What's the best way to fund a large-scale commercial space project?

[MattJL]

This is something I've been wondering about for a while, especially in light of Golden Spike's crowdfunding attempts.  (I define "large-scale" to be something on the order of 250 million+ USD).

In my un-educated opinion, it makes little sense to crowdfund such massive projects unless one has succeeded in showing off something beyond a paper rocket.  Even then, I don't think that one could really succeed in collecting anything beyond a couple hundred thousand dollars (look at how much difficulty GS has had raising $240,000).  Rather, I feel that approaching a small number of wealthy investors is the best way to go, such as universities.

I've been studying a conceptual manned lunar landing that could be paid for for 250 million - hence the minimum limit I gave - so I might as well use that as an example.  Suppose, then, one gave any research institution the opportunity to send an experiment to the lunar surface at a cost of 25 million/kilo (this is easily affordable by the top 10 universities in the U.S - MIT spends about half this on their alumni association (0.4% of their expenses), for example).  The ten wealthiest universities in the U.S. could very easily afford this, giving scientists the un-precedented ability to study the Moon with their own experiments.  It'd also get people back to the Moon within Bolden's lifetime.

[QuantumG]

The "best" way is to self-fund, of course, but few have that option.

[simonbp]

Golden Spike was only doing the crowdfunding as a PR thing, rather than really trying to raise real money.

Joe Pistritto's talk at the end of Space Access is the answer to your question: http://tinyurl.com/cgxuc8y

[QuantumG]

Golden Spike was only doing the crowdfunding as a PR thing, rather than really trying to raise real money.

Did anyone ask what kind of PR they were trying to raise?

If the PR they were trying to gain was that they're broke and have no hope of raising the necessary capital then I'd say it was a great success.

[Robert Thompson]

If the PR they were trying to gain was that they're broke and have no hope of raising the necessary capital then I'd say it was a great success.

You've been holding out. That was nearly textbook Douglas Adams.

[mrmandias]

Golden Spike was only doing the crowdfunding as a PR thing, rather than really trying to raise real money.

Did anyone ask what kind of PR they were trying to raise?

If the PR they were trying to gain was that they're broke and have no hope of raising the necessary capital then I'd say it was a great success.

Not all publicity, it turns out, is good publicity.

[KelvinZero]

To the OP:
Im assuming that is $250m/mission, with much larger investment before the first mission actually happens? This is still an order of magnitude less than GoldenSpike so quite a claim. (On the other hand I once heard a claim that spaceX offered $80m for one ton cargoes to the moon)

If we are really honestly talking  commercial, isn't the key just that you can convince investors that you can do what you claim, can demonstrate you have the buyers lined up at that price, and so on?

haven't there already been a bunch of commercial missions around that dollar value? I mean with launches costing around $100m and launch cost typically being significantly less than %50 of total cost, it must be a common amount to throw around for satellite businesses etc.

In terms of commercial companies making fantastic HSF claims, I prefer the SpaceX approach. On the one hand you could say they are doing exactly the right things to head for Mars, on the other hand they are not going out on a limb.

Re Golden Spike, yeah well. As far as I was concerned they didnt need billions or customers. Just producing an architecture signed off on by credible companies for each component would have been declaring war on SLS/Orion and possibly crowbarring open that amount of yearly budget or embarrassing congress into a less cynical scheme. But I dont see they have sold that approach in particular. Last I looked they were very vague about what they would even do with that $250k. All people see is that it would be a very tiny drop in the bucket.

[Voyager4DK]

It is interesting to see a lot of new an innovating way to try to pay for or jump start space programs.

Here are 4 different example's of current programs using some kind of crowdfunding.

Name:	Pr/month:	Total:
Copenhagen Suborbitals:	~$12,000	~$500,000
Mars One	n/a	~$72,000
Golden Spike	n/a	~$15,000
Mars Initiative	~$100	~$2,000

Copenhagen Suborbitals has about 700 people paying around $17,50 (100 dkk) each month. The money is only used for materials, as no one in CS are being payed. Aside from that they also get donations from companies and private persons, and make Indigogo campaigns once in a while.

Mars One has received around $72,000 in donations and you can donate on a monthly basis, but I have no idea, how many are doing that.

Golden Spike have until now collected around $15,000 in a Indigogo campaign. They have no way of getting donations on a monthly basis.

Mars Initiative is just getting started and only around 30 people are paying on an average $3 a month + one time donations.

[Robert Thompson]

(youtube.com/watch?v=gb_qHP7VaZE)
The Mars Initiative boot print on red resembles the Mars One round thumb print on red.

