A Spanish satellite startup that once built spacecraft for under $30,000 is now chasing defense contracts in Tokyo, betting that a rapid transition from tiny experimental satellites to larger, more capable platforms can open doors to government customers hungry for sovereign space capabilities.
FOSSA Systems has reportedly partnered with Japanese trading firm Kanematsu and opened its first office outside Europe in Tokyo, positioning itself to serve Japan’s expanding defense and national security market. The company, which has reported significant revenue growth since pivoting beyond sub-kilogram picosatellites in 2023, is scaling up from cubesats to planned microsatellites, with signals intelligence and secure communications as key selling points.
The move tells a broader story about how small European space companies are finding paths into the defense budgets of allied nations, often by offering speed and cost advantages that larger prime contractors struggle to match. Japan, which has been one of several allied nations increasingly willing to buy from non-domestic space vendors, makes strategic sense as FOSSA’s first expansion target in the Asia-Pacific region.
From $30,000 Satellites to Defense Platforms
FOSSA’s origin story reads like a hardware hacker’s dream. The company deployed multiple picosatellites in low Earth orbit, each weighing less than a kilogram. According to the company, an early satellite was developed in under 6 months at relatively low cost. Those tiny spacecraft proved the company could get hardware to orbit cheaply and quickly, but they weren’t going to win defense contracts.
The pivot began in 2023. FOSSA moved to larger 3U cubesats, which offer extended operational lifespans compared to the earlier picosatellites. The company currently operates multiple 3U cubesats in orbit. Its largest satellite so far, a 6U cubesat, launched recently on SpaceX.
But even 6U cubesats have limits. The planned larger microsatellites represent a significant jump in capability, moving FOSSA from being seen as an experimental venture into territory where military planners start paying attention. Defense customers care about data rates, revisit times, and the kind of payloads a satellite can carry. A picosatellite running LoRa protocol at low data rates is useful for agricultural IoT. It’s not going to satisfy a signals intelligence requirement.
The Numbers Behind the Pivot
FOSSA’s financial trajectory suggests the market is responding. The company has grown its workforce to approximately 50 people since the 2023 transition and raised a €6.3 million ($7 million) Series A funding round in 2024. That’s not a massive war chest by space industry standards, where single satellite missions can cost tens of millions. But it reflects FOSSA’s vertically integrated approach: the company builds its own satellites, ground stations, and user terminals, which keeps per-unit costs lower than companies that rely on third-party suppliers for each piece of the chain.
The revenue growth since 2023 sounds dramatic, but context matters. Growing from a small base always produces impressive percentages. The real test will be whether FOSSA can sustain that trajectory as it enters the defense market, where procurement cycles are longer and qualification requirements are far more demanding than what a commercial IoT customer typically asks for.
Current data rates for the company’s existing systems are adequate for IoT telemetry, asset tracking, and basic sensor data. They are nowhere near sufficient for the bandwidth-intensive applications that most defense users expect. The microsatellite platform, when it arrives, will need to deliver something fundamentally different.
Why Japan, and Why Now
Japan has been rethinking its defense posture in recent years, committing to significantly higher defense spending and a more assertive approach to space-based capabilities. The country’s geographic position, surrounded by water and facing potential threats from North Korea and China, makes satellite-based maritime surveillance and communications a natural priority.
FOSSA’s IoT connectivity already has maritime applications. Fernández has stated that the company has sensors deployed in international waters and is expanding worldwide. A partnership with Kanematsu, which has deep roots in Japan’s industrial and government procurement networks, gives FOSSA a credible local presence that most foreign startups lack when approaching Japanese defense buyers.
The choice of Japan also reflects a calculation about where the competition is thinnest. The U.S. defense small satellite market is crowded with domestic players and complicated by ITAR export restrictions. Japan, by contrast, has fewer homegrown alternatives in the cubesat-to-microsatellite range and a growing appetite for allied-nation technology that can be deployed under sovereign control.
The NATO Connection
FOSSA’s acceptance into NATO’s Defence Innovation Accelerator for the North Atlantic (DIANA) adds institutional credibility that matters when courting government customers. DIANA’s stated mission is to source future military capabilities from dual-use commercial innovators, and the program has drawn thousands of applicants across Europe.
The DIANA program provides access to funding, accelerator sites, and test centers where companies can demonstrate their technologies for potential defense applications. For FOSSA, the value extends beyond the money. Being a DIANA participant signals to defense procurement officials in NATO member states that the company has passed at least an initial screening for military relevance.
That signal matters more than it might seem. Western defense establishments have been struggling to integrate commercial space capabilities into their acquisition pipelines. Programs like DIANA are designed to bridge that gap, but the distance between an accelerator program and an actual production contract remains substantial.
The Constellation Bet
Fernández has indicated FOSSA expects to have a full constellation in orbit within the next few years. The company has filed plans to expand its constellation significantly. That’s an ambitious timeline for a 50-person company with $7 million in Series A funding, and it raises obvious questions about how FOSSA plans to finance the buildout.
A large constellation of microsatellites, even small ones, requires significant capital for manufacturing, launch services, ground segment operations, and insurance. The current constellation’s revisit times are inadequate for time-sensitive defense applications like signals intelligence collection. More satellites would improve that figure, but each additional spacecraft costs money that FOSSA will need to raise.
The vertical integration model helps here. Companies that control their own manufacturing can iterate faster and keep costs predictable. But building ground stations and user terminals alongside the space segment means FOSSA is effectively running three hardware businesses simultaneously, each with its own engineering challenges and capital requirements.
Where FOSSA Fits in the Broader Market
The small satellite defense market is getting crowded. Companies like BlackSky, Capella Space, and HawkEye 360 already offer various flavors of satellite-based intelligence to government customers. Export deals for rapid-deployment satellites have been accelerating, and FOSSA’s competitors in the signals intelligence space have years of operational experience and established customer relationships.
What FOSSA brings is cost. A company that started by building spacecraft for under $30,000 carries a DNA of extreme frugality into its scaling efforts. If the microsatellite platform delivers useful defense capabilities at a fraction of what competitors charge, there’s a real market opportunity, particularly in countries that want sovereign space capabilities but can’t afford the price tags attached to traditional defense satellite programs.
Japan fits that profile. So do many other mid-tier military powers in Europe and the Asia-Pacific that are looking at the Ukraine conflict and concluding they need better space-based situational awareness but don’t have the budgets for custom-built national constellations.
The question is execution. FOSSA has demonstrated it can build and launch small satellites quickly. It has demonstrated revenue growth and international expansion. What it hasn’t yet demonstrated is that it can build the larger, more capable platforms that defense customers actually need, and do so at a price point that justifies choosing a Spanish startup over more established alternatives.
The next few years will answer that question. If FOSSA gets its full constellation to orbit and lands meaningful defense contracts in Japan, it will have pulled off one of the more impressive scaling stories in European space. If the money runs out before the satellites go up, it joins a long list of small satellite companies whose ambitions outpaced their capital.
The smart money watches what Kanematsu does next. Japanese trading houses don’t partner with foreign startups casually, and a deepening relationship would signal that FOSSA’s defense pitch is landing with the people who actually write the checks.
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