Championing Small Space Start-ups Over Big Primes

In the rapidly evolving sector of space technology, the UK stands at a crossroads. The traditional procurement approach favours large prime contractors known for their robust capabilities and extensive resources. However, a burgeoning group of agile, innovative small start-ups is proving increasingly pivotal. In the wake of the UK government's recent announcement to turbocharge defence innovation, the strategic focus is increasingly shifting towards nurturing smaller companies. This new direction, including plans to establish a Defence Innovation Unit akin to that of the US, sets a dynamic backdrop for understanding why investing in small space startups is not just beneficial but essential. These initiatives promise to invigorate the UK's defence capabilities, making now the perfect time to discuss the unique advantages that small, agile space companies bring to the table. The question facing policymakers, defence, and industry leaders is clear: should the UK shift its focus and resources towards these small-scale innovators?

The Strategic Advantages of Small Space Enterprises 

Small companies, particularly those in the cutting-edge fields of space technology, offer unique advantages that large primes often cannot match. Agility, innovation speed, and a propensity for risk-taking enable these enterprises to adapt quickly to new technologies and changing market demands.

Unlike their larger counterparts, small start-ups often operate with less bureaucracy, making them more flexible and quicker to pivot in response to technological advances or shifts in market needs. This agility is crucial in the space sector, where technological advancements occur at a rapid pace. Small firms are often more willing to explore niche markets and innovative applications, from advanced propulsion systems to novel satellite applications, driving forward the frontier of what is possible in space.

Investing in small space companies not only spurs innovation but also promotes economic growth and job creation within the UK. Start-ups tend to collaborate extensively with local universities and regional research institutions, fostering an ecosystem of innovation and expertise that can have broad economic benefits. Moreover, by focusing on high-tech sectors like space technology, the UK can enhance its standing in the global space market.

From a national security perspective, small satellites and the companies that develop them play an increasingly critical role. These platforms offer an alternative to the current large space systems by providing versatile capabilities in communications, earth observation, and a myriad of defence applications. By investing in start-ups that develop these technologies, the UK can enhance its independent operational capabilities in space, reducing reliance on foreign entities and large corporations that may not always align with national strategic interests.

Challenges Faced by Small Start-ups

Despite their potential, small space start-ups face significant challenges that can impede their growth and operational capacity. Access to capital, regulatory hurdles, and the need for technical expertise are among the most pressing concerns. The UK government, however, can play a transformative role by facilitating access to funding, streamlining regulatory processes, and supporting skills development.

Securing start-up and growth capital is often the most significant barrier small companies face. Government grants, investment incentives, and public-private partnerships are critical in bridging this gap. Additionally, simplifying the regulatory landscape for space operations can significantly lower the entry barriers for new firms, encouraging more start-ups to enter the space sector.

While technical innovation is at the heart of the space industry, business acumen is equally vital. Many small start-ups struggle with the commercial aspects of operation, including marketing, customer acquisition, and supply chain management. Educational programmes, mentorships, and business support services provided by the government or in collaboration with academic institutions can empower these companies to succeed not just as technology innovators but as viable businesses.

UK Space Specific Examples

Limited Launch Capabilities

Historically, the UK has lacked domestic launch capabilities, which has meant relying on international partners to place satellites into orbit. While recent developments in spaceports, such as those in Cornwall and Saxa Vord aim to address this, the full operational capability is still being developed.

Supply Chain Challenges

The UK's space industry faces significant supply chain vulnerabilities, particularly in its reliance on international suppliers for critical satellite components like radiation-hardened microprocessors, predominantly sourced from the United States. This dependency poses risks of delays, increased costs, and forced reliance on less proven technology, especially during global disruptions such as US-China trade tensions, underscoring the need for the UK to diversify its sources and enhance supply chain resilience in essential space technology components. Small startups can significantly mitigate supply chain vulnerabilities in the UK's space industry by innovating in component manufacturing and offering specialised solutions that reduce dependency on foreign suppliers. Their agility allows them to rapidly adapt to market changes, while their collaborative nature fosters strong local networks, enhancing the entire supply chain from R&D to deployment. By attracting investment and creating competitive alternatives, these startups not only promote technological self-sufficiency but also bolster national resilience in critical high-tech sectors, making them invaluable in strengthening the UK's space capabilities.

Space Sustainability 

UK startups could play a pivotal role in addressing the challenge of space debris through innovative technologies and solutions. By leveraging their agility and focus on cutting-edge research, these startups can develop and implement advanced debris monitoring systems, collision avoidance algorithms, and end-of-life satellite management strategies. Their capacity for rapid prototyping and partnership with academic and research institutions allows for the quick deployment of these technologies. Startups can also pioneer the development of cost-effective debris removal technologies, such as robotic arms or nets, contributing significantly to global efforts to make space operations more sustainable and minimising the risks associated with orbital debris.

The future of the UK's space industry may well depend on its ability to foster a thriving ecosystem of small start-ups. By investing in these nimble, innovative companies, the UK can position itself as a global leader in the new space economy, characterised by rapid innovation, economic growth, and enhanced national security. Emphasising small start-ups over big primes does not diminish the role of large contractors but rather complements the overall strength of the UK's space sector by injecting vitality, creativity, and resilience into its foundation.

As the UK moves forward with its ambitious plans to revolutionise defence innovation, the creation of a Defence Innovation Organisation highlights an urgent need for policies and measures that actively include small space startups. It is imperative that these burgeoning companies are not just participants but central drivers of the innovation landscape. The challenges and opportunities specific to the space sector, such as sustainable space practices and advanced satellite technologies, must be addressed to ensure these grand visions of defence innovation materialise effectively. By championing small startups, the UK can ensure it not only participates in but leads the next era of strategic and secure space exploration. Let us champion these small stars, for they hold the key to our strategic ambitions in the vast, uncharted territories of space. Harnessing the power of small companies will get the UK to Space 2.0.

© Clifford Fletcher Jones, 2025, published by RUSI with permission of the author.

The views expressed in this Commentary are the author's, and do not represent those of RUSI or any other institution.

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