5 minute read
Why Luxembourg?
Countries big and small can learn from Luxembourg’s leadership in commercial space.
Bogdan Gogulan, CEO and Managing Partner of NewSpace Capital
When I founded NewSpace Capital with the aim of building a private equity firm that invested in growth-stage, deep-tech space companies solving global problems, it was obvious to me and my co-founders where we should base ourselves. Though I grew up in Estonia and studied in England, and though the members of our founding team have a very international background, we chose to set up in Luxembourg, a place known as a historic crossroads in Europe.
Luxembourg boasts a high standard of living, easy access to different European countries, and a multilingual culture. But the real reason we established ourselves there is because it is the birthplace of the world’s commercial space industry.
The case for space
The Luxembourg example is instructive. It shows how even a small country can become a global player in a matter of years. Luxembourg was way ahead of the curve, seeing and seizing the chance to lead in commercial space before many others. It realized the space industry is fast becoming central to the global economy, shaping everything from transport and farming to finance and communications, and so took action. Now, with space-based technology supporting precision farming, advanced navigation, real-time global transactions and more, it’s clear that their investment has paid off. The World Economic Forum recently predicted that the global space ecosystem would reach $1.8 trillion in value by 2035.
Future focus
Luxembourg showed the instincts of a seasoned investor by going long on space when no one else was. The government showed remarkable foresight by predicting that commercial space would have an increasingly big role to play in modern life and has supported those working in the sector to the extent that Luxembourgish space is now at about 2 percent of GDP. Year after year, the government has invested in emerging technologies, encouraged research and development, and remained on the lookout for the technologies that will change the future.
A fertile ecosystem
Since the late 1980s, Luxembourg has worked diligently to nurture and maintain a diversified, resilient space environment that’s highly competitive on a global scale. The emergence of SES as the first truly commercial and global SatCom operator testifies to that effort. Based on a deliberate strategic choice by Luxembourg, government backing has enabled the development of a favorable space industry ecosystem—one that brings together high-tech firms, entrepreneurs, and researchers. The Luxembourg Space Agency, founded in 2018, has acted as both guide and connector, helping to mold companies as they pass through each stage of growth. In such a fertile environment, ideas are exchanged freely and companies can learn from and challenge each other to succeed. The result is a highly innovative ecosystem where space actors want to be.
Investor appeal
For investors like those of us at NewSpace Capital, Luxembourg is a very appealing location. The government realizes that having a good idea is only half the battle. Innovators need money at every stage of their journey to bring their ideas to their fullest expression and to the market. Luxembourg has created a place that’s perfect for investors who want to bring in money from the United States and other countries and use it to back the most exciting companies in Luxembourgish space. This investment has been vital to establishing the country as a major commercial space hub.
Look outwards
In 2005, Luxembourg joined the European Space Agency, ESA, soon becoming one of its biggest investors per capita, Euro for Euro. This move expanded Luxembourg’s reach, giving companies based in the country access to the rest of the continent, including new markets and funding. Its national space program, LuxIMPULSE, which was built in partnership with ESA, is playing a key role in financing groundbreaking technological developments with the aim of strengthening the country’s economy and European space.
Legislate for space
While other nations debated the ethics and logistics of navigating the new space economy, Luxembourg pressed ahead with the creation of a favorable regulatory environment and legal framework that put certain questions to bed. Its 2017 space resources law was a breakthrough moment for space legislation, giving confidence to companies that they weren’t going to break the rules if they pursued bold new ventures.
In terms of its leadership in commercial space, Luxembourg stands as a shining example, having rolled out the red carpet for ambitious young innovators and the investors who want to back them. Despite having next to no space tradition to speak of before the 1980s, Luxembourg has managed to pull itself up by its bootstraps, establishing itself in a matter of mere decades as one of the top countries to be in if you work in or adjacent to the space sector. They show what can be possible for countries that take commercial space seriously, and follow up on their intentions with investment, encouragement, partnerships, and legislation.
