Nourishing commercial growth in Earth observation

The global Earth observation data and service market is estimated to be worth around €2 billion every year and predicted to increase to €7–9 billion by 2032. But despite this wealth of opportunity at a global level, companies in the commercial Earth observation sector in Europe may find getting off the ground difficult owing to the complexity of navigating the investment landscape.

As a major partner for space suppliers, ESA has a crucial role to play in stimulating European industry and has enshrined commercialisation in its Agenda 2025. The Agency can help ensure pathways to expansion for commercialisation activities for start-ups, small and medium-sized enterprises, and large companies in a number of ways. This includes organising commercial industry events, providing funding support and by becoming an anchor customer.

The Earth observation angle

In Earth observation, ESA is nurturing commercialisation in all three of these strands. The recent Earth Observation Commercialisation Forum brought entrepreneurs and start-ups together with capital providers, giving an ideal matchmaking platform for discussions on investment and partnerships.

ESA makes direct funding available to the European Earth observation sector via the InCubed programme, a vehicle for the development of innovative, commercially successful products and services. Launched in 2018, InCubed supports companies with co-funding, along with technical, industrial and business development mentoring, in order to develop their ideas up to market launch.

To date, InCubed has co-financed over 70 activities for a total project cost of more than €124 million, of which around 63% on average is funded by the programme. Subscription to InCubed by ESA Member States is voluntary and now includes 21 countries, with a total subscription value of around €200 million.

All parts of the Earth observation value chain fall within the remit of InCubed, from satellites, sensors and data transmission through to the ground segment, customer applications and even innovative business models.

Homing in on satellites, a substantial stimulus to the European market stems from the Copernicus Contributing Missions (CCMs). ESA develops, builds and in many cases operates the Sentinel satellite missions for Copernicus, but also coordinates the contributing missions on behalf of the European Commission.

These currently consist of around 20 operational satellites from private companies that supply complementary commercial very-high-resolution data, and nine further European emerging enterprises have recently been added to the roster.

One of the objectives of the CCM strategy, derived with the European Commission, is to build momentum in European Earth observation New Space, and a fundamental element of that strategy is the concept of the anchor customer. By awarding CCM contracts of up to five years to European emerging data providers, ESA acts as an ‘anchor’ or enabler for growth in the European market.

Anchor contracts give the industry a longer-term perspective of data sales for European public needs, meaning that companies can better plan their activities and, significantly, attract investment from private investors.

Start-up stories

Several of the latest InCubed and CCM emerging companies illustrate how ESA’s multifaceted support generates considerable traction in Earth observation New Space and encourages private investment.

OroraTech was originally given a helping hand by the incubation programmes ESA BIC Bavaria and ESA Kick-Start, before being awarded funding from InCubed for the development of its wildfire detection CubeSat. The German start-up was then able to raise further capital from public and private investors, giving a grand total of €15 million to bring its products to market.

OroraTech’s deep involvement with ESA, along with its successful launch of two missions, paved the way for its CCM contract.

Like OroraTech, fellow German company constellr will supply thermal infrared data to Copernicus. Its HiVE mission was originally funded by a mix of InCubed and venture capital, and shortly after the awarding of the CCM contract, constellr announced that it was to receive a further €17 million in seed funding from a number of investors.

Finnish start-up Kuva Space and Belgium’s Aerospacelab have both enjoyed a similar journey of InCubed funding, private investment and joining the CCMs. Aerospacelab’s rapid evolution since its inception in 2018 has led to it garnering a sizeable €40 million in investor funding last year.

AIRMO is another example of a start-up receiving a significant investor capital injection in conjunction with its InCubed support, and other CCM data providers are in the process of obtaining additional funding.

Commenting on the wider significance of these success stories, ESA’s Michele Castorina said, “Because of InCubed’s comprehensive evaluation process and continued guidance and monitoring, attaining co-funding from the programme is a cast-iron endorsement of the market viability of start-ups’ products and services.

“As we’ve seen many times, the award of ESA funding or supply contracts to a business helps to give confidence to other investors and customers, thereby unlocking further capital and growth.”

“The CCMs are a win-win for European Earth observation,” added ESA’s Peggy Fischer. “Not only do these commercial missions greatly enhance the datasets available to Copernicus services, but the intrinsic assurance of business continuity in the anchor contracts clearly creates a multiplier effect in the European New Space sector.

“It’s also encouraging to see InCubed alumni companies joining the CCMs, a perfect demonstration of ESA’s nurturing of Earth observation New Space ventures from development to market release and beyond.”