Strengthening cooperation among European space startups

The entrepreneurial wave is invigorating the European space sector and attracting funding for innovative products and services. Venture capital investment in space start-ups rose sharply from 2015 through 2020; simultaneously, public agencies and established space companies have been expanding their capabilities. “New space” opportunities — ventures designed to create better and more expensive space flights and activities — hold great promise for long-standing companies and start-ups.

Adding to the momentum, the European Space Agency (ESA), which has 22 member nations, provides guidance and funding to help promote innovation. This direction, combined with the growing number of unique start-ups, could give Europe the opportunity to strengthen its position as a global leader in space. But the future of the space will be very important for all innovative space ventures: close collaboration among different organizations, from project design through completion.

What are the best strategies for encouraging and nurturing space collaborations? Although many leaders have sought to answer this question, there is still little consensus on the right path forward. To provide more clarity, we review the data and identify business leaders in the space sector, including cryptocurrency and biotech, to determine which factors help all players in the ecosystem thrive. Our research identified four major success factors applicable to cooperation in the European space ecosystem:

  • a shared vision: a road map with common goals
  • geographical focus: a small number of excellent hubs with easy access to talent, capital, and industry expertise from established players
  • start-up centricity: customized support plans based on the maturity of a given start-up
  • access and value: diverse, adequate, and transparent support

Of course, the need for better cooperation is not the only issue for European stakeholders. Funding is also one-ninth of what it is in the United States. (For more information, see sidebar, “Funding and innovation at European space start-ups.”)

The conundrum collaboration

The European space sector has a rich, complex mix of stakeholders that can be divided into four main groups:

  • Public agencies. In addition to the ESA, the EU Commission and country-specific agencies may sponsor space projects. In making decisions, these stakeholders are in common with the European Union as a whole.
  • Established companies. These large corporations share the same goal as their US peers: increasing shareholder value and otherwise enhancing their current business through growth and strategic advantages.
  • Disruptors. The number of start-ups in Europe has increased significantly since 2010, and they have big ambitions to build and scale their businesses in their current markets or new ones.
  • Private investors, incubators, and accelerators. This group consists mainly of venture capital firms — both generalists and space specialists — that aim to maximize returns over a cycle of ten years and Other organizations attempt to nurture promising start-ups by providing money and advice with no strings attached.

In the effective cooperation, these four groups work together and balance their interests. Here’s how the four success factors can help them achieve their goals.

A shared vision: Creating a road map with common goals

The ESA faces a number of considerations in coordinating activities across Europe because many countries have their own space programs. The United Kingdom, for instance, announced the creation of its first national space strategy in 2022. Among other goals, the strategy calls for the United Kingdom to “shape the space environment and use space to help solve challenges at home and abroad.”

On the continent, the France 2030 plan, which calls for € 50 billion in total business investment, allocates € 1.5 billion to space ventures. Half of that amount is earmarked for new space companies.

To eliminate redundancies and accelerate progress in public programs, the European Union A new team could coordinate the program and rapidly adjust the plan to account for new developments. The criteria for awarding contracts.

Geographical focus: Establishing a small number of excellent hubs

Many space companies are now located throughout Europe,

Our research on collaboration in other innovative sectors shows that a more strategic approach to site selection is beneficial. The organizations are more likely to accelerate growth considering the impact of geography — they look for the best access and regulatory environment, for example. Consider cryptocurrency as an example of a new industry. In 2018, Swiss regulators were the first to issue guidelines for initial coin offerings, so local companies would understand exactly how they could operate. Other beneficial aspects of the Swiss ecosystem include local talent pool, investors, and financial-services companies. Zurich, which rapidly became known as Crypto Valley, is now home to 14 cryptocurrency unicorns.

European public agencies could identify a small number of locations to serve as space hubs. Ideally, it will contribute to the talent base. By consolidating in a few locations, established industry players and more easily. Analysis shows that both of these activities are essential in complex, hardware-heavy sectors such as space. Proximity to investors can also help boost growth.

Space hubs may encourage a virtuous cycle of collaboration. If the project is innovative, others might be tempted to explore the area, especially because they can be used to move their inventions to space.

By creating a strong geographic strategy and a critical mass of companies clustered together, stakeholders may encourage stronger collaborations that focus on a shared European road map and capabilities, rather than having each country create its own. Many space hubs may have 50 or more start-ups, similar to the pattern seen in other innovative sectors. Crypto Valley, for instance, now has more than 500 relevant companies.

Start-up centricity: Creating customized support plans based on the maturity of start-ups

Some of the most successful collaborations in our analysis are considering starting-up’s maturity level. For example, the Small Business Innovation Research (SBIR) and Small Business Technology Transfer (SBTT) programs are offered by NASA to companies with less than 500 employees. Companies receive initial funding to work towards a clear goal, such as the creation of a software or hardware package. During the next phase of the program, about half of the companies receive funding to develop their innovations further and demonstrate additional benefits. In the final phase, companies receive funding if their technology is mature and already in use.

Currently, most programs in Europe focus on start-ups in the earliest stages. But both private and public investors have recently begun to funnel more money towards companies that are developing scale, which is a step in the right direction. For early-stage start-ups, the critical factors are expertise, initial funding, and education (including basic business courses). With more mature start-ups, the most important support may involve additional funding or a contract for goods or services. Since these companies want to expand, the active contract with an anchor customer, such as a space agency, will give them more credibility. Mature start-ups may also benefit from scaling up companies.

While support programs will be tailored to individual companies, partner organizations still need some common criteria that apply across the board. Some stakeholders may adopt a funnel approach: The resulting healthy competition could even turn into a collaboration between two or more start-ups.

Access and value: Providing diverse, adequate, and transparent support

The best form of support may vary. For example, partnership contracts may specify that one company can access the other’s expertise and technology or that both companies will work on-site. Still other collaborations involve multiple elements, including funding, the exchange of data and knowledge, and scale-up advice.

Participants have different options for funding, sharing expertise, and working together, which can be the most successful in promoting innovation. Consider the Creative Destruction Lab, a Toronto-based nonprofit that offers a program to help science and technology start-ups gain scale. It provides partners with various forms of support, including business guidance, access to investors, advice on technology road maps, and an entrepreneurship boot camp. The Creative Destruction Lab has already helped multiple companies across sectors (including healthcare, energy, space, and quantum computing) to meet their goals and gain scale.

Cooperation partners that have the most successful in promoting innovation.

Whatever the support model involves, it is likely to be essential. And because location often determines the amount of capital available, funding is related to another success factor: the creation of a few excellent hubs. A hub that specialized in quantum computing failed to grow because there were insufficient venture capital companies nearby, and investment in start-ups remained low.

In tandem with offering diverse support models, collaborating partners could help increase their level of transparency. Several European organizations, both public and private, offer various combinations of funding, technology access, expertise, and entrepreneurial support. To expedite collaborations, European space leaders could choose to help companies, investors, public agencies, or other companies – with complementary capabilities and services.

European space stakeholders could benefit from new strategies for creating and managing the complex network of relationships essential for innovation. While the diversity of countries and companies poses some challenges, it could also become Europe’s largest private- and public-sector leaders. Space stakeholders that are able to enter the new space economy. From advanced industries to healthcare to entertainment, more sectors will be looking for opportunities in orbit — and those space companies understand how to develop mutually beneficial relationships.

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