Space Entrepreneurship

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The Space Startup Group
Omar Qaise
Darmstadt, 05 March 2015
oqaise@gmail.com
http://www.meetup.com/Commercial-Space-Entrepreneurship-Meetup/
Commercial Space
Entrepreneurship
Space Startup
Group

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oqaise@gmail.com 05 March2015
Group Mission Statement
To spread the word and
increase the awareness of the
importance of the private space
business among the general
public, policy makers, funders,
and the startup community
How?
1) Meetups
2) Inviting professionals
3) Educating the audience

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Konstantin Tsiolkovsky
(1857-1935)
Dr. Robert H. Goddard
(1882-1945)
Dr. Wernher von Braun
(1912-1977)
Sergei Korolev (1907-1966)
History of Space Exploration

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Space Economy
• Defintion: The full range of activities and the use of resources that results
in value creation and humanity prosperity through space exploration,
management, and utilization.
• Governments, launch industry, commercial satellites; entrepreneurial
activities (about $100 billion per year)
• Equipment: ground stations, receivers, satellite dishes, etc. (about $80
billion per year)
• Secondary products and services (value added weather and remote
sensing, spin-off industries and technologies, etc.)
• Space goods and services as a “backbone” infrastructure that, if we didn’t
have it, many essential capabilities would not function.

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Space Economy
2005
2006
2007
2008
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
$Billions
Source: Organization of Economic Co-operation and Development

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Space Economy

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Space Economy

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Growth
• Commercial space products and services revenue increased 7 % in
2013 and decreased to 3% the year after, and commercial
infrastructure and support industries increased by 4.6 %.
• Government spending decreased by 1.7 % in 2013, although
changes varied significantly from country to country.

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Revenue Streams

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Value Chain (Telecom)
Source: European Satellite Operators’ Association

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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 of
fortune 500
US companies

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So, if the space sector is so small,
why does space get so much
attention?
Exxon-Mobil, in comparison, had sales of nearly $400 billion in 2006

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Because of: IMPACT
Commercial
space services
that did not exist
in 1980

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Because of: IMPACT
• 1980: ESA Conf. in Strasbourg on Economics
Focus on Spin-offs and telecommunications
• Today, the difference is huge
Space is R&D field for telecom advancement
Space as a key backbone in the economic infrasturctureof the
U.S. and World
Test: What happens to the world if we shut down satellites for 24-hours?

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

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Investment
Space
Others
Source: Space Angels Network

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Investment
Source: Space Angels Network, B. H. Lee

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

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Challenges: Public Perception
• Astronauts
• Shuttle and launch vehicles that have mediocre performance
success
• 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 space
and commercial space
Source: Space Economics, Herzfeld

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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

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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 immediate
backups are available
• Specific knowledge and expertise are needed
• Risk: rockets may explode!

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

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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)

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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

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Emerging Space
Source: Space Entrepreneurship, B. Lim

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NASA's Smartphone Nanosatellite
Source: Space Entrepreneurship, B. Lim

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• Started 2002 by Elon Musk (PayPal Co-
founder)
• 500 Million USD startup investment
• NASA awarded the ISS contract to SpaceX
on 2012
• Launch costs is much cheaper than all
common rockets

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• 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

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Space Startup Landscape

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Source: Space Angels Network

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US EU
Source: Space Angels Network, B. H. Lee

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EU vs US : Entrepreneurial
Landscape
There 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

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Agricultural Revolution Industrial Revolution
IT Revolution
Space Revolution

Space Entrepreneurship

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