25 years before the launch of Sputnik 1, a Czech lawyer named Vladimír Mandl wrote what would become the very foundation of space law.In a book titled “Das Weltraum-Recht: Ein Problem der Raumfahrt (Space Law: A Problem of Space Travel)”. This 50 page book was well ahead of many thinkers in regards to the question of how space itself should be governed, and therefore expressed some of the first ideas of the politics of space itself. It is certainly a fascinating read, and comparing this to what would eventually be signed in 1967 as the Outer Space Treaty gives us a picture of how space law has developed and the politics of space.
It is obvious to say that we are entering a new era of the space race. In previous decades it was a hard fought battle grounded in cold war rivalries. Now, the political dynamics driving the space race have changed drastically. Most notably, private corporations have come to become an ever salient matter in how governments plan on dominating an interstellar age. This article will be taking a look at some of the key political factors and trends driving the space race, and how startups and VC’s might be affected by the often unpredictable swirls of politics.
Written by: Tanay Sonawane
GREAT POWER COMPETITION
Great power competition has been a key element of technological innovation for hundreds of years. During both World War 1 and 2, great enhancements in both commercial and military technology were made possible because of a drive to compete with other powers. The initial space race of the 60’s and 70’s was one equally driven by a sense of great power competition - a rivalry between the US and the Soviet Union to be exact.
Now though in the 21st century we find that great power competition, especially in the domain of space, has changed drastically. Now, instead of two great blocs competing, the number of actors involved in this space race is significantly greater. As of 2023, 77 countries have space programs, 16 of them have launch capabilities. Therefore, more countries than ever before now have space as a tool to navigate and compete with each other. A result of this has been a notable increase in deal activity and funding to these startups.
With several significant conflicts occurring across the globe, and the challenge of needing even more accurate data, the power of space and spacetech has become ever present in discussions on economic growth.
In this regard, politics has been favourable for spacetech. Even with volatile economic conditions, governments’ demand for these ideas to keep up with this new space race, driven by this great power competition to maintain influence will still be ever present. Spacetech startups should take this in their stride and be confident that even in poor economic conditions, the demand for space tech innovation will remain.
THE CHALLENGES OF GOVERNMENT REASSERTION
However, with such demand and competition, some costs for startups have arisen. Governments’ efforts in due diligence with their vast space budgets has become far more rigorous. Concerns about national security and a need for startups to remain committed to the interests of the governments who fund them mean that the amount of red tape and scrutiny have become major challenges for founders to navigate. It also remains a challenge for VC’s to evaluate the potential ramifications of startups being confronted by government committees down the line as their operations broaden, and their impact on government interests increase.
For example, the UK government's purchase of Oneweb in 2020 shows a reassertion of state power in spacetech markets, with governments playing a closer role in funding startups as well as controlling their corporate mission and operations. Such a reassertion means that spacetech markets could be more geographically fragmented, and governments could play a role in limiting the ability of spacetech startups to sell their technology across geographical borders.
LEGAL UNKNOWNS
With such excitement around spacetech projects and VC’s as well as governments throwing money at such projects, notably the legal infrastructure around space law has remained rather neglected. Several major complications remain as commercially driven startups start taking a more front line role to our move to the stars, and governments have yet to iron out agreements to enable such a transition.
Liability: As multiparty operations increase, complications surrounding liability become more important. For example, the payload provider, launch vehicle, and launch site may all originate from different countries, creating complex interdependencies. The prevalence of “rideshare” agreements has intensified the need for an equitable approach to liability.
Current contractual practices for such operations typically follow a no-fault approach, which is unusual for procurement contracts and requires a complex framework of cross-waivers and indemnities, often counterintuitive to both nations and companies involved.
Intellectual Property: Space law’s international scope conflicts with territorial legal systems, such as those governing intellectual property (IP) rights. As more technologies and products are developed in space, challenges arise in determining a legal territorial nexus, identifying applicable domestic laws, and preventing forum shopping in the absence of clear legal standards.
Taxation: The ambiguous nature of property rights under international space law raises concerns about potential double or even triple taxation.
International Cooperation and Competition: Law firms are increasingly forming specialised teams to address emerging cross-border legal challenges and to construct a sustainable legal architecture for space investment. This will likely build on foundational international treaties from the 1960s. The U.S., through the multinational Artemis program, has pioneered new forms of cooperation between governments and private sector entities, blending public and private partnerships. This is certainly a step in the right direction, but far more work needs to be done to produce the right frameworks for international cooperation that will truly allow this industry to flourish.
Other countries, particularly China and India, are also establishing unique legal frameworks, as they recognise that building robust national space regimes—covering aspects like liability and rights beyond Earth—may allow them to shape the legal landscape of space globally. India, for instance, mandates state ownership of IP developed in space, while China’s draft bill favours high state control over space activities. Additionally, China’s construction of launch facilities in Djibouti, a non-signatory of major space treaties, enables it to explore legal interpretations that it might otherwise be restricted from pursuing.
Although much of existing space law was established by consensus, divisions among nations in international settings are becoming increasingly apparent.
Such divisions are fundamentally political in nature, creating a complex landscape for VCs and startups to navigate. While these challenges can partly be attributed to the nascent stage of the spacetech market, the competitive nature of space exploration makes it crucial to consider which frameworks will best facilitate cross-border cooperation in the future. Startups and VCs alike should be more proactive in advocating for consistency in space law, yet must exercise patience. A purely reactive approach to this shifting landscape could prove detrimental; instead, startups need to identify the regulatory frameworks that currently support their goals while staying informed about the evolving political dynamics that shape global space cooperation.
For VCs, their role as advocates for clearer frameworks is equally important. However, they should also be mindful of how political shifts may impact the ventures they invest in, as changes in international space policies can directly affect the operational and legal landscapes in which their portfolio companies operate.
As we stand on the cusp of a new era in the space race, the landscape for spacetech startups and VCs is being fundamentally shaped by complex political forces. Unlike the Cold War space race, today’s competition involves a greater number of players, including not only nations but also private corporations vying for technological and economic supremacy beyond Earth. While this competition fuels rapid innovation and investment, it also brings substantial challenges, particularly around national security, government regulation, and the lack of a cohesive international legal framework.
Startups and VCs venturing into spacetech must recognize that political dynamics can either facilitate or constrain their success. The uncertainties around liability, intellectual property, and taxation require careful navigation, as does the increased scrutiny from governments looking to secure their national interests in space. Although initiatives like the Artemis Accords signal progress toward a shared vision, divergent national policies—especially from major players like China and India—underscore the geopolitical complexities of space.
For spacetech ventures, the path forward will require a proactive approach to understanding and engaging with these political and regulatory dynamics. Startups and VCs must stay informed, strategically advocate for clearer and more consistent frameworks, and prepare for potential shifts in international policies that could impact their operations. With patience and an informed strategy, the spacetech ecosystem can continue to thrive within this politically charged environment, contributing to a future where space becomes an accessible and stable domain for innovation and exploration.
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