The global space market has grown exponentially in the past decade, with revenue for 2020 reaching an all-time high of $447 billion. Truly there is money to be made with large players such as SpaceX and Blue Origin funding and absorbing hundreds of space tech startups to develop new space tech. However, UK space startups are facing a much harsher reality. While across the world, space tech companies are drowning in governmental funding, many UK space startups are left to hang. It’s surprising that there isn’t enough funding to go around since the UK is home to roughly 6% of the world’s space companies, making it the world’s largest space tech startup hub, second only to the US. With over 1,300 space tech companies struggling to make ends meet in the United Kingdom, why isn’t the government taking advantage of this goldmine?
Big players invest in space startups
While UK space startups are struggling to survive, every other country seems to be pouring resources into the global space economy. This seems to be a continuing trend. When analyzing data provided by Crunchbase, it is quite evident that the global space economy has been quite bullish. Since 2017 ($2 billion), total investments have more than doubled by 2020 ($6 billion), with all signs pointing towards further expansion. Furthermore, data shows that total venture funding for 2021 has already exceeded expectations by hitting $5.2 billion in the second quarter. Most notable investors include SpaceX’s $850 million space tech acquisition deals and Long Beach’s $650 million Series E funding. Experts suggest that this year’s figures are promising enough that the market will easily surpass the $6 billion funding record from the past.
This uphill trend has been continuing for some years now, with many countries around the world setting aside larger budgets to stake in the space market. Germany, for example, has a governmental space budget of $2 billion that goes towards financing many independent and governmentally contracted space tech startups. There is a healthy mix of domestic and foreign support, ensuring that new and already established startups will survive. Most recently, Porsche announced a $75 million deal with Isar Aerospace startup through a holding group that owns several luxury car brands such as Porsche Bugatti, Lamborghini, and Bentley.
Why UK businesses ignore space tech
If the rest of the world is so excited about the prospects of the global space economy, why are space startups UK lacking domestic funding?
The tech economy has seen a definite rise in the UK in the past several years, with foreign investors looking to acquire shares in high-profile companies. However, domestic interest has been rather lukewarm. Roughly $9.4 billion (63%) of all space startups funding comes from foreign investors. The UK tech sector is quite massive, with overall assets priced at around $15 billion. However, only 37% of all funding is secured through domestic investors.
This raises the question: is the UK interested in the space sector at all?
Well, the government has spoken openly about their interest in expanding the domestic sector in recent years, with three spaceports planned to be built on British soil by 2022. The first satellite launch is scheduled to go through by the second quarter of 2022. In addition, a national review of governmental spending, issued by the UK government, showed plans for the development of state-of-the-art facilities that will be able to develop and launch their own satellites with plans of outsourcing this service to other countries. According to some experts, the global satellite market should reach $4.2 billion by 2024, with all signs pointing towards a growing trend. Clearly, the UK government realizes this potential investment opportunity and plans to take action towards solidifying its position. However, the lack of domestic investor interest in UK space startups is troubling and could prove a hurdle.
British government needs to boost its space industry
Numbers speak louder than words so let’s take a look at the top ten countries that invest in the space sector, placed from largest budget to lowest.
- USA ($40,999 billion)
- China ($5,833 billion)
- Russia ($4,170 billion)
- France ($3,158 billion)
- Japan ($3,056 billion)
- Europe ($2,115 billion)
- Germany ($2,151 billion)
- India ($1,493 billion)
- Italy ($1,127 billion)
- UK ($894 million)
Based on imperial data, the UK is placed at the bottom of the ladder regarding annual space budget costs. Despite talks of expanding its space economy, the UK hasn’t invested in solidifying its infrastructure or supporting space technology startups. Moreover, most space startups receive funding from foreign Angel Investors rather than domestic companies. This creates a dangerous rug-pull trap that could go off at any moment. Should investor interest decline over time, many companies will be left without a safety net, resulting in massive layoffs and eventual bankruptcy. Without a proper support system from the government, space tech companies cannot grow, thus, stifling the UK economy. It’s a double-edged blade that will end up causing a lot of harm unless taken care of.
Let’s sum up
The global space economy is experiencing exponential growth and prosperity, with thousands of tech companies spread throughout the world. However, due to passivity on the UK space market, many companies have to resort to securing foreign funding, leaving them exposed. Despite assurances from the UK government that they plan on expanding their space economy, little to nothing has been achieved. Domestic investors seem to be put off by the idea of space exploration, choosing instead to hold on to their money or invest it in safer ventures.
Unless things start to change, the UK space market could lose out on a tremendous opportunity. Simply put, the government is not investing enough into an industry that could generate impressive revenues for the state budget.