Investors interested in exploring the final frontier have become more diligent and cautious about European spacetech deals recently. “The hype is meeting the reality,” said David Ford, Partner at the London-based advisory firm Silverpeak, which is active in spacetech deals.

Dealmakers have been shifting their focus recently, Ford said. Industrial businesses that focus on delivery are still attractive targets, he said, mentioning sub-sectors such as satellites and sub-components like solar panels, avionics, or computers as being of interest, particularly those that have intellectual property (IP).

Meanwhile, low Earth orbit (objects orbiting with an altitude never more than about one-third of the radius of Earth) is already entering the industrial zone, Christian Schmierer, co-CEO of the German spacetech company HyImpulse, said.

There had been a boom in significant transactions in European space technology and satellite-related sectors in recent years, but the trend is slowing, according to Mergermarket data.

The peak year was 2021, when 28 transactions with combined disclosed deal volumes of EUR 8.6bn were launched. Since then, deal volumes have fallen to EUR 2.3bn over 21 deals in 2022 and just EUR 727m over 23 deals in 2023. Only four significant deals have been made as of April 11 this year compared to ten in the same period in 2023 and 13 in 2022.

Space investment goes through cycles, partly driven by the visibility of exits, Ford said. The initial exit cycle took place around 2016, he said. “And then nothing really happened for a couple years, so the investment levels started to fall as well.”

Recent deals in the space include a financing round by Unseenlabs, a French developer of satellite radio frequency geolocation solutions for maritime surveillance and aerospace. It raised EUR 85m from investors such as Supernova Invest, ISALT, UNEXO and others.

Meanwhile, ICEYE, a Polish-Finnish provider of satellite-based information services, secured an impressive USD 93m round, increasing the total amount raised to date to USD 438m.

It takes years to develop spacetech technologies and not all companies can deliver what they promised, which makes investors more cautious and focused on more mature investment targets, according to Grzegorz Brona, CEO of the Polish satellite systems maker Creotech Instruments [WSE:CRI]. By the end of 2023, the company had raised more than PLN 60m (c. EUR 14m) and is planning to launch its EagleEye satellite from the US later this year.

It takes five to ten years for satellite and rocket companies to reach profitability, Christian Schmierer of HyImpulse, said. It expects to launch its rocket from Australia today (2 May).

European governments are key stakeholders in the development of the sector, Ford said. “Since the Russian invasion of Ukraine, many players are signing commercial contracts with the military. Also, there’s a lot of sovereign activity and a lot of states want to have their own satellites, to do comms, or earth observation, and because of the geopolitical situation, they want to have their own assets.”

Schmierer said that European states need a space strategy. “We need the data from space to enable everything that we do today in the industry,” he said, adding that Internet of Things (IoT), communications, mobile phones, earth observation are all strategically important areas.

Although M&A is down at the moment, institutional support in Europe should ensure that the secular trend pushes forward in the years ahead.

Proprietary intelligence

HyImpulse (25 April)

HyImpulse Technologies, a German spacetech company, expects to close a EUR 30m fundraise in September and is already discussing a further EUR 50m round to close around mid-2025, co-founder Christian Schmierer said. The company, which has undisclosed commitments from some investors for the ongoing round, is looking for a lead investor, Schmierer said. Pulsar Consulting Group from Munich is advising, he added.

Loft Orbital (3 April)

France- and US-based Loft Orbital, which provides turnkey space technology, will raise funds in 2024 en route to an eventual IPO, CEO and co-founder Pierre-Damien Vaujour said. The company will look to raise at least as much in the upcoming round as in its 2021, USD 140m Series B round, which will enable it to finance its next stage of development, Vaujour said.

CloudFerro (15 March)

CloudFerro, a Poland-based cloud services company, is actively screening the market for potential acquisitions, CEO Maciej Krzyzanowski said. The company is already in talks with potential targets, Krzyzanowski added. It could make a few acquisitions within two years, he said, adding that it looks at targets that generate between several hundred thousand and several million euros in EBITDA. CloudFerro has ambitions to become a leader in cloud computing and satellite earth observation in Europe.

Sateliot (1 March)

Sateliot, a Barcelona-based satellite operator that offers Internet of Things (IoT) connectivity, remains committed to an IPO in 2026 or 2027, CEO and co-founder Jaume Sanpera said on the sidelines of the Mobile World Congress (MWC). Sanpera had begun speaking to advisors about a potential IPO, which was slated for 2026, the CEO previously told Mergermarket at last year’s MWC. However, the company has yet to take any strategic decisions on this front, even though the end goal is clear, he said in the most recent interview.

Greenerwave (1 February)

Greenerwave, a France-based electromagnetic wave control technologies developer, will consider mandating a US-based advisor in early 2025 as it seeks an entry into the US market via acquisitions, founder and CEO Geoffroy Lerosey said. The Paris-based company plans to expand in the US market from 2025 and will consider acquisitions to gain clients and penetrate its defence market, which will require it to be US-based, Lerosey said.