Burton Lee presented on Space Angels Network, an online platform connecting space entrepreneurs with angel investors. The presentation covered: 1) the difficulty of seed-stage funding for space startups due to a lack of angel investors; 2) Space Angels Network's goal of aggregating individual space angels and sustainable deal flow; and 3) the network's strategy of offering diverse, lower risk space-related investment opportunities to broaden interest before introducing higher risk "NewSpace" companies.
Space Investment Summit 3 Market Overview and Seed-Stage Space Venture Finance
1. Moderator
Burton Lee, Ph.D., MBA
Managing Director,
Space Angels Network
Space Investment Summit 3
5-6 December 2007
2. Space Investment Summit 3
Seed-Stage Space Venture Finance
Market Overview, Strategy and Plans
Dr. Burton H. Lee PhD MBA
Managing Director
December 6, 2007
3. Space Angels Network
Startup Equity Finance Pipeline
Major Chronic Structural Gap
in Seed-stage Funding for Space-related Companies
Angel Investors Private Investment
And Networks Equity Banks
FFF Seed Early Growth Later
Venture
Capital Funds
4. Space Angels Network
Structure of Angel Finance in US Commercial Space - 2006
$25.6 Bn 234,000
51,000 deals Individual Investors
$24.1 Bn Independent Angels ACA Angel Networks $1.5 Bn
~50,000 deals (229,000 Investors) (5,600 Investors) ~750 deals
~$10 Mn ~100 Active Space Angels Order of
~10 deals ~ 100 Entrepreneurial Space Companies Magnitude
Source: UNH CVR/ACA/Innovarium Ventures estimates - 2006
5. Space Angels Network
Angel Investor Preferences - 2006
Where do the majority of US angels invest?
Financial &
Business Industrial &
Sector Healthcare Software Biotech Retail Products Energy
Deals 21% 18% 18% 8% 6% 6%
Space &
Aviation ?
Source: UNH CVR/ACA (2006)
6. Space Angels Network
Finding Seed-stage Equity Finance for Space Startups Is Difficult!
Space
Space Angel
Angel
Space
Space Angel New York/
Space Angel Boston
Angel
Silicon Angel
Group
Valley
Space Angel
Angel Group Space
Angel
Space
Space Angel
Angel
Space
Los Angeles Venture
Space
Angel
Space
Today
Angel
Space
Angel Houston
• How to find an angel investor today:
Use personal networks, apply to angel networks
• Result: hit or miss for the average space startup
7. Space Angels Network
Virtual Solution for a National Network of Angel Investors
Space
Angel Space
Space Angel
Angel
Space
Space Angel
Angel
Space
Angel Space
Angel
Space
Space Angel
Angel
Space
Space
Venture
Angel
Space
Angel
Space
Angel
Space
Angel
• A Need and Opportunity: Aggregate individual angel investors and space-related startups
• Goal: Sustainable deal flow of good companies Confidential
Private and with solid management teams & technologies
8. Space Angels Network
“Space Angels Network”
Space Angels Network is a Web “infomediary”: an online platform for
distributing information between and among space entrepreneurs and
prospective angel investors—our members.
www.spaceangelsnetwork.com
We enable our members to:
• Find seed- and early-stage investment opportunities.
• Connect with like-minded investors throughout the U.S.
• Collaborate on due diligence and deal negotiations.
• Find deal flow which is unavailable thru traditional angel channels.
• Access aerospace industry experts: technology, markets, legal, finance
9. Space Angels Network
Defining a New Investment Domain
“Space” is not an industry (like Internet, clean tech, etc).
“Space” is a place — with unique risks and rewards.
Specific industries in which our members actively seek seed- and early-stage investment deals based on
space-related technologies include the following:
• Biomedical and Life Sciences • Materials
• Energy, Environment, Clean/Green Tech • Nanotechnology
• Entertainment, Sports, Media and Education • Retail and Consumer Products
• Information Technologies and Software • Transportation Vehicles and Infrastructure
• Information Technology Services • Transportation Services
• Manufacturing, Mining and Construction • Travel and Tourism
10. Space Angels Network
Major Space-related Market Trends
Space-Information Technology convergence
Integrated telecommunications and imaging systems (Iridium, etc)
Location-based services integrate imaging and telecom with GPS and RFID
Desktop Google Earth, Microsoft Virtual Earth + migration to mobile platforms
Environmental sensing & climate change monitoring (CO2 levels, etc.)
