This year, a military satellite launched by Russia started acting in strange and possibly dangerous ways. Instead of following a stable orbit like most satellites, it moved up and down around its path. It even flew close to spacecraft owned by other countries, private companies, and services operated by space start-ups. A few days later, the satellite released an unknown object, which continued to travel nearby.
Unusual Satellite Moves Raise Alarm
Experts say such behavior is new and worrying. Satellites from China have also been seen making unusual moves. These events are happening at a time when countries are spending more money to strengthen their military and space technologies.
More governments are now investing in space for defense. This is opening new opportunities for private companies, especially space start-ups, to offer services and products. Some space start-ups are trying to attract these funds by providing faster, cheaper solutions compared to big defense companies.
Emerging Risks and Intense Competition in Space
Governments Turn to Commercial Providers
Around the world, countries are planning to work with private space companies. They believe that these businesses can help them access new technologies more quickly and at lower costs.
Nato, the Pentagon, and the US Space Force have all released plans to invest in commercial space services. The White House has invited new contractors to take part in a $175 billion missile shield project. Germany’s defense budget of €650 billion is also looking for suppliers who are more flexible and innovative.
Officials say that space start-ups are becoming essential to military operations. If Nato countries meet their goal of spending 5 percent of their total economy on security by 2035, it could add $2.7 trillion to defense budgets each year.
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Many space start-ups are moving from areas like climate monitoring to military services. Elon Musk’s Starlink already leads the satellite internet industry and helped Ukraine’s defense. It now offers Starshield, a service designed for military use.
Earth observation companies are also finding new markets. For example, Planet Labs signed a €240 million contract with the German government to provide high-resolution satellite images. Defense-related contracts now account for half of the company’s business.
Finland’s Iceye, which became popular for helping Ukraine access radar data, is now seeing more governments showing interest in its services. Smaller space start-ups are partnering with governments to increase satellite coverage and reduce costs.
Big Money but Big Challenges
Private equity investors are paying close attention to space start-ups. For example, a major investment group acquired Maxar, a top satellite imagery company, in 2023. This shows that investors see space security as closely linked to national safety on Earth.
Still, defense spending on space is a small part of overall budgets. By 2030, Nato allies in Europe might double their defense spending to €800 billion, but space projects would likely remain just about 1 percent of that total.
Many defense budgets are stretched thin. There are shortages in areas like ammunition and military personnel. As a result, space is not always the top priority for spending, especially in Europe.
Experts say Europe’s military space budget may grow by 10 to 15 percent each year, but this increase will not drastically change the landscape.
Space start-ups face another challenge: competing with long-established companies that have built strong relationships with governments. Procurement systems are slow and risk-averse, making it hard for new space start-ups to break in.
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Some new space start-ups are planning to buy smaller defense firms to create new opportunities. This strategy could help them enter established networks and supply chains.
However, big defense companies say that governments are still unsure about what services can be bought commercially and what must be kept under national control. This uncertainty makes decision-making difficult.
Despite these barriers, many in the space start-ups industry believe the demand for advanced technologies is growing. There is increasing need for digital solutions that can support military operations, surveillance, and intelligence gathering.
While the path is not easy, space start-ups are pushing to prove that they can help meet urgent defense needs. They are offering products and services that are ready to use, cost-effective, and capable of filling gaps left by slower government projects.
