Financing Entrepreneurship: Outreach to Non-Space Investors

Abstract

A global movement involving attracting private investors to entrepreneurial space startups is receiving support of international industry as well as nonprofit advocacy organizations. Earlier, in 2005 and 2006, the foundation for this space investment coalition was laid in a series of groundbreaking space commerce roundtables. In recent years, other organizations have also held events designed to attract investors. Underlying such efforts is the conclusion that neither the existing group of space investors nor the established companies in the space industry can bring to bear the financial resources necessary to support entrepreneurial efforts adequately, given the risks and capital requirements involved. Governments are also interested in the success of this effort because their resources are limited in volume and constrained by legal/regulatory considerations. It is vital to recognize that seed and early stage capital is most likely to come from “angel” investors, who are willing to invest the relatively small amounts of money needed by startup entrepreneurs, taking into account the risk of new ventures and the limitations on amount and rapidity of return on investment. Outreach to angel investors must take into account their tendency to prefer dealing with individuals whom they already know, through personal networking, rather than being approached impersonally. It is also important to understand the history of each investor’s portfolio and activities, since angels tend to address new opportunities in the terminology and conceptual framework of earlier experience. Angel investors also favor situations where the entrepreneurial “deals” to which they are exposed have already been selected in a rigorous process designed to evaluate quality of business plans and investment already obtained. Beyond this, investors tend to be most interested in results rather than methods—e.g., in biotechnology or tourism, not in microgravity space facilities or launch vehicle design per se. When taking such insights into account, investor outreach events can constitute a valuable service to the global community, encouraging entrepreneurial innovation and resulting economic growth.