What main trends do you see in the space sector that makes it attractive for investors?
Pierre Festal, Promus Ventures: I see two: firstly, the privatisation of what was, up to 15-20 years ago, a primarily government-driven endeavour. It has made the sector much more open to innovation and entrepreneurial ventures.
Secondly, the radical decrease of the cost for launching payloads into space. The result is an explosion of companies looking into sending new payloads and satellites with new capabilities into orbit. These constellations will make a lot of things possible, particularly in the fields of Earth observation and remote sensing, which have tremendous value and a wealth of terrestrial applications.
In what geographical areas do you see most investment opportunities arise?
Space skills and interesting companies tend to come from the main established technology hubs: Silicon Valley, the US East Coast, the UK, India, China and so on. In Europe, we find Germany, the Nordic countries, France, Switzerland and also Eastern Europe particularly interesting. Promus Ventures has been doing early-stage deep-tech investing since the early 2010s, primarily in the US but also across the globe with an increasing focus on Europe. I joined the company in 2020 to head up our new European office located in Luxembourg.
Luxembourg is punching way above its weight, in space as well as in other technology sectors.
Luxembourg is punching way above its weight, in space as well as in other technology sectors. The country has done everything to attract companies and talent and build a very robust and international space ecosystem, and it is working. There is definitely a case to be made for Luxembourg as an attractive destination for space companies. We have already invested in one of the companies in the Luxembourg space community, Spire.
What return on investment can investors expect from the space sector?
The time frame depends on what part of the value chain and the ecosystem you are considering. We have a typical venture stage return horizon on 5-8 years, and you can definitely find technology with a relatively short-term return on investment of 5-10 years.
The more exotic space endeavours – space tourism, deep-space exploration, space colonisation, space mining, micro-gravity manufacturing, and so on – hold tremendous economic potential but tend to be much longer term of 10-15 years or more. For private investors this might not really make sense, but it is still interesting for governments or institutions wanting to make investments that will pay dividends in a distant, but not too distant, future.
Promus Ventures is one of the stakeholders of Orbital Ventures, an investment fund focused on early stage companies engaged in space activities that is backed by the Luxembourg government. What is the objective of this fund?
Orbital Ventures is a public-private cooperation that backs new space entrepreneurs and early stage start-ups with disruptive technologies, products and services across Europe and globally. We are investing in companies active in the broad space economy. The fund is yet another crucial building block for consolidating Luxembourg as a leader in the new space economy.
Illustrations: Quattro Creative