Insights
ESA's Space Economy Report 2025 - Key Insights for Startups
May 9, 2025
The European Space Agency has published its much-anticipated "Report on the Space Economy 2025." As this comprehensive analysis shows, the space sector continues to transform rapidly, creating both unprecedented opportunities and challenges for startups. Here are our top insights from the report that space entrepreneurs should pay attention to:
Why it matters: Europe's share in capturing global private investment has grown from 3% in 2019 to 22% in 2024, showing a dramatic improvement in the funding environment.
Strategic insight: This trend indicates Europe is becoming a more attractive region for space ventures. Startups should consider European funding sources, especially if they're working in sectors getting the most investment. Look at how successful companies like ICEYE and The Exploration Company secured significant funding in 2024.
Why it matters: Defence has become a major growth driver, with the share of orders in value originating from defence customers reaching 67% in 2024, compared to 13% in 2021.
Strategic insight: Defence applications represent an increasingly vital market for space technologies. Startups should explore dual-use technologies that can serve both commercial and defence markets, potentially partnering with established defence contractors to access this growing segment.
Why it matters: There were 259 orbital launches in 2024, an 18% increase over 2023, marking a third consecutive double-digit growth rate.
Strategic insight: Increasing launch availability means more opportunities to deploy satellites and other payloads. This trend reduces a key barrier to entry in the space sector. Startups should plan for potentially faster deployment timelines and consider how increased access to space affects their business models and competitive landscape.
Why it matters: European space startups account for more than 8,500 FTEs in 2023, representing 14% of total European space employment.
Strategic insight: The sector is creating significant employment opportunities, but it also means increasing competition for skilled talent. Startups should develop strong recruitment and retention strategies while considering where industry expertise is concentrating geographically for potential office locations.
Why it matters: Europe's market share of the global upstream market has declined from 21% in 2008 to just 6% in 2024, with only 33% of its accessible market captured.
Strategic insight: The upstream sector (manufacturing and launch) faces intense global competition and market access challenges. Startups in this segment should identify specific niches or technological advantages that can differentiate them from competitors, especially those with captive domestic markets.
Why it matters: The global downstream market reached €408 billion in 2024 (9% increase from 2023), and unlike upstream, the majority (>90%) of the downstream market is commercial.
Strategic insight: Services that leverage space infrastructure offer greater commercial potential than hardware development alone. Startups should consider business models that capture value from downstream applications, particularly in Earth observation, satellite communications, and navigation services.
Why it matters: In Europe, Infrastructure accounted for 80% of total investment in 2024, compared to just 25% in the US where Applications dominate (72%).
Strategic insight: European funding sources appear more receptive to infrastructure-focused startups, while US investors favor applications. Startups should tailor their pitches based on investor region and consider the maturity of different market segments in their business planning.
Why it matters: VC investment in European Deep Tech startups working on Defence, Security and Resilience reached €4.8 billion ($5.2 billion) in 2024, posting the strongest growth among all VC Deep Tech segments.
Strategic insight: Defence-related technologies (including dual-use applications) are attracting significant investment. Startups should explore how their technologies align with defence and security applications, particularly in fields like robotics, biotech, quantum computing, Earth Observation systems, and "dual use" artificial intelligence systems.
Why it matters: Key hubs for Defence, Security and Resilience funding include Oxford, Paris, and Munich, with Munich attracting nearly €1 billion in VC funding in 2024.
Strategic insight: Location matters for accessing specific funding environments. Startups should consider establishing presence in these hubs to benefit from local expertise, investor networks, and ecosystem support. Understanding what makes these locations successful (e.g., industrial and testing facilities, top talent, regional industrial supply chain, connections to customers) can inform strategic decisions.
Why it matters: While the startup segment has had the most impressive growth in terms of employment, the majority of these new players remain unable to cover their costs with sufficient revenues.
Strategic insight: Growth alone doesn't ensure sustainability. Startups need clear paths to profitability beyond initial funding rounds. Focus on developing sustainable business models with realistic revenue projections and consider strategic partnerships with established players to accelerate market access.
The ESA's comprehensive analysis paints a picture of a space economy at an inflection point - expanding rapidly with shifting priorities and new opportunities. For startups navigating this dynamic landscape, understanding these trends isn't just helpful - it's essential for strategic planning and long-term success.
