Space Entrepreneurship

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The Space Startup Group Omar Qaise

Darmstadt, 05 March 2015

[email protected]

http://www.meetup.com/Commercial-Space-Entrepreneurship-Meetup/

Commercial Space Entrepreneurship

Space Startup Group

2 of [email protected] 05 March2015

Group Mission Statement

To spread the word andincrease the awareness of theimportance of the private spacebusiness among the generalpublic, policy makers, funders,and the startup community

How?1) Meetups2) Inviting professionals3) Educating the audience


Konstantin Tsiolkovsky

(1857-1935)

Dr. Robert H. Goddard (1882-1945)

Dr. Wernher von Braun (1912-1977)

Sergei Korolev (1907-1966)

History of Space Exploration


Space Economy• Defintion: The full range of activities and the use of resources that resultsin value creation and humanity prosperity through space exploration,management, and utilization.

• Governments, launch industry, commercial satellites; entrepreneurialactivities (about $100 billion per year)

• Equipment: ground stations, receivers, satellite dishes, etc. (about $80billion per year)

• Secondary products and services (value added weather and remotesensing, spin-off industries and technologies, etc.)• Space goods and services as a “backbone” infrastructure that, if we didn’thave it, many essential capabilities would not function.


Space Economy

20052006

20072008

Space Commercial Transportation Services

Infrastructure Support Industries

International Government Space Budgets

U.S. Gov't Space Budgets

Commercial Services and Infrastructure

0

20

40

60

80

100

120

140

160

180

$ B

illi

on

s

Source: Organization of Economic Co-operation and Development


Space Economy



Space Economy


Growth

• Commercial space products and services revenue increased 7 % in2013 and decreased to 3% the year after, and commercialinfrastructure and support industries increased by 4.6 %.• Government spending decreased by 1.7 % in 2013, althoughchanges varied significantly from country to country.


Revenue Streams


Value Chain (Telecom)

Source: European Satellite Operators’ Association


Source: Economy Watch- Fortune 500, 2013

Rank Company

Revenue Profit

($million) ($million)

1 Wal-Mart Stores 469,162 16,999

2 Exxon Mobil 449,886 44,880

3 Chevron 233,899 26,179

4 Phillips 66 428,167 4,124

5 Berkshire Hathaway 162,463 14,824

6 Apple 156,508 41,733

7 General Motors 152,256 6,188

8 General Electric 265,702 13,641

9 Valero Energy 138,286 2,083

10 Ford Motor 134,252 5,665

11 AT&T 127,434 7,264

12 Fannie Mae 127,230 17,220

13 CVS Caremark 123,133 3,876.90

14 McKesson 122,734 1,403

15 Hewlett-Packard 120,357 -12,650

16

Verizon

Communications 115,846 875

17 UnitedHealth Group 110,618 5,526

18

J.P. Morgan Chase &

Co. 108,184 21,284

19 Cardinal Health 107,552 1,069

20 IBM 104,507 16,604

21 Bank of America Corp. 100,078 4,188

22 Costco Wholesale 99,137 1,709

23 Kroger 96,751 1,497

24

Express Scripts

Holding 94,417 1,313

25 Wells Fargo 91,247 18,897

26 Citigroup 90,769 7,541

27

Archer Daniels

Midland 89,038 1,223

28 Procter & Gamble 85,120 10,756

29 Prudential Financial 84,838 469

30 Boeing 81,698 3,900

How big is the space industry?

Example:Comparison of revenues offortune 500 US companies


So, if the space sector is so small,why does space get so muchattention?

Exxon-Mobil, in comparison, had sales of nearly $400 billion in 2006


Because of: IMPACTCommercial space services that did not exist in 1980



Because of: IMPACT

• 1980: ESA Conf. in Strasbourg on EconomicsFocus on Spin-offs and telecommunications

• Today, the difference is hugeSpace is R&D field for telecom advancementSpace as a key backbone in the economic infrasturctureof theU.S. and World

Test: What happens to the world if we shut down satellites for 24-hours?


Because of: IMPACT

Check NASA Spinoff yearly reports http://spinoff.nasa.gov


InvestmentSpace

Others

Source: Space Angels Network


Investment

Source: Space Angels Network, B. H. Lee


So, why it is difficult for entrepreneurs to access space? Why investors are reluctant to invest in space


Challenges: Public Perception• Astronauts• Shuttle and launch vehicles that have mediocre performancesuccess

• Consumer products– Knowledge that they are at least partially space-based

– When services are delivered, public really doesn’t care how they are delivered--a phone call is a phone call

– Public is relatively ignorant of the cost and contributions of space R&D and investments

• Cold War technology and mentality• Same thinking often permeates government policy toward spaceand commercial space

Source: Space Economics, Herzfeld


Challenges: Space is for rocket scientists

• Too abstract, complex, and removed from perception of everyday life• Message is difficult to communicate

• In fact, NASA may be its own worst enemy

• Because of focus on human space flight

Source: Space Economics, Herzfeld


Challenges: Space is expensive and risky

Huge entry barrier to entrepreneurs:• Large investments required• Long waiting time until Return-On-Investment• Few players, mostly large corporates and the government• Space assets are fragile: very vulnerable and no immediatebackups are available• Specific knowledge and expertise are needed• Risk: rockets may explode!


The Benefits

+ Low competition+ High chance of public-private partnerships+ High profits+ International cooperation and business opportunities+ Long term business and customer relations


Emerging Space

- Space disasters and cost - NASA policy change- Technology advancement- Knowledge access- New generation of Hi-tech entrepreneurs- Easy funding (crowd funding, emerging space angels and VCs)


Emerging Space

Propulsion Storage and transfer

Laser telecom Robotics

Flight opportunities programs

Small satellite programs

Data analysis and support tools

Source: NASA Emerging Space Report


Emerging Space

Source: Space Entrepreneurship, B. Lim


NASA's Smartphone Nanosatellite

Source: Space Entrepreneurship, B. Lim





• Started 2002 by Elon Musk (PayPal Co-founder)

• 500 Million USD startup investment

• NASA awarded the ISS contract to SpaceXon 2012

• Launch costs is much cheaper than all common rockets



• Started by Richard Branson

• Winner of the X Prize of 10,000,000 USD in 2004

• Sold more than 500 tickets to date

• One ticket to space costs 200,000 USD

• Had a recent accident during a test flight


Space Startup Landscape




Source: Space Angels Network



US EU

Source: Space Angels Network, B. H. Lee


EU vs US : EntrepreneurialLandscapeThere are many reasons for this phenomenon:- The first one is the labor laws. - Recovery from a failed business is not easy e.g. France - up to 9 years to recover from a bankruptcy; in the US it takes less than a year.- Fragmented Market- Europe does not have any “hot” start-up hubs like Silicon Valley or New York City- Venture Capital. Risk capital is needed, but that is very hard to come by in Europe, after the dot.com bubble - Risk averse culture (fixed long term job security)

Source: The Economist, “European Entrepreneurs”, 28.07.2012


Agricultural Revolution Industrial Revolution

IT RevolutionSpace Revolution

Space Entrepreneurship

Small Business & Entrepreneurship

march2015 space economy

space goods

march2015 source

history of space exploration

private space business

commercial infrastructure

march2015 revenue streams

services value