This chapter will look at how various classes of new space and satellite projects which may have capital requirements that can go from as low as under a $1M up to well into the billions of dollars are now able to come to fruition leveraging novel financing models which are being constructed. It is clear that for “New Space” to mature and reach its fullest potential, mastering the ability to drive large-scale infrastructure level investment into the sector is required. The financing mechanisms change as one progresses to new support service companies or small satellite ventures operating at the cubesat level, to satellite constellations of larger and larger size, to very ambitious space projects involved with building the cislunar architecture and beyond which may take decades to realize. A smaller space business might start with family and friends financing, angel investors, or even crowdsourcing on the Internet via such sites as “Kickstarter.” The next step involves venture capital financing that might end with an initial public offering (IPO) or merger/acquisition. Finally, there are very long-term and ambitious space ventures that may involve various forms of public-private international financing arrangements which have been used in the past for large collective projects which are now being framed and envisioned for new space applications. In this chapter, all these mechanisms will be explored with the greatest emphasis and most lengthy discussion related to demystifying the venture capital financing process for new space actors since this is perhaps one of the most common approaches used. Other mechanisms exist such as spin-offs from established corporations or equity-based loans, but these are not addressed in any detail because they are unusual mechanisms which are available to entrepreneurial projects and small satellite venture startups but not often used. 

    The goal in this chapter is to help the budding space entrepreneur make their case for the right investment type and to help them to propose a structure based on a better understanding of the different investment classes and vehicles. There is also some consideration of how to posture their enterprise based on the longer-term future at a time when space industries will represent a multitrillion dollar sector. When one thinks of some of the larger projects described later in this chapter, it is important to see them in historical perspective. Although the numbers presented here for long-term space infrastructure projects seem large, they need to be seen in light of other infrastructure projects such as the original US Interstate highway system which is estimated to have cost $500 billion (in 2008 dollars) and the upgrade costs alone for the emerging 5G network which are estimated to be $200B per year. It is clear that when the case is made properly, the investment dollars are available. Currently, NASA’s FY 2020 budget was nearly $22.629B in order to address their very ambitious mandate, and the capital requirements for some of the larger new space infrastructure projects are way beyond the political will that exists to support the kinds of budget expansions that would be needed if all space-related fundings were to come from the government. What can thus be seen is that to really make financial room for truly innovative, capital-intensive, and longer-term new space projects, there is a need for a new transnational investment model whereby there can be a pooling of the resources of international partners, corporations, high-net-worth individuals and family supporters, and other forms of private equity (PE) along with venture investors. It is clear that these future projects will not only involve venture capital and governments, but there will be a need to involve more of the capital community, coordinated in a way that supports competition and innovation which will allow these new space enterprises to keep learning and improving. All of this needs to be done while respecting and abiding the laws set by each sovereign nation to address their own national security concerns arising from non-controlling investments involving foreign parties.

    It is important to keep in mind that as far as the investment community is concerned, investing in space has the same business risks as many other fields of endeavor – execution, technology obsolesce, and regulatory risk plus an additional set of risks due to operating in the space environment which magnifies the difficulty of executing the business plan and getting a return to the investors who ultimately want to make money and will compare this investment opportunity to many others. Although space investors are often motivated by a highest set of principles involving mankind’s advancement in space, one of the main challenges that the space entrepreneur faces is finding innovative ways of buying down risk to create a level playing field with other capital investment opportunities available to the investor.

    Although successful space missions are hard, financing space missions can be harder because in addition to the high and uncertain capital needs and high-risk levels of any space venture, space entrepreneurs also face immature and uncertain markets in terms of price points and market behavior. It is hoped that this chapter helps to equip the space entrepreneur on this journey to bring forward concepts which will enable the continuing progress of humanity in space for the advancement of a sustainable prosperity for all humankind.


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