NextSpace Session Recap: European Sovereign Financing
Europe is at a turning point for space. While the world funnels resources into space technology and deployment, European countries have been slow to adapt. That’s why we started a conversation series to discuss everything related to the topic: Space Is Critical Infrastructure.
Our NextSpace Sessions kicked off with a topic of immense importance: European Sovereign Financing. Reflex Aerospace CEO Walter Ballheimer sat down with Bulent Altan, Founding Partner at Alpine Space Ventures and former SpaceX executive, to dissect Europe’s approach to building up competitive space industry and what it takes to develop sovereign capabilities.
From the legacy of scientific missions to the operational backbone of modern life, the discussion clarified one thing above all: Europe must change its approach to funding space technology startups and actively create a more dynamic, competitive environment.
Space as Infrastructure, Not Just Science
“Space is an ever-expanding industry. It has not lost its scientific part... but what’s happening is that space is expanding into every other part of our lives.”
– Bulent Altan
There’s a very common, mistaken understanding that space is a primarily scientific endeavor. That’s changing. Altan argued that space activities now underpin key economic and defence activities across the world. Today, satellites are involved in everything from calling a taxi to understanding and mitigating floods, wildfires, and earthquakes.
Dependency and the Sovereignty Imperative
Walter Ballheimer took this shift and spelled out the natural way to safeguard our infrastructure: “We need to shift from big monolithic systems to distributed networks of systems.”
Europe’s strategic dependency on non-European infrastructure is a recurring theme in space industry discussions.
“The war in Ukraine actually started in space. It was Starlink in the end which changed the course of the whole conflict. That can be said for sure.”
– Walter Ballheimer
Ballheimer stressed that Europe must develop sovereign capabilities, which means that EU infrastructure must be built by European companies to reduce external dependencies. But it’s all meaningless if the funding isn’t from Europe.
“Because otherwise the dependency is there again… it’s shifted from the product level dependency to the funding level dependency.”
– Walter Ballheimer
The Intelligence Gap: Europe vs. the US
The divide is growing. Altan drew a stark comparison between institutional setups regarding the different approach to ISR (intelligence, surveillance, reconnaissance) capabilities in the US vs. Europe. Due to the differing institutional setups, and despite the presence of talent and funding, technological progress doesn’t turn into capabilities serving Europe.
Historically in Europe, space was the goal, not the service it brings. Civilian agencies with top-down approaches fostered development of innovative space technologies, but there was a lack of defence customers in Europe to fund an ecosystem to support the development of these capabilities.
Overly centralized, highly specialized procurement processes impeded the success and expansion of companies with the required capabilities. This means that today in Europe, advanced capabilities might exist theoretically, but they were never deployed. The US defence ecosystem deploys and operates many of the advanced systems they fund, and as a result, the capability gap between US and Europe only widens further.
“Looking at institutions like the NRO, the NSA, the Missile Defense Agency, these are giant institutions that operate assets in space... We are lacking those same capabilities… Partnership is about equality. If you only receive, then it’s not a partnership, it’s a protectorate”
– Bulent Altan
Ballheimer concurred, noting the mismatch in timelines and adaptability: “We have the cutting-edge capabilities, but they do not meet the modern requirements for timelines, costs, etc.”
“The development time of a system like that, several years, can be outdated at the very moment when it’s launched.”
Both agreed: the future demands a “good enough approach with smaller agile projects instead of aiming for absolute excellence” in long-cycle mega-projects.
Building Investable Space Companies
When asked what makes a space startup worth backing, Altan shared a clear set of criteria:
Technical clarity
Go-to-market plan
Ability to execute
VCs have an interest in companies building critical parts of the value chain and have a go-to-market plan, even for cases in which the technology is young and the demand doesn’t exist yet.
To underline this point, he shared a key insight from his time at SpaceX:
“There wasn’t really a demand signal that was there… But there was a very clear message to what needs to be built and what the market needs.”
He praised Reflex for taking a similarly forward-leaning stance with a tailored plan that goes beyond simply selling a certain number of satellites:
“The goal was to sell sovereignty… to build a capability that your customer, in this case Europe, needed.”
Reflex saw that the market’s weakness could be their strength: the deployment of small to medium-sized custom-made high-performance satellites.
Ballheimer added that Reflex deliberately was laser-focused on certain segment of the value chain:
“Not to do like Space-as-a-Service end-to-end with all these additional bells and whistles… for us, our USPs, it’s the tailoring and the time to orbit.”
Pressure and obsolescence risks are too high for Reflex customers. The intersection of sophistication, power, and speed is where Reflex sees both the commercial and defence markets trending.
Procurement Reform: From Grants to Anchor Customers
European KPIs are currently not pegged to building capabilities, but rather industrial policy. That is, making stakeholders (primarily countries) happy.
Europe’s fragmented industrial base and political balancing act were highlighted as serious frictions.
“Making everybody happy does not necessarily mean building the best possible technical system.”
– Walter Ballheimer
Altan mentioned that in US, in addition to NASA, there’s the intelligence community that procures and design services. In Europe, ESA is a very prescriptive space agency. There are also intelligence agencies that are not prescriptive. In the end, this combination results in either project companies on civilian side or large primes on defence side. Both companies are unattractive for venture investment: no product, no scalability, no competitive market.
“We need more engaged and less prescriptive institutional customers that procure services without telling companies how to do it. Co-designing but not prescribing.”
As an example Bulent mentioned IRIS² - lack of customers requirement outsourced to large primes resulting in bureaucracy, lack of vision and viability. On the other hand, there is an example of US SDA where intelligence community conducted gap analysis, architecture with multiple companies to benefit from and build capabilities.
Space agencies and intel communities should talk to each other. One side needs to do a little bit less, and one side needs to do a little bit more
Walter: “We need anchor customers instead of grants… because like in grants, companies tend to develop stuff they didn’t plan to develop in the end and end up dependent instead of growing.”
The Road Ahead: Selectivity Over Size
There’s a common perception that Europe spends far less than the other significant global actors in space, for example in % of GDP for space activities. On the perennial question of funding gaps, they dismissed the idea of trying to reach budget parity, instead focusing on spending more wisely.
“I don’t think it’s money that’s the answer. I think it’s selective money… and market dynamics that is the solution.”
– Bulent Altan
Instead of pouring a little money into everything via a “projects and grants” model, Europe needs to shift to fixed, firm-price competitive contracts that give the same chances to primes and new entrants. IRIS² is an example of how not do it.
By writing rules that functionally exclude startups and SMEs, they removed the pressure to perform well or deliver on time or budget. And the results are exactly what you’d expect: nothing. A contract environment that took away biases towards large primes would improve overall outcomes and European competitiveness.
“We don’t need that much capital. We just need to spend it wisely, which means acceptance of market consolidation and creation of champions capable to compete internationally.”
– Walter Ballheimer
The emphasis was clear: Europe must move beyond “spray and pray” and focus on the backing of potential champions.
How Does Europe Move Forward?
As a parting message to the audience, Bulent Altan summed up the crossroads Europe faces and predicted that it will quickly go to American model:
“Space is critical infrastructure for Europe and it [is going] through a Renaissance now…
We’re going to have a system of winners and losers, and those winners are going to be the ones that are fast, focused, and, given the current European focus, dual-use.”
Ballheimer closed with a call to decisiveness:
“Europe can lead. But it needs to move beyond endless planning processes and start to build.”