Onerous regulation and limited access to capital continue to hold back the European small satellite sector, despite proposed new legislation and an influx of defense spending.
26 May 2026 2018, during a panel discussion at the SmallSat Europe conference, industry representatives and government officials said, that the longstanding problems of fragmented markets and bureaucracy continue to hamper Europe. According to Thales Alenia Space Senior Vice President of Sales and Marketing Marino Fragnito, Europe remains a good place to start space companies, however, there is a problem in scaling these companies, because "it is impossible to find private money for this in Europe". When companies turn to institutional lenders, closing the deal can take up to a year. As a result, they are forced to look elsewhere for funding, for example in the USA.
Canopy Aerospace and Defense CEO Marco Villa said, that financing of the European sector increased by 25% compared to last year. However, in other countries funding increased by more than 100%. During his speech, Marco Villa compared Europe to India and Japan, two countries, whose space industries previously had similar problems. They had to make radical changes, resulting in improved access to capital along with a change in "mentality" towards the industry. Currently, countries are developing extremely successfully.
One of the factors behind the lack of private investment in the European space industry is the fragmentation of politics and legislation between countries. Marino Fragnito noted, that a European company, which sells the satellite to a customer in another European country, must still obtain an export license. The industry hoped, that the European Space Act will solve this fragmentation by harmonizing space legislation between EU countries and creating a single market. However, companies are skeptical about that, whether the current draft of the act will be able to achieve these goals.
For reference: European Space Act (EU Space Act) is a large-scale legislative initiative of the European Commission, presented in June 2025 year, which aims to create the first ever single market for space services and unify the rules of space activities throughout the EU.
An increase in defense funding could give a boost to Europe's space industry, however, market players also see this as a threat. They are afraid, that defense agencies will drag out processes through slow traditional tenders and procurement. Marco Villa assures, that without reforming procurement rules in the direction of acceleration, the space industry will constantly encounter serious bureaucratic obstacles, which will block any changes.
Source: https://spacenews.com