Composite image of Europe at night. Photo: NASA Earth Observatory/ Joshua Stevens.

Europe has not invested enough in sovereign space capabilities. This is one of the conclusions of a new Seraphim Space white paper released April 16. The white paper details several policy recommendations to unlock growth within the European and U.K. space sector required to what Seraphim calls “Europe’s security crisis.” It paints a somewhat bleak picture making the observation that satellites are the bedrock of modern defense systems, and Europe has neglected to invest in its own sovereign capability, resulting in a near-total reliance on the U.S. for space-based intelligence gathering.

The white paper has some interesting findings. For example, Seraphim points out whereas two-thirds of spacetech venture capital deals over the last five years in North America and Asia have been into upstream companies, in Europe, less than half of the investments have been in these strategically vital domains, with investment activity focused on more capital-efficient downstream areas such as data analytics.

The global spacetech sector continues to grow at an unprecedented rate, with a record number of companies raising money last year. The latest analysis from Seraphim reveals that 601 spacetech companies raised venture capital investment in 2024, representing a 50% year-on-year increase relative to 2023.

According to Seraphim, Europe still significantly lags behind both North America and China. Over the last five years, Europe has accounted for just one-fifth (19%) of the money invested in the sector, highlighting the continued underinvestment in European spacetech companies relative to the U.S. and China.

Seraphim says that if European governments want to solve the current security crisis, a significant amount of budget allocation must support the rapid procurement of satellites and the deployment of sovereign secure communications constellations to support homegrown companies that can grow to become SpaceX equivalents, bridging gaps in defense capabilities.

“The prospect of Europe no longer being able to rely on American intelligence and communications capabilities for its security plays directly to the pressing need for Europe to develop more sovereign space capabilities as quickly as possible. Europe’s over-reliance on America for these highly strategic technologies goes right to the heart of Europe’s current security crisis. The $840 billion defense budget coordinated by European leaders reflects the lengths Europe is willing to go to build up its defense capabilities at speed to address such shortcomings,” James Bruegger, chief investment officer of Seraphim Space, said in a statement.