Exploring performance measurements for rocket companies to support venture capital investment decisions

1. Pietro Tansini – M.Sc. Thesis Defence April 15th 2020
Venturing in the New Space Economy
Exploring performance measurements for rocket companies
to support venture capital investment decisions
1

2. Pietro Tansini – M.Sc. Thesis Defence April 15th 2020
THE NEW
SPACE
ECONOMY
Agenda
Introduction
2
SCOPE AND
RESEARCH
QUESTIONS
DISCUSSION
AND
CONCLUSION
METHOD
AND
MAIN FINDINGS
VENTURE
CAPITALS
IN SPACE

3. Pietro Tansini – M.Sc. Thesis Defence April 15th 2020
1. The New Space Economy
3

4. Pietro Tansini – M.Sc. Thesis Defence April 15th 2020
The industry went through a paradigmatic change
From governmental-driven to commercial-driven
RACE TO SPACE IN THE COLD WAR
Space agencies such as NASA were the main and only
customer of space services. The main academic interests were:
• Risk management
• Technology management
RACE TO SPACE IN THE VENTURES WAR
Government becomes one of the customers of commercial
services of private space companies. The attention shifts to:
• Performance management
• Business profitability
NASA as System Ordering Customer NASA as Industry Service Consumer
4

5. Pietro Tansini – M.Sc. Thesis Defence April 15th 2020
The launch segment is catalyzing the access to space
By drastically lowering the cost to deploy satellites in orbit
5
0
10
20
30
40
50
0
50
100
150
200
250
NumberofLaunches
AverageLaunchPrice(Millions)
Average rocket launch price is declining while
number of launches is increasing
Average Launch Price Number of Launches
Trend line (number of launch)
Source: Space Economy Evolution Lab, SDA Bocconi
MINIATURIZATION SMALL-SATELLITES
SERVICE
REUSABLE
ROCKETS
CHEAPER
SPACE LAUNCH
Space
ventures
flywheel

6. Pietro Tansini – M.Sc. Thesis Defence April 15th 2020
6
2. Venture Capitals in Space

7. Pietro Tansini – M.Sc. Thesis Defence April 15th 2020
New commercial opportunities are attracting VC funds
Which expect above average returns from the ventures in the new space economy
7
COMMERCIAL SPACE
LAUNCH ACT, 1984
mined the oligopoly of incumbent
space conglomerates
SPACE START-UPS
RECEIVED $18.4 BILLION
between 2000-2017

8. Pietro Tansini – M.Sc. Thesis Defence April 15th 2020
US-based investors dominate the industry
While European VC are limited by several factors largely investigated in the literature
Structural,
operational and
environmental
(Arundale, 2019)
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IVC and GVC
specialization (stage,
industry, risk profile)
(Bertoni et al., 2019)
Lack of space-
specific industry
expertise
(De Concini and Troth, 2019)
Since 2015
US investors originated
75%
of all investments
90%
of seed and angel
investments
Thirty non-US space start-
ups received funds in 2017
13
in UK (hq of 20% of all
non-US based start-ups)
4
in Spain
Source: Bryce, 2018

9. Pietro Tansini – M.Sc. Thesis Defence April 15th 2020
3. Scope and research questions
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10. Pietro Tansini – M.Sc. Thesis Defence April 15th 2020
This study is a pioneering research
Which aims at exploring space-specific performance measurements
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VENTURE CAPITALS EMERGING START-UPSPUBLIC AGENCIES
Investment portfolio
selection
Undercapitalized market
segment stimulus
Competitive market
positioning
Space-specific Performance Measurements
would benefit
generating a virtuous growth cycle

11. Pietro Tansini – M.Sc. Thesis Defence April 15th 2020
The study focus on the launch segment
Which is deemed as being the most disrupted by the ventures of the new space economy
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Q1.
What are the key factors
driving the performances of
rocket space companies?
Q2.
Did the space commercialization
have an impact on the space
launch industry?
Q3.
How the launcher segment
is going to evolve in the
next future?

