I. Tracking
1. Japan is the clear leader in the current wave of commerical lunar missions
Three commercial missions are headed to the Moon in early 2025, with the latest one launching being Intuitive Machine’s IM-2 mission. Launched before it was another American startup called Firefly’s Blue Ghost mission, and Japanese iSpace’s HAKUTO-R mission.
The standout from these missions aren’t necessarily the companies, but a country: Japan. While Japan’s iSpace mission is enroute, what is important to note is how the country’s aerospace industry has managed to remain a relevant player in the domain that is more and more financed by NASA and other US government contracts. Aboard the Intuitive Machine missions is a Japanese rover, and on the HAKUTO-R mission, iSpace also included its own European-built rover (built by a subsidiary of iSpace based in Europe).
Why this is relevant? While the Japanese company has followed similar processes as its American counterparts, mainly, asking their national government for money, they also managed to earn European government funding, allowing the entity to diversify its government sources, while also remaining cognizant of the geopolitical realities of operating in space. The image of Japan is further expanding its lunar geopolitical reach with the inclusion of a Japanese rover built by Japanese firm Dymon hitching a ride on the American IM-2 mission. In essence, Japan has managed to introduce itself as a lunar landing and roving leader across Europe and US space industries through its own startup ecosystem.
For iSpace, the company further expanded its financial independence by partnering with famous media conglomerate Bandai Namco for financial support.
While IM has a partnership with Columbia clothes maker, both IM and Firefly lag in potential non-government finances compared to iSpace. The two American companies are financed almost entirely by NASA, either directly, or through a separate private company developing a payload that is itself financed by NASA.
Of course, NASA and its fellow agencies are depending on commercial solutions, but there will reach a point where three (or more, given other startups spooling up capabilities) companies are not needed to all go to the Moon. iSpace and Japan are currently writing the book on how to prepare for that day when NASA contracts start to slow down, and companies want to remain viable.
For now, Japan enjoys a lead in its ability to bridge national skepticism between various countries, and there's more opportunities for it to continue. Hint: it's in LEO and could use a neutral player.
2. Why startups are shaping the future of military technology, and the challenges that exist for the shotgun marriage between government needs and startup financing
While AI has gotten the headlines lately, especially the current geopolitical climate with the increasing antagonistic rivalry between the US and China, the integration of these technologies to space operations and defense has had an impact on space businesses. In fact, the global AI market in aerospace and defense is expected to grow significantly, reaching $65 billion by 2034, putting Silicon Valley squarely in line for lucrative defense contracts that the US government can’t really afford to ignore.
A notable example of this transformation is the rise of Palantir Technologies, an AI company that now surpasses the combined valuation of traditional defense giants like Lockheed Martin and Northrop Grumman. The modernization of armed forces is increasingly focused on software, drones, and robots, rather than traditional military equipment.
This demonstrates that while the primes struggle to keep up, startups also have significant choices to make between which markets to satisfy; defense, and remain more and more within their national borders, or eschew defense contracts for broad international appeal, if they can compete.
This trend exists also in Europe, where investments in defense technologies are rising significantly due to tensions with Russia. The defense sector is becoming one of the most dynamic in terms of venture capital, and funding for this area could reach $5.2 billion by 2024.
As we continue to follow various startups make their pitch to deep government pockets (and getting deeper, as the Trump-Musk alliance destroys in-government capabilities, alongside with the new American policy to sideline allies that would have happily purchased in US solutions), investors should focus on three key areas: companies combining AI and defense, semiconductor manufacturers, and emerging tech startups in defense. These sectors represent an investment opportunity in a new revolution in defense technologies."
II. Immediate Awareness
1 Magdrive has secured $10.5 million in seed funding to advance its high-thrust electric propulsion systems for satellites, coming one step closer to allowing significantly more efficient propulsion in space and the ability to reposition spacecraft more often.
2 Not to fall behind its American counterparts given the current presidential administration (see below), Germany's defense procurement agency contracted POLARIS Spaceplanes to design a hypersonic research vehicle, which will serve as a testbed for defense applications and satellite launches.
3 Japan's Astroscale successfully approached and performed a 360° fly-around of a derelict H-IIA rocket body in LEO, demonstrating the first time a commercial company conducts complex RPO with non-cooperative objects, paving the way for future defense contracts and potential space clean-up testing efforts.
4 The U.S. Air Force plans to conduct an environmental review for two landing pads to be built-out on Johnston Island, a first step to develop the Rocket Cargo program, aiming to test the idea of cargo delivery using rockets and reentry capsules.
5 Firefly Aerospace's Blue Ghost 1 successfully landed on the moon on March 2, 2025, delivering various NASA payloads for the US space agency and proving out technology for its future ESA and NASA contracted missions.
6 The Space Force Association has strongly criticized a Mitchell Institute report suggesting the Space Force focuses too much on "competitive endurance" rather than defeating adversaries, playing out a proxy fight that is sure to become public between the USSF and the Trump White House.
7 Varda Space Industries successfully landed its W-2 reentry capsule in Australia on February 28, 2025, providing data for military hypersonic research and NASA's thermal protection systems to further fund its much-needed in-space manufacturing reentry profiles.
III. Quote of the Week
"If the independent space sector wants to push back effectively, it must adopt more aggressive and unconventional strategies"
Rick Liebling, President of VSC, in response to the Trump-Musk duopoly spreading blatantly false claims about space rivals.