Astron Systems Ltd (SPA0002)
Company summary
Astron Systems are leading the way globally in bringing full rocket reusability to the small scale. We’re a fully UK based company and we’re bringing game changing affordable, fast & flexible rides to orbit and also back again for small payloads, helping service the small satellite launch and in space manufacturing markets. We have >$350M/yr of signed LOIs and >$1B/yr of further informal interest in our commercial services and also are well positioned to service defence applications sought by the US DOD and Space Force. Positioned highly competitively on the global stage, we are by far the best positioned company to deliver on the UK’s stated goal within the National Space Strategy of having leading commercial launch services within the UK, best meet defence mission needs, and provide an opportunity for high growth and support a large number of highly skilled well-paying jobs throughout the UK (notably outside of London). We’re backed by globally leading US space investors Techstars Space – as a portfolio company and the only UK space hardware company alumni of their prestigious accelerator ran in partnership with the US Space Force and NASA JPL, the European Space Agency - through their business incubation program and other non-dilutive funding, and have raised over $650k to date and built and tested first prototype key enabling propulsion system hardware.
We’re also supported by some of the best in the industry and one of the advisors we work with led the design and development of SpaceX’s Falcon 9 rocket’s upper stage. We also have our first customer booked for our first commercial launch, and some of our propulsion hardware is also separately useful in ramjets/scramjets and power generation in such systems which the US's air force research lab (AFRL) is interested in seeing the technology developed further for.
Lack of support from government and mismanagement of UK grant programs
Despite perfect alignment to the UK’s space strategy goal of becoming the European leader for small satellite launch by 2030 and the UK’s goal of having sovereign launch capability, Astron have had lacklustre support from government compared to past industry peers largely due to unfortunate timing and structural failings within government agencies.
Typically government can best support industry by focusing helping fund early stage technology development and research, which can then catalyse private investment which companies can then subsequently use to reach market and profitability. Structural problems with the way UK Space Agency and space R&D funding is handled have severely limited the funding from government Astron has received to date and private capital has so far had to carry much of the burden, representing ~61% of funding into the company to date. This is despite the reluctance of venture capital investors to fund early-stage technology developments, resulting in at least a year of delays in the development of the technology Astron is working on compared to a scenario where government R&D funding schemes were functioning correctly.
Astron has enjoyed reasonable funding support from the European Space Agency and Innovate UK, but where the UK Space Agency is involved, we have received very little funding and encountered major structural problems. From the UK Space Agency directly Astron has received <£8k (for hosting interns in the now terminated SPINTern programme) and from ESA ~£113k. A clear example of major structural problems encountered is that in late 2022 Astron applied for ~250k EUR of funding from the UK’s flagship ESA GSTP early-stage technology funding program. Astron received board approval from the UK Space Agency for this funding (for GSTP the application is via the UK Space Agency), and however then encountered a 20-month delay to project kick-off due to UK Space Agency losing the application despite during this period repeatedly chasing the status of the application and being told it was in progress. Worse still, the delay was so severe that the project then fell into a different funding cycle and was downgraded from a 250k EUR project to an 80k EUR paper study. For early stage startup companies this level of mismanagement of grant funding on the part of UKSA is clearly hugely impactful, delaying Astron’s technology roadmap by at least a year and Astron only survived the ordeal thanks to further investment from private capital.
A further example of poor management of a grant from UK Space Agency that impacted Astron is the NSIP programme. In this case applicants submitted two documents, the main grant application and a “north star metric” where the main grant application had no questions on the business case for the technology and questions related to this and plans for its exploitation were asked in the north star metric. Astron therefore reasonably put all information about the business case and exploitation plan for the technology into the north star metric submission document. However, despite not being mentioned anywhere in the grant call guidance, the north star metric was never shown to assessors and instead only the main grant application. Unsurprisingly all 4 of Astron’s NSIP grant submissions (each for up to a few hundred thousand £s) were rejected on the grounds of not having a good enough business case – despite having no question directly focused on that area within the material given to assessors. In this same NSIP call a German launch company with limited UK presence and who’s technology is not close to competitive on the global stage and which has yet to receive any venture capital investment, HyImpulse, won £5M of funding.
