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Participation in the industry by non-qualified investors...

Posted by: mmealling - Tue Oct 31, 2006 6:07 pm
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Participation in the industry by non-qualified investors... 
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Launch Director
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Post Participation in the industry by non-qualified investors...   Posted on: Tue Oct 31, 2006 6:07 pm
One of the things we talked about within the Artemis Society, and even early discussions with the Space Elevator guys, was how to get those who are not qualified investors to be able to help fund these early days of the industry. We had discussions about Regulation D 50x offerings, investment clubs, etc but all ended up having huge legal and liability questions that no one could answer with enough satisfaction to put their personal liability on the line.

I'd like to start a discussion on the ways that those 30,000 some odd people who came to the XPRIZE Cup or even the few hundred people who hang out here can help jumpstart the industry a little more. It needs to be low overhead, legal, and fun. SpaceShot is probably one of the better examples but even it depends on the market place being shown that suborbital trips are a reality.

Anyone got any ideas?


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Post Low overhead, legal, fun   Posted on: Wed Nov 01, 2006 8:27 pm
1. Become a Space Shot affiliate, build a website or a bricks and mortar referral service and start funneling folks to us.

2. Throw an espacetickets fundraiser for a charity.

3. Form a club where you take turns playing spaceshot and all agree on the day's predictions.

4. Start a business convincing schools to use espacetickets or spaceshot as a fundraiser--girl scout cookies only bring in about $0.90/hr per worker.

5. Convince local schools to adopt Space-Explorers.com content at $600/yr per school

6. Try to arrange for Orbital Commerce Project to bring their launch sim to your vicinity. I.e., hold a mini space day somewhere. $10k?

7. Lobby your state lottery.

8. Lobby your state assembly and form a space authority for your state if it doesn't have one.

9. Found the Colonial Party as a political party in your state. Nominate someone cool for office. Doesn't have to be a party member.

10. Found a religion based on Genesis 22:17.


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Post Funding New Space   Posted on: Wed Nov 01, 2006 10:10 pm
The most logical (and perhaps one of the easiest, but exactly fun) method to raise the capital needed to get these enterprises off the ground is to form a "NewSpace Mutual Fund". Get all of the publicly traded NewSpace companies interested as well as a handfull of larger space-related firms (lockheed, boeing, general dynamics, etc. to hedge the fund and lower the risk).

Then serious investors will take advantage, and all of the 30,000+ people interested in furthering space development can not just invest their money, but maybe make some too. Its a win-win.


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Post Like the Colony Fund?   Posted on: Thu Nov 02, 2006 12:18 am
Loughman,
You mean like The Colony Fund? Tom had real problems raising the institutional money. Its still a good idea since it doesn't require the smaller companies to have to do a public offering (although Reg A and Reg D do make that easier). But if you could convince those institutional investors to underwrite the majority of the fund then you could also easily confince them to invest directly in the companies in the first place.

That's part of the problem, this industry is to young to attract VCs. VCs are the ones that represent the kind of institutional money you're talking about. And they're simply not interested yet. Once someone IPOs at a significant multiple, then they'll be on us all like flies.


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Post    Posted on: Thu Nov 02, 2006 10:00 am
Hello, mmealling,

which investors do you call non-qualified? Does it mean non-experienced?

I am asking the question because investment in general is a very complex business regardless of the sum to be invested being hundreds or millions of Dollars.

The larger the sum and the longer until payback the more the investor not only must be conscious about the risks provided by economic growth, fate, markets and economic policy but in particular about the subject of the business and the investment also. In the case of space vehicles this includes the non-foreseeability of future innovations and the impacts of them on young and other existing technologies.

...

What do you think regarding that?


Dipl.-Volkswirt (bdvb) Augustin (Political Economist)


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Post    Posted on: Thu Nov 02, 2006 2:02 pm
Ekkehard,

Ekkehard Augustin wrote:
which investors do you call non-qualified? Does it mean non-experienced?


It is a legal term here in the US that refers to someone who does not qualify for being able to invest in a company other than through a public offering. Let's say I setup a coffee shop and I want to find investors for an expansion round. According to US law I cannot publicly solicit investors (there are exceptions but they're not illustrative to this example). I can only raise money from those directly involved with the company (officers and the always nebulous "friends and family") or from what is called a "qualified investor". Qualified investors have to adhere to the following criteria:

Quote:
# a natural person who has individual net worth, or joint net worth with the person’s spouse, that exceeds $1 million at the time of the purchase;

# a natural person with income exceeding $200,000 in each of the two most recent years or joint income with a spouse exceeding $300,000 for those years and a reasonable expectation of the same income level in the current year; or


The entire criteria and a discussion can be found at the IRS' discussion on accredited investors.

Quote:
I am asking the question because investment in general is a very complex business regardless of the sum to be invested being hundreds or millions of Dollars.

The larger the sum and the longer until payback the more the investor not only must be conscious about the risks provided by economic growth, fate, markets and economic policy but in particular about the subject of the business and the investment also. In the case of space vehicles this includes the non-foreseeability of future innovations and the impacts of them on young and other existing technologies.


