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E 778 — Isar in Orbit, Nyx for ESA: Deep Tech's Stack · Deep Tech Germany – AI, Robotics & Frontier Innovation by Startuprad.io™

• 0:00
  On September 5th, a German rocket reached orbit from Norway.
• 0:04
  3 days later, a French AI company raised €3
• 0:08
  billion and a German space company
• 0:11
  raised $450 million. 2 days
• 0:15
  after that, the European Space Agency signed that same
• 0:19
  space company to a contract worth up to
• 0:22
  €760 million. And yet,
• 0:26
  according to KfW, more than 3 quarters of the venture capital
• 0:30
  invested in German startups in the first quarter
• 0:34
  came from abroad. Money, customers, ownership.
• 0:38
  Europe moved on 2 of the 3 this
• 0:42
  month. I call it the sovereign stack.
• 0:56
  Hello and welcome everybody. This is Startuprad.io,
• 1:00
  episode number 778.
• 1:04
  I'm Joe Menninger, joining you from Frankfurt am Main. This is our
• 1:08
  monthly startup news for Germany, Austria, and Switzerland,
• 1:11
  covering everything from August 28th to September
• 1:15
  20th, 2026. As always, what we
• 1:19
  don't cover in this episode will be part of the next episode.
• 1:23
  In our last episode, we called August the concentration economy—
• 1:27
  more money, fewer deals, and a funding market that
• 1:31
  narrows at the bottom. This month, the
• 1:35
  concentrated top got 2 new partners:
• 1:39
  public-private growth capital and public
• 1:42
  customers. Here's my thesis for September.
• 1:46
  Europe is assembling a sovereign stack. Layer 1 is
• 1:49
  capital. Layer 2 is customers. Layer 3 is
• 1:53
  ownership. In September, Europe moved on capital.
• 1:57
  And on customers. Ownership remained a trade-off for money
• 2:01
  by scale and market access, and it makes a share
• 2:05
  of the upside in return. If you think I'm wrong about that
• 2:09
  trade-off, tell me in the comments, because by the end
• 2:13
  of this episode I'll argue both sides of it.
• 2:17
  First, the scorecard. We keep our
• 2:20
  predictions on record, so let me check on them. In June,
• 2:24
  we predicted Isar Aerospace would reach orbit by December
• 2:28
  31st. On September 5th, check, they did
• 2:32
  it. So that one's confirmed. In August, we predicted
• 2:35
  that at least 3 competing Altersvorsorgedepot products
• 2:40
  by the first quarter of 2027. A comparison portal
• 2:43
  now lists more than 12 providers that have announced one,
• 2:47
  and Trade Republic had confirmed back in April. So yes,
• 2:52
  this is also met, but honestly, that was too easy to call. We should not
• 2:55
  get credit for predicting something that has already happened.
• 2:59
  Still open, Helsing at $25 billion.
• 3:04
  2 more German defense unicorns by year end and €5
• 3:08
  billion pension pipeline. The quarterly deal count
• 3:11
  below 150 and distress at 2 of this
• 3:15
  year's 10 new German unicorns. We keep tracking all
• 3:19
  of them. Let's go a little bit into the macro overview.
• 3:23
  The Sovereign Stack defined. Let
• 3:27
  me define the Sovereign Stack because we'll use it all
• 3:31
  episode. Sovereignty for a technology company
• 3:35
  is not a flag on a headquarters building. It is a
• 3:38
  stack of 3 layers. Layer 1 is capital. Who
• 3:42
  funds the company when it needs to scale? Layer 2 is
• 3:46
  customers— who buys first and commits to anchor
• 3:50
  demand before the product is proven.
• 3:54
  Layer 3 is ownership— who holds the equity and who
• 3:57
  collects the upside when it works. A country can be
• 4:01
  strong on one layer and weak on another. The mistake is to
• 4:05
  celebrate a strong layer as if it settled the whole
• 4:08
  question. Our read number
• 4:12
  2: capital moved up the stage. What
• 4:15
  happened in the same week? The EU scaled—
• 4:19
  the EU-backed scale-up Europe Fund, sorry, managed by
• 4:23
  EQT, co-led 2 of the largest European funding
• 4:26
  rounds of the year: Mistral and the Exploration Company.
• 4:31
  Why it matters structurally: Europe has always been good at
• 4:35
  seed money and weak at the €100 million rounds. According
• 4:39
  to Dealroom, European pension funds and insurers committed about
• 4:42
  $15.5 billion to European venture
• 4:46
  funds over 10 years. That is roughly 0.1%
• 4:50
  of a $15 trillion pool. What people are
• 4:54
  getting wrong: this did not start in September. The
• 4:57
  Scaleup Europe Fund made its first investment in August,
• 5:01
  co-leading a €1 billion round in
• 5:04
  September is when the pattern
• 5:08
  became repeatable, and at home, the German government announced the next
• 5:11
  phase of the WIN initiative, aiming to mobilize
• 5:15
  more than €25 billion by 2030.
