Israel is not a space power, and certainly does not have a company competing with Elon Musk’s SpaceX or other global space conglomerates, but it is clear that a local industry is slowly growing and finding its own little niche within an ecosystem dominated by large American, European and Asian companies.
Earth & Beyond Ventures VC fund, which specializes in investing in this sector, and Deloitte Israel mapped Israel’s space tech startup scene for Calcalist and found that there are currently 105 startups active in space applications in Israel. These startups have raised a total of $314 million in the past year, and many of them are focused on dual-application technologies that solve challenges in the space market but can also be leveraged on Earth.
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Israel space technology map.
(Earth & Beyond Ventures)
Despite the rise of startups, space technology in Israel is still in its infancy. Unlike other sectors, space giants such as SpaceX, Blue Origin, Axiom Space, and Sierra Space do not operate R&D centers in Israel. The current stage of Israel’s space tech industry is reminiscent of that of the automotive tech industry before Intel’s acquisition of Mobileye in 2017. The acquisition led to the world’s largest automotive brand opening a development center in Israel and even sending delegations of experts to Israel in search of innovation and technology.
Currently, most of the Israeli space companies are close to their customers in the industry value chain. They piggyback on the infrastructure of the larger companies that manufacture missiles, launchers and satellites, and provide services to their customers that depend on this infrastructure. Therefore, in the near future, it is expected that the companies that will grow in the Israeli space industry will not be those that develop infrastructure themselves, but those that develop technologies and components based on existing space infrastructure.
Noga Yaari, VP of Ecosystem Development at Earth & Beyond Ventures, said: “The presence of startups targeting the space market is currently low compared to its share in the global high-tech industry. The key to change is the recognition that space is not just ‘spaceships’ but a potential market for various technologies developed for traditional industries on Earth. There is huge business potential in this sector and an opportunity for Israel to lead innovation in this field. There are hundreds of deep tech startups related to this industry but not yet operational.”
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Noga Yaari (right) of Earth & Beyond Ventures and Idan Adler, Israel Innovation Hub (IIH) leader at Deloitte.
(Photo: Earth & Beyond Ventures and Deloitte)
The report maps out the startups by the space application they are in. The eight categories include:
“Earth observation” accounts for 26% of all startups. Ventures operating in this sector use satellite imagery and sensors to collect and analyze data about the Earth for scientific, environmental and commercial purposes.
“Communications and Navigation” (25%) – The technologies and systems that satellites and spacecraft use to determine location, direct traffic, and transmit data, information, and signals.
“Space infrastructure” (20%) – The physical systems, technologies, facilities, and components required for space exploration and commercial space operations.
“Space Activities” (10%) – Activities conducted in the space environment, including experiments and scientific research, as well as satellite servicing, assembly and maintenance.
“Computing and Software” (6%) – Systems, hardware, and software used to process, manage, and store mission and space research data.
“Space Services” (5%) – commercial and government services provided in space and in support of exploration and trade activities.
“Space Manufacturing (4%) – The production and development of a range of goods, materials and equipment made in space.
“Exploration and Resources” (4%) – Technologies for space exploration and learning, as well as space technologies for discovering and utilizing resources on planets, moons, and asteroids.
Because many space tech companies are developing dual-use technologies, the report also categorized companies by the type of traditional industry they operate in on Earth: “Smart transportation” accounts for 17% of startups, followed by “Aerospace” (16%), “Energy and climate” (12%), “Agriculture” (11%), “Communications” (10%), “Health” (10%), “Industry 4.0” (7%), “Computing and infrastructure” (5%), “Insurance” (4%), “Military and security” (4%), “Food” (2%), and “Cyber” (2%).
Space applications can be combined with terrestrial industries, for example by analyzing satellite images to benefit industries such as agriculture, climate, insurance, etc. Furthermore, conducting medical experiments in space can accelerate research in the health sector, satellite communications can help develop smart transport infrastructure, and the production of alternative foods for space missions can be used by the terrestrial food industry.
According to the report, the average amount raised by Israeli space startups at the seed stage is $3.8 million, followed by $10.7 million for Series A, $21 million for Series B, and $76 million for Series C and above.
A general acceleration of funding is expected in this rapidly growing sector, which will have an impact on Israel. The traditional space industry is expected to reach a value of $1 trillion by the end of the decade, due to several factors. These include a significant drop in launch costs, allowing more companies to access the industry, as well as smaller satellites that fly in lower orbits and improve cost efficiency. The industry is also influenced by the entry of global players such as SpaceX, Blue Origin, and traditional companies that are mimicking their activities in the space sector. For example, Amazon, which offers AWS cloud services to companies in the space sector. Similarly, other giants such as Honda Motor and T-Mobile are also venturing into the sector, creating new business opportunities for collaborations and commercial agreements for start-ups.
Idan Adler, Deloitte’s Israel Innovation Hub (IIH) leader and one of the report’s editors, said: “The entry of private companies into the space industry, coupled with continued investment by public institutions, opens up unprecedented possibilities for previously unrelated ventures. In our view, space can become a new business area for existing ventures in a variety of sectors, potentially giving Israeli companies a significant competitive advantage.”