One final example of poor grant management from UK Space Agency that impacted Astron severely was the 2022 LaunchUK Technology Investment call. Astron was not around as a company for earlier similar relevant funding calls, and there have not been any since. In this instance the agency ended up requiring projects to be able to complete within 3 months due to budget cycles, which is a laughably short amount of time to achieve anything meaningful with hardware, and so Astron was not awarded funding because the agency did not (quite reasonably) believe the project objectives could be completed within 3 months.
Access to private capital
The UK has some structural challenges that make it difficult for venture capital investors to fund ‘deep tech’ technologies with high capital costs to market, as are often found in the highest growth opportunities in the space sector and other ‘hard tech’ industries. UK Venture Capital Investments are not able to underwrite CapEx risk when compared to US alternatives. In particular UK investors are quite fragmented into different regional and stage focuses and have a smaller appetite for ventures requiring significant R&D and capital spend before reaching profitability compared to the US. In particular, there is a lack of investors who are willing to fund from the earliest stage of development through to exit for deep tech ventures and who have sufficiently large amounts of capital to feel comfortable doing so. This results in early-stage investors often being unwilling to fund an investment because they are concerned where businesses will later get the next rounds of capital required to continue the technology development as they cannot provide it, and later stage focused investors who don’t want to invest in companies until somebody else has financed the earlier rounds of funding. This leads to a structural issue finding investment for deep tech ventures within the UK, resulting in a lot of companies instead taking investment from US investors (We already have US investment for example) or relocating to the US to better access investment capital there.
The UK therefore needs more large funds with both a broader mandate, e.g. not regional focused, and with a mandate to invest from the earliest stages through to IPO/exit. Such funds are more common in the USA and are the key to unlocking deep tech companies and the subsequent growth they bring, as the same investor can be confident making an early-stage investment knowing they have the capital themselves to keep funding the business through the development of the technology if needed.
To encourage more funding across company lifecycles, the UK could for example re-work the EIS and VCT schemes and increase the amount of funding they can invest in knowledge intensive companies over their lifetime or otherwise work to enable funds using this mechanism to also have capital to deploy into later rounds. For example the knowledge intensive company limit under EIS is £20M, whereas rocket launch services require >£100M of investment and fusion and other energy generation technologies may require >£500M of investment. Alternatively the UK could find other ways to incentivise multi-stage funds and investments from private investors into deep tech, perhaps for example also incentivising today’s later stage investors to also invest in earlier rounds.
Opportunities for the UK
The UK is actually incredibly well positioned globally to have the potential to be a leader in the space industry. The UK is home to some of the best universities in the world and the cost of R&D and manufacturing is lower than in the USA. The UK also maintains good access to the European market and suppliers, particularly in the space sector through ESA, and through AUKUS better access to the US defence market than from anywhere else in Europe.
Launch in particular can be a big opportunity for the UK. The UK’s geography is ideally suited for polar launches from a suitably located spaceport (E.g. Saxavord on Unst), and smart regulations from the CAA, and support of domestic launch companies can unlock a huge potential for jobs and revenue for the economy and can position the UK as a leader in this sector globally. For Astron, positioned to become the most commercially competitive option for launching small satellites globally, we already have >$350M/yr of signed LOIs and >$1B/yr of further informal interest in our commercial services many of which are from US customers. Our first commercial launch customer is also US based. The global small satellite launch market is forecast to be worth of the order $34B in the next decade, and the global in space manufacturing market is forecast to be worth over $22B from 2033. It is important to realise though that to compete globally in the commercial market, leading technology companies like us need to be supported especially in the earliest stages of R&D or there are strong incentives to simply move abroad to nations (like the USA, and increasingly other European countries) which have better support frameworks.
The importance of recognising the dual-use nature of space and considering it a key part of future defence budgets
Space is becoming an increasingly important warfighting domain, as recognised by the USA most notably with their establishment of the US Space Force and subsequent well-funded and executed programs around assured access to space and various warfighting capabilities. The USA is in particular good at recognising the importance of funding companies developing security capabilities for the space domain through the likes of SpaceWERX and regular SBIR/STTR/TACFI opportunities.
