A conversation about space economy and extra-atmospheric geopolitics with Raffaele Mauro, co-founder of Primo Space.

BY EMILIO COZZI

Today, so many things converge in space that it’s hard to enumerate them all. We tend to box in the era of the space race, the glorious rush to conquer Earth’s orbit, and then the Moon, into a narrative that concluded in the early 70s with regular landings on the lunar surface. However, an increasing number of observers believe this viewpoint should be revisited. Among them is Raffaele Mauro, an expert in space economy, co-founder and general partner of Primo Space, a venture capital fund specializing in the new space economy and deep tech startups. For him, the space race has never reached the finish line, especially when considering the races happening closer to our planet, the so-called LEO (or Low Earth Orbit). This, Mauro suggests, is a representation of the economic realm fueled by the exploitation of what lies beyond the atmosphere. The players have changed, thought processes have evolved, and knowledge has merged. Hence, the space economy is like an underground river that has continued to flow powerfully and now seeps into every possible crevice. Currently, Europe possesses the capabilities but struggles to fully express them. Mauro employs a striking metaphor: “Europe is like Luke Skywalker: it needs to learn how to use the Force.”

Primo Space is “a venture capital fund, which invests in high-growth companies in their initial phase, startups, as they are commonly referred to,” explains Mauro, who co-authored, with Alessandro Aresu, The Gates of Heaven: Economy and Politics of the Great Space Race (Luiss University Press, 2022). “The fund aims to help them grow and, of course, generate financial returns. It focuses on space and was the first European fund dedicated to this sector.” Currently, with a closing of 86 million euros, it supports twelve budding companies in the sector, or rather, in sectors that have emerged with new opportunities related to outer space. It’s crucial, especially for the general public, to heavily engage and fuel this economic engine. And for private experts, it’s an opportunity to invest in a sector whose robust growth is unanimously agreed upon by all analysts: “Space, where the number of activities and services is steadily increasing, is becoming more and more accessible. Launching a kilogram of material into low Earth orbit is getting cheaper, making access much easier. It’s therefore reasonable to assume that opportunities will increase in the near future. For this reason,” Mauro continues, “if we want Italy and Europe to remain prosperous regions tomorrow, it’s essential to invest in space today.”

Thus, according to Mauro, new chapters are being written in the saga that began on October 4, 1957, when Sputnik took off from the Soviet cosmodrome in Baikonur, Kazakhstan. Back then, it was truly a leap into the unknown; today, there’s much less fog, even though a venture capitalist always has to account for risks. Unsurprisingly, Mauro constantly seeks to predict the future or at least get ahead of the curve. A hint of what he’s looking for in his crystal ball is provided by the startups in which Primo Space has already placed its bets: “The first significant aspect of space is its current ability to incorporate technologies from heterodox sectors, such as 3D printing, additive manufacturing, and the Internet of Things. Space is becoming increasingly hybrid, a realm where other industries and technologies will continue to connect,” he explains. “The second significant aspect is the software component, which is now essential for leveraging all the data produced by orbiting infrastructure and for ground-based industries. A prime example would be environmental protection. This information is of immense value and utmost importance. In an international context dominated by increasing tensions, discussions about space security and cybersecurity are becoming more prevalent.”

The companies that have piqued the interest of Primo Space’s analysts operate in different sectors and on both “sides” of the business. The upstream, meaning flying technology, is well represented by Sidereus Space Dynamics, a startup founded by prodigy Mattia Barbarossa in Salerno, which develops lightweight vehicles to launch small payloads into orbit; Pangea Aerospace manufactures satellite propellants; Apogeo Space is developing a constellation of nanosatellites to provide connectivity for Internet of Things devices; Aiko creates artificial intelligence software for automating space missions. Caracol joined Primo Space’s portfolio two years ago, thanks to its ability to 3D print large monocoque components.

