Move over AI. There’s a new hot topic in town, especially in Europe. Barely a day goes by without one of the continent’s leaders noting that Europe is at a crossroads or facing a watershed moment. Commitments to raise defence spending have abounded. Beyond battlefields, how future wars will be determined will be a function of what happens in outer space.

We have made the case for space since 2018 but believe 2025 may be the year when investments go stratospheric. It probably helps that Donald Trump’s righthand man also happens to be the major shareholder in SpaceX. Investments in space-tech rose 25% year-on-year to $8.6bn in 2024. Meanwhile, global VC deals involving start-ups within the industry hit a new high of 595 last year (source here).

Space has never been simply about astronauts and trips to the moon. Almost every bit of equipment launched into the earth’s orbit has always been inherently dual use. Defence needs typically come first, followed then by commercial initiatives. Satellites and other related equipment offer critical navigation (GPS), secure communications, intelligence, surveillance and reconnaissance services.

The ongoing Russia-Ukraine conflict is – sadly – indicative of things to come. Cyberattacks, drone warfare and electronic warfare (the latter, for example, involves the flooding of radio frequency signals) have all been tools in the arsenal of both sides. SpaceX’s Starlink satellites have also provided a crucial form of communication.

More satellites mean more related infrastructure – antennae, transportation, servicing and so on. Further, it’s not just the US and Europe who are investing, but China and India too. Add it all up and the space economy could be worth well over $1tr in a decade’s time, per McKinsey. Watch this space – no pun intended – as we will be producing a more detailed theme piece on this topic later in 2025.

20 March 2025

The above does not constitute investment advice and is the sole opinion of the author at the time of publication. Past performance is no guide to future performance and the value of investments and income from them can fall as well as rise.

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Alex Gunz, Fund Manager

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