Private capital markets in Europe are showing increasing confidence in space-sector startups, even as structural challenges remain, according to a new report by the European Space Policy Institute.
In its annual “Space Venture 2025” report, ESPI said European space ventures secured €1.4 billion in private investment last year, representing an 8% decline year-on-year. However, venture capital accounted for €1.2 billion of that total, marking a 13% increase compared with 2024, while the remainder came largely from debt financing.
Despite the gains, Europe’s share remains relatively small compared with the global total of €11.7 billion in private space investment. Still, ESPI officials pointed to improving momentum across the continent. “We are really in a moment where Europe is scaling up,” said Hermann Ludwig Moeller, director of ESPI, adding that rising public investments across countries including Germany and through the European Space Agency are creating broader opportunities. “There is certainly an opportunity for the private side to scale up…this is an opportunity for the whole of Europe,” he said.
Investment activity showed a broad geographic spread, with Germany leading, followed by Finland, France, Bulgaria, and the United Kingdom. Notably, companies in smaller markets gained traction, with firms such as ICEYE and Endurosat securing significant funding rounds. This shift contributed to a milestone in 2025, when countries outside Europe’s traditional “Big Four”—France, Germany, Italy, and the UK—collectively attracted more private investment than those nations.
“We see that more and more new space hubs, new technology hubs, new capability hubs are appearing across Europe,” said João Falcão Serra, ESPI’s lead on industry and finance. “This is, of course, an opportunity for a lot of countries in Europe—and also an opportunity for Europe to have a more cohesive economy, and to be able to capture this new wave,” he added.
However, ESPI identified several persistent challenges. One key issue is a lack of growth-stage financing. According to the report, no growth-stage funding round in 2025 was led by a European private investor, leaving startups reliant on public funding and foreign capital.
“Foreign investment is not an issue by itself,” Falcão Serra said. “But if you are tapping into foreign investment because you have no other alternatives at home, then that puts you in a weak[er] position and potentially highlight[s] vulnerabilities in the ecosystem.”
The report also highlighted limited exit opportunities for investors, noting that Europe lacks streamlined pathways to public markets compared with the United States. As a result, many startups pursue acquisitions, often by overseas buyers. Since 2014, about one-third of European space company acquisitions have involved foreign buyers, shifting value generated in Europe beyond the region.
Looking ahead, ESPI expressed cautious optimism. Increased public spending by national governments and the European Space Agency, alongside a growing acceptance of defense-related investments, is expected to encourage further private capital participation.
“We’re certainly now in a situation where there is…energy in the system that we didn’t have before, and I would be hopeful that this is a positive impulse,” Moeller said.
