Space tech has long been a relatively niche area of investing for venture firms. But with technological advances in recent years, more investors have turned their attention to the stars.

So far this year, $1.6 billion has been invested across 85 space tech deals globally, according to PitchBook data. New technologies have made space more accessible, and government support—like the EU's first space strategy for security and defense launched earlier this year—have increased space tech's popularity.

Dealmaking has dipped since the peak in 2021, but investors predict the sector will continue to attract investment despite the economic downturn.

"Ever since we started looking into New Space investments in 2017, momentum and excitement have grown exponentially. 2023 will be no different," Benedikt von Schoeler, general partner at Vsquared Ventures, said. "Products and solutions are maturing further. Commercialization is becoming more tangible." 

He added that while offerings such as launch services or satellite communications are becoming increasingly commonplace, in-space services are also gaining a lot of interest and could be one of the field's "next big frontiers."

We spoke to four European VCs active in space tech for their thoughts on which startups—both in and outside of their portfolios—are worth watching.

Benedikt von Schoeler
General partner, Vsquared Ventures (Munich)

Constellr (Germany)

"Constellr's satellite-based thermal and hyperspectral imaging technology enables water and crop monitoring at an unprecedented level of detail, safeguarding agricultural yields in the face of pressing global challenges.

"With threats such as climate change, land degradation and population growth looming, there is an urgent need for the agricultural industry to rethink its consumption of resources. Moreover, unmitigated crop stress can lead to huge repercussions across supply chains, and today's satellite systems don't provide farmers with the granularity needed for actionable, real-time insights.

"In addition to all of this, Constellr has the potential to become the backbone and key data reference for soil carbon management at an unprecedented level of precision and reliability."

Lunar Outpost (US)

"When thinking about the next leap of potential New Space investments, Lunar Outpost is high on the list. The company is a leader in robotics for the lunar surface and extreme terrestrial environments, as well as a leader in space resources. The company is developing lunar rovers and will launch their first rover to the lunar surface later in 2023 as part of an Artemis mission involving NASA and Intuitive Machines. Their second rover is planned to launch to the moon in 2024.

"Lunar Outpost is focused on developing a business around hosting commercial payloads for customers on these lunar rovers, and [they intend] to continue to develop this roadmap to become a leading player in the emerging lunar economy.

"Lunar has flight heritage already in the space and space resources sector, being involved in the creation of oxygen on Mars via the MOXIE [Mars Oxygen In-Situ Resource Utilization Experiment] payload on board the Perseverance rover, and the company was selected for the first-ever contract for collection and sale of space resources with NASA. Lunar Outpost has recently been selected to develop a lunar mission for Australia's Space Agency and has announced a partnership with Lockheed Martin to develop human-rated lunar transport vehicles."

Maureen Haverty
Vice president, Seraphim Space (London)

ICEYE (Finland)

"Our portfolio company, ICEYE, had a fantastic 2022, and we expect an even better 2023. The international market leader in synthetic aperture radar [SAR] offers a range of services from selling SAR satellites to providing data from the world's largest SAR constellation. This approach allows them to tap into the widest-possible market: militaries, government, insurance companies and others. 

"ICEYE has delivered crucial, rapid intelligence to the Ukrainian government throughout 2022. Investors are convinced: ICEYE's $101 million raise in 2022 was the largest for any European space company that year."

Skylo (US)

"Skylo is a market leader in the satellite-to-cell trend, dominating cellphone communications in 2023. Following a key change in the 3rd Generation Partnership Project in 2022, standard cellphones can now communicate directly with satellites. Backed by 65 patents, Skylo's technology enables phones, wearables and internet of things devices to connect to existing geostationary satellites.

"By removing the need to launch its own constellation, Skylo can save chip and phone manufacturers billions and accelerate market entry. Partnerships with Deutsche Telekom, MediaTek and others are expected to grow in 2023."

Wojtek Walniczek
Partner, OTB Ventures (Warsaw)

Hydrosat (US)

"Hydrosat aims to provide high-resolution, daily thermal and infrared imagery of the whole planet as well as build analytics and products on top of this precious data. The ability to observe not only the thermal footprint of Earth, but also plant transpiration—all in high resolution and with a high revisit rate—opens up completely new possibilities in precision irrigation, water conservation, yield prediction, etc. The purpose of those capabilities is making agriculture and other industries more resilient, sustainable and efficient, responding to current and long-term challenges in climate management, defense and security, and others.

"The company is working with multiple partners and making great strides in its core domains. Its yield prediction product is already delivering results at or above the gold standard, quicker and at a more granular level. This is particularly impressive as it's already doing it in the second year of testing. Those highly promising results make me a big believer in Hydrosat."

Kurs Orbital (Italy)

"We start observing paradigm shifts happening in various areas of the space value chain. In-orbit servicing is emerging. A new understanding of and approach to space sustainability and debris management is being developed. Space transportation is undergoing massive change. Interaction between space players is being reformulated and lines redrawn. The industry that surfaces from those transformations will require completely new capabilities of rendezvous, proximity operations and docking.

"Few teams in the world have as much experience in this highly promising area as the team behind Kurs Orbital, whose legacy stems from the Ukrainian State Space Agency and its work on rendezvous and docking systems for the Progress/Soyuz spacecraft and [the International Space Station]. It's still early, but it's shaping up to be a pivotal platform of the future sustainable space industry."

Sam Gyimah
Venture partner, Lakestar (London)

Isar Aerospace (Germany)

"Isar Aerospace has just completed a $165 million Series C, with Lakestar as the lead investor. This is one of the largest deep-tech and space-tech rounds in 2023, and it shows the potential in this area. The team at Isar Aerospace, based in Munich, develops and builds launch vehicles to transport small and medium-sized satellites, as well as constellations of satellites, into Earth's orbit. All of this is happening on European soil, building on the wealth of deep-tech expertise flourishing across the continent."

ICEYE (Finland)

"Satellite technology is a cornerstone of space investment. The war in Ukraine has put this into sharp relief and shown how developing and owning the technology of the future is as much about geopolitics as it is about business. ICEYE is a Finnish microsatellite manufacturer, and some of their most interesting work is around natural disasters and developing capabilities that create images despite adverse weather conditions, including significant cloud and fog cover and through smoke. For emergency response work, and in times of greater geopolitical instability, this couldn't be more important."

Featured image by Vadim Sadovski/Shutterstock

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