L11 - Space Tourism Financing 2 Flashcards
What recommendations would you have for Orbital Space Tourism ventures regarding NPV?
A pure equity investment does not provide any positive returns if the project becomes too large.
What recommendations would you have for Orbital Space Tourism ventures regarding Cost of Capital?
Higher leverage (more debt) would gain positive long-range returns, but a sophisticated financial system must be in place to avoid financial distress. (Interest payments)
What recommendations would you have for Orbital Space Tourism ventures regarding Time to Market?
Minimize it!
What recommendations would you have for Orbital Space Tourism ventures regarding R&D Cost?
Smaller projects promise a positive NPV due to their smaller up‐front investment needs.
How to retain more equity for founders during the investment rounds?
By maximizing the company’s valuation.
How to induce higher evaluations for your company?
By having tangible results instead of viewgraphs such as flight hardware, demonstrators…etc
What is an example NPV over 10 years for Orbital Tourism?
-$4,665 million (@17.6%)
What is an example NPV over 10 years for Suborbital Tourism?
$20 million (@17.6%)
What is an example IRR for Orbital Tourism?
13.7% (over 50 years)
What is an example IRR for Suborbital Tourism?
32.9% (over 10 years)
What recommendations would you have for Suborbital Space Tourism ventures regarding Cost of Capital?
Opportunity cost of capital is high (~17.6%)
Debt financing can reduce CoC, but availability is
questionable (needs collaterals!)
What recommendations would you have for Suborbital Space Tourism regarding R&D Cost?
Small size (X‐Prize), maximum use of COTS* can reduce R&D cost to under $100 million Higher IRR due to lower up‐front investment needs.
What recommendations would you have for Suborbital Space Tourism regarding Time to Market?
Time to market is absolutely critical (< 5 years!)
It‘s worthwhile to seek ways for accelerated certification of vehicle.
What recommendations would you have for Suborbital Space Tourism regarding Expected Revenue?
High‐income people (HIP) promise sufficient demand (~3000 tickets @ $100k over 10 years)
But: Potential clients do not sit and wait; active marketing & PR is needed.
Give an example of two companies slicing the “value pie” in the suborbital space market.
Scaled Composites want to build spaceships while Virgin Galactic wants to be a spaceline.
