Unable to raise sufficient funds to scale and restricted by the fragmented European market, many have failed to outgrow the start-up stage. To some, American investors and venture funds have come to the rescue, offering the much-needed capital, frequently under the condition of relocating to the U.S. The problem has been so widespread that some industry insiders refer to it as the European space start-up exodus.

Some hope that the wave of investment in defense projects, motivated by the continued threat from Russia and escalating disputes with the administration of Donald Trump, might thwart the trend.

Over the nearly quarter-century since the new space movement emerged to develop space technology faster and more cheaply than the old-school agencies and corporations, the U.S. government departments have nurtured giants like SpaceX, Blue Origin, and Planet Labs. 

SpaceX, founded in 2002, has grown into the world’s most valuable company. Responsible for the vast majority of space launches globally, the company is now valued at over $800 billion. Jeff Bezos’ Blue Origin may have progressed at a much slower pace than SpaceX. Still, the company is currently valued at around $100 billion. Planet Labs, which in the early 2010s revolutionized Earth observation with its fleet of low-cost low-Earth-orbit cubesats, has grown to more than $ 7 billion. There are many others.

In contrast, Europe’s single new space unicorn — ICEYE — is valued at €2.4 billion ($2.8 billion). The Finish company, founded in 2014, operates the world’s largest constellation of synthetic aperture radar satellites that observe the surface of Earth day and night and even through clouds. Bulgaria’s Endurosat, which manufactures software-defined nano-satellites, is valued at around €200 million ($236 million). 

Many of the frequently mediatized names of the European new space world, including rocket developers ISAR Aerospace, PLD, or Rocket Factory Augsburg, have yet to prove they are worth the hype. Chances are that not all will survive. The UK’s long-promoted green rocket company Orbex has recently entered administration after the  UK government withheld £100 million of promised funding. While some rescue buyouts have been discussed, the company’s future is uncertain.

So what exactly is wrong with Europe? Bulent Altan, Founding Partner at Munich, Germany-based Alpine Space Ventures, and early executive at SpaceX, told Supercluster that, unlike the US, where government players such as the Space Development Agency, the Department of Defense, and NASA have fully embraced new entrants, Europe has historically lacked “anchor customers” ready to support potentially disruptive players.

“Without those demand signals, companies could not scale, and capital formation was nearly impossible,” Altan told Supercluster. 

German producer of laser communications terminals, Mynaric, is among the high-profile visionary technology pioneers who have learned the hard way that Europe doesn’t offer a smooth path to success to those ahead of the game.

The company, a spin-off from the German Aerospace Center, described by some analysts as one of Germany’s most advanced start-ups, has been forced to accept a buyout offer from U.S.-based Rocket Lab after its money ran out due to a string of production glitches. 

“Sometimes the timing just doesn't play out nicely,” Joachim Horwath, Mynaric’s chief technical officer and one of the co-founders, commented on the company’s 15-year journey to Supercluster. “In a way, we were too early. There was no market when we first started.”

Today, laser communications are a hot trend in satellite technology, replacing radio frequency terminals as a go-to solution for transferring data in space. Lasers offer greater bandwidth and inherent protection against signal interception and jamming due to their high frequency and accurately focused beams. SpaceX began fitting Starlink satellites with laser terminals in 2021. Today, most of the constellation’s 10,000 satellites are interlinked with a mesh of space-born lasers. Amazon’s Kuiper, too, relies on the technology, and Chinese megaconstellations Guowang and Qianfan are expected to begin using lasers soon.

But in the late 2000s, when Horwath and his colleagues at the German Aerospace Center first started thinking about building a business from their research, none of those projects existed even on paper. 

Although a few experimental laser terminals had been flown in space by German researchers before, Mynaric’s demonstrations first focused on connecting aircraft. The company collaborated with Facebook on its Aquila drone project, which intended to beam internet from the stratosphere to unconnected areas on Earth. 

“We delivered prototypes to lots of interested companies, and then people started approaching us and asking whether we could also do that in space,” says Horwath.

The company won early funding from venture capital funds and angel investors,s mostly from Germany, but the funds didn’t suffice to move to production and scale up fast. 

“You can try to grow from cash flow, having small programs and living from program to program,” Horwath says. “But then you cannot take large steps, and when somebody comes who has more money than you, then you are basically gone because they can move faster.”

The company, Horwath added, needed another fifty million euros to complete the development and kick-start production. The investors recommended Mynaric to raise further capital by going public and listing first on the German stock exchange in Frankfurt in 2017, and subsequently, in 2021, on the American NASDAQ. 

“That was the only way to get that amount of money that we needed,” says Horwath. “The programs we had in Europe, either from the European Space Agency or the German Aerospace Center, were in the order of a few hundred thousand euros. Not millions.”

By that time, internet-beaming satellite megaconstellations, first considered sci-fi by many industry experts, were quickly turning into the next big trend in satellite communications. Both SpaceX and OneWeb began launching their constellations two years prior, and other players, including Amazon and the Chinese project Guowang, were boasting about ambitious plans.

Mynaric quickly acquired an impressive list of customers, including big American primes working on the US Space Development Agency’s Proliferated Warfighter Architecture Constellation, designed to detect intercontinental missiles. Horwath admits that from the beginning, the product was “gaining traction” much more in the U.S. than in Europe. 

At that time, the company opened a subsidiary in California but managed to keep most of the production in Europe. Then, in 2024, a faulty supplier component that couldn’t be readily replaced caused a sequence of production delays. Because Mynaric was publicly traded, they had to announce its production output that year would only reach one-third of the forecast, meaning much lower than expected revenue.