Yes, investing is a complex business. But there is a very large number of people who know enough about aerospace in general and the emerging market who are more qualified to make investment decisions about the technology and marketplace than most people who meet the "accredited investor" definition. These people have a little bit of money and they would like to invest that small amount somehow but can't for simple legal reasons.

But what I'm actually trying to get at is not equity investment. The legal hoops you have to jump through are outside the reach of most startups. What I'm after is something where the ten thousand or so NSS members, or the few hundred people who are SpaceFellowship participants can help get a new space company off the ground. It may not be in the form of an equity investment but there needs to be some way to get the large number of space fans out there to help out. To participate.


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Post    Posted on: Thu Nov 02, 2006 10:08 pm
Sadly--the one realm with enough money to go to space is the military, as proven by von Braun and Korolov.

Here:
http://spacefellowship.com/Forum/viewto ... 2202#22202
I link the "Direct" Ares V alternative.

Unlike the Ariane 5/Hermes, and the even weaker Kliper/Soyuz-3 rocket combo, Direct is probably the only LV that has a chance of pulling something like OSP off, with even Delta IV being rather underpowered.

Therefore the best hope would be of advocating mini-spaceplanes such a Direct LV could support.

Smaller LVs limited to 20 tons or so, simply do not have the authority or the thrust needed for a good spaceplane.

With Direct--any weight creep is still well under margin. A "X-20 Heavy" may sit well with the Air Force, or any dedicated space service which more and more are calling for every day:

http://www.squadron.com/ItemDetails.asp?item=OS4553

Remember, small spaceplanes can have weight creep sneak up on you fast, what with metal heat shields, munitions/provisions, escape mechanisms, docking, etc. But a good Air Force contract will give you real money--and wings are (yawn) a big selling point.


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Post    Posted on: Wed Dec 20, 2006 2:25 pm
mmealling wrote:
What I'm after is something where the ten thousand or so NSS members, or the few hundred people who are SpaceFellowship participants can help get a new space company off the ground...


Could an organization you, the solicitor, belong to (NSS, this great site, etc.) be legally considered "friends and family" for the purposes of raising capital?


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Post    Posted on: Wed Dec 20, 2006 7:07 pm
With all do respect, but in my humble opinion, and probably those of economists you should deserve trouble raising money for bad ideas. You don't start with raising funds before you even have a very detailed business plan and not just a flimsy idea and/or statement about that what cherish all here: the advancement of humans into space. I mean, look at Scaled, they didn't have (much) trouble finding capital. Sure, this may seam and probably is very black and white (not sure what the english term for this is, my bad) but c'mon, what would you actually do if you had the money and some guy came to you (yeah, they come to you, most of the time not the other way around) with an idea that sounds great, but the guy/company has absolutely no track record in the chosen market. Or any market for that matter. I don't think anyone with a sense for logic will jump into a business as an investor. Certainly not with millions of euro's/dollars.

And, when will the investors get any return? Investing means putting money into something with the intent of getting more money out of it. Preferably a lot more off course. And since space is far from profitable for private companies (unless you're name is Boeing or the other big contracter) and they rely on governments, which is silly in itself in my opinion.

But, getting back ontopic, the best way to invest in any of this is to invest in yourself. Go (back) to school and get a degree in aerospace engeneering or anything which is related to it, off course with a lot of management course so you can understand economics at least a bit. Not just worldeconomics, but businesseconomics. And trust me, businesseconomics is weird if you're used to the logic of any sciencestudy.

Back ontopic again, i'd say that investing your money into any of this should be to do lowcost highprofile projects/studies. Go to your local engineering/business university/college and try to get something going there for a whole semester or half a semester. What i mean by this is the following. Students are the future, they aren't rusted/settled in everyday life and actually use their intelligence without having some 'normal' boundaries the some more elderly people have. Like space is always expensive so don't bother or something like that.
If you can get a few thousand students in contact with the subject, they will think about it themselves and maybe even choose a career in that direction. Plus, the semester could be filled with parts of studies or simply ideas you want to put to the theoretical test. For a management study, a startup spacecompany would be a no-brainer off course, but you could get a lot of bright and new ideas on the subject. And thats more value you get for your money then dumping it into a company with zero experience.


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Post Re: Participation in the industry by non-qualified investors   Posted on: Thu Jan 11, 2007 7:25 pm
mmealling wrote:
One of the things we talked about within the Artemis Society, and even early discussions with the Space Elevator guys, was how to get those who are not qualified investors to be able to help fund these early days of the industry. We had discussions about Regulation D 50x offerings, investment clubs, etc but all ended up having huge legal and liability questions that no one could answer with enough satisfaction to put their personal liability on the line.

I'd like to start a discussion on the ways that those 30,000 some odd people who came to the XPRIZE Cup or even the few hundred people who hang out here can help jumpstart the industry a little more. It needs to be low overhead, legal, and fun. SpaceShot is probably one of the better examples but even it depends on the market place being shown that suborbital trips are a reality.

Anyone got any ideas?


"Regulation D 50x"? I assume this is a reference to a tax code or similar, but I am not familiar with it.

I am just getting into this all, and would like to read as much as possible on the subject. I realize you are a bit busy, but could you outline those discussions for me? I am in the process of studying for the CPA exam, so I can handle technical terms of business organization.

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