Authors: Elena Vrabie and Bogdan Iordache
“We have seen these kinds of communication shifts around, ‘we’re pivoting to defense,’ but it’s not really a pivot. I would say it’s ‘back to the roots’. Space is a core defense domain. It’s how it all started,“ states OTB Ventures’ Partner, Wojtek Walniczek.
As Europe accelerates its space ambitions, initiatives like the €10B IRIS² satellite constellation aim to enhance digital sovereignty and secure communications across the continent. Simultaneously, the ESA’s Zero Debris Charter underscores a commitment to space sustainability by 2030. These strategic moves highlight the continent’s renewed focus on integrating space capabilities into national security frameworks.
Wojtek Walniczek has a background in international business and finance, with earlier roles at MCI Capital and McKinsey. At OTB, a pan-European VC managing nearly €350M, he has been backing DeepTech startups across SpaceTech & Physical AI, Enterprise AI & Data, as well as Novel Computing in the past five years. He focuses on foundational space infrastructure like satellite constellations, in-orbit servicing, space R&D and manufacturing, alternative launch capabilities, and building interdependent ecosystems that amplify value.
In the interview below with Underline Ventures, Wojtek unpacks the forces shaping today’s space economy, from government-led demand and geopolitical uncertainty to the rise of commercial applications and infrastructure, such as Space-for-Space. He explains why space remains inseparable from defense, how investors must judge timing as much as technology, and why collaboration between slow-moving institutions and fast-moving startups is critical, among other things. For Europe’s chance to lead in space sustainability, as well as the regulatory paradox of orbital debris, and Very Low Earth Orbit (VLEO) early “bets”.
Underline Ventures: What do you see as the key drivers of space tech today? Corporate adoption of satellite data, AI, geopolitical competition, or European defense sovereignty, to name a few?
Wojtek Walniczek: There is a sequence of events that drives space technology nowadays. Historically, governments have been a key driver of growth. Although I would love to say commercial markets are now the main driving force, this is still not entirely the case.
The recent geopolitical uncertainty has created a “burning platform” on the demand side. Alongside generating significant interest and growth, and providing much-needed visibility for space tech to develop, it has triggered the sovereignty and resilience movement to take off. It reminded us that history has not ended, as many in the West might have deluded themselves into believing.
In this environment, even within the NATO bloc, states still want to keep their strategic independence. In the defence domain, you need unique capabilities, or at least you need to contribute some elements of them to the Alliance, which come with their own set of risks and challenges. If you don’t delve into the traditional military domains of maritime, land, air, as well as newer ones like cyber and space, you lose the advantage over whoever your adversary is.
Alongside governmental dynamics, there are budding signs of hope for the commercial market as well. Technological development is also driving news on the supply side. Access to space, primarily driven by decreasing costs, is at an unprecedented level today, which in turn fuels a flurry of innovation across a broad range of areas, such as launch and in-orbit servicing. Increasing adoption of AI is intricately linked to this. Although AI and data processing in space is much harder than on Earth (not to claim it’s easy here), it’s an area with huge commercial potential.
UV: The SpaceTech market is expanding rapidly, but long development cycles and regulatory hurdles create interdependencies between foundational platforms and complementary applications. Looking at your portfolio – from satellites (ICEYE) to analytics (SpaceKnow), debris removal (Kurs Orbital), and reentry logistics (Atmos) – how do you decide which foundational technologies to prioritize when progress depends on parallel developments?
WW: Rather than “foundational” and “complementary application”, I look at this problem, and generally at space tech development, through the lens of three broad “layers”. It all started with what I call Earth-to-Space, the technologies that allowed humanity to rise above the ground and travel to space – engines, boosters, rockets, launch vehicles, etc.
Then came technologies for the Space-to-Earth layer – communication and Earth observation satellites, ground stations, data processing, and analytics. Now, with the proliferation of various assets in space, we also start to see a Space-to-Space infrastructure layer, such as in-orbit servicing, in-space assembly, and manufacturing, among others. The development of those infrastructure layers is sequential, but also iterative in a sense, as the new layer also allows for new developments in the previous layer.
To make it more tangible, let’s take the development of modern road transport as an analogy. You first had cars and trucks, and then paved roads that led to motorways to allow for safe and efficient driving. Then you started developing roadside infrastructure such as lighting, signage, mechanical shops, gas stations, etc., to service this new emerging market. In the meantime, appropriate regulations had to be developed to prevent chaos and increase efficiency. On top of that, over time, you had the application layer, like maps, GPS systems, and eventually Google Maps (in a continuous cycle of Schumpeterian creative destruction), to further enable it.
