Space Funding: How We Did It

Abstract space mining image created by DALL-E

Accomplishing anything in space can require high upfront costs. Five Luxembourg-based space companies shared how they raised funds.

Solutions to tackle the problem of radiation in space are critical to advance a space economy. However, getting traction for their development from traditional VC channels proved challenging for EMTD Labs’ space division. “We have very long development horizons for our products,” founder CEO and CTO Cédric R. G. Thiry said, adding: “Governments are the best investors for this type of project.” 

EMTD Lab’s AI develops advanced materials for radiation shielding, providing the groundwork to enable other technologies in future. To fund the vast amounts of R&D, the firm focused on securing partnerships with governments and supranational bodies like the EU, the European Commission, European Space Agency (ESA) and the Luxembourg Space Agency (LSA). 

The latter two have provided non-dilutive capital through the Lux Impulse programme, aimed at bringing innovative ideas to market. To pursue the programme, in 2021, the startup moved its headquarters from the Singapore Space and Technology Limited incubator to Luxembourg. 

“The government of Luxembourg is focusing on space mining, a business model which is not so different. So if we want to achieve the ambition of one day mining on the surface of the moon or asteroids with robots or humans helping machines to drill, you will also need to do a lot of work to shield those electronics components and humans against radiation,” Thiry explained. 

Securing government and agency contracts raises new challenges for startups, notably because of the rigorous application procedures when applying for grants with the likes of the European Commission or ESA. “The amount of documentation, the forms, the business planning, the project management, are exactly the same whether you’re a startup or larger corporation. It means the process is lengthy and complex and also the success rate is not high, but potentially it’s higher than to make a match with a venture capitalist.”

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Experience & team knowhow

What helped EMTD Lab navigate the procedures was Thiry’s decade of corporate experience, combined with the knowhow of his team. 

“Without any corporate background in the world of research and development innovation funding, I don’t think that would have been possible for us,” he said. “You need to have a kind of a corporate mentality. Given that these processes are heavy, tedious, bureaucratic,  and very administrative.”

Looking to the future, EMTD Lab plans to apply for the new European Commission EIC pathway funding, dedicated to “risky research programmes” which fill a scientific gap. Thiry said: “It’s all based on scientific collaboration between three countries. And we believe in the power of collaboration.”

The firm is also moving into corporate collaborations and is currently in advanced negotiations with a large corporation which has a shared vision in terms of space development. 

OQ Technology

“It was extremely difficult,” recalls OQ Technology founder and CEO Omar Qaise of his last fundraising round. “In Luxembourg, private VC firm investment in Luxembourg space startups is very limited if non-existent. So, we had to go internationally.”

For the first eight months Qaise relied on investment consultancy companies without success. “We decided to take things into our hands. VC firms were not very keen on investing in Luxembourgish companies. So, we had to go internationally.”

He read up on fundraising and reached out to investors all over the world. “I thought I’ll probably get hundreds of rejections but probably one person will listen. That’s when things kicked off.”

Qaise targeted VCs with legacy in telecom, space, energy and deep tech. Coincidentally, one of its Series A investors, Wa’ed Ventures, is the venture capital arm of what was at the time a potential customer Saudi Aramco.

“When they saw the value of what we do, they wanted to be more than just a customer. They have multiple partners and they wanted to support OQ to grow also, and that’s how we got them,” said Qaise. 5G Ventures (manager of the Phaistos fund) joined the 2022 Series A round which, according to Qaise, almost ended up oversubscribed. “A lot of investors wanted to join but we had to close due to time constraints […] And if I’m not mistaken, we’re the only space startup company in Luxembourg that closed a Series A funding round of more than $10 million.”

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Building commercial aspect

Qaise’s advice to other space entrepreneurs is to focus on building the commercial aspect of their business and avoid getting hooked on the “drug” that is subsidies and grants.

“You have to go out there and raise money and be commercial and that is something that I think a lot of companies missed or failed,” he said. That said, he acknowledges the support and insights of the LSA. “Luxembourg Space Agency were really very supportive even in the darkest financial moments for OQ. I deeply appreciate this.”


When Hydrosat began operations, nobody had ever commercialised thermal imagery before because of the high cost associated with cooling sensors in space. 

“You had to launch a cooling system the size of a refrigerator with your sensor, so the satellites were massive, heavy, and very complex,” explained Hydrosat President Royce Dalby. NASA and ESA have excellent thermal satellites, but they are far more expensive. Hydrosat’s technology operates at ambient temperatures, saving hundreds of millions in costs.

