The surge in military budgets can help Europe’s entrepreneurial space sector — if spending speeds up

AMSTERDAM – The recent surge in European defense spending could bolster Europe’s entrepreneurial space sector, but only if bureaucratic roadblocks are cleared, panelists said at the SmallSat Europe conference.

While the increase in available capital can provide funding for space-related products and services, government defense agencies tend to operate at a deliberative pace. Startups, meanwhile, often have a 12-month cash runway.

“Traditionally, defense is not being known for speed, so I don’t think that they’re going to necessarily help as much as they could or should,” Chiara Manfletti, CEO of Portuguese space domain awareness startup Neuraspace, said in an interview. “You either feed innovation quickly, or innovation will perish.”

In July, the European Commission proposed a 2028–2034 budget that would increase defense and space spending fivefold to roughly $150 billion over seven years.

Michael Mallon, industrialization engineer at the European Space Agency, cited the potential for European defense spending to lead to the creation of space unicorns as it has spawned artificial intelligence and drone unicorns.

However, the rapid production and deployment of drones, prompted by the Russian invasion of Ukraine, occurred largely because traditional many of the rules followed for decades were “thrown out the window,” said Marco Villa, Canopy Aerospace and Defense CEO.

Will European agencies adopt the rapid pace of decision making shown, for example, by the U.S. Space Force Space Development Agency?

“Is there going to be that sort of culture of being able to try things, make mistakes, learn from them?” asked Noel Rimalovski, GH Partners managing partner. “Otherwise, money is going to sit around and maybe end up in a few companies’ pockets as opposed to developing a true diverse ecosystem at all levels of the supply chain.”

European organizations have shown they can move rapidly to acquire and deploy drones at scale. “These companies have proven that we can do it if the urge is large enough,” Mallon said.

Yes, but does Europe need a war to speed up its institutional processes for acquiring space systems, Manfletti asked.