European space startups are still unable to fly due to a lack of funding

According to a white paper published by the Access Space Alliance (ASA), a small satellite industry association, a lack of available funding sources is holding back European space companies, while supply shortages and price increases threaten to disrupt the industry’s post-pandemic recovery. The European Union (EU) has been increasing funding for the sector, lately approving the largest-ever budget for its space program, $17.3 billion (€14.88 billion) for 2021-2027.

However, Betty Bonnardel, ASA’s founder and board member, said European space entrepreneurs have numerous hurdles in attracting private and public investments, which are still greater in the United States and other markets beyond Europe. “Financing is one thing; increasing investment is crucial, but you also need to make it easier for small businesses to get that funding,” Bonnardel stated in an interview.

“If you have a small business that needs to sift through a lot of initiatives to find funds, or apply for a financing scheme with a very low possibility of success, it renders their life very tough since it is time-consuming and adds an added risk.” It all comes down to striking the appropriate balance.”

The ASA white paper makes several recommendations, including establishing a website that provides access to all the European public financing instruments, including those from the European Space Agency and the European Union, similar to what has been done in the United States. In order to synchronize the time and breadth of investments between private and public institutions, more innovative funding approaches are also required, according to Bonnardel.

According to the white paper, space entrepreneurs in Europe frequently lack the client contracts they require to keep their firms afloat until they can produce revenue. For companies, early pledges from potential government clients can serve as a vital link between research and sales. According to the white paper, however, there is a scarcity of space for public-private partnerships (PPPs) and structures that allow public bodies to function as anchor consumers in Europe. Existing support systems are likewise geared at achieving short-term growth objectives.

The white paper continues, “There are little synergies in respect of public and private tools, defense and civil, space and non-space industries, and nearly no synchronization in respect of the timing of such expenditures.” More synergistic PPPs, according to Bonnardel, would help increase investor demand and speed these enterprises by more effectively sharing risk while also playing to Europe’s strengths. “With such a huge continent and an open market, there’s a possibility to gain a lot more government customers,” she said.

Low chances of success for public assistance programs in Europe, on the other hand, risk compromising their validity and discouraging future applicants. According to the white paper, the last advanced grant success rate in Europe’s Horizon 2020 research and innovation project was around 8%, while the success rate in the EIC (European Innovation Council) 2021 accelerator initiative is less than 3%.

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