Each new layer creates a market by itself, but also feeds into the development of the previous and next layer, forming large commercial markets. Interestingly, GPS is a space technology, but it’s so deeply embedded in our lives now that few people think about it this way anymore. This, in my opinion, is another big driver of commercial adoption, making the new tech so embedded that it’s barely “visible”.
Initially, with satellite broadcasting, and increasingly so with the development of satellite broadband and now the so-called “direct-to-device” connectivity, satellite communications, once reserved for governments, are substituting their ground-based cousin, disrupting current markets and creating new ones, through a nearly invisible layer in our everyday lives.
Earth observation, on the other hand, while dynamically growing, hasn’t reached that stage yet. Access is still exquisite, fragmented, and expensive, and it won’t become fully commercial and mainstream until companies and individuals can instantly access various types of sensing payloads, at any time and in any location, without really thinking about it.
From a VC investor’s perspective, while we like seeing all the components coming together to form a new layer or disrupt an existing one, it is less about whether it can be done and more about who’s going to do it. When investing, I need to see a person who’s deeply committed, who has a burning need to build a ground-breaking solution, and an idea of why they are the ones to build it.
Then, it’s our role to consider, play with, and weigh up what they say and look at it objectively. We check if the timing and the next layer to gain adoption and succeed are right. We assess if the people, the demand, and the components are aligned, before the entrepreneur, with their vision and energy, brings all the elements together, fills the missing pieces of the picture, and brings it to life.
UV: Working with government agencies and international organizations seems critical for many of your portfolio companies, especially in the beginning. What lessons can you share with us about their experience so far?
WW: Most of the companies that you see in our portfolio at OTB Ventures – SpaceKnow, ICEYE, Hydrosat, ClearSpace, Kurs Orbital, ATMOS Space Cargo, Auriga Space – work with one or more governments or space agencies.
Without these institutions, the market would not be where it is today. They have created and are still pushing to develop the space market. They are often the critical first customer who can allow a breakthrough-type of technology to come out of the lab.
On the other hand, these are slow-moving, bureaucratic, requirement-driven vehicles or institutions with a lot of risk aversion. To put it in a maritime analogy, they are like a tanker, with massive power and carrying a lot of load, but too slow to move compared to the small, agile motorboats, which are startups. Startups move quickly to develop technologies, but are far from perfect after multiple iterations.
The motto “move fast and break things” doesn’t really work in space (unless you’re SpaceX or extremely well funded, which is rarely the case). There is no MVP. Things need to work in the harshest of conditions. Space agencies can provide “adult control”, all the learning and expertise in operating in space. As long as they provide it through basic levels of security, risk mitigation, and show an understanding of what can go wrong, that’s good. But if you overburden those small enterprises with too many requirements, they cannot move forward, and you will kill them.
As a space tech founder, you need to learn how to work with NASA, ESA, and the rest. When a company gets a large contract with a space agency, it’s a stamp of approval of the technology trend, the solution, the team, and the needs of potential customers. It’s a booster for the entire ecosystem that a tanker can work together with a speedboat. But it will nearly inevitably lead to some sort of culture clash, a mindset clash between the organizations.
How you approach it is critical. It requires an open and transparent discussion, interests need to be aligned, both sides need to strive for a common understanding of various risks and the intended pace of changes, and turn it into a mutual learning experience. Learning each other’s mindsets, way of doing things, incentives, and stakeholders is of utmost importance for the cooperation to be beneficial for both parties.
UV: With ESA’s Zero Debris Charter and increasing regulatory pressure, how do you see regulations influencing both market opportunities and your portfolio-building strategy – do they accelerate adoption, competitiveness, or create constraints?
WW: First of all, it is quite situational whether a particular regulation is good or bad, beneficial or harmful, well-timed or poorly-timed. It depends on which area it relates to, what the timing of it is in the technology development cycle, and it even depends on which side of the regulation you are sitting on.
If you were a single player in space, you don’t want any regulation or anyone bothering you in your activities, and it probably wouldn’t be wrong. On the other hand, in a much more realistic scenario, if there are multiple players with different interests competing in space and somebody, through some reckless or inadvertent actions, is going to make some orbits unusable, everyone loses.