• 5:19
  More on that in a moment.
• 5:23
  Customers became the lever. What happened? The
• 5:26
  European Space Agency signed a contract with the exploration
• 5:30
  company worth up to €760 million.
• 5:35
  Why it matters: a customer contract does something
• 5:38
  equity cannot— it de-risks the product.
• 5:44
  ESA's Director General said the deal shows how ESA
• 5:48
  can act as an anchor customer.
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  Who benefits? Of course, the companies that convert public procurement
• 5:55
  into private fundraising. Who loses? Companies that raised equity
• 6:00
  without a buyer in sight. Read number 4, the
• 6:03
  ownership is the trade-off. What happened? KfW
• 6:07
  Research reported that in the first quarter of 2026, more than
• 6:11
  3 quarters of the venture capital invested in German startups
• 6:14
  came from abroad. In the second quarter— in the 2
• 6:18
  quarters before, it was about 2 thirds. US
• 6:21
  investors alone supplied 34%. According
• 6:25
  to Dealroom, the same holds at European scale.
• 6:28
  58% of the capital in rounds above
• 6:32
  €100 million since 2020 came from outside of Europe,
• 6:36
  41% of the total from the US. What people are getting wrong:
• 6:41
  foreign money is not automatic foreign control.
• 6:45
  Mistral has Korean, American, and European investors and is still a
• 6:49
  European company. The real test is governance and
• 6:53
  anchor demand. Not the passport of every shareholder. This is
• 6:57
  the capital structure dynamic we analyzed in our Scale-Up Gap series
• 7:01
  in Capital Architecture in June and Capital Gravity earlier
• 7:05
  this month. The links are in the show notes. So
• 7:08
  let's talk startups. Number 1, of course, Isar
• 7:12
  Aerospace reached orbit. On September 5th,
• 7:16
  2026, Isar Aerospace's Spectrum rocket reached
• 7:20
  orbit from, uh,
• 7:24
  Andøya— sorry for butchering the name— spaceport in Norway.
• 7:28
  Uh, Andøya? Andøya? Ah, let
• 7:32
  me know in the comments what's the right pronunciation. I'm sorry, I don't speak Norwegian.
• 7:36
  The European Space Agency called it the first launch to orbit from
• 7:40
  continental Europe. This is the build layer of
• 7:43
  sovereignty, and it's working. A company from Munich area now has a
• 7:47
  rocket that can reach orbit. We covered what the orbit
• 7:51
  means for its value in our Unicorn Atlas profile
• 7:55
  earlier this month. The short version: reaching orbit answers the
• 7:58
  technical question. The commercial question— launch
• 8:02
  cadence and customers— come next.
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  The Exploration Company. 48 hours, 2 layers.
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  On September 8th, The Exploration Company raised
• 8:15
  $450 million in a Series C. The
• 8:19
  round was co-led by Bessemer Venture Partners,
• 8:22
  Atomico, and the EQT-managed
• 8:26
  Scaleup Europe Fund. On September 10th, the European Space
• 8:30
  Agency signed a contract with the same company worth up to
• 8:34
  €760 million for its
• 8:37
  Nyx cargo capsule. That is the
• 8:41
  second layer of the sovereignty stack, capital and
• 8:45
  customers, in 48 hours. Now, the fine print, because it
• 8:48
  matters. Of the €760 million, only
• 8:52
  €310 million is firm for the
• 8:55
  demonstration mission. The other €450 million covers
• 8:59
  2 optional missions that ESA still has to confirm.
• 9:03
  And ESA says The Exploration Company secured 40%
• 9:07
  of the financing for the demonstration from private investors.
• 9:11
  ESA covered the other 60%. Another
• 9:15
  correction to a common framing: the
• 9:19
  exploration company is headquartered in Germany, with its parent company
• 9:22
  registered in Munich and major operations in France
• 9:26
  and Italy. It's a German-headquartered European space company.
• 9:31
  And it's not alone. On September 2nd, HyImpulse, the
• 9:35
  launch company from the Heilbronn area, Raised
• 9:39
  more than €50 million with Bayern Kapital and the German
• 9:42
  Aerospace Center among the new investors. ESA, the
• 9:46
  exploration company HyImpulse— Germany now has a
• 9:49
  space cluster with capital, public customers,
• 9:53
  and public co-investors in the same month.
