Italy is Headed into Space

This week Italian fund manager Primomiglio announced the first closing of a new EUR 58M early-stage fund. The fund, Primo Space, will be focused on technology startups building both upstream and downstream applications for space exploration. Upstream technology includes electronics, robots, and satellites, among other space infrastructure projects. Downstream applications focus on the technology used on earth but are enabled by space, such as satellite networks, cryptography, and GPS. Although this is the first close, the fund has an overall goal to raise EUR 80M.

 

This new fund opens a new door not just for Italy, but the whole of Europe in exploring the next frontier, as the European Investment Fund (EIF) has provided more than half of the raised capital thus far. This commitment is provided by the European Commission’s Framework Programme for Research and Innovation, dubbed Horizon 2020. The European-based InnovFin Space Equity Pilot also supports the fund, which will partner closely with the Italian Space Agency and other research and academic groups in the field.

 

The timing of this announcement is on par with many trends we’ve seen around space exploration. SpaceX recently launched its first astronauts into orbit, which they plan to bring back home as early as this weekend. Virgin Galactic showed off its new passenger spacecraft, and Amazon just received approval to launch its Starlink competitor. Governments are also heavily involved in the vertical with the U.S.’s launch of the military arm: “Space Force” and the UAE’s Al Amal Mars mission. This week, NASA also launched its Perseverance rover to explore the possibility of whether there was once life on Mars.

 

Beyond the attention-grabbing headlines, the private industry for space startups has been thriving as well. VC-backed space technology firms have been growing in both investment and deal size over the last few years, with 2019 hitting a record high USD 2.3B (+23% LY) across 218 deals. 2020 is still going strong, with USD 1.2B invested in the first half of the year, primarily driven by SpaceX investments.

Data provided by Pitchbook

And this is only the beginning. A recent Morgan Stanley analysis projects space technology will continue to see impactful growth going forward, stating:

“Near term, space as an investment theme is also likely to impact a number of industries beyond Aerospace & Defense, such as IT Hardware and Telecom sectors. Morgan Stanley estimates that the global space industry could generate revenue of more than $1 trillion or more in 2040, up from $350 billion, currently. Yet, the most significant short- and medium-term opportunities may come from satellite broadband Internet access.”

Italy’s contributions to the European Space Agency rank second in the region, and the country also ranks top ten globally in the sector. By using Primo Space as a primary investment vehicle for the industry, Europe has emerged as a critical player in an area that will only become more competitive (and politically motivated) going forward.

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