Europe’s defence tech hype has reached space — and more spacetech startups are now pivoting to capitalise on the buzz.
“I would say the vast majority are repositioning for the defence market,” Mark Boggett, CEO of London-based space-focused VC Seraphim Space, tells Sifted. “This is what the VCs and investors want to back.”
He sees AI and defence as the two big investment themes for the coming decade. “Most people have already made their AI bets,” he says. And then you’ve got defence: “a whole new area that most people have not invested into historically and are finding their way around that.”
Spacetech — in particular satellite data — is crucial for many battlefield defence technologies.
The pull of spacetech — “halfway between AI and defence” — is that it falls under dual use, Boggett says. “That’s becoming really attractive to investors, because you can play defence, but there’s also the commercial angle as well. I think those two things have really made space much more interesting.” Trillion-dollar defence budgets in the US and European countries like Germany also make it appealing. Everyone’s like, ‘how do we access that?’” Boggett says.
Seraphim Space has backed its own share of space startups working in defence, including Finland’s Iceye, which deploys radar satellites to collect real-time, 24/7 images of Earth’s surface and recently struck a joint venture with German defence prime Rheinmetall, and UK-based All.Space, which makes terminals to communicate with satellites in orbit to help with battlefield communications on the land, sea and air.
But pivoting into selling to the government isn’t easy. “You need a specialist sales team, you need to have people with security clearances,” Boggett says. “You can’t just move from being focused on the insurance market to being focused on the defence market overnight — there’s an investment that’s required, there’s a transition period and most of the companies that we’re speaking to are very much in that process.”
He says that while some of the first space-related government contracts are being doled out, they largely haven’t been awarded yet.
“A significant proportion of the market is earlier stage, so they are just going to take longer to engage with the procurement process,” Boggett says.
Boggett also predicts we’ll see a lot more VC funds investing in space companies — largely riding the defence wave. “The number one thing for GP fundraising seems to be the establishment of defence-related funds. That is really where the LP fundraising is going at the moment,” he says.
“I think we can see [the number of funds investing in space] doubling or tripling with those that are going to be defence funds, which will naturally have a proclivity to want to try and find space-related deals.”
Read the orginal article: https://sifted.eu/articles/space-startups-pivot-defence/
