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The Space Startup Group Omar Qaise
Darmstadt, 05 March 2015
http://www.meetup.com/Commercial-Space-Entrepreneurship-Meetup/
Commercial Space Entrepreneurship
Space Startup Group
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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
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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 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.
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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
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Space Economy
Source: Organization of Economic Co-operation and Development
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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.
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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 offortune 500 US companies
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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
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Because of: IMPACTCommercial space services that did not exist in 1980
Source: Organization of Economic Co-operation and Development
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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?
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Because of: IMPACT
Check NASA Spinoff yearly reports http://spinoff.nasa.gov
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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 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
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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 immediatebackups 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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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 SpaceXon 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
Source: Organization of Economic Co-operation and Development
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Space Startup Landscape
US EU
Source: Space Angels Network, B. H. Lee
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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
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Agricultural Revolution Industrial Revolution
IT RevolutionSpace Revolution