[kkattula]

...  Suppose, then, one gave any research institution the opportunity to send an experiment to the lunar surface at a cost of 25 million/kilo (this is easily affordable by the top 10 universities in the U.S - MIT spends about half this on their alumni association (0.4% of their expenses), for example). 

That won't work. I'd undercut you by taking SpaceX up on their 1000kg for $80m offer and sell the 10 universities 50kg to the moon for $20m.
 
My payload on the lander would be a simple 500kg platform with a couple of robot arms, cameras, solar panels and comms back to Earth. Plus space for 10 x 50kg experiments which could be lifted and placed on the surface. Even have switches activated. Pretty much anything they'd want a human in a suit to do.
 
Assuming the SpaceX price is now more like $100m, and my development cost is $20m, that gives me an $80m profit.
 
Dude! You should just do what I suggested three times. That'll get you your $250m, plus lots of experience.
 

The ten wealthiest universities in the U.S. could very easily afford this, giving scientists the un-precedented ability to study the Moon with their own experiments.  It'd also get people back to the Moon within Bolden's lifetime.

They could afford it, but would they? I doubt it. Money spent on Alumni brings in endowments. At $1m or $2m a shot they very well might.
 
New plan! Do the SpaceX thing but sell payload space at $2m per 5kg or part there of. Probably need a volume limit of around 5 or 10 litres per 5kg too.

[savuporo]

The best way to fund a project is through revenues from the products and services your company sells. Novel, i know.

[kicaj]

It is interesting to see a lot of new an innovating way to try to pay for or jump start space programs.

Here are 4 different example's of current programs using some kind of crowdfunding.

Name:	Pr/month:	Total:
Copenhagen Suborbitals:	~$12,000	~$500,000
Mars One	n/a	~$72,000
Golden Spike	n/a	~$15,000
Mars Initiative	~$100	~$2,000

How did you get this information? are you a member of the copenhagen suborbitals?

$ 500,000 is a lot of money, other companies can only dream about such a result.
I guess that money pay mostly Danes.

[Ben the Space Brit]

Ultimately, the issue is getting over the: "It will never really happen" disbelief barrier.  The only way to get venture capital is to convince people that there will be a product in the end; with spaceflight, that's difficult.

Hopefully, once SpaceX (and Bigelow, specifically in terms of their space-station modules) demonstrates that it is possible to create a workable crewed spacecraft, investors will look at these projects more carefully and wonder if it is doable and, ultimately, capable of an easily quantifiable ROI.

[JohnFornaro]

Ultimately, the issue is getting over the: "It will never really happen" disbelief barrier.  The only way to get venture capital is to convince people that there will be a product in the end; with spaceflight, that's difficult.

Hopefully, once SpaceX (and Bigelow, specifically in terms of their space-station modules) demonstrates that it is possible to create a workable crewed spacecraft, investors will look at these projects more carefully and wonder if it is doable and, ultimately, capable of an easily quantifiable ROI.

I believe that I could provide about a hundred kilowatts of electric power at a lunar pole for between $180-240M.  The plant would provide power for more than twenty years, and could be significantly upgraded over time.

The goal is modest and pragmatic. However the billing rate for the electricity would be very high, and there are no takers at the site for the foreseeable future. 

I don't see a way to even create a presentation for investors.

[Lar]

Ultimately, the issue is getting over the: "It will never really happen" disbelief barrier.  The only way to get venture capital is to convince people that there will be a product in the end; with spaceflight, that's difficult.

Hopefully, once SpaceX (and Bigelow, specifically in terms of their space-station modules) demonstrates that it is possible to create a workable crewed spacecraft, investors will look at these projects more carefully and wonder if it is doable and, ultimately, capable of an easily quantifiable ROI.

I believe that I could provide about a hundred kilowatts of electric power at a lunar pole for between $180-240M.  The plant would provide power for more than twenty years, and could be significantly upgraded over time.

The goal is modest and pragmatic. However the billing rate for the electricity would be very high, and there are no takers at the site for the foreseeable future. 

I don't see a way to even create a presentation for investors.

Is that an all-in price including delivery, or is that the price plus delivery costs?[1]

Even "plus delivery costs" that seems a very attractive price. But then I don't have a spare 240M so who am I to judge?

1 - I don't see how it POSSIBLY could be inclusive of delivery

[Patchouli]

The best way to fund a large space project is to have enough money to build some initial hardware and then offer a service a government or large corporate entity would pay for.

Unfortunately this means being a multimillion or even billionaire to start with.

