Investments in Space Economy

Author: Pietro Santoriello

Historically, the main actors in the space sector, i.e., those who provided various facilities and funds for the advancement of space exploration, were the governmental space agencies. Thanks to their advancement and development, but in a climate of Cold War and continuous competition between the US and USSR, the foundations were laid for future developments in the space sector. Today we can benefit from a phenomenon that has allowed many private operators to become active in the sector and to contribute to innovation: this phenomenon is the democratisation of space.

According to 2021 Euroconsult report “World Government Expenditures for Space Programs”, the global public investments in Space Economy are $92.4 billion. It is always difficult to give an overall figure as some powers such as China do not disclose the amount spent on investments. The main activities concern missions defined by government space agencies and activities of national interest for exploration, defence, earth observation, telecommunications, and others. At European level, ESA continues to be the reference body, but since a few months it has been accompanied by EUSPA, which aims at greater commercialisation. The top three contributors in terms of ESA investments in 2021 were France (1065.8 million), Germany (968.6 million) and Italy. Italian investments (data from the Space Economy Observatory of the Politecnico di Milano) guarantee a contribution to the European Space Agency of 589.9 million euros. With specific regard to Italy, in the context of the European recovery plan, significant investments (1.49 billion euros) have been set aside in the PNRR for the development of the Space Economy sector in the country.

Public-to-private investments are an important resource for different realities such as start-ups and small companies that guarantee the substrate of evolution and innovation in the sector.

ESA makes investments through its business incubation centres, focusing on numerous innovative companies and trying as much as possible to channel ideas towards commercialisation.

As mentioned above, the democratisation of space has led to the opening of space to numerous private entities and companies that have begun to invest in space technologies or have decided to enable themselves through satellite applications. What made this possible were the increasingly developed and still developing processes of digitisation and Artificial Intelligence, which, especially in recent years, have made it possible to streamline the manufacturing processes of components and of satellites themselves, with mass production and ever lower costs. This is where the phenomenon of mega constellations of Small Satellites comes in, which today account for a large part of global investment.

At the level of space exploration, thanks to the Artemis programme and the Lunar Gateway project, a different type of partnership involving both the public and private sectors has been and is being tested (according to Andrea Sommariva, Director of Space Economy Evolution Lab, Bocconi). In this vision, the public will lead the way in space exploration and the establishment of a greater human presence in space, while the private sector will consolidate this establishment by creating new markets and new trade.

Lastly, there is private investment in private individuals, i.e., funds and capital invested in innovative businesses such as start-ups or small companies. This is the case of venture capital, which scouts for activities, ideas and emerging companies and finances their development with a view to future growth. In Italy, one of the very few venture capital firms operating in the sector is Primo Space, which closed 2021 with over 80 million euros invested.

In conclusion, a personal reflection: in the last few years in Italy and Europe a real market has been developing linked to private investment and the development of new activities in the sector, both upstream and downstream, in the wake of what has happened in the USA. It will certainly be necessary to focus not only on technological innovation but also on driving commercial demand to generate more and more value.

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