Financing space: the final frontier

The global space industry – currently valued at US$350 billion and projected to reach US$1 trillion by 2040 – is booming. Australia is determined not to be left behind. With a A$12 billion revenue target for 2030, more than A$2 billion in federal government commitments since 2018, and a domestic sector already generating A$4.6 billion in annual turnover, the ambition is unmistakable. Yet a striking gap remains: traditional debt financing is almost entirely absent from Australia’s space industry, and globally, the transition from venture capital dependency to mature, diversified capital structures remains in its infancy.

The financing landscape for space enterprises

Equity investment dominance

Equity investment remains, by far, the dominant source of funding for space enterprises. In 2024, it accounted for 92% of funds deployed across 188 deals. By the second quarter of 2026, approximately US$7.5 billion had been deployed across 141 venture deals. In Australia, Gilmour Space Technologies’ A$217 million Series E round, supported in part by a A$75 million investment from the National Reconstruction Fund Corporation, valued the company above A$1 billion, making it Australia’s first space unicorn. 

Debt financing in the space sector

Debt financing in the space sector is growing, but it remains comparatively small. In 2024, debt financing accounted for just 4% of space industry funding across 22 deals, totalling approximately US$278.6 million. As the space sector matures and an increasing number of entities transition from developmental to revenue-generating phases, debt funding is likely to become more prevalent, as traditional debt financiers are generally averse to speculative projects with unpredictable cash flows, particularly those with limited reliable assets over which security can be taken. This leaves an important question: what types of debt funding will be required and available to an up-and-coming space company?

Asset financing

Asset-based lending, secured against physical equipment, is viable for the ground-based components of a space enterprise. Ground stations, manufacturing facilities, testing equipment and mission control infrastructure are all assets ripe for funding. The bankability of asset financing diminishes markedly for orbital assets. The location and repossession challenges render security over satellites and payloads largely theoretical. 

Project and property financing

Both project and property financing – securing debt against land and buildings – offer a more conventional lending proposition. Several Australian space entities hold or are developing significant project assets. For example, Fleet Space Technologies is constructing a Space Manufacturing Hub in Adelaide, and Gilmour Space operates a launch facility at Bowen in Queensland. Launch facilities, manufacturing hubs and associated office and warehouse premises can all support standard financing models, although are questionable in terms of their resale value.

There also remain a number of residual risks. Launch sites may carry contamination risks and noise impacts that depress land values, and their often remote locations may limit alternative use. That said, the economic development benefits of launch infrastructure may provide a countervailing uplift in emerging aerospace precincts.

Receivables financing

Receivables financing presents a compelling option for space entities with established customer bases. Launch service contracts, satellite data subscriptions and government procurement agreements can all, in principle, serve as collateral. For example, SpaceX’s use of United States government contracts to underpin US$250 million in leveraged loans from Goldman Sachs demonstrates the viability of this approach where the borrower can point to creditworthy counterparties and predictable cash flows.

However, challenges persist. Revenue in the space sector is often contingent on the successful completion of launches or satellite deployment, introducing an additional performance risk. It may be difficult for lenders to step in or appoint contractors to perform on behalf of the borrower. Government counterparties may also require consent before receivables can be assigned, and concentration risk is often acute, as many space entities derive the bulk of their revenue from a small number of contracts. These are, however, not dissimilar to some of the risks facing data centre funding.

Intellectual property financing

The high-technology nature of the space sector means that many entities hold valuable intellectual property portfolios, including patents in propulsion systems, satellite communications technology, data analytics algorithms and software. Intellectual property financing, where these assets serve as collateral for debt, is an emerging but complex field.

Key challenges include the difficulty of accurately valuing intellectual property, particularly in a rapidly evolving technological landscape where obsolescence risk is material. Enforceability across multiple jurisdictions adds further complexity, as does the question of how effectively a financier could realise value from specialised space technology IP in a default scenario.

Government funding

Australian Government support has been channelled through a range of programs. However, the landscape is fragmented and many programs have now closed.

The Australian Space Agency (ASA) has distributed approximately A$171 million in grants since its establishment in 2018. The most significant of these is the Moon to Mars Initiative, allocating A$150 million over five years, with A$9 million shared among 12 projects in March 2024. The Modern Manufacturing Initiative provided A$20 million to Fleet Space Technologies, and the Industry Growth Program, totalling A$392.4 million across all sectors,  awarded A$5 million to Gilmour Space.

The National Reconstruction Fund Corporation (NRFC) has made equity investments including A$75 million in Gilmour Space Technologies, A$10 million in Southern Launch, and A$25 million in Myriota. Other programs such as the Australian Space Discovery Centre, the R&D Tax Incentive, and the SmartSat Cooperative Research Centre provide additional support. The Australian Space Concession Program offers further avenues for international collaboration.

