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UK skyrockets to first place in European space race

17 May 2023

A new report has revealed that the UK’s £17.5 billion space sector is the most attractive destination for private investment – second only to the US.

The report, ‘Expanding frontiers – The down to earth guide to investing in space’ was produced by PwC in association with the UK Space Agency. It expects that the global space sector will see an annual growth rate of up to 11 percent over the next decade.

It also predicts a significant surge in venture capital investments in revenue-generating space companies in the UK, which could nearly double between 2015 and 2022. 

Notably, 63 percent of investors entering the sector in 2021 were new to space investments, underlining the growing interest and confidence in the industry. 

The report reveals emerging  trends for new and established investors who are looking to expand their space portfolios.
It also showcases opportunities for companies to improve access to healthcare and tackle global climate change challenges, ranging from decarbonising economies to increasing food security.

Craig Brown, Director of Investment at the UK Space Agency, commented, “This report shines a light on the breadth and depth of space investment opportunities. 

“From today’s satellite communications to the future of orbital assembly, space has taken on an increased significance as a deeply embedded part of the global economy that is poised to grow at up to 11 percent per annum to 2030.”

As the number of satellites above us increases dramatically, there are even greater opportunities to capitalise on the wealth of data they collect and on the international efforts spearheaded by the UK to keep the space environment safe and sustainable for generations to come.

The rapid increase of satellites orbiting above us opens up greater opportunities to capitalise on the wealth of data they collect and the UK's leading role in international efforts to maintain a safe and sustainable space environment.

According to the report, the UK has been the leading destination for space investment in Europe – and second globally only to the US – since 2015, securing 17 percent of global investment.

Matt Alabaster, Partner at PwC Strategy, said: “This report shines a light on the substantial contribution that the space industry can make to solving some of our biggest global challenges, from decarbonising our economies to increasing food security and improving access to healthcare.

“Our analysis shows that there are opportunities for investors of all stripes; the industry contains asset-light and technology-driven businesses, as well as infrastructure assets and supporting services businesses, all of which stand to benefit from the significant growth of the global space industry.”

The Expanding Frontiers report calculates a median 400 percent increase in deal size for early-stage investments. It further reveals a number of fast-growing UK space organisations, from satellite communications firm, OneWeb, to Wales-based aerospace manufacturer, Space Forge, which raised Europe’s largest-ever seed round for a space tech company in December 2021.

Joshua Western, CEO and Co-founder of Space Forge, enthused, “We’ve spear-headed new investment into the UK space sector from homegrown and valued international partners. The growth in our company and this sector is testament to the untapped potential of the UK space ecosystem.

“We are excited to be part of a dynamic and rapidly expanding industry that makes a significant contribution to the UK economy.”

Research shows that the UK has become an increasingly attractive market for venture capital firms, being home to the HQ of leading space fund, Seraphim Capital, and offices of TypeOne VC, a US space and deep tech fund.

UK space organisations have received investments from at least seven of the most active global investors, and nine of the largest UK-based venture capital firms, including University of Cambridge Enterprise, Octopus Ventures, and Molten.

Encompassing government, non-commercial (universities and research institutes) and commercial organisations, the report describes the UK space sector as a “hidden utility” that underpins our daily lives and supports an estimated £370 billion of the country’s economy, predominantly through satellite-based services.

The data follows figures in the recent Size and Health of the UK Space Sector Report, which showed that, last year, £635 million was invested in UK-headquartered space companies through 34 identified deals. Acquisitions accounted for three-quarters of the total investment value. 

The space sector’s income experienced an increase of more than five percent into 2021, outpacing both the growth of the global space industry in the same period (1.6 percent) and the general UK economy, which contracted by 7.6 percent.

The UK's ascent as a leading force in space investment sets the stage for a thrilling era of exploration, innovation, and groundbreaking advancements. With promising continued growth expected over the next few years, its space sector is prepared to conquer new frontiers and help shape the future of space exploration.

Read the full report here.

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