Finnish space startup rejects defence trend: - We need our flexibility

European defence groups are moving quickly to acquire and integrate space startups, as demand for satellite-based intelligence accelerates.

For many companies, becoming part of a larger defence structure is emerging as the default path to scale.

Finland’s Kuva Space is taking a "modern" approach, as Tero Vauraste, who leads defence business development at the company, calls it:

- Our expected partnerships are primarily vertical as we need our flexibility, he adds.

This stance goes against the more common market logic, where big defence primes across Europe are not building space capabilities from scratch. Instead, they are buying or integrating them.

Germany’s Rheinmetall has formed a joint venture with Finland’s ICEYE. Norway’s Kongsberg has taken a majority stake in small satellite manufacturer NanoAvionics. Saab has moved to integrate ICEYE’s data into its command-and-control systems.

The pattern is consistent: rather than develop space capabilities internally, defence groups are moving to partner or even absorb them.

- The defence industry is looking at space companies and trying to acquire and absorb them more quickly than developing capabilities from the ground up, as James Francis, research fellow at the European Space Policy Institute, earlier told Defence Nordic.

Speed or size?

However, Kuva Space is not ruling out partnerships altogether.

- But it’s not part of our core strategy to team up with a prime tomorrow, Vauraste says.

His concern is not access to markets, but what may be lost in the process.

- When you operate in a startup, the pace of development and the rhythm of technology is very different from large organisations, he adds.

- In smaller companies, development is faster. It brings in something new, and it tends to be more efficient and driven by innovation.

That speed, he argues, is difficult to maintain inside large defence structures.

- If you go too far in that direction, you risk becoming part of a much bigger organisation, losing one of your main strenghts, he says.

Instead, the company is looking to collaborate within a network of smaller firms.

Finances matter

In Finland, that ecosystem is referred to as the “Space Coast” - a cluster of startups and scaleups working across different parts of the satellite value chain in Espoo just outside Helsinki.

- Combining technologies within that kind of cluster may be a closer fit than working closely with large primes, Vauraste says.

But the question is also financial.

European startups have historically faced more limited access to late-stage capital than their US counterparts, making acquisitions a more likely outcome.

Vauraste argues that this dynamic needs to change.

- I would encourage European investors to take more risk, to invest in startups and scaleups and support growth that way, rather than relying on primes, he says.

Whether that model can compete with the scale and resources of established defence groups remains uncertain.

For now, companies like Kuva Space are betting that speed - not size - will define the next phase of the sector.