehicles in 2023. Those projecting a 2024 debut are even further behind with just as tall mountains to climb.

It’s a longer road than it appears

While all this is happening, a backlog of European customers are being left without adequate launch capacity. This is forcing many to look to other regions like India and the US to meet their needs. Even the European Space Agency is not immune to the difficulties with the agency having contracted SpaceX to carry its Euclid and Hera missions aboard Falcon 9 rockets in 2023 and 2024 respectively. It has, as a result, never been a more important or more advantageous time for European industry to begin operating commercial launch vehicles.

However, the solution will not immediately come from these commercial operators. Currently, the RFA ONE is the most powerful European launch vehicle being developed outside of the halls of Avio and ArianeGroup. The rocket is capable of delivering 1,350 kg payloads to low Earth orbit. RFA also has plans for a larger vehicle called RFA ONE MAX that will likely push its capability closer to the two-tonne mark. The Isar Aerospace Spectrum is the only other vehicle being developed capable of deploying one-tonne payloads into low Earth orbit. The result is that all of the vehicles being developed will only be capable of serving smallsat and cubesat markets customers, especially at higher orbits.

Customers wanting to launch larger payloads into higher orbits will still only have an ArianeGroup-developed launch vehicle to choose from if they’re hoping to fly with a European operator. This segment is currently serviced by Ariane 5 which only has two more operational flights left on its manifest. Following the vehicle’s final flight in April 2023, Europe will be on the bench until the maiden flight of Ariane 6 in late 2023 followed by the commencement of commercial operations in 2024. And this is not a foregone conclusion. It’s fairly widely accepted in the industry that if a company is targeting a fourth-quarter debut more than 12 months out, chances are it will slip into the new year. This could result in Ariane 6 entering commercial service in mid to late 2024 leaving Europe without medium and heavy-lift launch capabilities for more than a year, which would be devastating.

European launch startups may eventually mature to the point of developing larger vehicles. However, the list of launch operators will be far smaller than it is today, and it is unlikely to happen before the end of the decade, not without an immense financial commitment that looks unlikely to arrive.

Note: The figures presented in this analysis are based on publicly available sources. This does not always give a true reflection of a company’s funding efforts. HyImpulse and Skyrora, for instance, have likely raised significantly more funding than it would appear, but I have used the figures I have. Additionally, staff complement figures are sourced from each company’s LinkedIn page and may also not be completely accurate.

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A sad start to the news - Stockholm-based in-orbit logistics startup porkchop has announced that it is closing its doors. According to a LinkedIn post, the closure is due to a failed fundraising effort that left the company without sufficient funds to continue. The announcement brings the company’s four-year effort to produce its porkchop M vehicle to an end. The vehicle would have been capable of autonomously collecting new sets of customer payloads in orbit, enabling it to be used several times over. I had the good fortune of speaking with many of the passionate people behind porkchop and I will be sad to see the company struck off my OTVs index.

Don’t put away the tissues just yet - After more than 25 years, Beyond Gravity has completed and shipped the final two payload fairing halves of an Ariane 5 launch vehicle. The two fairing halves left Switzerland late last week for their trip to Rotterdam and then French Guiana for launch. The fairing halves will be utilized to launch the final Ariane 5 mission, which will carry ESA’s JUpiter ICy Moons Explorer (JUICE) mission.

Europe is going deep - ESA awarded a €117.5 million contract to OHB Italia for the agency’s deep space Comet Interceptor mission. The contract is the first awarded under the agency’s fast-class initiative, which aims to develop and launch spacecraft with a mass of less than 1,000 kg within a period of no more than eight years. The Comet Interceptor mission will be composed of a main spacecraft and two small probes. The mission is expected to be launched in 2028.

The more, the merrier - The French government has awarded funding to five projects as winners of the CNES call for tenders for the data for space surveillance category of the county’s France 2030 initiative. Safran Data Systems is the only company to receive funding as a sole entity, with the other four projects being comprised of consortiums of companies. The four consortiums are ArianeGroup, Eutelsat, Mangellium and Sodern, ShareMySpace, ONERA and CS-Group, U-Space and Airbus Defence and Space, and Infinite Orbits, Telespazio, IMCCE, and IRT Saint Exupery. The five projects were selected from seven submitted applications. The press release did not include any award amounts. 