“We were still ready to ship a huge amount of devices compared to the fact that previously, companies have only shipped one or two, and for a much higher cost,” remarks Horwath. “But the expectation of the market was different. The stock lost value, and we couldn’t issue new shares.”

At that time, California-based Pacific Investment Management Company stepped in and bought out Mynaric. The firm’s original shareholders, including Horwath and other founders, lost all their equity in the process. PIMCO is now selling Mynaric to Rocket Lab, whose satellite manufacturing branch had previously been purchasing Mynaric’s satcom laser terminals. The German government will have to approve the acquisition. The company hopes to still retain its European footprint, but will now be under the control of the US-domiciled Rocket Lab.

Mynaric's story is the most high-profile example of the challenges facing European space-tech visionaries. Founders of multiple European space start-ups have spoken to Supercluster about their struggles securing funding in Europe and receiving active encouragement from investors to relocate to the US in exchange for support.

“The pull to move to the US as a UK/European space start-up is constant,” a founder of one publicly known UK-based start-up who didn’t wish to be named, told Supercluster. “It’s about capital, but it’s also about momentum. The US ecosystem seems better set up to turn funding into capability quickly and keep that capability moving through procurement, regulation, and scale.”

Several founders complained about Europe’s reluctance to accept risk, which, they believe, results in an inability to foster genuinely new technologies.

“The only thing that gets funded here is somebody copying what SpaceX was doing 15 years ago,” another founder said under the condition of anonymity, pointing to the plethora of small rocket launchers currently being developed. “There's, like, 12 Falcon 1s that have been funded in Europe. But Falcon 1 was a dead end even for SpaceX.”

Falcon 1 was a small launcher developed by SpaceX between 2006 and 2009. The company ultimately discontinued the development to pursue the heavy lift Falcon 9, stating the small rocket couldn’t be made sufficiently profitable.

Despite the optical unification of Europe through the European Union’s single market, the founders also state that Europe remains a fragmented entity, and founders have to think carefully where they domicile their business. Countries prefer to nurture “national champions,” supporting local companies, whose growth is then limited by the funds available within that country. 

“For some years, I lectured at [an unnamed Spanish university],” one of the founders told Supercluster. “Most of my best students have left Spain either for Germany, the UK, or increasingly for the US. You can see many companies that do their engineering in Europe, but their headquarters are in the US. If there is a national security situation in Europe, these companies are American; they are not an asset for Europe.”

Some founders are still fighting for their future in Europe, bound to their home turf by the sense of duty, family ties, or dislike for the American way of life.

“I’ve been quite involved with the European space sector for almost 18 years, but for exactly that reason, I also decided to sell my remaining shares in the [unnamed space technology company] that I had built and move onwards to deep tech AI work,” another founder said.

Horwath admits that for the Mynaric founders, the possibility of having to relocate to the US has always loomed large.

“People have asked us many times — why did you do it in Europe? Why have you been so stupid in a way?” he says. “For us, because we grew out of the German Aerospace Center, we wanted to stay close to them. From the equity side of things, it would have certainly been better for us in the US.”

He adds that even today, with the satellite mega-constellations revolution in full swing, European projects are still rather rare among the company’s customers.

Another founder added: “When your runway is tight and your investors, often US-based, are watching for rapid progress, it becomes increasingly difficult to justify building the same footprint in the UK/Europe when recent history suggests the US offers a clearer path to scale.”

Some think that things might be about to change in Europe. The growing tensions with Russia and worsening relationships with the US, a long-term key ally, are forcing European governments to rethink their attitude to defense spending, and that includes funding for strategic space infrastructure. 

Last September, Germany announced it would invest over €35 billion ($40 billion) into space defense technology over the next five years. The investment is equivalent to the entire budget of the civilian-focused European Space Agency, and has raised hopes that things might change in Europe. 

Pierre Lionnet, a space industry analyst and director at the ASD Eurospace industry association, called the investment “a lifeline” for the struggling sector and “really transformational for Europe.”

“Previously, the German spending on military satellite capability was less than 400 million euros [$479 million] a year,” Lionnet said. “This is basically Germany saying ‘we are multiplying by one order of magnitude our investment in space capabilities.”

Other European countries have made pledges to boost funding for military space systems, albeit not on the same scale. France said it would increase its space defence funding by 4.2-billion-Euro over the next five years, bringing the country’s total investment for that period to 10 billion Euros. Other countries have been announcing the purchase of sovereign satellites for military purposes, and more are expected to come. 

Still, whether the geopolitical pressures will prove to be a lifeline to Europe’s malnourished space start-ups remains a question. 

Candice Massucci Templier, a space policy and strategy analyst at Paris-based space consultancy Novaspace, says that the European government institutions need to significantly overhaul their procurement practices if the exodus is to stop. 

“The exodus into the U.S. is basically driven by structural differences,” Massucci Templier said. “It’s not only the lack of spending. The start-ups move because the U.S. offers faster procurement rounds and bigger scale-up rounds.”

Dallas Kasaboski, a space industry analyst at the Analysis Mason consultancy, adds that European tender rules frequently prevent innovative players from winning substantial contracts.

“The European governmental approach has often been to say ‘here are my exact requirements, prove to me that you will meet them and then I will work with you,” he says. “The requirements are prescriptive, and their disadvantage is that they don’t allow a lot of room for innovation. It locks out some players who may have a different offering or work in a different way.”

Alpine Space Ventures’ Altan, however, thinks that things are about to shift. 

“While the U.S. has historically offered a more mature market, we’re seeing Europe start to catch up, particularly with rising government budgets and early signs of procurement reform,” he said. 

“The talent and technical readiness are there. What’s been missing is a market pull, and now it’s arriving.”