Though a multibillionaire can pretty much self fund a very large operation.
I wonder if they can count it as a tax deduction?

[JohnFornaro]

I believe that I could provide about a hundred kilowatts of electric power at a lunar pole for between $180-240M.  ...

The goal is modest and pragmatic. However the billing rate for the electricity would be very high, and there are no takers at the site for the foreseeable future. 

I don't see a way to even create a presentation for investors.

Is that an all-in price including delivery, or is that the price plus delivery costs?[1]

Even "plus delivery costs" that seems a very attractive price. But then I don't have a spare 240M so who am I to judge?

1 - I don't see how it POSSIBLY could be inclusive of delivery

It would be a very small powerplant, including one F9 launch.  Pretend for a moment that I could afford to build it and launch it. 

Now tell me how much I'd have to charge for electricity each month for the next twenty or more years.

Nobody else is proposing any lunar presence.  There is no business case.  While the mission wouldn't be a "lark", who would or even could possibly fund such an effort without a chance for a return?

[Lar]

I believe that I could provide about a hundred kilowatts of electric power at a lunar pole for between $180-240M.  ...

The goal is modest and pragmatic. However the billing rate for the electricity would be very high, and there are no takers at the site for the foreseeable future. 

I don't see a way to even create a presentation for investors.

Is that an all-in price including delivery, or is that the price plus delivery costs?[1]

Even "plus delivery costs" that seems a very attractive price. But then I don't have a spare 240M so who am I to judge?

1 - I don't see how it POSSIBLY could be inclusive of delivery

It would be a very small powerplant, including one F9 launch.  Pretend for a moment that I could afford to build it and launch it. 

Now tell me how much I'd have to charge for electricity each month for the next twenty or more years.

Nobody else is proposing any lunar presence.  There is no business case.  While the mission wouldn't be a "lark", who would or even could possibly fund such an effort without a chance for a return?

I can't answer what you would have to charge without knowing your IRR[1]...

 but if we just assume flatline cost of money, no profit, etc... 240 million spread over 20 years (or.. conveniently, 240 months) would be 1M/month... So ballpark that to 2M per month. That is insanely cheap, to my way of thinking...

If you build it, they will come.

1 - it has been a long time since I took engineering econ and calculated NPV of payment streams and suchlike so forgive the SWAG

[JohnFornaro]

It may be that $2M per month is affordable, but without a viable customer, there's no way to know.  "Insanely cheap" is not a viable concept for such an effort, that I can tell, because there's no comparative value. 

"Build it and they will come" is not really a viable investment strategy either. 

Continue pretending I have the money, and am willing, in principle, to spend it on a successfull project, and am willing to wait for the next guy to land.  A speculative venture then.

You do realize that with $240M, and an appropriate trusteeship, I can take care of my grandchildren with this amount?  Maybe the great grandkids.  Might take up to six months to work out the legal and investment details.  With the subsequent free time, and the disposable income for me, I could sketch out this idea more fully over the years, and really develop BioRectangle (r).  And travel more.  And ... yada yada more.

My "timeline" for this project is on the order of five years.  It would be sixty or more hours a week of managing that project to fruition.  Without that personal committment from me, and a trusted staff, it could not happen.

Without a rational basis for a strong belief in a customer, why would I embark on that difficult course of action?  There's no business case.

But thanks for considering the idea for a few minutes.  It certainly made me think a bit more about the idea.

[Lar]

Without a rational basis for a strong belief in a customer, why would I embark on that difficult course of action?  There's no business case.

Big companies drop more than this amount on large projects. How much is a typical Rio Tinto mine development project. How much is a big skyscraper?

Power is one part. Check, you've got that part.[1] Mining is another part, refining yet another, and finally transport.

How much per KG is LH2 and LOX worth in LEO? 

Ya, right now it's not worth it, no business case. As Jim loves to point out. But if you pony up your 240M and the mining guys pony up their xxxM and the transport guys pony up their yyyM...

1 - If we assume your entire plant's output supports propellant production, how much propellant production a month does that support? Energy costs are recharging the mining/digging, and powering the refining/electrolysis... I figure the other costs like LH2 and LOX tankage cooling are probably noise, comparatively... Is that valid?

[JohnFornaro]

Big companies drop more than this amount on large projects. How much is a typical Rio Tinto mine development project. How much is a big skyscraper?

No question but that they invest large amounts of capital, larger in some cases than what I propose.  You've glossed over the business case for those investments however.

True, I would offer electrical power, a crucial pre-requisite for any lunar base activity.  Do you realize the mass constraints for an F9 payload landed on the Moon?  These constraints severely limit the power production of that very first plant.

