The space sector has been on the front page of every business newspaper and online blog. Success stories of satellites launched and recreational rides into space are buzzing about, solidifying the demand for space travel. It’s true: the space sector has been incredibly lucrative for some years now, with prominent players such as Jeff Bezos’s Blue Origin and Richard Branson’s Virgin Galactic proving that there is plenty of profit to be had.
Meanwhile, the UK has pledged to invest more into the space sector by building three spaceports. The spaceports are expected to be complete by 2023, with the first satellite launch scheduled for the second half of 2023. This is a big step for the UK space sector as the ability to construct and launch satellites from native soil will boost local economies and create plenty of job openings. However, while the UK government claims to have plans to put Britain on the space map, the sad truth is that many UK space startups are starving for funding. Maybe it’s time the UK wake up and realise they have a literal goldmine of technology at their feet.
What businesses invest in space startups?
Other countries in Europe seem to be doubling their efforts to land both foreign and domestic investors for their space startups. Germany has been quietly building up its space sector with governmental funding and plenty of domestic investors. Recently, Porsche announced that they had invested over $75 million into the Isar Aerospace startup, with plans to invest further should the project progress smoothly. Porsche’s hope is that the space race will open up further investment opportunities and modernise the field of transportation.
Space Angels is an early-stage investor tracking incoming investments into the space sector. They reported that for the first quarter of 2019, $5 billion of private funds were made available to an array of US space tech startups. Blue Origin invested a whopping $1.4 billion, accumulating several promising startups into the fold. For the period 2009 – 2019, Space Angels poured nearly $24 billion into 509 space tech startups, helping develop hundreds of patterns that are currently used in the development of tech for upcoming missions.
Unfortunately, domestic UK space startups aren’t receiving that level of funding. While the UK remains home to roughly 5.7% of the world’s space tech companies, second only to the US, the governmental and private funding they receive is abysmal. As of this moment, the UK is home to over 1,300 space technology startups, many of which are struggling due to financial issues, some of which have had to shut down operations. The UK government’s annual space budget set aside for 2020 for the space sector is $894 million, falling a few billion of the US’s annual budget of $41 billion.
Why don’t British corporations support local startups?
The UK space startups have received little to no domestic funding since the large tech boom of 2009. Most of the funding received by the British space sector is outsourced, meaning that it comes from outside the country. Foreign investors make up $9.4 billion (63%) of the space sector’s $15 billion total investments. Only 37% of all investments come from the government and domestic private investors. This creates a large discrepancy which serves as an air-sealed bubble. Should foreign investors stop the flow of money, most of the 1,300 tech companies currently located in the UK will lose their primary source of income.
There are several reasons why domestic investors are not investing:
1. They see the UK space sector as a risky investment
Many investors hate risking their money – that’s a widespread fact. However, recent years have shown that the space industry is a global force to be reckoned with. There have been hundreds of successful satellite launches in the past five years, including several non-scientific trips to Earth’s orbit. The space sector generated over 446.9 billion US dollars in 2020 on the global market, proving that there is plenty of money to be had, with little to no risk.
2. There isn’t enough widespread information regarding the future of UK space startups
It could be possible that while many space tech startups originate in the UK, the general population knows little to nothing when it comes to space tech. This lack of information could directly influence the amount of funding each company receives. After all, how can you invest in something when you aren’t aware it exists?
3. The UK government’s lack of funding is a sign that the space sector isn’t as stable as it could be
Let’s face the music: nobody wants to invest in a venture that seems abandoned. The word abandoned is quite correct: $894 million of government funding per year for such a large number of startups is not nearly enough. It could be that, through inaction, the UK government is scaring away potential investors.
What does the British government say?
So far, the UK government has maintained its stance on the space sector: they are interested and will invest further. However, besides planning to build three separate spaceports, they’ve done little else to back that statement. Numbers never lie, and the amount of government funding received by UK space startups is in the bottom ten in the world. The top ten space sector investors in the world are the USA, China, France, Russia, Japan, Europe, Germany, India, Italy, and in the last place, the UK.
This level of domestic disinterest in the future of the fastest-growing sector in the world is mind-boggling, going against the initial statements of ambition that the UK will occupy a large percentage of the global space market by 2030.
Final thoughts
There need to be some changes made if the UK space sector can flourish. Such a lack of interest within the country could prove a downfall for the hundreds of startups that have put their faith in the hands of a government that doesn’t seem to care all that much. Without funding from the government and private investors, the UK risks losing the 21st-century space race.
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