• 9:59
  Segment number 3, Mistral and the Scaleup Europe Fund. On
• 10:02
  September 8th, Mistral raised €3 billion
• 10:07
  in a Series D at a post-money valuation above €21
• 10:11
  billion. Samsung led the round. The Scaleup
• 10:15
  Europe Fund and PSG Equity were co-leads.
• 10:18
  Mistral is French, not from Germany, Austria, or Switzerland,
• 10:22
  but it mattered for every founder listening because
• 10:26
  it shows where Europe's new growth capital sits at the
• 10:30
  table as a co-lead next to Korean industrial
• 10:33
  giant. Look at the investor mix. Europe is not
• 10:37
  replacing foreign capital, it is sitting next to it, and
• 10:40
  that's the ownership trade-off in a single cap table.
• 10:46
  WIN, €25 billion, and the foreign capital question.
• 10:50
  On September 17th, the German government and KfW started the
• 10:54
  next phase of the WIN initiative. The goal is to mobilize
• 10:58
  more than €25 billion by 2030, up
• 11:01
  from the original target of €12 billion.
• 11:05
  Handelsblatt reports that for the first time, the initiative was
• 11:08
  specifically called Pension Funds, Foundations,
• 11:12
  and Vorsorgeeinrichtungen, meaning pension funds for
• 11:15
  professionals— think lawyers,
• 11:19
  dentists, doctors, notaries, and so on and so forth.
• 11:23
  The professional pension schemes. Um, now
• 11:27
  the reality check. According to KfW, €2.64
• 11:31
  billion of the original commitments have been invested by the end of
• 11:35
  2025. So the target is to mobilize, not
• 11:39
  money already in the market. Why does this matter?
• 11:42
  Because of the KfW numbers from the first quarter. More than 3
• 11:46
  quarters of venture capital invested in German startups came from
• 11:50
  abroad. WIN is Germany's attempt to fill
• 11:54
  layer 3 of the sovereignty stack— ownership— with German
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  pension money instead of foreign funds. The question is not whether
• 12:01
  €25 billion is enough, it is whether German pension
• 12:04
  funds will actually sign. Meanwhile, the concentration from
• 12:08
  last month continues. According to Sifted, just 3
• 12:12
  deals account for almost half of all German
• 12:15
  venture funding so far this year. A quick
• 12:19
  word on how we work. If you run a company or a fund
• 12:23
  that wants to reach founders, investors, corporate decision makers in Germany,
• 12:27
  Austria, and Switzerland and across Europe, our growth
• 12:30
  partnership at startuprad.io/become-a-partner.
• 12:42
  Stay with me because next I will show you why a German
• 12:46
  AI company's new ownership may matter less than
• 12:49
  its cloud contract. Segment number 5,
• 12:53
  Cohere and Aleph Alpha sign. On September
• 12:57
  16th, Cohere and Aleph Alpha signed a definitive
• 13:01
  business combination agreement. This formalizes the combination
• 13:05
  they first announced already back in April. The combined company
• 13:09
  will operate as Cohere with headquarters in Berlin and
• 13:13
  Toronto, and Aleph Alpha's Heidelberg site focused
• 13:17
  on research. The deal still needs regulatory approval
• 13:21
  and is expected to close later this year. On ownership,
• 13:24
  Handelsblatt reported in April, citing insiders, that
• 13:28
  Cohere shareholders were set to hold about
• 13:32
  90% of the combined company and Aleph Alpha shareholders
• 13:36
  about 10%. The companies have not published a split.
• 13:41
  Back in April, we wrote on Startuprad.io that this merger is a
• 13:44
  strategy. Not a surrender. That still holds.
• 13:48
  September shows the price. Here is the part that most coverage
• 13:51
  skips. The combined company will deliver sovereign AI
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  on STACKIT, the cloud service of Schwarz Group, the owner of Lidl and
• 13:59
  Kaufland, 2 German retail giants. So Germany's influence
• 14:03
  over this company runs through layer 2 and the infrastructure
• 14:07
  underneath as customers and cloud partners,
• 14:10
  not mainly through layer 3, the cap table. This is a legitimate
• 14:14
  model. It is also a choice, and it should be made with open
• 14:18
  eyes. Segment number 6:
• 14:21
  Quantum Systems and the American Door. On August
• 14:25
  31st, Reuters reported that Quantum Systems, the
• 14:29
  German drone maker, got into the US market with help from
• 14:32
  In-Q-Tel, an investment arm linked to the CIA.