Space-Air Traffic Management System (SATMS) modernization around IP networks
IT “Super Angel” investments responsible for most NewSpace momentum
Space-Aviation convergence
Combined aerial/space imagery (e.g. Google Earth, etc)
Growing integration of hybrid technologies: aircraft, UAVs, LEO Sats, GEO Sats
Horizontal takeoff/landing suborbital RLVs (SpaceShipTwo, Rocketplane XP, etc.)
Spaceport/airport hybrids emerging
11. Space Angels Network
Major Space-related Markets in Next 5 – 15 Years
Next 5 Years
Very Light Jets and associated equipment & services (VLJ’s aka “Air Taxis”)
Unmanned Aerial Vehicles (UAVs) (commercial, civil, military)
Satellite-RFID Services (fixed/mobile asset tracking & monitoring)
LBS = Earth Observation + GPS + Internet (real estate, mapping, environment)
Telemedicine
Sensors and avionics
ISS Resupply
Small Satellites (micro-nano-pico-etc)
Space Tourism (suborbital, orbital)
From 5 to 15 Years Out
Point-to-point suborbital transportation (commercial, military)
Operationally Responsive Space (ORS)
FAA Air Traffic Management System Modernization
First Personal Air Vehicles (PAVs) ??
12. Space Angels Network
(Aero)Space and The Spectrum of Investor Risk
A Broad Spectrum of Investment Opportunities
IT:
Telecom
Imagery Aircraft
GPS Components NewSpace NewSpace
Air Traffic
& Services
Management RFID VLJs UAVs
System (SubOrbital) (Orbital)
Materials Avionics
Sensors
Telemed
Life Sci
Lower Risk High Risk
13. Space Angels Network
Major Space-related Investor Exits and Events - 2007
Scaled Composites (acquisition by Northrop Grumman)
Aviation and space platform/composites manufacturer
AeroAstro (merger with Radyne Corporation)
Small satellites + telecommunications systems
Payload Systems (acquisition by Aurora Flight Sciences)
Space payloads + UAV manufacturer
Other significant events
MicroSat featured at Houlihan Lokey Aerospace Defense conference (October)
XCOR Aerospace investment by Boston Harbor Angels
Orion Propulsion wins major Boeing subcontract
14. Space Angels Network
Strategic Relationships – Aimed at Deal Flow and Successful Exits
Local
Angel Networks
Federal
Venture Capital
S&T Agencies
Firms
Space Prize
Organizations
State Space
Authorities
& Equity Funds Corporate M&A
Groups
Research Universities
& Non-profit
R&D Institutions
Viable
Seed-stage Startups Early-stage Startups
Input Output
15. Space Angels Network
Company Acceptance Criteria
Solid management team with track record
Product or service with sustainable competitive advantage
Strong IP assets and strategy
Clear understanding of the market(s) and market growth profile
Viable business model
Reasonable financial analysis and ROI projections
Risk management approach
Well-written Business Plan and Executive Summary
One-person shops, hobbyists and Flying Saucers need not apply!
Passion is OK, but sound business fundamentals must come first
16. Space Angels Network
Space Angels Network Core Strategy
Broaden Spectrum of Investment Opportunities Beyond High-Risk
“NewSpace” Companies
Go “Downstream” in Investor Risk for primary deal flow
Offer Diverse Menu of Lower Risk Space-related Companies
Show Investors Deals Closer to What They Understand & Now Invest In
Space-Information Technologies (software, Internet, electronics, digital media)
Space-Life Sciences
Achieve successful exits for New Investors
Then move them “upstream” - to higher risk NewSpace companies
Space Angels Network is a startup company too …. !
17. For more information, please contact:
Dr. Burton Lee
blee@spaceangelsnetwork.com
+1 (703) 282-4513