How Sweden failed its space technology

Shortly after Sethu Saveda Suvanam founded his aerospace technology startup ReOrbit in Sweden in 2019, he said he realized the country’s national space agency would hinder rather than help his company. This is despite the fact that the Nordic country has the EU’s only spaceport and a history of sending astronauts into space. In 2020, Suvanam moved the company to Finland.

He told Sifted that Finland’s view of space is diametrically opposed to Sweden’s. One of their mottos is that if they see major innovative ideas that are in line with national strategies, they will fully support them. That’s the clarity you need as an aerospace company because it’s a very long-term investment, he said.

He’s not the only founder to tell Sifted that they’re hindered from building commercially viable space tech startups in Sweden, which would be more advantageous in neighboring Finland, which lacks astronauts and spaceports.

Just last week, ICEYE, a Finnish startup that deploys radar satellites to collect images of the Earth’s surface, announced the completion of a $94 million growth round of financing, making it the second most funded space startup in Europe.

So what’s going on?

Resource differences

Space budgets vary significantly between European countries. The Swedish National Space Agency says its annual budget is about 100 million (SEK 1.2 billion), more than half of which is donated to the European Space Agency. In comparison, France has the largest space budget in Europe at $2.6 billion.

Anna Rathsman, director of the Swedish Space Agency, said part of the difficulty in supporting early-stage startups in Sweden was resources.

We support new startups through ESA BIC [European Space Agencys Business Incubation Centres] and other activities, but we want to do more, she said. Unfortunately, other countries are doing more on this, but we don’t have the resources to do so.

Still, Sweden’s space budget is higher than that of Denmark, Finland and other small European countries. Saveda Suvanam says it’s more a question of how you use the money.

In Finland, the Space Council, part of the country’s Ministry of Economic Affairs and Employment, works closely with the government organization Business Bank of Finland, which has invested in a number of space technology startups, including ICEYE and Kuva Space, which is building a spacecraft for Earth observation. Satellite constellation.

the first thing [Business Finland] The question is how much export revenue can it bring in the next five years? How many people can you hire? Those were the only two questions they asked, Savida Suvannan said.

This is a great way to start because then you can cut out all the nonsense and focus on just two important things. However, if you are in an environment where you are judged based on exciting research, you will be further and further removed from the market.

ReOrbit, which develops software-first satellites in a similar way to how Tesla builds its cars, also benefits from local investors. Last August, it raised $7.4 million in seed funding led by Helsinki-based VC Inventure. The company said it will conduct its first satellite space launch in 2025 and already has six paying customers ranging from government to commercial customers. It also said it has been profitable for the past three years and expects revenue in 2024 of about $5 million.

Saveda Suvanam mentioned other companies in Europe, such as Lithuanian NanoAvionics (acquired by Kongsberg Defense and Aerospace in 2022), Bulgarian EnduroSat and Danish Atlant3D, which have raised more than $10 million in funding from sources other than local aerospace agencies.

These companies are not entirely funded by their state budgets. It’s more about the framework and mentality. “I would say that if it comes to budget, all European space unicorns should probably come from Germany, France and the UK, which have the largest annual budgets and therefore the largest space investment opportunities,” Savida Suvarnan said. “

lack of interest in business

According to data platform Dealroom, of the 167 aerospace industry startups that have raised more than $1 million in funding, only one is headquartered in Sweden.

Victor Gonzalez founded hardware startup Porkchop in 2019 while studying for a PhD in Sweden, which developed nanosatellite propulsion systems. and test its propulsion system.

If you want to run an aerospace company in any country, you need support from a national space agency. If you don’t have that, Gonzalez said, things are going to be very, very difficult.

The Swedish National Space Agency is part of the Swedish Ministry of Education and Research, and its overall goal is to allocate government funding for space research, technology development and remote sensing activities, and to initiate space research and development. There is little talk in the strategy about building commercial industries.

The Swedish space ecosystem is characterized by […] I can support making all activities more integrated with science, research and education. But Gonzalez said there is a lack of interest in business when it comes to fostering innovation, new ideas and supporting startups.

It’s easy to get big funding from government agencies, but winning commercial contracts is a whole different ballgame. Saveda Suvanam said once you get used to relying on government funding, it’s difficult to start selling.

Still, there was cross-departmental collaboration, Rathman said.

The Ministry of Education is adequate in terms of research. When it comes to other parts, there are other departments involved, such as climate and environment departments, which play a large role in social benefits, and in terms of international relations, it is the Ministry of Defense or the Ministry of Foreign Affairs. ‘I would like to see a cross-departmental group at the top of government,’ she said.

Like Finland, national space agencies tend to fall under trade, employment or defence.
According to the strategy set 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.

Tero Vihavainen, director of the Finnish Space Office, said: “We are still a small country, but the growth of companies and space activities is impressive for our size.

Finland’s policy changed in 2018 after the launch of Aalto-1, the first space satellite developed by Aalto University. In the same year, ICEYE became the first company in the world to launch a SAR microsatellite in space. Vihavanen said it points the way for many other entrepreneurs building new space startups in Finland.

He does think Sweden’s aerospace history can benefit Finland as well.

Sweden has a great spaceport that is very impressive. We do not have this capability because it requires significant resources to maintain. Vehavanen said that Sweden also has astronauts, and the cost is quite expensive.

We also want to have astronauts, but when we focus on growing the aerospace industry, we have limitations.