Financing
I work with multiple domestic and international funding sources who provide both debt and equity financing. I generally work with alternative energy companies but some of their businesses have internal similarities to space businesses.
I've noticed that there are several things that are common among the various funding sources. They are things that you should think about before you seek financing.
Unless you have a bunch of assets to secure the financing (this rarely applies), the business plan and the management team are key.
For the business plan, figure out your niche, how you will reach that niche, how you will service that niche, who your competitors are, what percentage of the niche you will service, and what your profit margin will be when reaching that percentage of the niche. If a business plan says something like, "everyone will want this product," it means that they don't know what their market is, how to reach them, or what their conversion rate will be.
Don't underfund. Assume that the funding you ask for will be the only funding you will ever get. If you ask for a shoestring budget, the funding sources will know that you are underfunding and will assume that you don't know the business aspects of your venture. On the other hand, no $10,000 toilet seats.
You can assume that they don't know space tech as well as you but also assume that they know business, in general, better than you. Also assume that if they are going to be investing $10M - $2B in your business, they will hire someone who knows space tech to evaluate your plan prior to funding. These guys do not have that kind of investment money by being fools.
The other very important thing to have when seeking funding is a strong management team. This is at least as important as the business plan. Make sure you have a CEO who has experience running a business and is good at team building. I have sent back business plans that have a management team consisting of two PhDs and a grad student. They are entrusting you with a lot of money. So they need to know that you have a good plan and that you are capable of executing that plan.
Another concern that is specific to the space industry: ITAR. I do not know what issues they would have with financing sources. I would assume that debt financing would be allowed but equity financing might run into issues. ITAR issues will be important to you because there are a lot more international funding sources out there than there are US sources. I would assume that they would have more concern over oil and Chinese sources than European sources but I'll leave that discussion open until I learn more about ITAR.
If you have any questions that are not appropriate for discussion on an open forum, please contact me at:
Jeff Miller
949-249-3673 (I'm on the phone a lot so I may be slow to respond)
shadocat2atcoxdotnet (I don't like to post my unobscured email)
I've noticed that there are several things that are common among the various funding sources. They are things that you should think about before you seek financing.
Unless you have a bunch of assets to secure the financing (this rarely applies), the business plan and the management team are key.
For the business plan, figure out your niche, how you will reach that niche, how you will service that niche, who your competitors are, what percentage of the niche you will service, and what your profit margin will be when reaching that percentage of the niche. If a business plan says something like, "everyone will want this product," it means that they don't know what their market is, how to reach them, or what their conversion rate will be.
Don't underfund. Assume that the funding you ask for will be the only funding you will ever get. If you ask for a shoestring budget, the funding sources will know that you are underfunding and will assume that you don't know the business aspects of your venture. On the other hand, no $10,000 toilet seats.
You can assume that they don't know space tech as well as you but also assume that they know business, in general, better than you. Also assume that if they are going to be investing $10M - $2B in your business, they will hire someone who knows space tech to evaluate your plan prior to funding. These guys do not have that kind of investment money by being fools.
The other very important thing to have when seeking funding is a strong management team. This is at least as important as the business plan. Make sure you have a CEO who has experience running a business and is good at team building. I have sent back business plans that have a management team consisting of two PhDs and a grad student. They are entrusting you with a lot of money. So they need to know that you have a good plan and that you are capable of executing that plan.
Another concern that is specific to the space industry: ITAR. I do not know what issues they would have with financing sources. I would assume that debt financing would be allowed but equity financing might run into issues. ITAR issues will be important to you because there are a lot more international funding sources out there than there are US sources. I would assume that they would have more concern over oil and Chinese sources than European sources but I'll leave that discussion open until I learn more about ITAR.
If you have any questions that are not appropriate for discussion on an open forum, please contact me at:
Jeff Miller
949-249-3673 (I'm on the phone a lot so I may be slow to respond)
shadocat2atcoxdotnet (I don't like to post my unobscured email)
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