Despite these commitments, significant concerns remain. Many grant programs are now closed and were, while open, highly prescriptive in their eligibility criteria, with conflicting constraints blocking applicants for one or more of the available grants.

Despite the Australian Government’s push to include the space sector as a focus area under the Economic Accelerator Program, the ASA has suffered a cumulative 70% budget cut, leaving a significant shortfall in available government funding. At this stage, it is unclear whether further government funding opportunities will materialise. Until there is greater alignment between the government's stated ambitions for the space sector and the funding commitments needed to realise them, space industry entities will continue to have to look beyond government support, and increasingly towards private capital and debt financing, to bridge the gap.

Challenges facing lenders

Legal uncertainty: PPSA and lex situs

The Personal Property Securities Act 2009 (Cth) (PPSA) provides the framework for registering security interests in personal property. While space equipment can in principle be registered on the Personal Property Securities Register, the PPSA presupposes that property is located within a recognisable jurisdiction. Section 238 of the PPSA determines the governing law for security interests by reference to the location of the goods. The exception in section 238(3) for goods used in multiple jurisdictions has been narrowly interpreted and has never been judicially considered in respect of space objects. There is no recognised lex situs – no governing law based on location – for assets in orbit, leaving lenders without a settled legal framework for enforcing their security interests or taking control of assets in orbit.

Licensing and regulatory complexity

Space operations in Australia are governed by the Space (Launches and Returns) Act 2018 (Cth), which requires licences for launch facilities, Australian launch permits, and related authorisations. Whether these licences constitute personal property capable of supporting a security interest under the PPSA remains uncertain. Moreover, sections 27(f) and 37(f) provide that no compensation is payable if a licence is transferred by the Minister, raising significant concerns about the bankability of licence-backed security.

Beyond domestic regulation, space entities must navigate multi-jurisdictional licensing requirements, the International Traffic in Arms Regulations (ITAR) in the United States, and Australia’s own Defence Trade Controls Act 2012 (Cth). This regulatory complexity adds materially to the cost and risk profile of space transactions.

Insurance, technology and revenue risk

The space insurance market has become increasingly volatile. In 2023, total claims reached US$883 million against premiums of just US$500 million, with several major insurers exiting the market following significant losses in 2019. Premiums can reach as high as one-third of the cost of a satellite, materially affecting project economics.

Technology and operational risks remain elevated. Development timelines are long, capital expenditure requirements are substantial, and the consequences of failure can be total. The bankruptcies of Kleos Space and Virgin Orbit in 2023, together with Ligado Networks’ US$7.8 billion in accumulated debt, serve as cautionary examples. For start-ups in particular, the absence of long-term revenue contracts makes conventional project finance modelling extremely difficult.

The Cape Town Convention Space Assets Protocol

The Space Assets Protocol to the Cape Town Convention on International Interests in Mobile Equipment (Protocol) was adopted in Berlin on 9 March 2012. It seeks to establish a uniform international legal regime for security interests in space assets, defined as man-made, uniquely identifiable objects in or designed for use in outer space.

The Protocol intends to:

• create an international registry for space asset interests; 
   
• establish uniform rules for the priority and enforcement of security interests; and 
   
• provide insolvency protections through two alternative regimes, either to surrender the asset within a specified waiting period, or allow the debtor to elect to cure the default or surrender the asset. 

Public service safeguards, including standstill periods of three to six months, would protect essential space-based services from abrupt disruption. Importantly, the Protocol preserves the sovereign powers of contracting states over matters such as licensing, orbital positions and export controls.

The Protocol is not yet in force. It requires ten ratifications and the establishment of an operational international registry. As at September 2026, the Protocol has been signed by Burkina Faso, Germany, Saudi Arabia and Zimbabwe, and acceded to by Paraguay and the Democratic Republic of the Congo. Australia has not signed. If the Protocol were to be brought into force, it would provide the legal certainty and uniform enforcement framework that the sector currently lacks. Australia’s decision on whether to ratify the Protocol will be an important signal of the nation’s commitment to facilitating private capital flows into its growing space industry.

Going where no financier has gone before 

Australia’s space ambitions are unmistakable, but the financing needed to realise them remains a work in progress. Equity investment continues to dominate capital raising in the sector, both globally and domestically, while debt financing remains nascent, accounting for only a small fraction of funds deployed. As the sector matures and revenue-generating operations become more common, the range of available debt structures will grow, each with their challenges, whether arising from the illiquidity of orbital assets, the remoteness of launch sites, the performance risk inherent in space-derived revenue, or the difficulty of valuing specialised intellectual property.

These structural limitations are compounded by the broader challenges facing lenders, that will require a few brave souls to venture forth to go where no financier has gone before in order to unlock the incredible growth potential of the space industry.