A "build it and they will come" investor might conclude that the power offered would be a significant factor warranting her investment in this project.  However, "might" is just a different way of saying "if", as you do here:

But if you pony up your 240M and the mining guys pony up their xxxM and the transport guys pony up their yyyM...

Without knowing what "xxx" and "yyy" should be, another way of putting this is: "Who's on first, What's on second, and I Don't Know's on third."

I agree that the mining guys and the transport guys, if they could be convinced to launch more or less simultaneously, might be able to pull off the "build it and they will come" scenario, if they had the fourth person lined up.  Who would be "Naturally", continuing the analogy above.  The fourth person would be the hotelier, as I tell the story.

I've done a bit of work on the mining aspect, and even less on the transport aspect, but I do have a loose sense of the mass and costs that would be required.  Keep in mind that the mining guy would pay the power guy; the transport guy would pay the miner; the hotelier would pay for transport; and the tourist, who may be public or private, would pay the hotelier.

It only takes a minute to realize that this is much easier to say than it would be to present convincingly to the additional three investors.

[Lar]

No I'm not sure of the mass fraction you get to lunar surface... but it's not very big, I expect... from the 13 mT you get in LEO you have to subtract the TLI stage, and the lander (if we assume direct descent with no intermediate low lunar orbit) leaving not a lot for payload... SWAG of 1 or maybe 2 mT if you're lucky? What did you get?

Point being though, that even with your insanely cheap power,  saleable to the other pieces of the puzzle at a nice profit, you need someone to put up xxx and yyy... I really don't think tourism is the way to go to close the business case

I'm not actually arguing with you John. Just nodding my head sadly after musing out loud.

PS I remember someone somewhere long long ago did a study of what a self replicating pilot plant would take, with certain (fantastical) assumptions, masswise. It was lower than I thought possible.

here it is:  http://www.islandone.org/MMSG/aasm/  from 1980!!!!
and another one: http://www.niac.usra.edu/files/studies/final_report/880Chirikjian.pdf from 2004

Ahahaa check out figure 7 in the second paper... Space 1999 ships and transport equipment, modeled in .... LEGO

[A_M_Swallow]

I suspect that the hotel will be self catering, so more of a YMCA.

How electricity is needed to produce fuel for a single Moon to Earth trip per year and oxygen for 2 weeks plus 10 kW to power the building?

(The Earth to Moon fuel comes from the Earth.)

[Lar]

I suspect that the hotel will be self catering, so more of a YMCA.

How electricity is needed to produce fuel for a single Moon to Earth trip per year and oxygen for 2 weeks plus 10 kW to power the building?

(The Earth to Moon fuel comes from the Earth.)

The Earth to LEO fuel should come from Earth. ALL the rest should be ISRU lunar. Including TLI and return fuel.

[JohnFornaro]

No I'm not sure of the mass fraction you get to lunar surface... but it's not very big...

Ayup.

I'm not actually arguing with you John. Just nodding my head sadly after musing out loud.

I quite understand.  Thanks for your condolences.

[A_M_Swallow]

I suspect that the hotel will be self catering, so more of a YMCA.

How electricity is needed to produce fuel for a single Moon to Earth trip per year and oxygen for 2 weeks plus 10 kW to power the building?

(The Earth to Moon fuel comes from the Earth.)

The Earth to LEO fuel should come from Earth. ALL the rest should be ISRU lunar. Including TLI and return fuel.

Transporting the Moon_to_LEO fuel from the Moon requires a delta-V of 5.93 km/s, which will make the delivered fuel very expensive.  Cost control will require things like reusable SEP tugs.  Too complex for the first missions.

[Lar]

Transporting the Moon_to_LEO fuel from the Moon requires a delta-V of 5.93 km/s, which will make the delivered fuel very expensive.  Cost control will require things like reusable SEP tugs.  Too complex for the first missions.

I don't think I agree. Fuel from earth will be more expensive than fuel from the moon. Even to LEO. That's the whole premise of ISRU.

[A_M_Swallow]

Transporting the Moon_to_LEO fuel from the Moon requires a delta-V of 5.93 km/s, which will make the delivered fuel very expensive.  Cost control will require things like reusable SEP tugs.  Too complex for the first missions.

I don't think I agree. Fuel from earth will be more expensive than fuel from the moon. Even to LEO. That's the whole premise of ISRU.

Prepare cost estimates.  Allow for machines on the Moon.  You may get different results for 10 years time and 100 years.