The downstream, referring to the use of data and services produced by space activities, offers an even broader array of solutions. This is demonstrated by Eoliann, an Italian startup that uses satellite data to help financial institutions and those involved in energy and infrastructure to predict the probability and impact of climate risks. Then there’s Irreo, specialized in precision agriculture, and Leaf Space, which is assembling a global network of antennas to enhance connectivity and communication with downlinks from constellations of small satellites.

However, one can’t ignore that 86 million is just a drop in the ocean of a sector that globally moves about 500 billion dollars. “So far, we have invested in twelve companies, most of them Italian, that touch on almost every sector of the space economy,” Mauro clarifies. “However, it’s worth noting that we’re just one part of the value creation for a company. We represent a portion, not the entirety of the funding. There are other parties, both upstream and downstream, that step in to support these businesses. It’s also important that in the early stages, entrepreneurs retain significant shares of their companies, facilitating future development and value growth. It’s a form of finance that creates positive fallout in the region it operates.”

This leads Mauro to address the topic of the “system”, from the American to the Chinese. And, as a side note, the not exactly central, European corollary. Mauro cites initiatives like Cassini (one billion to fund space companies from the European Investment Fund), business incubators, and efforts from the European Space Agency. But this isn’t enough, he quickly adds: “Private investments in the space sector by Europeans have been about one-third to one-fourth compared to the Americans, even if this gap has been narrowing. In the US, the market and economy allow the rapid building of large private companies, meaning scaling them up quickly. Besides significant public support, there’s the dynamism of a vibrant private sector. The Chinese case,” Mauro continues, “is about a nation that has set incredibly ambitious long-term goals and is funding them. Conversely, Europe has a fragmented market with strong regulatory and linguistic barriers. There’s a vicious circle where there are few publicly traded companies and few entities investing in venture capital.”

Size matters, and in America, the cult of individual grandeur complements the vigorous encouragement of what works. Mauro talks about real money: “In the US, the main venture capital funds, those that invested in Google, Apple, SpaceX, and the like, in turn, raise capital from pension funds, like Calpers. We’re talking about funds managing hundreds of billions of dollars; even if 1, 2, or 3% goes towards venture capital, such significant amounts make all the difference in the world. This chain in Europe is much more jammed. Therefore, private savings don’t end up in innovation. We also shouldn’t underestimate regulatory friction, especially in Italy, which makes entrepreneurship more challenging.”

Space, Mauro asserts, mirrors what happens on Earth in terms of political balances and technology utilization, even if just as a show of strength. It’s been this way since its inception. And this remains the case for what’s happening in Ukraine, a situation that led ESA to end its historic collaboration with Russia. Meanwhile, as we wait for Ariane 6 to debut and Vega C to return to the launchpad, Europe struggles without autonomous access to space. The dramatic urgency of this is underscored by the still-under-consideration intentions of EU countries to rely on launch services sold by American companies like SpaceX or ULA (United Launch Alliance). Rather than commenting on European development strategies, Mauro focuses on a new topic, which – he and many others believe – won’t age quickly: light launchers. “There’s a growing buzz around small space vehicles, with new projects that I believe are worth promoting. They need to thrive and compete so that the most efficient operator on the market is adopted. At least in terms of talent and skills, Europe isn’t second to anyone. To harness this potential, we must ensure there’s a robust institutional and financial infrastructure. The fact that companies outside Europe are achieving technological milestones unthinkable a few years ago should spur us on: Luke needs to use the force.”

His metaphor is illuminating in its simplicity. Especially since, coming from a venture capitalist, it’s not entirely about profit: “Beyond the economic perspective, I believe there are three significant dimensions to space: the first is scientific, leading to knowledge of the universe, Earth, and ourselves. Space is an indispensable part of this journey. The second dimension relates to applications and services derived from extra-atmospheric activities. I think of the medical field or any technology enabled for and by space. Finally, there’s a third, perhaps even ‘higher’ dimension: space forces us to think about the future while we’re bombarded by stimuli that limit our vision, from smartphones to stock markets to election cycles. Space demands long-term investments, study, and planning. Think about it; there aren’t many things nowadays that stimulate the same approach.”