The Germans are coming to Scotland - German launch startup Rocket Factory Augsburg posted a vacancy for a UK Launch Site project manager. In reviewing new company filings, I discovered that RFA has set up a subsidiary in Scotland. This likely narrows the spaceport in question down to SaxaVord Spaceport, considering that Orbex has taken over Sutherland. Additionally, HyImpulse announced that it would begin engine testing in Shetland, supported by a £399 million UK Space Agency grant.

Money, money, money (be honest, you sang that) - Luxembourg-based NewSpace Capital has announced the €100 million first closing of its space-focused growth fund. The private equity fund aims to target growth-equity opportunities in downstream applications and supply chain segments of the space market. With the announcement, NewSpace Capital revealed that it had invested €15 million in French deep-tech company Cailabs as the lead investor in its €26 million Series C funding round.

Equipping the lunar economy - Swedish space tech company AAC Clyde Space secured a SEK 8.8 million (€800,000) contract from Intuitive Machines for subsystems for the company’s IM-3 mission to the Moon. The order is the third the company has received for Intuitive Machine's lunar landing missions. Delivery of this third order is expected to take place in Q4 of 2023 ahead of the mission’s launch in 2024.

Under new management - ESA appointed two new directors, the Director of Science and the Director for Technology, Engineering, and Quality. The appointments were proposed by ESA Director General Josef Aschbacher and approved by the ESA Council at its meeting on 15 December. Carole G. Mundell was appointed as the new Director of Science, taking over from the current director Günther Hasinger. Dietmar Pilz was appointed as Director of Technology, Engineering, and Quality, succeeding the current director Torben Henriksen. The pair are expected to begin their duties in 2023.

An Australian and Brit walk into a bar - The UK Space Command and the Australian Defence Space Command have signed Terms of Reference for the establishment of a Military Space Cooperation Framework. Under the new arrangement, the two countries will strengthen collaboration in the space domain, with cooperation in areas like complimentary space capabilities and cooperative space operations.

Wanted: New space capsule - ESA has signed a Memorandum of Understanding with The Exploration Company to explore potential uses of the company's private reusable Nyx capsule for Europe from 2026 onwards. The agreement was signed under a pilot phase of the agency’s Commercial Partnership Initiative. Nyx is designed to be capable of hosting payloads in orbit for up to 6 months and then returning them safely back to Earth.

Let’s start with suborbital - SaxaVord Spaceport in Scotland has received £300,000 in UK Space Agency funding to construct a launch rail. The rail will allow the facility to begin hosting suborbital launches while it completes facilities for the launch of orbital missions. The new launch rail will be capable of supporting vehicles with a total gross mass at liftoff of up to three tons.

Plenty of pie to go around - The UK Space Agency awarded £2.7 million in funding for early-stage UK launch tech projects. A total of 13 projects across England, Scotland, and Wales received funding. The country aims to utilize funding opportunities like this to support the growing satellite launch sector. Space Prime, UKLSL, Rocket Engineering, European Astrotech, SmallSpark, Lunasa, Magdrive, Shetland Space Centre, HyImpulse, Gravitilab, AltaRange, Discover Space, and TISICS all received funding. Awards ranged from £17,000 to £400,000. The UKLSL grant will be used to reduce the process of applying for spaceflight licences in order to make the UK a more attractive launch option for international customers.

A partnership built on ambitious goals - Swiss IoT startup Astrocast has signed a multi-year contract with UK-based Wyld Networks, with the ambition to target a joint business of over 200 million messages. Astrocast’s nanosatellite IoT network will extend Wyld Network’s capacity and coverage. 

Just a little one - The UK Space Agency published a call to provide small grants (up to £10,000) to companies pursuing business-viable solutions that utilize space data in a climate-related application. The agency hopes that the initiative will help foster climate services innovation. Registration closed on 30 December 2022.

You get a contract, you get a contract, YOU ALL GET A CONTRACT - German thermal remote sensing startup constellr signed agreements with OHB, NanoAvionics, Exolaunch, and Fraunhofer EMI to bring the first two satellites of its HiVE constellation into orbit. OHB will supply the cryocooled, multispectral thermal infrared and VNIR sensors. Fraunhofer EMI is responsible for two on-board data processing units. NanoAvionics will supply two of its MP42 satellite platforms, optimized for high agility and high attitude stability. Finally, constellr awarded Exolaunch a multi-launch agreement to deploy its first two thermal infrared satellites. 

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