Soon after Sethu Saveda Suvanam founded his spacetech startup ReOrbit in Sweden in 2019, he says he realised that the country’s national space agency would hinder rather than help his company. That’s despite the Nordic nation having the EU’s only spaceport and a history of sending astronauts into space. In 2020, Suvanam moved his company to Finland.
“Finland has a 180-degree opposite view of space than Sweden,” he tells Sifted. “One of their mottos is that if they see a big innovative idea aligned with the national strategy, just support them full-heartedly. That's the level of clarity you require as a space company, because it’s a very long-term investment,” he says.
He’s not the only founder to tell Sifted that they’re being held back from building commercially viable spacetech startups in Sweden, and that neighbouring Finland — which lacks both astronauts and spaceports — is more favourable.
Only last week, Finnish startup ICEYE, which deploys radar satellites that collect images of the surface of the Earth, announced a €94m growth round – making it the second best-funded space startup in Europe.
So what’s afoot?
Difference in resources
Space budgets vary greatly between countries in Europe. The Swedish National Space Agency says it has an annual budget of around €100m (1.2bn SEK) — up to more than half of which goes towards contributions to the European Space Agency. France, in contrast, has €2.6bn to play with — the largest space budget in Europe.
According to the director general of the Swedish space agency, Anna Rathsman, the difficulty of supporting early-stage startups in Sweden is partly a question of resources.
“We support startups through ESA BIC [European Space Agency’s Business Incubation Centres] and other activities, but we would like to do more,” she says. “Other countries have done more on this — unfortunately, we don’t have the resources to do that.”
That said, Sweden’s space budget is still larger than countries such as Denmark, Finland and other small European countries; it’s more a question of how you use the money, says Saveda Suvanam.
In Finland, the Space Committee — which sits under the country’s Ministry of Economic Affairs and Employment — works closely with the government organisation Business Finland, which has invested in plenty of spacetech startups including ICEYE and Kuva Space, which is building a satellite constellation for Earth observation.
“The first thing [Business Finland] asks is how much export revenues can you bring in the next five years? How many people can you employ? Those were the only two questions they asked,” Saveda Suvanam says.
“That's a really good way to start, because then you're cutting all the crap and you're just focused on two important things. Whereas if you're in an environment where people judge you based on exciting research, you're moving further and further away from the market.”
ReOrbit, which develops software-first satellites “in a similar fashion to how Tesla makes cars”, has also benefitted from local investors. In August last year, it raised a €7.4m seed round led by Helsinki-based VC Inventure. The company says it’ll have its first satellite space launch in 2025 and it already has six paying customers — from governments to commercial clients. It also says it has been profitable for the past three years, and expects approximately €5m in revenue for 2024.
Saveda Suvanam points to other companies in Europe, such as Lithuania’s NanoAvionics (acquired by Kongsberg Defence and Aerospace in 2022), Bulgaria’s EnduroSat and Danish Atlant3D, which have raised more than €10m in funding from sources other than their local space agencies.
“These companies don’t get their funding money exclusively from their countries’ budgets. It's more the framework and the mindset. I would say that if it was about the budget, then probably all European space unicorns should come from Germany, France and the UK, who operate the largest annual budgets and consequently have the biggest opportunities to invest in space,” Saveda Suvanam says.
“There is a lack of interest in business”
Only one of the 167 space industry startups that have raised more than $1m in funding is based in Sweden, according to data platform Dealroom.
Victor Gonzalez founded hardware startup Porkchop, which has developed a nanosatellite propulsion system, whilst doing his PhD in Sweden 2019. Although his company managed to get into one of the European Space Agency’s Business Incubation Centres, acquire customers and test its propulsion system in space in early 2022, when things turned difficult during the pandemic he didn’t have the support to pay his employees’ salaries and was forced to file for bankruptcy.
“If you want to run a space company in any country, you need to have the support from your national space agency. If you don't have that, then it's going to be really, really hard,” Gonzalez says.
The Swedish National Space Agency — which sits under the country’s Ministry of Education and Research — has an overall aim to distribute government grants for space research, technology development and remote-sensing activities and to initiate research and development in space. There’s little in the strategy that talks about building a commercial industry.
“The thing with the Swedish space ecosystem is that it [...] aligns all the activities more into science, research and education, which I can support. But when it comes to fostering innovation, new ideas and supporting startups, then there is a lack of interest in business,” Gonzalez says.
“It's very easy to get big institutional governmental money, but to win a commercial contract, it's a completely different game. Once you've gotten used to being dependent on government money, then it's very difficult to start selling,” says Saveda Suvanam.
There is cross-departmental collaboration though, Rathsman says.
“The Department of Education is appropriate when it comes to research. When it comes to other parts, there are other departments involved, such as climate and environment, which work a lot with societal benefits, and Defence or the Department of Foreign Affairs when it comes to international relations. I would like to see an interdepartmental group for this higher up in government” she says.
National space agencies tend to be under trade, employment or defence — like in Finland.
According to the strategy set by the Finnish government in 2018, the main objective is to make Finland “the world's most attractive and agile space business environment that benefits all companies operating here” by 2025.
“We are still a small country, but the growth in companies and space activities are quite impressive for our size,” says Tero Vihavainen, head of the Finnish Space Office.
The shift in policy in Finland came in 2018 following the launch of its first space satellite, Aalto-1, developed at Aalto University. The same year, ICEYE was the first company in the world to launch a SAR microsatellite in space. According to Vihavainen, it has shown the way for many other entrepreneurs building space startups in Finland.
He does look at Sweden’s spacefaring history as something Finland could also benefit from.
“Sweden has an excellent spaceport, which is really impressive. We don’t have that capability because it takes a lot of resources to maintain. Sweden also has astronauts and that is quite expensive,” Vihavainen says.
“We would like to have astronauts too, but we have limitations as we focus on growing our space industry.”
