Sethu Savedha Svanham founded his space-tech startup ReOrbit in Sweden in 2019, but soon realized the country’s national space agency would hinder his company, rather than help it. Even though the Nordic nation has the EU’s only spaceport and has a history of sending astronauts into space, Svanham moved his company to Finland in 2020.
“Finland has a completely opposite view of space to Sweden,” he told Sifted. “One of the mottos in Finland is that if we see a big innovative idea that aligns with our national strategy, we wholeheartedly support it. What we need as a space company is that level of clarity because it’s a very long-term investment,” he said.
He’s not the only founder to tell Sifted that Sweden is hindering the creation of commercially viable space tech startups, and that he prefers neighbouring Finland, which has no astronauts or spaceports.
Just last week, ICEYE, a Finnish startup that deploys radar satellites to collect images of the Earth’s surface, announced a €94 million growth round, making it the second-highest-funded space startup in Europe.
So what’s going on?
Resource Differences
Space budgets vary widely between European countries. According to the Swedish National Space Agency, the annual budget is around 100 million euros (1.2 billion Swedish kronor), more than half of which goes to donating to the European Space Agency. In contrast, France operates a budget of 2.6 billion euros, making it the largest space budget in Europe.
Anna Rasman, head of the Swedish Space Agency, says the difficulty in supporting early-stage startups in Sweden is partly a matter of resources.
“We support startups through ESA BIC [European Space Agency’s Business Incubation Centres] “We do other activities but we would like to do more,” she said. “Other countries are doing more in this area. Unfortunately, we don’t have the resources to do it.”
But Sweden’s space budget is still bigger than countries like Denmark, Finland and other smaller European nations. The question is how to spend that money, says Saveda Svanam.
In Finland, the Space Commission under the Ministry of Economy and Employment works closely with the government agency Business Finland, which has invested in a number of space tech startups, including ICEYE and Kuva Space, which is building a constellation of Earth observation satellites.
“The first one [Business Finland] “They asked: How much export revenue can you bring in over the next five years? How many people can you employ? Those were the only two questions they asked,” says Saveda Svanam.
“This is a really good way to start because it cuts out all the clutter and lets you focus on just two important things. Whereas if you’re in an environment where people are judging you based on your exciting research, it’s going to push you further and further away from the market.”
Sethu Saveda Svanam, Founder of ReOrbit.
ReOrbit, which is developing software-first satellites “in a similar way to how Tesla makes cars,” is also benefiting from local investors. Last August, the company raised 7.4 million euros in a seed round led by Helsinki-based venture capital firm Inventure. The company plans to launch its first satellite in 2025 and already has six paying customers, ranging from governments to commercial clients. It has also been profitable for the past three years and expects to generate revenue of about 5 million euros in 2024.
Saveda Svanam points out other European companies that have raised more than €10 million in funding from sources other than local space agencies, including Lithuania’s NanoAvionics (acquired by Kongsberg Defence & Aerospace in 2022), Bulgaria’s EnduroSat and Denmark’s Atlant3D.
“These companies are not funded solely from their own country’s budgets. It’s the framework and mindset that matters. If it was a question of budget, then perhaps all European space unicorns should come from Germany, France and the UK, which have the largest annual budgets and, as a result, the biggest investment opportunities in space,” says Saveda Svanam.
“There’s less interest in business.”
Of the 167 space startups that have raised more than $1 million, only one is based in Sweden, according to data platform Dealroom.
Victor Gonzalez founded Porkchop, a hardware startup developing nanosatellite propulsion systems, while he was doing his PhD in Sweden in 2019. His company got into one of the European Space Agency’s business incubation centers, gained customers, and successfully tested its propulsion system in space in early 2022, but when the pandemic made things worse, he was unable to get help paying his employees’ salaries and was forced to file for bankruptcy.
“If you want to run a space enterprise in any country, you need the support of your national space agency. Without that, it’s really tough,” Gonzalez said.
The Swedish National Space Agency, which falls under the country’s Ministry of Education and Research, allocates government subsidies for space research, technology development and remote sensing activities, with the overall goal of starting research and development in space. Its strategy makes little mention of building a commercial industry.
“The Swedish space ecosystem is characterized by: […] “There’s been a greater focus on science, research and education in all activities, which I can support. But when it comes to innovation, nurturing new ideas and supporting start-ups, there’s a lack of interest in business,” Gonzalez said.
“It is very easy to get big funding from the government, but winning commercial contracts is a whole different story. Once you get used to being dependent on government funding, it becomes very difficult to start selling,” says Saveda Svanam.
But there is coordination between departments, Rathman said.
“For research, the Ministry of Education is the right place to be. For other areas, other ministries are involved, such as climate and environment, which are of great public interest, and for international relations, the Ministry of Defence and the Ministry of Foreign Affairs. I would like to see an inter-ministerial group on this at the highest levels of government set up,” she said.
National space agencies tend to be under the jurisdiction of trade, employment and defence, as in Finland.
According to a strategy drawn up by the Finnish government in 2018, the main goal is to make Finland “the most attractive and agile space business environment in the world by 2025, benefiting all companies operating here.”
“We are still a small country, but the growth of companies and space activity is very impressive considering the size of our country,” said Tero Vihavainen, director general of the Finnish Space Agency.
Finland’s policy shift came following the launch of the country’s first space satellite, Aalto-1, developed at Aalto University in 2018. That same year, ICEYE became the first company in the world to launch a SAR nanosatellite into space. Vihavainen said ICEYE paved the way for many other entrepreneurs to launch space startups in Finland.
He believes Sweden’s space history could also be a boon for Finland.
“Sweden has a great spaceport, it’s really great. It takes a lot of resources to maintain, so we don’t have the capacity. Sweden also has astronauts, but that’s quite expensive,” Vihäväinen said.
“We would love to hire astronauts too, but we are limited by our focus on growing the space industry.”
