How much hypothetical risk would be associated with retail space investment?
An investment in "alt.space" and other companies would definitely not be for "day-traders", short-term speculators or financial market dilettantes. Rather, it would be for mature investors with a significant degree of risk tolerance and a long-term investment horizon. Such investments should never be thought of as a foundation for a conventional portfolio. However, investors who share a vision for the vast potentials of humanity's expansion into space might consider such a move as a more "aggressive element" of a comprehensive investment strategy.
Why can't we just give NASA more money to expand the existing space program?
NASA has achieved a great deal in the past but it is highly unlikely that its budget will be significantly expanded anytime soon. In general, the NASA budget, in constant dollars, has remained static for many years. Until early 2004, NASA had not had a specific long-term goal since the Apollo era. Even with a mandate from the President and congressional leaders to strive toward specific long-term goals and to provide consistent funding to reach them, there is no guarantee that any technologies developed will "trickle down" to the private sector, or that a foundation for commercial enterprise will naturally result. In addition, the agency's legacy of vast cost overruns associated with past projects leave little in the way of confidence. Even if this situation turns around, which it could under the leadership of NASA's new head, Mike Griffin, history has shown that government support, by itself, does not provide the impetus required to open new frontiers. History is still on the side of the entrepreneurs!
With all the current space activity by NASA, the Russians, the European Space Agency and now China, why do you perceive a need for something like this?
We don't believe that the future should be a spectator sport. NASA, ESA and similar agencies are supported by governments, i.e, by involuntary taxation of their citizens, who have virtually no say in resource allocation or goals. We hope to help build investment tools for space commerce infrastructure that is both voluntary and primarily answerable to investors as opposed to ever-shifting political agendas. As opposed to a "voter", each investor would be a participant in the enterprise. As such, an investor would also be entitled to share in the profit potential offered by space business activities. By building this commercial infrastructure, such investment tools could offer a more consistent level of support for ongoing space exploration and development than government funding, which is often far more focused on the next election rather than on the long-term potential of humanity's expansion into space.
How can commercial space activities, beyond those that already exist, be profitable in light of the huge cost of launching payloads into space?
There are two answers to this one.
Government space programs have a poor track record in providing space transport at reasonable prices. In fact, the average cost of launching payloads into orbit hasn't dropped in nearly two decades. Even the partially reusable Space Shuttle, requiring thousands of skilled workers for refurbishment after each flight, has not improved the economics of space transportation. Virtually all other launch systems are entirely disposable after a single use. At transport costs of up to $10,000 per pound, the current range of commercial space activities is severely constrained. This is not surprising. Imagine how much it would cost to fly to Paris if your airliner had to be thrown away after a single flight. In the past few years, a significant number of startup companies have appeared on the scene to attempt to drastically reduce the cost of launching equipment into space by introducing new technologies and new design philosophies. One of our primary goals is to foster a new kind of launch industry that will more closely resemble aircraft operations. By providing higher reliability, more flexibility and lower costs, these firms will capture a larger segment of the worldwide launch market and, at the same time, make many new arenas of commercial space activity feasible - and profitable for investors in those companies.
The early history of aviation development was marked by "incremental steps", i.e., privately funded experimentation towards realistic and achievable goals, but always in the common direction of "higher, farther, and faster". Experimenters built upon what they and others had learned, mitigating the risks by "bild a little, fly a little" in a steady fashion. Driven by market competition, consumer demand and profit, hundreds of firms employing 10's of thousands of people all over the world were able to participate, thus enabling us to get from Kitty Hawk to commercial jetliners in only 50 years. The early space age, however, was driven by Cold War politics. As a result, we moved away from a privately-funded incremental steps model, to one of a government-funded "all or nothing" model. It was orbit or nothing, the Moon or nothing. As a result, the only viable business model that grew from Apollo was the satellite launch industry. In addition we have spawned aerospace contractors that only know how to use a "cost-plus" government contract scheme, and have become so accustomed to NASA and Defense spending that they have become ill suited for true private sector competition. We have, to date, missed out on all the business opportunities that would have grown from sub-orbital, hypersonic aircraft, that might have developed as an outgrowth of an incremental model. When one considers it takes about 17 times more fuel to get something into orbit than it does to get something almost to orbit, it seems we're missing a bet here! This tremendous error in official judgement has held us back for over a generation, and we feel it is part of our mandate to raise awareness of the issue, and support, via the private sector, a return to an incremental model of private space technology development.
What do you mean by "The Power of Inclusion"?
Most of the new aerospace
startup companies are unavailable, today, to the private investor.
Most are not public companies, listed on an exchange, so your broker
(online or otherwise) can't simply buy a few shares of Scaled
for example, for your portfolio. Many up and coming space firms raise
seed, startup, or expansion capital via limited partnerships or other
means, as a way of avoiding the expense and pain involved in the securities
laws. As a result, you usually have to have assets of $1,000,000 or
more in order to qualify as a player in that area. By contrast, a mutual
fund, for example, with its mass market appeal, allows smaller
investors to take part in certain opportunities without having
to have a personal fortune to do it. We think that space development
is going to be the "next-next
and why should only a relative handful of VCs and institutional investors
reap the rewards? It is our firm conviction that the average investor
should never again be "late to the table". The small
of modest means but great vision, would be able to own a piece of literally
dozens of cutting-edge firms.
Tough question. When
we first presented our concepts a few years back, it was greeted with
indifference or skepticism. Since 2004, however, as NASA continues
to drop the ball on and space commerce development, ideas
such as ours are getting another look. We also believe that everything
happens in its own time, and for a purpose.
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