European Startups Challenging the Status Quo

Inmarsat. Eutelsat. Intelsat. SES. Deservedly, Europe has earned a reputation for incubating some of the most successful satellite operators in the world. Since the 60s, 70s and 80s, these players have dominated the industry even as new competitors have attempted to encroach on their market share.

But in a market as risk-averse as satellite, oftentimes a good idea simply isn’t enough to get a young business off the ground. Some U.S. companies can afford to go toe-to-toe with these established satcom players because the wealthy tycoons at their helm can sustain the costs of pursuing their radical projects. SpaceX, which now plans to launch more than 4,000 satellites into Low Earth Orbit (LEO) after already investing $1 billion in its meticulous reusability process, is a prime example.

However, other entrepreneurs whose resources are comparatively less abundant have turned to other parts of the value chain to unlock value. It’s here that European startups have really begun to gain traction.

Giovanni Pandolfi and his Leaf Space co-founders had big ambitions when they set out to start their own aerospace company back in 2014. “The first thing we imagined was a microlauncher for nanosatellites,” he recalls. “The microsatellite market was booming.”

It was true: that year, analysts at Space Works forecasted that up to 2,750 microsatellites would require a launch between 2014 and 2020. Sensing the opportunity, Pandolfi and his team put together a feasibility study for their own microlaunch system. But entering into the Italian launch sector would ultimately prove more difficult than they anticipated. The one big mainstay in the country, Avio, which had also turned its sights on light-lift vehicles and would be a direct competitor, had the advantage of a century-long heritage in aeronautical research.

“We saw that the funding needed for an Italian startup was quite huge, and we found that entering the space market with a launch vehicle is not so easy,” Pandolfi says. “You really have to build up a lot of trust.”

Although he believed their business plan was solid, it was a tough sell to investors who were hesitant to make a 10 million euro bet on a project that could potentially not see a commercial return for years. The money was hard to find in Italy, Pandolfi admits.

So the team reoriented, hoping to find an easier ramp into the satellite sector. “We were searching around for other initiatives to start with and we found out that a lot of startups were actually manufacturing nanosatellites, even here in Europe. But services for these constellations was really lacking,” he says.

In the end, the Leaf Space team discovered their strengths played to the ground segment, and used grant money from the European Commission’s Horizons 2020 program to install the first ground station for its Leaf Line network, which will download as much as seven terabytes of satellite data per day once completed. The company then raised $1.1 million in a 2016 seed round led by RedSeed Ventures — though Pandolfi says even that was an uphill battle. “We struggled to get the $1 million funding. The main difficult part for us was explaining to investors what satellites are doing for us and why a system like Leaf Line is needed to improve the amount of data we can get from constellations,” he says.

Nonetheless, since its initial funding round Leaf Space has picked up interest from customers and continues to chug along, with the team is now preparing to install its fourth ground station in Ireland.

The conservative attitude of Italian investors plays a stark contrast to the startup environment overseas in the United States. Pandolfi believes funding is almost too easy to come by in the U.S., to the extent that businesses with no real commercial viability get hoisted up before crashing back down soon after. “We’ve been seeing a lot of excitement for nano and micro satellites but not everyone really understands that spacecraft are not an easy task, and also that producing data from space is not equal to producing value,” he said.

Ideally, Pandolfi would like investors to take a more moderate approach between the two extremes. “So from the European side, a much more simple way to get the funding to start your company and see if your product is really valuable. From the other side I would like to see more realistic opportunities because we have seen a lot of new constellations funded and then disappear after one or two years because the product they had was not valuable,” he says.

Meanwhile, 1,500 miles north, the launch industry in the United Kingdom is evolving into another beast entirely. Having recognized the importance of bolstering space in its national industrial strategy, the country is hellbent on securing at least 10 percent market share of the global space market by 2030. Leading the charge is the U.K. Space Agency, which has thrown its full support behind companies such as Orbital Access.

Working alongside with a consortium of aerospace partners, Orbital Access is spearheading the U.K.’s Future Small Payload Launcher (FSPL) program, which intends to establish a horizontal space launch facility in the country. But the company’s principle line of activity, according to CEO Stuart McIntyre, is developing its own commercial horizontal launch system with spaceports that span the globe.

“Our program recognizes the reality that whilst locations exist to support such spaceports, the technologies are immature right now in terms of the launch systems that will exploit them,” McIntyre says. “If you look at examples such as Australia, South Africa or Singapore, where there is an appetite to develop their own small payload design manufacturing capabilities, what we’re offering is the prospect of being able to operate their own spaceports — and for our system to be able to provide the launch capacity.”

Orbital Access has had some initial discussions with players in India, Norway and Sweden as well, McIntyre says, and he believes this speaks to the fact that national bodies are becoming more interested in developing their own space capabilities. “We see a spaceport as being at the heart of expressing that ambition,” he says.

Of course, a project of this scale depends largely on cost. But McIntyre argues that one of the benefits of a horizontal launch system is that it is relatively inexpensive compared to building out a vertical launch site. “It allows ... infrastructure that doesn’t require massive fixed overhead or investment. It basically means Australia doesn’t have to build a Kennedy Space Center somewhere; they just need to use an existing air field that can access the launch range,” he says.