The company’s first commercial products apply thermal imagery to agriculture. Hydrosat measures plant stress to forecast crop yields and to help farmers manage irrigation in a way that increases production and reduces water consumption. 

The firm plans to deploy a constellation of 16 satellites. However, its first focus was on developing and perfecting the agricultural products that would make use of the thermal data. Hydrosat landed a contract with ESA in 2019 for €3.7M to prove the concept. This was followed by a second for €4M, which will mature the products and take them to market. This, Dalby said, was critical for building credibility with investors. “ESA has been extremely helpful to us,” he said, “because they validate our results. The agency is very particular about making sure our results are accurate.” He added, “It helps demonstrate the benefits of thermal imagery and show that there is demand for the unique products you can develop that are in many cases better than what you could develop otherwise.”

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Equity investment

Hydrosat landed its first equity investments in 2021, raising $10M in Seed funding. It is currently working on a $15M Series A round that it expects to close in the next month. The funding has been raised in equal parts in the US and Europe. Dalby said: “We’ve found that, in general, European investors are much more open to environmentally focused applications and environmental companies. On the other hand, we’ve also found that European investors tend to be more methodical: they do a lot more diligence, so they’re slower to make a decision than a US VC.”

Dalby said that it was challenging for Hydrosat to land VC funding because many investors are focused on either upstream or downstream applications, while Hydrosat does both. “The two ends of the spectrum are often not the same group of people. Each has a different risk profile and investment time horizon,” he said.

In 2024, the firm will launch the first two of 16 satellites, after which it will start on Series B to continue deploying the constellation.

Dalby’s fundraising advice is to look at government contracts for co-investment, as government agencies can make reliable and helpful partners. He points out that the motivations are different from VCs, as they are more focused on creating jobs and intellectual property that will benefit their economies, but these objectives are usually aligned with those of startup companies.

Lunar Outpost

When COO Julian Cyrus and brother Justin established Lunar Outpost in the US in 2017 their first goal was to develop robotic vehicles and mobility platforms to develop a permanent human presence off the Earth. 

“We recognised that it’s really great to have these large space ambitions, but they take time and space is not cheap. Since I don’t have a billion dollars in my back pocket, we’ve got to be a successful company to last long enough to accomplish our goals,” recalled the COO. 

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The team focused on bootstrapping, seeking smaller contracts to generate revenue in the short term, by developing IoT air quality monitoring systems for lunar habitats. Things snowballed when they responded to a call for environmental monitoring solutions from the City of Denver. “That helped sustain us as we were doing our own internal development and research into the space applications,” said Cyrus. 

Having a mature product was a tremendous advantage for gaining traction with customers and NASA, not to mention investors. 

“They [Investors] want the deep potential for large growth. They’re giving you money, they should expect to return and that blue sky is multiple times return on what they’re looking for,” Cyrus said, adding: “The flip side of that coin is to have good fundamentals as a company. If you can show revenue as well, and be grounded in your path, that shows a track record for them.”

Lunar Outpost remained bootstrapped for four years, a period which Cyrus said put them in a “good position to accept resources and accelerate” when, in 2022, they closed a Series seed (between A and Seed) round of $12M. It took 6-9 months and a certain amount of persistence to raise the funds. 

Cyrus said: “It’s important to understand who the investors are, understand ones that are interested in your industry and what they’re looking for. And to recognise that you’re going to talk to many, many people. And you’re going to maybe talk to 100 investors and a couple will want to invest, that’s just how it works. So don’t get discouraged with that.”

Kleos Space

“When I started in space, there weren’t many VCs that were interested in investing in space,” explains Kleos Space CEO Alan Khalili. “Because it required a lot of upfront capital and you don’t see revenues sometimes for years.”

Kleos was fortunate to find strategic investors that were more patient for equity and seed funding. But its activities required more investment as the firm scaled. In 2018, founder Andy Bowyer took the company onto the Australian stock exchange. 

“If he hadn’t gone down that path, we wouldn’t be having this conversation right now,” said Khalili. Being a publicly traded venture company came with its own challenges. The CEO observed that high net worth investors on the Australian stock exchange are less patient than VC investors. “So I wouldn’t necessarily recommend going public for a startup. But it always depends on the circumstances you’re in right now. There’s no reason for a startup to go down the public path. But you always have to deal with the environment you’re in at the time.”

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This article was first published in the Silicon Luxembourg magazine. Get your copy.

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