• 14:36
  Co-CEO Sven Kruck told Reuters that US investors,
• 14:39
  including In-Q-Tel, helped open doors in Washington,
• 14:43
  D.C. The size of In-Q-Tel's stake and its
• 14:47
  rights have not been disclosed. Now, the easy reading
• 14:50
  is that a German defense champion took American intelligence
• 14:54
  money. The better reading is that it bought access to the
• 14:58
  larger defense procurement— to the largest defense procurement market
• 15:02
  in the world. This is the strongest argument against my own
• 15:06
  thesis. For a company that needs global customers,
• 15:10
  foreign capital is not a loss of sovereignty, it's the entry
• 15:13
  ticket. Both can be true. The ticket
• 15:17
  is worth buying, you just need to know what you are paying
• 15:21
  with. The lightning round. Nvidia and
• 15:25
  Hugging Face. On September 3rd, Nvidia announced that it will acquire Hugging
• 15:29
  Face for $12.93 billion. The
• 15:33
  deal is expected to close in the first half of next year. The
• 15:36
  most important open model platform in the world will be owned by the world's most
• 15:40
  important chipmaker. Layer 3 ownership in one
• 15:44
  headline. Proxima Fusion, the Munich-based fusion company,
• 15:48
  won the startup category of the Deutscher Gründerpreis, meaning German
• 15:51
  Founders Award, on September 8th. It's a spin-off of the Max Planck
• 15:55
  Institute for Plasma Physics and a reminder that the
• 15:59
  next building layer is energy. Concentration.
• 16:02
  According to Sifted, 3 deals accounted for almost half
• 16:06
  of German venture funding in 2026. Keep that in mind every
• 16:10
  time someone puts a record total. Operator and
• 16:13
  investor takeaway: if you were a founder in Germany, Austria, or
• 16:17
  Switzerland right now, I would map my own sovereignty
• 16:21
  stack before my next round. Who funds me at scale?
• 16:25
  Who is my anchor customer? And who will own the upside?
• 16:30
  If you sell to governments, agencies, or regulated industries, go
• 16:33
  after the anchor customer before the mega round. The
• 16:37
  exploration company shows the order that works. The
• 16:40
  contract makes the equity cheaper. If
• 16:44
  I were an investor, I would watch the
• 16:47
  co-lead seat. Public-private funds like
• 16:51
  the Scaleup Europe Fund are now taking co-lead positions in the
• 16:55
  largest rounds. That changes syndication dynamics
• 16:59
  and it changes who sets the terms. And I
• 17:02
  would ask one question in every foreign-led round:
• 17:07
  does this investor bring customers and market access, or only
• 17:10
  capital? If only capital, the ownership trade-off is
• 17:14
  expensive. What to watch next: 2
• 17:18
  things to watch over the next 30 to 90-ish days. First,
• 17:22
  WIN commitments. Watch for the first named German pension funds and
• 17:25
  foundations to commit— names and amounts, not targets.
• 17:29
  Second, regulatory approval for Cohere and Aleph
• 17:33
  Alpha and the first German public-sector contracts that follow.
• 17:37
  So let's get to the close. So here's the September read:
• 17:42
  Europe is strengthening the capital layer, with the Scaleup Europe Fund
• 17:46
  co-leading major rounds and WIN aiming to mobilize more
• 17:49
  domestic capital. Europe is also strengthening the
• 17:53
  customer layer, with ESA signing an
• 17:57
  anchor contract worth up to €760 million.
• 18:01
  And ownership is a trade-off. More than 3 quarters of the venture money in German
• 18:05
  startups in the first quarter came from abroad. 3
• 18:08
  predictions on record, of course. Prediction number 1: the Scaleup
• 18:12
  Europe Fund will co-lead at least 2 more European rounds above
• 18:16
  €100 million by March 31st, '27, and at
• 18:20
  least one of them in Germany, Austria, or Switzerland. Uh,
• 18:24
  let's say 65%. Prediction number 2: By
• 18:27
  the end of '27, WIN will publicly confirm
• 18:31
  less than €5 billion of new institutional commitments. I
• 18:35
  put this at around 60%.
• 18:41
  Prediction number 3: ESA will exercise at least one
• 18:44
  of the 2 optional Nyx missions before
• 18:48
  the demonstration flight. I put that at, say, 55%.
• 18:55
  We will score all of them here as we did with ESA today.
• 18:59
  Next month's news covers September 21st to the—
• 19:02
  to the end of October. If this
• 19:06
  episode helped, send this to one founder still operating on last
• 19:10
  cycle assumptions and subscribe and rate and review wherever you're
• 19:13
  listening. The full blog post with all our sources is on Startuprad.io.
• 19:18
  Europe has learned to write the check
• 19:22
  and to sign the contract. The next test is whether it decides
• 19:26
  what it wants to own.