ESA funding for the space business

When thinking about space technology, spectacular rocket launches, probes exploring the mysteries of outer space, lunar missions, or projects aimed at colonising Mars are probably the first things that come to mind. But for humanity’s survival, monitoring our own planet from space is becoming increasingly important.

Space technology is no longer the exclusive domain of large space agencies like NASA and ESA or corporate giants like SpaceX. Finland’s space era began in 2017 with the launch of Aalto-1, a student-led satellite project. Since then, the country has become home to dozens of space technology companies, such as Iceye and Kuva Space, which have gained international recognition as satellite operators.

‘The space sector in Finland is growing rapidly, and there is still huge potential, particularly in developing data analytics and geospatial technologies,’ says Miika Kostamo, project manager of the newly established ESA Phi-Lab Finland.

This role brings together many of Kostamo’s passions. With a background in land surveying, extensive experience in the geospatial sector, studies in international business, and involvement in a company that expanded into global markets, he sees ESA’s innovation programme as a critical resource for Finnish space entrepreneurs. ‘Now is our chance to make a mark,’ he says.

ESA’s interest signals recognition

Phi-Lab Finland operates out of the Aalto Startup Center accelerator and collaborates with the Finnish Meteorological Institute, the National Land Survey of Finland’s Geospatial Research Institute FGI and the University of Vaasa. ESA BIC Finland, a business incubator supporting space startups, is also a partner.

The innovation funding offered by Phi-Lab can be used for research (30%) but is primarily focused on commercialisation (70%), such as identifying customer needs and acquiring potential clients. The minimum funding amount is €200,000. The programme also provides consulting support, offering 110 hours of expert assistance for research and another 110 hours for business development.

Companies receiving the funding do not have to be startups. Small and medium-sized enterprises (SMEs) must contribute 20% of the project’s financing, while large companies need to cover 50%. ‘In practice, even major corporations can apply for funding from ESA Phi-Lab—there are no age or size restrictions,’ says Kostamo.

To qualify for funding, a company must be based in Finland or demonstrate that the project’s benefits will remain in Finland. This ensures that the funding fosters national space innovation, new business opportunities and the development of expertise.

‘Distributing funding is our key task, but building an ecosystem for the space industry and sharing knowledge is just as essential.’

Bridging knowledge gaps in Finland’s space sector

According to Kostamo, the biggest barrier to growing Finland’s space industry is not a lack of talent but a lack of awareness. Finnish companies have limited understanding of international networks and customer needs, while elsewhere in the world, Finland’s high-quality expertise remains largely unknown.  

‘Many space companies are engineering-driven, so they could benefit more from Aalto’s strengths in design and business.’

Large space organisations like NASA and ESA are not looking for single, isolated solutions but rather surveying the full range of available expertise. ‘We need to be able to communicate that Otaniemi is home to a hundred top AI researchers, quantum computing expertise, geoinformatics specialists and world-class space technology experts. We must present a comprehensive package to potential partners,’ says Kostamo.

Kostamo believes that ESA Phi-Lab is a valuable asset for the entire university. ‘The fact that the European Space Agency has operations in Finland is a brand and communication advantage in itself—it can also attract interest from other potential partners.’

Coping with climate change drives space technology development

Phi-Lab can fund the development of sensors and satellites, as well as the analysis of data from positioning and remote sensing satellites. While some radar satellites have both civilian and military applications, Kostamo emphasises that ESA is a civilian organisation, and Phi-Lab does not fund defense technology.

Instead, radar satellites can be used to monitor floods and changes in natural ecosystems. The international market potential is vast—Iceye, for example, provides real-time disaster monitoring services to governments and the insurance industry. In the event of a flood or other natural disaster, satellite data can quickly identify the affected areas,’ Kostamo explains.

Companies can also receive Phi-Lab funding to apply space technology to new industries. For instance, a forestry company might begin using space technology in agriculture. Satellites offer an unparalleled tool for monitoring environmental changes, such as glacier melt or the effects of the EU’s restoration regulations—challenges that are difficult to assess from the ground alone. Kuva Space’s hyperspectral imaging, for example, is helping to address these climate and food security issues.

Climate change is also shaping the development of space technology. 'Winemakers in Southern Europe are already analysing where Chardonnay will be grown 10 to 30 years from now,' says Kostamo. ‘Maybe Finland won’t be a prime wine region within this century, but parts of the Baltics are getting close. Satellite data enables the creation of predictive models that can determine these future trends.’

Finland launches the fourth ESA Phi-Lab

• Finland is one of the 23 member states of the European Space Agency (ESA) and contributes approximately €28 million to the organisation annually. This membership fee funds various programmes, such as the ESA BIC business incubator and ESA Phi-Lab, supporting the development of the space sector in member countries.

• ESA has granted €5.2 million for the six-year Phi-Lab Finland project, with €4.4 million allocated directly to supporting companies and projects. The total budget is €11 million, with additional funding from foundations such as KAUTE, Weisell and the Technology Industries of Finland Centennial Foundation.

• Finland’s ESA Phi-Lab is the fourth of its kind. The first was established in 2017 in Italy at ESA’s Earth Observation Center, followed by labs in Austria and Norway.

This article has been published in the Aalto University Magazine issue 35 (issuu.com), May 2025.