The cost of putting a satellite into orbit has fallen dramatically since the days when space was a government-dominated industry as smaller, cheaper components and lower launch costs have fuelled the expansion of the commercial sector.

The price of getting a SpaceX Falcon 9 into low Earth orbit in 2022 was $62 million (£53.2m). NASA’s space shuttles, which were retired in 2011, cost an average of $1.6 billion per flight.

So cheaper, yes, but it’s still big money. With a global race on to capture market share, the question is whether companies in Scotland can overcome the country’s historic difficulties in accessing the scale-up funding required to compete on the world stage.

The industry is moving very fast and while the US remains at the epicentre of space activity, others are rapidly upping their game. According to researchers at McKinsey at least 70 countries now have established national space agencies, and 20 have estimated civil spending of more than $100m (£79.3m) per year.

“One of the challenges that we have and that the country has is can we move quickly enough to ensure that we develop the industry? If not it will move somewhere else,” SaxaVord chief executive Frank Strang warns.

“The reason there is a race is because all of these launch companies are chasing the same clients, and those satellite owners are looking to get their product into space as quickly as possible.”

The launch companies that are first to successfully deliver will be in high demand, and “without the satellites, you are not making money”.

Funding concerns are not limited to the big-ticket activities of building and launching rockets. Celestia chief executive Malachy Devlin worked in Scotland’s Silicon Glen at the time when it was thought that inward investment from big overseas semiconductor manufacturers would transform the country’s economy.

READ MORE: Scotland's space sector shoots for the final frontier

“My concern at the time was I wasn’t sure if Scotland could afford to do semiconductors,” he said. “It was a very specialised and very costly business. We could do certain parts of it, but were we really in control of it all?”

Mr Malachy says this has “always been the challenge” in Scotland: “Great companies, great ideas, but how do we thrust through that growth stage and get them into globally significant companies?”

There is a good deal of funding about in Scotland for start-ups in any sector because of the tax incentives available on these investment opportunities. Those tax incentives start dropping off as the companies reach higher valuations, which impacts the availability of scale-up funding.

Maureen Haverty of venture capital group Seraphim Space said this is the point where many in the UK industry turn to US investors who are keen to put their money into firms with big growth ambitions operating in very large markets. Achieving this usually requires selling into the dominant US market.

READ MORE: Scotland's space industry prepares to go into orbit

“That is something [where] UK companies have a huge advantage over most other countries that they don’t really take advantage of enough, in my opinion,” she said.

“The UK is a Five Eyes country. What that means is that the US is really quite happy to buy from UK companies, or happy to buy from US subsidiaries of UK companies, and they are happy to do intelligence sharing. So there is an advantage there that many are not capitalising on, but those that do, they will get money from international investors.”

In other developments the UK’s Mansion House reforms should free up more investment at home, with Chancellor Jeremy Hunt announcing in last month’s Autumn Statement that £250m will be made available to enable pension funds to invest in science and technology through the LIFTS initiative.

A typical pension fund in the US has 20-25% of its money deployed into venture capital. This comes with an increased risk that the money could be lost, but when successful tends to generate far higher returns than other types of investments. The strategy is to ensure that pension fund members have an adequate retirement.

In the UK and Europe pension funds commonly have just 1-2% of their money in venture capital investments. The Mansion House reforms are aiming to raise that to 5%.

“I think 5% is probably a good place to start because that would already be a really big increase in capital deployed into the sector,” Ms Haverty said. “Pension funds will need to learn how to allocate and how to choose good VC funds to invest in.

The Herald: Allan Cannon, Krucial TechnologiesAllan Cannon, Krucial Technologies (Image: Krucial)

“It [going up to] 25% overnight, mistakes would be made and you would probably end up with bad returns immediately, and it would be cancelled as a scheme. So let’s walk before we can run.”

Glasgow-based Krucial – which uses space technology to provide digital solutions to the energy, rail, aquaculture and agriculture sectors – secured £3m in follow-on funding earlier this year from a group of organisations that included Dubai-based space and technology investor AzurX. Krucial co-founder Allan Cannon said this money will be vital in opening up new markets.

“Moving forward, I’d like to see more VCs based in Scotland to really increase the growth capital available to ambitious founders,” he said. “We have an excellent angel syndicate network already, but in Krucial’s experience working with VCs is critical to achieving the kind of major international growth that will lead to Scotland’s next unicorn.”