Once the exclusive realm of national space agencies and experimental startups, space is now a major commercial sector, one that serious investors cannot afford to ignore. The sector has in fact been growing rapidly for some time, and space and space-enabled infrastructure has come to undergird so many of the trappings of modern life that without it, our day-to-day experience would look strikingly different.
But it is at an inflection point. Commercial space is now a $600bn market. That number is expected to triple by 2035, to an eye-watering $1.8trn. That kind of scale qualifies it as a standalone asset class, comparable to fintech or renewables. We are talking about an industrial transformation on the level of the internet, and one that recent events have shown is no piece of idle speculation. Space is a standalone asset class with enormous strategic value. Accordingly institutional investors, including pension funds, should be treating it as essential.
When we set up NewSpace Capital seven years ago, our aim was relatively simple: to give large institutional investors a way to enter the space market at a hinge moment in the sector’s journey, when it was on the cusp of real change. Our strategy emphasises growth-stage companies – those that have proven the workability of the technology, have real customers, and show solid revenues. We are interested in commercial and technological maturity. This is where the space sector becomes investable at scale.
By this stage, the technology risk has largely dissipated. These are not science projects but real businesses with real products and growing demand. And this is key: institutional capital wants only one kind of risk: execution risk. Technology risk must be retired. That’s why we invest only in firms generating already substantial commercial revenue (usually at least €10m), many of which points along the supply chain, providing critical components, systems, or software used by satellite operators, data platforms, and downstream users. Others are on the application side of things, where they turn raw data into valuable insights for insurers, energy companies, logistics firms and others.
Yet, when most people think about ‘space,’ they imagine rockets. The real value is in fact in the data. Increasingly, the largest users of space-derived data are not governments or defence contractors, but traditional industries: insurance, for example, as well as agriculture, energy, infrastructure, and logistics. These sectors depend heavily on satellite data to track weather patterns, monitor environmental change, evaluate risk, and optimise their operations. In many cases, they simply could not function without it.
Insurance provides a useful case study. In California, wildfires now pose such a serious threat that some insurers have fled the state. In the past, these were reasonably rare events; now, they strike with such frequency and severity that it is difficult for insurers to cover the damage. Those that have remained in California and gained market share use geospatial technology – essentially, satellite imagery made intelligible through AI – to assess risk in real time. They can predict fires with startling accuracy, track spread, and more. Without this space tech, it would be impossible for these insurers to protect their clients. Space data here actually makes the industry viable.
Infrastructure
It is because space is about infrastructure more than exploration that it is so ripe for investment. Satellites are essential to the functioning of every modern economy on the planet. The market reflects that. The real challenge now is that institutional investors don’t yet have a ‘space’ cell on their spreadsheets. Space investments are often split across unrelated categories like telecoms, logistics or even pharmaceuticals, which confuses traditional allocation models. That has to change.
And though early-stage space ventures still carry risk, and this is why institutional capital has typically stayed away, the sector has matured. There are very many businesses with proven business models and strong customer bases and pipelines. Moreover, space is not unvarying. Within the sector there is a great deal of diversity – companies with different backgrounds, areas of expertise, applications, and levels of commercial readiness and development.
That’s also the contradiction: ‘space infrastructure’ can mean both science fiction and companies providing steady returns. On one end, you have speculative technologies like space-based solar or in-orbit pharma – fascinating, yes, but 10 to 20 years from maturity. On the other, you have laser communication and Earth observation platforms, which are generating revenue today. It’s all called ‘space’, but the risk profiles couldn’t be more different. Institutional investors need to disaggregate this sector accordingly.
Space will increasingly become a requirement for any strong diversified portfolio. This is not only because of the size of the market, and the future size of the market, but because of its relevance to other key sectors. Space intersects with climate, food, energy, mobility, security. It supports ESG goals, improves supply chain resilience, and offers stable long-term returns once the early-stage technology risk has gone away. We don’t see satellites every day, which gives the sector an abstract quality. But it’s highly practical. Space is all around us, facilitating life.
Europe
Europe, including the UK, still has a long way to go. The US leads in private capital and mindset; most of our own limited partners are American. There are some signs that European capitals are beginning to shift: Luxembourg is quietly setting the pace, through the Luxembourg Space Agency’s (LSA’s) commercial model, its leadership on space resources, and initiatives like ‘Space for Finance’, which link satellite data with green investment. But if Europe on the whole is to catch up, governments must become ‘captive customers’, signalling demand and de-risking investment. Right now, European capital markets still treat space as too exotic, too state-dependent. That has to change if we want a serious space economy on this side of the Atlantic.
It’s encouraging to see institutional investors beginning to catch onto this. They, like many others, are seeing how central space is. And so the ‘bet’ is not the distant future, or some moonshot technology, but on the infrastructure of today and tomorrow. The businesses with strong recurring revenue will be the data platforms, the analytics firms, the component manufacturers, and the application providers. Revenue is real, customers are global, and the market is growing fast. And we have yet to see the extent to which AI will supercharge the growth of the sector.
The opportunity is there, the market is ready. Space is fast becoming the must-have investment.