Additionally, McIntyre believes if Orbital Access can maintain a high launch rate, it can offer a competitive price point for its customers (around $30,000 per kilogram) while remaining firmly in the black. “Launch rate is the only way you recover the development expenditure,” he says. “The design of our system is expressly about [maximizing] launch rate. We need to be launching not just for the U.K. government and U.K. customers … but for the South African government and South African customers, the Australian government and Australian customers, and so on. Only by doing that do you achieve the launch rate that generates a return on your investment.”

In fact, McIntyre said his team calculated that approximately 20 percent market share of small payload launch would more than achieve the company’s flight rate demand to make an attractive return. “In terms of the numbers of systems in development like us, we actually see the market as being quite small. There are not many people approaching it this way,” he says, which gives him confidence that Orbital Access can achieve that critical rate.

This year’s U.K. Space Conference warmed his optimism too, he says. “It was hard to describe the atmosphere there as anything other than totally enabling and positive,” he says. “There’s a huge spike in confidence in terms of the U.K.’s ambition, and that of course is supported by the U.K. Space Agency and the U.K. government being absolutely determined to bring [the country] to its full height with this program.”

Although Ireland lacks a long heritage in the space industry specifically, its tech sector has always been strong. According to Deloitte’s 2016 Fast 50 ranking, which surveys Ireland’s domestic tech firms, companies there boast an average annual growth rate of 270 percent over the last four years. That foundation has proved a fruitful jumping-off point for companies looking to crack the aerospace suppliers market.

Enbio is a manufacturer of coating technology for titanium and other substrates used on satellites — but the company actually got its start in the biomedical sector. After patenting a new coating press for medical instruments called CoBlast, the Enbio team realized the technology could potentially have a range of use cases in other verticals as well.

Around the same time, the European Space Agency (ESA) was kicking off development of its Solar Orbiter satellite, which will fly within 45 million kilometers of the Sun (a distance closer than Mercury) to study its heliosphere. “So you can imagine it’s a very demanding environment,” says Kevin O’Flynn, general manager at Enbio. “It’s very hot and there’s a huge amount of radiation, so any kind of material you put into that environment has got to be extremely robust and also well adhered to the substrate.”

Both Enbio and the ESA realized that Enbio’s coatings could help strengthen the satellite’s titanium heat shield, and so the pair proceeded on an accelerated engagement process of the technology. “We went from concept to coating flight hardware in three years,” says O’Flynn, which resulted in a bone char-based thermal control surface known as SolarBlack. “In this case we are putting down a ceramic coating which will be very inert and capable of withstanding that kind of harsh radiation environment.”

ESA then requested Enbio develop a complementary version of SolarBlack with minimal absorption. This technology, SolarWhite, is currently undergoing qualification for the Solar Orbiter mission. Most recently, ESA awarded the company another contract valued at 650,000 euros ($727,987) to develop coatings for Neosat, Europe’s next-generation constellation of telecommunication satellites.

This ongoing partnership with ESA was the foot in the door Enbio needed to stake its claim in the aerospace market. Now, though, the company is looking elsewhere in industrial sectors to ensure its pipeline remains robust. “We’re still very much focused on supplying the aerospace sector, which makes up the majority of our business at the moment. We’re also looking to see how we can take that space technology and apply it to terrestrial problems as well,” O’Flynn says.

Arralis, an Irish company that focuses on millimeter wave technology, has taken a similar roadmap to success. While its early customer traction was in the aerospace and defense industries, the company’s key initiative now with 5G on the horizon is scaling millimeter wave technology into cars, helicopters and other commercial applications. “Satellite communications are going to be part of 5G — part of our mobile networks for the first time — which will be interesting,” says Arralis CEO Barry Lunn. “Autonomous radar for cars is essentially going to be between 76 and 81 GHz. So the problem we’re solving with millimeter wave will make that type of technology possible at scale.”

Both Facebook and SpaceX intend to use Ka-band from LEO to provide global connectivity. And like Kymeta, Arralis sees flat, beam-steering antennas as being a key enabler of these satellite systems for the mobility market. As such, the company is ramping up production of chipsets to support Ka-band flat panel antennas. Recently, Arralis won a contract from the ESA worth 650,000 euros ($727,987) to build out its Leonis Ka-band transceiver chipset. “You’re not going to stick a parabolic antenna on the roof of your car and drive around unless you’re Arnold Schwarzenegger,” Lunn jokes. “So we need these flat beam-steering antennas. But also because these megaconstellations are CubeSats, the smaller the form factor, the better.”

Lunn believes we’re going to see “a hell of a lot” more aerospace startups emerging to take advantage of these megaconstellations. Fortunately, he says the Irish delegation to the ESA, Enterprise Ireland, has been very supportive of expanding Ireland’s aerospace industry. “I think Ireland is a very good place to do business; that’s why all the multinationals come to Ireland. It’s a tax-friendly place,” he says. “There is venture capital — in fact there’s probably too much venture capital and not enough companies to deploy it.”

That will likely change in the near future, O’Flynn believes, as more companies take notice of the growth opportunities in the country. “Ireland has a long history of medical device and pharmaceutical production, so there’s a rich vein of suppliers here that are used to dealing in very demanding applications with high precision and high quality. A lot of these are the same requirements that you’ll see in space supply,” he says.

Now, a team of researchers plans to launch Ireland’s first-ever satellite, EIRSAT 1, on Enbio will perform an in-orbit demonstration of its thermal control coatings. Both Lunn and O’Flynn see this is as evidence Ireland can become a real player in the global satellite market. “As a small country, we’ve always punched above our weight,” Lunn says. VS