It’s widely understood that the global space economy, now valued at $546bn, stands at an inflection point both financially and politically.
That momentum was on full display at our recent industry event featuring leaders from Type One Ventures, Axiom Space, and Space Forge – whose announcement of a record-breaking £22.6m Series A marked the largest early-stage raise in UK space tech history. One message from our event that was loud and clear was that what once was a niche sector has transformed into a foundational pillar of future economic growth.
Fortunately, the UK has positioned itself as a leader in this transformation, home to major innovation R&D hubs, clusters and pioneering space tech start-ups. However, despite this success in early-stage innovation, the country is increasingly lacking the financial and regulatory infrastructure needed to support these companies as they scale into globally competitive ventures.
Without urgent action, Britain risks falling behind and missing out on one of the most significant economic opportunities of this century.
Beyond rockets
Nicholas Russell from Axiom Space articulated a vision that resonated deeply with me: today’s space industry transcends the traditional image of rocket launches to encompass a comprehensive economic engine integrating data infrastructure, logistics networks, and manufacturing capabilities. Space is becoming a hub for cross-sector innovation.
This shift is opening new investment opportunities, with various sectors along the supply chain set to benefit. Space Forge, the Cardiff-based aerospace manufacturer, offered perhaps the most compelling case study during our discussion.
Their pioneering work in orbital manufacturing leverages microgravity to produce advanced materials with transformative applications in semiconductors and pharmaceuticals – an area of both immense commercial potential and strategic importance. The conversation is less about space out in orbit, more about space’s commercial impact on earth.
Yet despite early breakthroughs, UK space startups face significant investment gaps and regulatory hurdles that threaten their ability to scale. Without targeted investment and better regulatory support, many of these firms may be forced to seek funding and growth opportunities abroad.
This is not a new phenomenon… Britain is the world leader in research and development– i.e. ideas and inventing things. Yet often the best talent and ideas start here and then head straight across to the likes of Silicon Valley for execution.
The ‘messy middle’
One of the most illuminating moments in our panel came when Joshua Western, co-Founder and chief executive of Space Forge, described the “de-risking” challenge facing the industry.
His historical parallel was striking: just as aviation and maritime industries evolved from experimental to essential infrastructure, space technology must achieve similar reliability to unlock its economic potential. Without this shift, investors will hesitate, and scaling companies will struggle to secure the backing they need.
This transition period – what I’ve come to think of as the “messy middle” – is precisely where UK space ventures are now stranded. While our regulatory framework boasts highly skilled bureaucrats, many lack the technical expertise necessary to effectively evaluate emerging space technologies.
This knowledge gap creates a form of friction that slows approvals, complicates infrastructure development, and leaves innovative businesses navigating uncertainty.
In contrast, the US has built a system where regulation and funding actively support high-risk, high-reward industries, enabling companies like SpaceX to scale rapidly. This is where Britain is falling behind. If it wants to retain start-ups like Space Forge, it must close the gap.
The space industry won’t wait
Perhaps the most sobering realisation emerged around the critical disconnect between government timeframes and commercial reality.
While the UK government’s ambition to build a Silicon Valley-style innovation hub between Oxford and Cambridge represents a positive step forward, the urgency of the situation became starkly apparent – Space Forge and other rapidly growing startups simply cannot afford to wait until 2035 for favourable conditions to materialise.
The capital gap is particularly concerning. UK pension funds, which collectively manage over £2.5tn in assets, allocate less than 1% to high-growth tech sectors like space.
This stands in stark contrast to Canadian and Australian pension funds, which actively invest in deep-tech ventures, recognising not just their potential returns but their long-term strategic and economic benefits.
Specialised investors like Type One Ventures are stepping in to bridge this gap, bringing deep technical understanding and the patience required for frontier technology investment.
These investors understand both the heightened risks and the potentially transformative rewards that space ventures offer. However, their efforts alone – while crucial – cannot substitute for a fully developed ecosystem.
What is abundantly clear is that Britain faces a now-or-never moment. Instead of relying on future innovation hubs, policymakers must prioritise immediate action: streamlining regulations and unlocking institutional capital at scale.
Without a comprehensive network of institutional investors, supportive regulatory frameworks, and readily available growth-stage capital, we risk watching our most promising ventures seek foreign shores to achieve their full potential.
This is also not just a commercial challenge. Space assets and infrastructure are crucial for defence and communications. This has not gone unnoticed in Washington, with the likes of SpaceX and Starlink used as leverage in trade negotiations. UK resilience is severely tested without having space as a priority.
Backing space means backing growth
Finally, consider the domino effect here. A thriving space sector creates more than just direct jobs – it establishes the foundation for future waves of innovation. Silicon Valley’s “PayPal Mafia” saw early employees go on to found Tesla, LinkedIn, and YouTube. The UK’s fintech sector is already demonstrating similar patterns.
The same effect could transform Britain’s space industry. If companies like Space Forge successfully scale, they could fund and inspire the next generation of deep-tech startups across advanced materials, satellite applications, and beyond.
But this virtuous cycle depends entirely on getting the current generation of companies through the “messy middle.”
Clearly then, the UK’s space future isn’t written in the stars, it’s being decided now, in boardrooms, investment committees, and regulatory offices across Britain. The technological capability exists.
The entrepreneurial talent is present. The only question remaining is whether Britain has the vision and urgency to seize this pivotal economic opportunity before it slips beyond reach.
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