VC is not the only source of financing for space techs. Luxembourg Space Agency CEO Marc Serres outlines the less obvious instruments.
Of the four pillars that Luxembourg’s space strategy is built on, funding is the most talked about. It takes money to make money and that is why for the sector to grow and be sustainable, the economy ministry along with the Luxembourg Space Agency (LSA) has developed and identified funding opportunities.
While the Luxembourg-based space-oriented Orbital Ventures Fund, managed by Promus Ventures and aimed at early-stage companies, has received a lot of media attention in recent years, LSA CEO Marc Serres points out there are other instruments available to startups.
“We have a national credit and investment organisation, the SNCI, we have the Luxembourg Future Fund that we can consider in a certain sense a Luxembourgish fund, although it’s not dedicated to space,” Serres said.
The latter is a €150M European Investment Fund aimed at stimulating the diversification and sustainable development of the Luxembourgish economy by attracting Venture Capital fund managers and early to later stage innovative businesses into Luxembourg. As of the end of the 2021 fiscal year, it co-invested in a handful of new space firms with a presence in Luxembourg including Spire, Iceye and NorthStar Earth & Space.
Another example he cites is the €20M Luxembourg Digital Tech Fund, a public-private seed fund supporting ICT startups and managed by Expon Capital. Thus far it has invested in 13 startups, including space firm Hydrosat.
“If you look beyond just a space fund, there are instruments that are closer to Luxembourg that have been used already to invest in companies. So it’s a mix,” said Serres.
There is a lot available but Serres acknowledges there are still gaps in the funding available.
“I think for space, you don’t find many funds or investors that come with tickets where we talk about several tens of millions.”
Marc Serres, LSA CEO
“What is missing today is funding for when the company needs to scale up. I think for space, you don’t find many funds or investors that come with tickets where we talk about several tens of millions. So this is something that is still missing.”
Serres expected this to change with the Cassini Initiative, published by the European Commission in 2022. The €1B seed and growth fund is designed to support entrepreneurship in space-related businesses across the EU. Among other things, it provides capital to VC funds to be invested into EU-based space companies. The list of VCs includes the Luxembourg-based Orbital Ventures/Promus Ventures. And it also operates loan guarantees.
In January 2023, European Commissioner Thierry Breton announced that more than 100 space-tech start-ups were already receiving access to finance, matchmaking and business development.
Serres said: “This is a huge amount of money. And hopefully this will also fill this gap by helping the companies that need to scale up.”
Meanwhile, the CEO is reassured by the level of attention Luxembourg is receiving from international VCs. In 2022, the LSA attended a workshop in New York with members of the space tech investment community, from which the feedback was positive. Serres credited this attention to the strong legal framework that the country has created around ownership of space resources and the way the ecosystem is being developed.
This article was first published in the Silicon Luxembourg magazine. Get your copy.