As a satellite operator, you don’t want to overburden yourself with the cost of removing your inactive assets or making sure you don’t leave any space debris. It’s better to launch a satellite, use it until it’s usable, and leave it there if it is deactivated. At the same time, though, you want everyone to be a responsible “co-habitant”.
It’s a classic example of the Tragedy of the Commons in Economics, in which you have a common good, in this regard, space orbits, where you have the freedom to operate to create some value for yourself. But if you overutilize it, it can create negative effects by making it unusable for others.
Now, freedom to operate is important to innovate, but at some point, orbits might be too densely populated, creating potential for the so-called Kessler Syndrome effect, where if two objects crash into each other, they create many more pieces of debris that can, in turn, crash further into other objects, triggering a potentially tragic chain effect. I don’t know how far we are from making this risk excessive, but we’re closer with every launch.
Putting excessive regulation on orbital debris 20 years ago would’ve been negative for everyone; it would have stifled a lot of innovation in space. There’s a moment in time where such well-crafted regulation can become net positive. It can mitigate excessive risks regarding this particular issue and, as a consequence, can create markets for companies building solutions for space debris removal, which is an important market signal for investors.
One needs to be careful, though. If regulations are ill-timed or poorly crafted, they can diminish innovation and entrepreneurial energy. It can also lead to regulatory capture. If regulation is steered too much by market participants, trying to consolidate, put up barriers for others to innovate and compete, then the regulation is again a net negative.
UV: Are there any specific SpaceTech trends that you see as poised to become critical European capabilities?
WW: I’m asking myself if Europe can afford to neglect any space tech area as a non-critical capabilities area, especially with the increasing need for resilience and national security.
If we look at it from a timing and mission perspective, and if we assess this question from a leadership, rather than catch-up perspective, I would carefully indicate space sustainability.
Europe has positioned itself as a leader of sustainability (whether well- or wrongly-understood, that’s another topic for discussion) in a very broad understanding. This movement towards space sustainability leads to an in-space economy, with in-orbit servicing, assembly and manufacturing, RPOD (rendezvous, proximity operations and docking) technologies, debris removal, etc.
Although Europe historically underinvested in some space technologies and infrastructure, the Space-for-Space layer is being formed right now. The competition to take leadership in those technologies is out there, but it’s becoming fierce indeed. If Europe wants to lead an area so closely tied to its values, it needs to realize its interests and run as fast and as hard as possible.
UV: Where would you be ready to make an early strategic commitment?
WW: One of the areas we are following closely and find interesting is technologies that enable Very Low Earth Orbit (VLEO) operations. It’s about what technologies we need to build to enable flying as low as below 150-200km, because the lower you get, the more capable your communications and Earth observation payloads are.
It nevertheless comes with tremendous challenges from atmospheric drag, atomic oxygen, thermal management, etc. Those are challenges of material science, aerodynamics, and new types of propulsion systems, ones that require fundamentally rethinking satellite operations. The early and risky nature of this area, combined with potentially opening a new plane of capabilities, is what makes it interesting from a VC investor perspective.
UV: Do you see the trend of space tech startups pivoting into defense as being primarily about access to funding, or is there something deeper driving it?
WW: It’s hard to think of a space tech company that’s not, in some way at least, a dual-use company. Space is inherently an area of sovereign or national security, and thus it’s either pure defense or at least dual-use. A couple of years ago, few were even talking about this; it was some kind of taboo, but fast-forward to today, “dual use” and “defence tech” are probably broadly overused and overmarketed.
If you look at the global budgets for space tech, money and demand are coming mostly from governments, particularly the US government in many of its branches, often linked to security activities. At OTB, we’ve observed the communication pivot to defense with curiosity. It quickly became a bit of a marketing or positioning game. The narrative out there is “we’re pivoting to defense”, but it’s not really a pivot; I would say it’s “back to the roots”.
In the VC ecosystem, most funds that previously steered away from the dual-use or defense market have all of a sudden become active players in the game. Space is a core defence domain. It’s how it all started. I think the market has come to accept and understand this reality.
Today, VC funds can accept that portfolio companies are selling to governments, and not be “ashamed” of that. At OTB, we have never shied away from this and, in fact, encouraged it. Supporting national security is something to be proud of. Maybe now people feel relieved that it’s not frowned upon and it’s actually respected for delivering a tangible impact. What we see in the media is perhaps a public sigh of relief.