In a groundbreaking shift, Europe has outpaced the United States in private space technology investments, according to recent findings. A study by Seraphim, a top spacetech venture capital company, unveiled that the European sector attracted $565 million during this year’s initial quarter. Comparatively, North America secured $456 million, Asia accumulated $306 million, and the rest of the world gathered around $29 million. Consequently, Europe has emerged as the largest global market for private spacetech financing.
Remarkably, European investments within the first quarter were almost equal to 50% of the total amount collected throughout the prior year. On the other hand, US investments experienced a further decline in comparison to 2022. Although Asia witnessed growth in the past year, it couldn’t maintain the upward trend in the recent quarter, ultimately losing its leading position to Europe. Seraphim’s discoveries highlight a surge in European investments and a significant US decrease.
Funding had plummeted to levels not seen since before 2021 due to the economic downturn over the last year. Seraphim pointed out that investors seeking growth have started focusing on early-stage deals to dodge high burn rates and considerable capital demands. Growth-stage startups have also chosen to delay fundraising, opting for alternative financing options and trying to prolong their financial runway until the economy recovers.
Despite these challenges, Seraphim provided a silver lining for spacetech funding. The number of investments and deals remains well above historical standards. Even though funding has dipped from the all-time highs of 2021 and 2022, those peaks were primarily fueled by colossal funding rounds from industry behemoths such as SpaceX, OneWeb, and Virgin Galactic. After accounting for these exceptional cases, Seraphim classified Q1 2023 as the fifth most-funded quarter to date.
The overall activity within the space economy seems to remain steady. Rob Desborough, Seraphim’s Managing Partner and a speaker at last month’s TNW València event, underscored a “remarkable rebound” this year, with particular emphasis on Europe. Desborough informed TNW that investment rose by 75% compared to the preceding quarter, with the most documented deals (128). The increasing activity in Europe was identified as especially thrilling for investors worldwide.
Part of this enthusiasm is rooted in the most substantial spacetech deals, as European firms secured half of the top 10 investments during the last quarter. The most prominent was a $165 million funding round completed by Isar Aerospace, a German rocket production company. This occasion marked the first European firm to top Seraphim’s rankings since OneWeb in Q3 2021.
With the growing demand for European launch services to rival US competitors, Isar can remain hopeful about future funding prospects. The European spacetech industry has been invigorated by the pursuit of sovereign capabilities. Desborough mentioned that European governments have strongly emphasized space sovereignty in aspects like launch, constellations, and communications in 2023, which has substantially stimulated investment.
For financiers, sovereign backing for startups in emerging areas can alleviate their perceived financial risks. If these efforts yield results, European spacetech could maintain its cosmic expansion.