Today I want to continue talking about the real new space revolution. Once again, I want to point out that the players really driving the changes in the way we go to and work in space are not those that get most of the attention.
For instance, let’s talk about the government. We hear it often enough: government is the problem in space, not the solution. It moves too slowly. It distorts markets. It crowds out private investment.
There is truth in all of that. But it’s not even close to the whole truth. And it does a disservice to the people in government who have worked hard to make government relevant. Because of their efforts, in some important and underappreciated ways, government is getting it right — and those ways are quietly shaping the new space revolution.
I say this based on what I have seen and continue to see firsthand. Canada is where my experience is deepest. But I am also more than passingly familiar with the United States, where the scale is larger, but the pattern is familiar. Increasingly, that pattern is small companies taking root and growing with the help of government programs that do far more than just hand out cheques. They create discipline. They create milestones. And they end up helping companies create value. This is the impact that is often overlooked by new founders and also by investors seeking to get in on the revolution.
The overlooked contribution
In fact, many investors roll their eyes at public programs. They see them as inefficient at best, and harmful at worst. Government money is, in this view, an artificial subsidy propping up companies that couldn’t make it on their own.
And yet — in the last few years, some truly disruptive companies have gotten their start with “non-dilutive” funding from the public sector because investors could not initially appreciate their value. Then, those same investors have ended up writing cheques to these companies when their critical breakthroughs, made possible by precisely those government programs, have ended up making their value obvious.
In Canada, in particular the Canadian Space Agency’s (CSA) Space Technology Development Program (STDP) has helped a steady stream of startup companies grow and mature to the point where they are no longer startups but are established enterprises with solid global reputations for knowing what it takes to get to space and be successful there. In the United States, programs like SBIR (Small Business Innovation Research Programs) in all of its incarnations, are also playing the same role.
None of these programs are glamorous. They don’t produce dramatic launch photos or splashy contract announcements. They don’t dominate social media news cycles. What they do produce is capability — in founders, in teams, and in the companies themselves.
Non-dilutive capital — but not just the money
Obviously, the first and most obvious benefit of these programs is that they deliver what founders crave: capital that doesn’t dilute ownership.
For a young company, this matters enormously. Government funding keeps the lights on, pays engineers, and buys parts and allows founders to work at getting the business up and running instead of forcing the founder to spend fruitless hours pitching countless investors who are just not interested.
But here’s the part that too often gets overlooked: the money is only part of the benefit.
That is because getting access to this funding requires the company to bid on the work and win. Winning requires a project plan. Not just a back-of-the-napkin idea, but a clear description of what you’re going to do, why it matters, how much it will cost, and how you’ll know if it worked. That plan is reviewed, scored, and sometimes rejected. To win, you have to get good at explaining your value in concrete, technical, and financial terms.
And once you win, you have to execute. Reports are due. Milestones are tracked. Payments are tied to progress. The government isn’t buying hype; it’s buying results.
For many founders, this is the first time they are forced to work to that kind of external standard. Founders who are used to working with funds raised from investment ofte do not have this experience because investors typically invest in a story or “in the founder.” They don’t really invest in a plan and many of them are not familiar with the standards of execution that are necessary to succeed in the space business so pitching investors is very different than winning a government contract.
But learning to deliver on a government project is invaluable training. Because in space, you will always be working to a plan. Customers and partners will require it, and they will also want to know if you’re following it. So, the discipline that is required to win and execute government R&D contracts is not an academic exercise. It mirrors the reality of space markets.
Large space customers — whether they are defense agencies, satellite operators, or prime contractors — expect a company to execute with rigor. They won’t tolerate excuses or missed milestones. They don’t pay for enthusiasm. They pay on delivery and after they have run their own acceptance test. If you can’t learn to work in that business environment you won’t succeed in the space business.
So, government R&D funding programs are, in effect, a safe rehearsal space. If you stumble, the stakes are lower than if you had failed when you were part of a mission where failing to deliver has serious consequences for everyone else on the team. But the habits you build when executing a government project — documenting requirements, tracking deliverables, measuring outcomes — are the same ones you’ll need when you scale.
I’ve seen companies learn this lesson the hard way. A founder who bristles at filling out reports for a CSA project may not yet understand that their eventual customer will expect the same — only with more zeroes at the end of the contract. Better to learn it early.
Let’s be clear – government is not distorting the market. It is preparing companies for it.
It’s also important to realize that funded government projects are not arbitrary. They are carefully scoped to achieve something concrete: advance a technology readiness level, validate a simulation, demonstrate a subsystem in relevant conditions. Government procurement regulations require this.
But these achievements are also of great value to founders because they are exactly the kind of de-risking milestones investors look for.
I’ve watched this pattern repeat. A company applies for a government program to demonstrate, say, a prototype optical sensor. They build the prototype, test it in the field, and deliver the report. At the end of the project, the technical risk has been cut in half. The company’s story is no longer, “We think this will work.” It’s, “We’ve proven it works at this scale. Now we need capital to scale it up.”
That shift is often enough to unlock private investment. More than once, I’ve seen a financing round close within months of a government project ending. Investors who would never have funded a raw idea are willing to back a proven prototype.
In other words: the government absorbed risk that private capital would not. That isn’t distortion. That’s leverage.
At the end of the day programs like STDP and SBIR work because they create alignment. Government wants national capacity and to create a “vibrant commercial space sector.” Investors want to see “de-risking” events that materially affect a company’s value. And Founders need to build a reputation for discipline and the ability to contribute in a high-quality, high-value environment in order to attract customers and grow the business.
A project-based, competitive, milestone-driven funding program accomplishes all of these. The state gets its industrial base. Investors get companies with proven capability. Founders get focus learning the habits they’ll need to succeed – while advancing their technology and their product.
So, yes, I really am serious when it comes to the new space revolution. The government is here… and it’s here to help.
The real revolution in the business of space is not private rockets and venture hype. It is the quiet, disciplined work of public programs that train the next generation of space companies.
These programs don’t make headlines. They don’t move markets overnight. But they move founders along the learning curve that matters: how to plan, how to execute, how to deliver.
Investors may overlook this contribution. Founders know better. And if you look closely at the companies driving the new wave of space innovation, you’ll find that government’s hand is there — not leading the parade, but setting the rhythm.