12. Pietro Tansini – M.Sc. Thesis Defence April 15th 2020
4. Method and Main Findings
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13. Pietro Tansini – M.Sc. Thesis Defence April 15th 2020
It has been adopted a multi-method approach
To capture the complexity of identifying relevant measurements for rocket companies
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• VP Launch Division at small satellite
manufacturer (US)
• Co-Founder at rocket start-up (EU)
• CEO & Co-Founder at global satellite service
company (International)
• Managing Director at European space investor
1. Semi-structured interviews to main industry actors
Rocket
Functionality
Financial
Constraints
Schedule
Reliability
Time to
Space
FOUR KEY EVALUATION CRITERIA
Price per Kg in LEO
Price per Actual Payload
Payload Capacity
Capacity Utilization
Success Rate
Launcher's Total Launches
Launcher's Yearly
Launches

14. Pietro Tansini – M.Sc. Thesis Defence April 15th 2020
The qualitative findings allowed to identify shared KPIs
While the empirical analysis studied potential correlations with launch vehicle performances
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Revenue per launch Number of launch per year
2. Regression analysis on launch vehicles performance over the period 1998 - 2018
Price per Kg in LEO ($/Kg) 0.132***
Payload Capacity in LEO (Kg) 0.426***
Price per Actual Payload ($/Kg) 0.057***
Capacity Utilization (%) 0.050**
Launcher's Yearly Launches (n) -0.046***
Success Rate (%) -0.007
Launcher's Total Launches (n) 0.111***
Period Before Commercialisation 0.126***
R2m R2c Number of Observations
0.592 0.895 1399
ModelVariables
Price per Kg in LEO ($/Kg) -0.085**
Payload Capacity in LEO (Kg) 0.090**
Average Capacity Utilization (%) 0.088**
Period Before Commercialisation 0.070***
AIC Num. of Launchers Num. of Observations
2338.6 166 686

15. Pietro Tansini – M.Sc. Thesis Defence April 15th 2020
5. Discussion and Conclusion

16. Pietro Tansini – M.Sc. Thesis Defence April 15th 2020
Focus on rocket’s functionality and affordability
Are the biggest drivers for launch vehicle competitiveness in the market
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ROCKET REUSABILITYCAPACITY OPTIMIZATION

17. Pietro Tansini – M.Sc. Thesis Defence April 15th 2020
Small launchers can compete on a niche segment
Of companies bonded to a tight time to space schedule for their business specifics
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70%
11%
17%
1%
Small launchers' reference
market segment
Commercial
Institutional
Institutional/Commercial
Institutional/Commercial/
Military
0
2
4
6
8
10
Number of Micro-launcher's First Test
and Operational Flights
First Test Flight First Operational Flight
Source: Space Economy Evolution Lab, SDA BocconiSource: Space Economy Evolution Lab, SDA Bocconi

18. Pietro Tansini – M.Sc. Thesis Defence April 15th 2020
The novelty of this study comprises some limitations
Which open up to several research extensions
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Indirect method
Limits performance
measurements accuracyL1
Segment specific
The findings are relevant only to
rocket launch enterprisesL2
Public perspective
Is missing from the industry
practitionersL3
Internal systems
Would provide more accuracy
on companies’ performanceR1
Satellite segment
Is deemed being the next
segment most impactedR2
Space agencies
Might adopt different evaluation
criteriaR3

19. Pietro Tansini – M.Sc. Thesis Defence April 15th 2020
“One small step for a man,
one giant leap for mankind!”
(Neil Armstrong, 1969)

20. Pietro Tansini – M.Sc. Thesis Defence April 15th 2020
One reusable rocket for a company,
One hundred spaceflights for mankind.
(SpaceX, 2019)

21. Pietro Tansini – M.Sc. Thesis Defence April 15th 2020
“Before another century is done it will be hard for people to imagine a time when humanity was
confined to one world, and it will seem to them incredible that there was ever anybody who doubted
the value of space and wanted to turn his or her back on the Universe.”
(Isaac Asimov, 1979)