Quote from: M.E.T. on 08/15/2022 04:19 amThe question is simple: For a new launch company, how many launches are required to recover the initial investment?Thought experiment addressing the above:If you invest $1B to get your first rocket to orbit, what is the expected profit per launch? In the new low cost launch market built by SpaceX, $10M profit per launch for any small to medium lift launcher seems highly ambitious, probably flat out unlikely.But even at $10M, that means 100 launches just to recover the initial investment. If it’s just $5M, that means 200 launches.How long is that likely to take from first making orbit? 10 years? And that’s without accounting for continued R&D to stay competitive with the still innovating market leader.In this context, how does any new launch company make sense as a business case?Agree with what you're saying, but I disagree with your numbers, and the numbers make all the difference.$1B to get your first rocket to orbit is a lot, and way more than I would say anyone has put into doing so. I forget the numbers but SpaceX spent at most ~200 million to put F1 into orbit, and other medium-lift companies are doing around the same. That changes your math to needing only 20 launches. I think the $10M figure is on the high end of what's possible, but I don't think it's unreasonable. Probably $6-10M is the right range on margin.But covering the investment isn't the goal. It actually isn't too relevant. For any company that's honest and has some dignity, the goal is to produce more than you take. Profit more than you spend. At that point, what matters is just what the yearly overhead is. That's where we really see things take shape -- the companies succeeding with the fewest people, the fewest facilities, the fewest locations, and the fewest exotic R&D development, are the ones that'll come out on top in this respect. Relativity, with a dozen locations, a hyper-exotic capital sinkhole of 3D printing, 1000 people on payroll, and hundreds of thousand of square feet of real estate, is an example of being in a bad position. There are others in a pretty favorable position. If you assume a company has 500 people that make an average of $70,000 that's $35M. Assume that for the rest of the year, all other expenses (leases, facilities, operations, etc) are another $65M. That's $100M/yr. At that rate, with a $10M margin, it just takes 10 launches to go red. At that point, you've taken the mantle of being the most successful company in the entire industry - look at Astra and VG sweating ~$60-70M/qtr while launching nothing. It's a shockingly low bar that few are meeting, but is a reasonable bar. It's like playing a game of Limbo where the stick is at the highest rung and you just gotta bend back a bit, but you choose to walk into it fully standing up.
The question is simple: For a new launch company, how many launches are required to recover the initial investment?Thought experiment addressing the above:If you invest $1B to get your first rocket to orbit, what is the expected profit per launch? In the new low cost launch market built by SpaceX, $10M profit per launch for any small to medium lift launcher seems highly ambitious, probably flat out unlikely.But even at $10M, that means 100 launches just to recover the initial investment. If it’s just $5M, that means 200 launches.How long is that likely to take from first making orbit? 10 years? And that’s without accounting for continued R&D to stay competitive with the still innovating market leader.In this context, how does any new launch company make sense as a business case?
And having a launch product is not necessarily important or desirable.
Quote from: butters on 08/15/2022 05:29 pmAnd having a launch product is not necessarily important or desirable.If your launch services are at least breakeven, you can leverage them for bundle deals with your in-space services, as well as use them as free launches for testing your own in-house hardware prototypes.
Quote from: trimeta on 08/15/2022 05:32 pmQuote from: butters on 08/15/2022 05:29 pmAnd having a launch product is not necessarily important or desirable.If your launch services are at least breakeven, you can leverage them for bundle deals with your in-space services, as well as use them as free launches for testing your own in-house hardware prototypes.None of the public companies are break even on launch.
Quote from: Danderman on 07/10/2021 02:56 amI wonder if we are going to see a new launch company do a SPAC, and then never launch again, holding into hundreds of millions of dollars in investment dollars.So, like a scamcurrency exit scam?
I wonder if we are going to see a new launch company do a SPAC, and then never launch again, holding into hundreds of millions of dollars in investment dollars.
