Europe cannot rely on Elon Musk’s SpaceX, top investor warns
Revolut backer Balderton Capital says continent needs to accelerate development of space and defence industry
One of Europe’s top tech investors has urged the continent to accelerate development of its own space industry to reduce reliance on Elon Musk’s SpaceX and open up a new frontier in the booming industry of defence start-ups.
Bernard Liautaud, managing partner at Balderton Capital, the investment group that has backed successful European tech groups such as Revolut, said a growing part of “military supremacy” will be fought in space.
But he added European countries are “too dependent” on the US, where SpaceX has come to dominate both the launcher and communications satellite markets. That creates a “huge risk”, Liautaud said. “We need to be more self-sufficient.”
European investment in defence tech start-ups has rocketed this year, as Nato countries have hiked defence spending in the wake of Russia’s full-scale invasion of Ukraine.
That has driven the creation of dozens of new start-ups developing drones, battlefield software and other military technologies.
However, Liautaud said that Europe needs to build much stronger capabilities to launch satellites and build space-based defences, a sector in which Elon Musk’s SpaceX has become the “dominant force”.
Balderton was founded 25 years ago as an offshoot of US VC firm Benchmark and became fully independent in 2007.
It has backed more than 250 start-ups including fintech Revolut, robotics start-up Wayve and mobile games developer Dream Games. Lately Balderton has stepped up what it describes as “sovereign” European bets, including nuclear fusion venture Proxima Fusion and drone maker Quantum Systems.
Last year Balderton co-led a $160mn funding for Franco-German space start-up The Exploration Company alongside VC firm Plural.
The Exploration Company is building space vehicles, including a capsule for transporting cargo to the International Space Station, a rocket and a lunar lander.
Hélène Huby, a former Airbus executive who founded The Exploration Company in 2021, said at the Italian Tech Week event on Thursday that space was a “huge market”, thanks to drivers including telecommunications, earth imaging and defence, but warned: “We are quite weak right now in Europe regarding this space-based infrastructure.”
European groups face an uphill battle. The main challengers to SpaceX, which was recently valued at $400bn by investors, are other well-backed US players such as Jeff Bezos’s Blue Origin.
Even in a venture capital industry where the majority of tech start-ups are expected to fail, backing defence and related companies requires a different attitude to risk, said Suranga Chandratillake, another Balderton partner.
The fact that start-ups are being more actively included in government defence procurement programmes is a testament to how far the European tech ecosystem has matured, Chandratillake added.
“Twenty-five years ago, in trying to solve these problems, one of the last things that Europe would have done would have been to turn to start-ups,” he said. “Today that is a key ingredient of what the solution looks like.”