As Europe looks toward its next phase of growth, space technology (“SpaceTech”) is emerging as a strategically important sector. The question is no longer just how much capital is available, but also how growth can be financed more flexibly and with less dilution.
SpaceTech is experiencing strong backing with record levels of investment in the sector in 2025, with private investment growing 48% year over year to $12.4B from 2024, including $3.8B in the final quarter, according to data from Seraphim Space. Europe is seeing rapid development across launch capabilities, satellite manufacturing, and downstream data services. Governments and SpaceTech companies are working together to build meaningful sovereign capabilities as the sector scales. The European Space Agency reported public budgets of €12.6B in 2024 (+2%), while the European Space Policy Institute found private investment rose 56% to €1.5B. Notably, 40% of this investment was directed toward security-focused companies, reflecting Europe’s increasing emphasis on defence and strategic autonomy.
A key characteristic of SpaceTech is its capital intensity. Compared to traditional technology businesses, these companies require significantly larger and more flexible financing solutions from inception through to maturity. Venture capital alone is not sufficient to support companies as they scale. The key question becomes: how will Europe finance and support its growing SpaceTech companies?
SpaceTech companies often begin like any other deep-tech startups, requiring heavy upfront investment in R&D, engineering, and early-stage product development. However, the scaling phase introduces a significant change in capital requirements. Companies must invest in manufacturing, physical infrastructure, and highly specialised talent. Facilities are complex, production is capital-intensive, and regulatory requirements add further friction. Unlike purely digital businesses, SpaceTech ventures may burn cash for extended periods before generating meaningful revenue. Developing a new launch vehicle, for example, can require 5–10 years of sustained funding.
The nature of the European space ecosystem therefore requires a broader range of capital sources. Venture capital remains a critical part of the capital stack, particularly in funding early-stage innovation, but it must be complemented by other forms of capital as companies mature.
Public funding including ESA and EU grants, as well as government-backed equity, continues to play a key role in supporting R&D and early development. However, these funding streams are typically tied to specific projects or milestones, limiting their flexibility. As companies grow, they require capital that can be deployed more dynamically to support different growth plans.
Debt financing is increasingly being explored as part of this broader capital stack. Venture debt and Infrastructure finance offer companies access to capital without immediate equity dilution. Despite this, debt remains underutilised in European SpaceTech accounting for just 8% of the share of total investment in 2024 according to a report by the European Space Policy Institute.
Venture debt allows companies to extend runway, continue research and development, and scale production without diluting equity too early, an important consideration in a sector where value creation takes time. Venture debt is also flexible and can be used at different stages of a company’s life cycle, from advanced R&D to scaling manufacturing and building infrastructure. It can even help finance customer contracts by providing working capital as companies start to earn revenue.
There are clear examples for this model. Venture debt has long supported capital-intensive innovation in sectors such as semiconductors, where companies with strong intellectual property but limited early revenues required less-dilutive funding to scale. SpaceTech shares many of these characteristics.
Claret Capital Partners has positioned itself as a leading European SpaceTech lender. Our investments include Open Cosmos, a leading satellite mission provider that simplifies access to space by designing, launching, and managing small satellite constellations aimed at supporting organisations solve global sustainability challenges. Claret has supported Open Cosmos since 2023, helping the company as it accelerated its growth internationally and expanded its offering to encompass sophisticated satellites and constellations as well as satellite-based analytics and insight solutions.
Europe’s ambition to build a strong, independent space industry will require a full range of funding options. Equity and public funding will continue to drive early-stage innovation, while debt and institutional capital will be increasingly important in supporting scale. European and national agencies are beginning to recognise this, with a growing emphasis on blended finance models that combine public and private capital.
Ultimately, the future of Europe’s space economy will be shaped as much by how these companies are financed as by the technology itself. A broader capital stack, including venture debt alongside equity and public funding, will be critical to enabling the sector to scale.
Authors: Jared Magnus and Max Haigh
