Building a spacetech startup not only requires large amounts of capital. It involves navigating long R&D cycles, complex security considerations and most importantly, a lot of patience.
European startups in the sector raised €1bn in funding in 2025, according to Sifted data, including the likes of German rocket maker Isar Aerospace and Bulgarian satellite manufacturer EnduroSat.
Spacetech startups are already on track to raise similar capital in 2026, with €174m already raised this year.
But R&D cycles for these companies can take anywhere from eight to 10 years from founding to first launch of a product, something crucial for VCs and funding partners to consider before working with them.
According to Catherine Wright, Director, Consumer Internet, Climate and Deeptech and Corporate Finance at HSBC Innovation Banking, VCs that typically fund enterprise software and SaaS businesses understand that “funding a spacetech company is significantly different. While SaaS businesses are typically asset-light, spacetech companies come with another level of complexity due to their capital-intensive profile.”
What makes spacetech different from other innovation sectors?
In order for the spacetech sector to be successful, it relies heavily on flexibility and adaptability from investors as well as founders, according to Bianca Cefalo, CEO of space manufacturer Space Dots.
“Adoption is difficult and there has to be a lot of patience. We need to get our product into space before we can see any results and that doesn't happen overnight. It’s also important to be flexible in accepting failures. That requires a level of adaptability and resilience.”
Europe and the UK want to be at the forefront of tech, but very rarely spend money on their own sovereign companies.
Spacetech startups require far more capital than many other sectors, due to the long R&D cycles, high infrastructure costs and high technical risk; something that other deeptech startups don’t have to navigate as often and as intensely.
One example is Finnish satellite unicorn Iceye which raised €200m in a late-2025 funding round bringing its total valuation to €2.4bn.
Given the capital demands, European spacetech startups should utilise government grants and bank loans on top of equity to boost their funding, Cefalo adds.
Securing a mix of funding support is a powerful message to the market for these businesses.
“There has to be a lot more support from the government. This happens a lot in the US but it happens less in Europe,” she says.
“Europe and the UK want to be at the forefront of tech, but very rarely spend money on their own sovereign companies. If you want your industry to thrive, you have to spend on your innovators.”
Wright emphasises the importance of having government involvement in de-risking capital structures. “A well-structured public-private finance partnership is important. When venture capital is complemented by government funding and debt financing, it creates a blended capital stack that meaningfully reduces early-stage risk and accelerates development timelines. This enables spacetech companies to begin operations earlier and keep momentum going through scale-up phases that would otherwise be constrained by capital availability.
“Securing a mix of funding support is a powerful message to the market for these businesses. It signals confidence in the company and the commercial and long-term potential of the business.”
Funding spacetech companies
Spacetech startups often have different funding requirements compared to other deeptech companies, says Wright.
“Spacetech businesses often take a decade or more to reach meaningful traction, and space missions themselves can span multiple decades.”
There are traditional VCs that we work with but also bespokeVCs such as Lockheed Martin, Boeing Horizon X and Airbus.
Some of our angel investors have introduced us to the next key hire or a potential customer that then turns out to be a very important conversation.
“The benefit of working with bespoke VCs is they are prepared to buy into the longer-term vision. They invest with a clear understanding that these businesses are unlikely to deliver quick returns, but they have the potential for high, long-term rewards. Specialist VCs understand and appreciate the long asset lifecycles with these businesses.”
Working with specialist spacetech funding partners can also open doors to networks and potential employees and customers, says Cefalo.
“In a lot of cases without specialist partners, you wouldn't have access to certain people or events because you don't even know they exist. For example, HSBC Innovation Banking has introduced us to networks and I’ve had opportunities to talk about Space Dots at events that I wouldn't have otherwise known about.
“Some of our angel investors have introduced us to the next key hire or a potential customer that then turns out to be a very important conversation. Capital often comes from introductions rather than money.”
Working with specialist institutions accelerates deals, enabling faster assessment and intervention.
These types of investors also often facilitate valuable conversations around what’s working for business and what’s not, she adds. “These investors have invested in multiple businesses which have gone through the same ups and downs, so they can tell us whether an issue is serious or not.”
Partnering with finance partners who have deep industry knowledge can also help fast-track funding, says Wright.
“Having deep expertise allows you to understand exactly what the product is trying to achieve and anticipate any operational delays, which helps not only to mitigate risk but also reduces the capital burden for founders” she says.
“When partnering with banks or investors without the same sector specialism, the time required to understand the business is significantly longer. Working with specialist institutions accelerates deals, enabling faster assessment and intervention. This not only streamlines capital deployment, but also enhances risk management, protecting investors, banks and founders’ capital.”
However, Cefalo urges the importance of funding partners not only having a deep understanding of the space sector but also knowing how to sell a product.
“You can have someone that supports you from a technical perspective,” she says. “But it’s important to see opportunities where the business can become valuable and grow exponentially.”