Quote from: Asteroza on 07/11/2021 10:46 pmQuote from: Danderman on 07/10/2021 02:56 amI wonder if we are going to see a new launch company do a SPAC, and then never launch again, holding into hundreds of millions of dollars in investment dollars.So, like a scamcurrency exit scam?More like a financial exit strategy for the early angels and VC investors who backed the company at the start, and then bundled it into an SPAC to have their own exit. I own a real world manufacturing startup going through similar issues now. We have early stage and angel investors who want an exit (cashing out at a profit). This is perfectly normal, and entirely expected. However, the aerospace and environmental technology we are building is wildly complex (plasma reactors for chemical synthesis), but no where nearly as large or complex as a rocket.The build risk for an aerospace firm is tremendous. Real world technologies in general are wildly more risky because all the development and de-risking cost of the business model happens in real space. Actual people have to cut actual steel in actual factories. The IT-world mythos of the entrepreneur-with-a-laptop-and-a-dream doesn't apply in real space.SPACs made good sense as a means of bundling a wildly high-risk venture in with some other lower risk companies and raising funds while providing an exit for the early investors. The problem, and in IMHO the cause of SPAC's souring the market, is that the company itself is just swept along for the ride to sink or swim until the next tranche of money can be found. Rocket companies are too risky for an IPO and inclusion in mutual funds, yet too large to fully be funded by angel investors and smaller institutional VCs. They fall in this donut hole where SPACs were the logical investment vehicle.
Another sign of the times@SatixFy_satcom / $EDNC SPAC deal valuation cut by 55%—$813M to $365MSatixfy must really need the cash@tomorrowio_ @D_Orbit cancelled their SPAC deals rather than lower valuation—makes me think they have better access to private capital than Satixfy
Success of a commercial launcher depends solely on cadence. The only customers who can support the kind of numbers these companies are throwing around are the megaconstellations. So if you aren’t launching Kuiper or OneWeb you’re going to struggle. Maybe Terran R will get there but I’d be surprised if any of the rest were big enough. If New Glenn and Starship both come to market it’s going to be very very tough for these smaller launchers.
Quote from: imprezive on 08/15/2022 04:02 pmSuccess of a commercial launcher depends solely on cadence. The only customers who can support the kind of numbers these companies are throwing around are the megaconstellations. So if you aren’t launching Kuiper or OneWeb you’re going to struggle. Maybe Terran R will get there but I’d be surprised if any of the rest were big enough. If New Glenn and Starship both come to market it’s going to be very very tough for these smaller launchers. It is unclear to me if heavy launchers will effectively serve constellations.The exception is Starlink V2, where the satellites are so large that Starship is required as a launcher. If Starship is delayed, Starlink will be sucking wind for a while.
Rising interest rates are making it more difficult for space startups to raise money, some warn, forcing them to seek alternative sources of funding.A series of rate hikes by the Federal Reserve, intended to halt the post-pandemic spike in inflation, could have the side effect of driving funding out of risky venture investments, such as space, because of the higher rates offered elsewhere.
Two years ago, I left my engineering position at Iceye to join a pre-seed space startup consisting of two people, one of which was me. As a newly minted CTO at a startup lacking capital, I was thrust into the fundraising game — with no deeper understanding of finance or business strategy than you’d expect of the average 40-year-old engineer with an oscilloscope.Daunted but undeterred, I set off into the depths of venture capitalism, strategy, marketing, pitches, PowerPoint slides, NewSpace, small talk, zero-sum games, and artificial politeness.
Carissa Christensen of BryceTech, in a finance panel at the Beyond Earth symposium: we are overinvested in launch compared to any existing demand signal; driven by visions of transformative human spaceflight by a few individuals.Nathan Whigham of EN Capital says he expects that we’ll see a wave of deals in a few years as space companies that went public through SPACs will be taken private by private equity firms.
Nathan Whigham of EN Capital says he expects that we’ll see a wave of deals in a few years as space companies that went public through SPACs will be taken private by private equity firms.
In a space commerce panel at #ascendspace, John Olds of SpaceWorks shows their NewSpace Index, which has fallen far below the overall market as well as a “Traditional Space” index they created. https://spaceworks.aero/commercial/new-space-index/Tejpaul Bhatia, chief revenue office of Axiom Space: you always hear that space is hard. You know what else is hard? Startups. #ascendspacePhil Ingle of Morgan Stanley notes that space is expensive and companies need capital; M&A deals among struggling companies may not solve that. #ascendspaceAsked about trillion-dollar markets, Olds offers one that is not one: launch. Even if launch rates go up, prices are going down; sees it as a $20B/year market at best. #ascendspace
