Over the past 12 years, Finnish spacetech startup Iceye has quietly amassed the world’s largest satellite constellation. This year, it has moved into defence territory by partnering with defence contractors such as Saab and Rheinmetall as well as European governments in a clear sign that countries are taking its defence sovereignty seriously — and more so in space than ever before.
Iceye, which deploys microSAR satellites as well as subscription services on imaging data, sees increased demand for its products. It’s predicting annual revenue of €250m for 2025, more than double the previous year’s — and people with insight tell Sifted it’s profitable.
Selling to defence contractors and governments
In 2012, Modrzewski and cofounder Pekka Laurila began a satellite project at Aalto University to make synthetic-aperture radar (SAR) technology smaller, cheaper, and commercially viable.
Iceye spun off in 2014 and four years later launched its first small SAR satellite, offering commercial imagery to customers.
Gathering data by transmitting and receiving microwaves, SAR makes it possible to transmit imagery from Earth — even during the night and through clouds. While other companies deploy similar technology, Iceye uses microsatellites that weigh less than 100 kilos, roughly 10 times less than a regular satellite, which means the company can scale its constellation quickly and at a fraction of the usual cost.
Last week Iceye announced a fundraise of €9.4m, led by Polish VC Vinci. The raise will help it deliver three satellites to the Polish government, as part of a deal recently agreed with its Ministry of National Defence, in partnership with Polska Grupa Zbrojeniowa, a holding company uniting state-owned defence firms in Poland.
Being Polish has helped Modrzewski do business in the country.
“It definitely helps to be Polish when you are signing a contract with Poland,” he says. “Polish people definitely do feel more comfortable buying from somebody who at least speaks Polish and eats pierogi along with them.”
Iceye also has contracts with Ukraine, which allows the Ukrainian armed forces to receive radar satellite imagery on critical locations, and with the Royal Netherlands Air Force. It also has Memorandums of Understanding (MoU) with the Ministry of Defence of Finland and the Swedish defence company Saab.
In Germany, defence prime Rheinmetall secured exclusive rights to distribute Iceye’s SAR satellites to Hungary and Germany last year. In May this year, Rheinmetall signed an MoU to establish a joint venture with Iceye, where the ownership would be split 60/40 and in which Iceye’s SAR satellites will be manufactured at Rheinmetall’s factory.
But it’s not always easy to manage partnerships between startups and large corporations, as seen in the recently cancelled contract between Helsing and Rheinmetall.
“Large corporations have a much more corporate culture compared to startups,” Modrzewski says. “All the startup founders will always argue that startup culture is better. But the purpose isn’t to prove your culture is better, but to understand how they are different and make peace between the two.”
Culture at Iceye
With more than 700 staff across nine locations, in Finland, Spain, the UK, the US, Australia, Japan, Greece, Poland and the UAE, each office has R&D and significant autonomy. “Every time we set up a new office, I find a capable person and give them the reins. The level of ownership is unbelievable,” says Modrzewski.
He notes that while the US office has 100 employees, other offices could easily grow. “I was just at the Greek office and there are 15 people there today. But three years down the line, I don’t see why it shouldn’t be 150. They know that they are being given an opportunity to build something and the size of it only depends on their own performance,” he says.
International expansion hasn’t always been smooth, though.
“People come to me often and say, ‘Oh, you guys have done very well in the US,’” Modrzewski says.
“Then I tell them, ‘Look, you may not know this, but this is the fourth US strategy that we deployed.’ So we had three previous strategies and clearly they didn’t work out that way.”
Why the previous three attempts failed was due to a number of reasons: wrong people, wrong financing and wrong structure. But the main thing was that the commitment wasn’t really there.
“Now, in hindsight, it was all obvious.”
“The principal thing was to actually focus and commit. And it became a very big thing for us going forward, where we said, ‘Look, doing something with a 50% commitment — better not to do it, because you are going to fail,’” Modrzewski says.
“Role model of founders”
Iceye has raised over $500m since founding the company in 2014 from investors including BlackRock, BAE Systems, In-Q-Tel and government funds, including UK’s National Security Strategic Investment Fund and Business Finland. Following its Series D in 2022, the company had a post-money valuation of $727m, according to PitchBook data. Although the company cannot comment on its current valuation, it is believed — at least internally — to be “significantly higher than $1bn.”
Still, the startup is not one to blow its own horn — at least not its CEO, Rafal Modrzewski.
“If I were in my natural habitat, I would just find myself reading books. But since I had to learn how to be among people and be happy, I can,” Modrzewski says, speaking to Sifted from his native Poland. “But I’m one of those founders who is not desperately looking for screen time or journalist time.”
Adam Niewinski, partner at Poland-based OTB Ventures, one of Iceye’s investors that first invested in 2018 at a post-money valuation of around $80m according to Pitchbook, says the company intentionally maintains a low profile, focusing on under-promising and over-delivering rather than generating hype. He expects that will result in a more sustainable (and higher) valuation over time compared to volatile, hype-driven peers. And he has a lot of faith in Modrzewski.
“He’s in a way like a role model of the founders,” Niewinski says. “He has very strong opinions loosely held. So he’s passionate, he’s a visionary, but he’s constantly listening to people. He’s constantly trying, you know, to make sure he’s on the right path, doing the right thing.”
Modrzewski says he’s a very hands-on CEO, but tries to give his team autonomy when it comes to business-as-usual.
“When you bring somebody in and you give them a task, you promise them the concept of freedom and authority. And you break it if you change it for them. On the other hand, the team is very much aware that when they are designing new things, they need to have me in the room,” he says.
Having been involved in the hiring of 300 of the staff, Modrzewski believes recruitment is one of the key tasks for the CEO, along with raising money and setting the company’s vision.
“Every time I’m lost and I wake up in the morning, I’m like, ‘Oh my God, there’s so much stuff to do. What should I focus on?’ I go back to those three principles,” he says. “Have I set the vision for the company? Is everybody aware of what we are doing? Do I have the right people? And do we have the money?”
From revenues of €100m to €250m in two years
Modrzewski explains that although Iceye has only around 10 customers that buy fleets of satellites (governments and defence contractors, such as Rheinmetall), the company also offers imagery services and solutions (such as flood detection) to customers in sectors such as insurance, natural catastrophe response and recovery, security, maritime monitoring and finance.
“I tend to say that it’s one of those overnight successes, 10 years in the making,” Modrzewski says.
In 2023, the company had an annual revenue of €100m, but in 2024, there was no growth at all. Modrzewski says that contracts that were supposed to have been signed late in the year were postponed to early 2025 — but that revenue is “doing really well” this year, and is on track to reach €250m.
There have been rumours that Iceye is planning an IPO and although investors, such as OTB’s Niewinski, are in no rush to see that happen, Modrzewski confirms that an IPO is possible within the next 12 to 36 months.
“Do I think Iceye will IPO at a certain point? Yes. Do I think it will be in the near future? Yes. Have we made a decision when? No.”
Read the orginal article: https://sifted.eu/articles/iceye-the-finnish-startup-at-the-heart-of-modern-warfare/
