Business in Space: Collaboration and Investments

The inaugural ‘Space-Comm Expo Scotland’ was held in Glasgow on 11 and 12 September 2024. It comes at an exciting time, as Scotland continues to see exponential growth in terms of both investment and development within the sector, and the world undergoes what some stakeholders are branding an ‘industrial revolution in space’.

Whilst ‘space’ often sparks thoughts of astronauts and rockets, one of the key takeaways from the Expo was the potential that the space industry has to address the everyday problems of everyday people. Already, it is thought that 60% of all companies, not just those within the space sector, are currently using space data and that every day, the average person uses 32 satellites – all without even knowing.

With the continuous growth in the sector, successful companies are now looking to scale up their operations. In order to do so, they face certain challenges, including access to funding. In addition, collaboration has been cited as one of the biggest factors required for growth.

Collaboration

With the surge in startups, the market is becoming increasingly competitive. However, one of the biggest objectives to enable growth in the sector is collaboration, at all levels.

This applies:

• globally, to deal with problems that affect the whole industry as it expands, such as ensuring sustainability and addressing environmental concerns;
• locally, to help with issues such as crop monitoring for those in agriculture;
• across sectors, including with those operating in the FinTech and artificial intelligence sectors, as well as in health, where, for example, it is thought that space data could be used to monitor the spread of diseases; and
• with governments, to help solve public sector problems, such as infrastructure planning and defence.

In addition, it is hoped that 20,000 jobs will be created in Scotland over the next ten years within the sector. These roles extend to a variety of areas, including logistics, project management, marketing and support roles, to name a few.

It is clear that collaboration is key for all companies looking to expand within the market. As such, companies will need to consider the need for service, contractor, employment and intellectual property licence agreements to ensure that any collaboration runs smoothly and that the interests of the Company are protected throughout.

Investments

The UK Space Agency stated that, over the last year alone, there has been a 25% increase in companies established and a 65% increase in total income within the space sector in Scotland. In addition, investments continue to grow globally, with a 31% growth in venture capital investments recorded at the end of 2023.

Most innovations currently being developed in the space sector in Scotland come from Small and Medium Sized Enterprises (SMEs). Whilst it is acknowledged that these SMEs are well supported at the start of their journey through incubators, grants and funding opportunities, to scale up, private investment is required.

It is important that companies are in a good position before pitching to potential investors, by:

• taking advantage of space clusters and networks to gain access to sector-specific advice, support and connections;
• ensuring regulatory compliance;
• ensuring that suitable employment contracts and HR policies are in place;
• protecting the intellectual property of the Company; and
• ensuring that a robust financial model is in place.

Looking forward, investments in companies within the space industry may result in a partnership that spans multiple years. Investors may wish the Company to update their articles of association and introduce leaver provisions, amongst other things, before committing to providing any funding. It is therefore important for companies to ensure that any such changes or investment agreements outline the terms of the relationship, protect their interests and accurately reflect their intentions.

Looking forward

It is predicted that within the next five years, vertical launches will be possible within Scotland. This, together with the ability to build small satellites, the development of five Scottish spaceports and the existing data processing capabilities means that end to end capabilities within the space sector are within sight for Scotland.

Through collaboration and investment, the sector in Scotland will continue to grow, and it is hoped that space data will become more accessible, providing benefits to people and companies globally.

Regardless of the stage or role of your business within operations, we can provide advice regarding transactional, intellectual property and employment matters. Please contact a member of BTO’s Corporate Team for more information.