The UK needs to recognise the importance of this domain for future national security and should establish similar dedicated programs and funding for UK capabilities, even if only limited to dual-use and independently commercially viable opportunities. Recent warfighting in Ukraine and the widespread use of space for SAR imagery and telecommunications have highlighted how critical the space domain is for modern warfighting. Currently the UK’s space command within MOD or DASA have no mandate or desire to fund space technologies, and DSIT/UKSA have little focus on defence or dual-use technologies.
The UK should consider a portion of the projected increased defence spending to go towards space capabilities and or supporting dual-use space technologies that can both be a commercial opportunity and source of growth and jobs for the UK and also provide the UK with sovereign space capabilities that are critical for security.
Recommendations (beyond increasing budget) for unlocking growth in the space sector:
Approve a year in advance the budget for UK Space Agency grant funding calls, or otherwise move them to a similar budget mechanism to UKRI/innovate UK. It is unacceptable that grant funding calls from the UK Space Agency are so sporadic and unpredictable, project timelines sometimes have to conform to short timeframes to align with UK budget funding cycles, and funding opportunities may disappear for months on end due to government spending and business case reviews and other problems whilst UKRI/Innovate UK and others seem comparatively unaffected.
Increase the pace of grant funding opportunities and shorten assessment periods
Space grant funding opportunities should occur at a much higher cadence (even if for smaller amounts each cycle) and assessments should be turned around within 2 months maximum (20 months is unacceptable). E.g. Move closer to how UKRI calls are ran. For small businesses speed is incredibly important and is overall more cost effective for everybody. There should be at least 4 NSIP grant opportunities/similar calls each year from the UK Space Agency.
Fix organisational problems in UK Space Agency, publish an org chart of key persons of responsibility, and incentivise better accountability for the outcomes of their areas of responsibility
It is clearly unacceptable for the UK’s flagship ESA GSTP program to have had applications like ours lost for over a year and to have had little staffing compared to the size of the programme. It is in general also very difficult to work out who is responsible for a given programme/initiative within UK Space Agency as there is no organisational chart published which makes it challenging for startups and small companies to know who to engage with.
For example there seems to be no information on the internet that would let you know that Emily Dineley is a key person in the launch team. I suggest a model closer to the US model where PEOs are known and published for programs, and tools like the SSC front door and US Air Force tech connect help connect companies to the right persons in government relevant to their technology and capability.
Change grant funding to include up-front payments rather than all funding in arrears
Hardware R&D projects often require large spending ahead of milestones to produce the hardware required, this makes cashflow very difficult or impossible for small startups and businesses when all payments from the grant are made in arrears. Up-front payments for at least portions of expected milestone spend need to be available and do not cost the Government any extra as the total spend is still the same. This is already implemented in ESA contracts where small businesses can receive up to 35% of the contract value in a pre-payment and has separately been used in some InnovateUK contracts (Transformative Technologies). Grant funding could also be moved to a FFP model as opposed to cost recovery to better incentivise cost saving and improve the efficiency of milestone meetings.
Create a UK equivalent of the US Space Force or otherwise provide a mandate for funding defence and dual-use space technologies critical for UK security
Right now the UK is far behind on capabilities critical for security in the space domain, there needs to be an agency or department of responsibility for this, or the UK will continue to fall behind. Even if the focus is initially only for funding technologies with strong commercial dual-use and economic growth potential, this would be a good start. From conversations this is currently divided between the UKSA, the MoD, and the DFT leaving many opportunities to fall between the cracks.
Incentivise larger UK investment funds with a mandate to deploy capital from the earliest stages to exit/IPO within high capex deep tech and hard tech ventures
Beyond space, this is also generally important for unlocking high growth deep tech companies within the UK. Reforming of the EIS etc rules for knowledge intensive companies could enable EIS funds to support more high growth deep tech ventures in the UK. However it is achieved, the UK needs more large funds willing to fund from day 0 to exit.
21 March 2025