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Topic: Specialty Space Fund

Page history last edited by Ken Davidian 12 years, 1 month ago

Warning:  Very outside the box thinking listed below!

 

Problem - Space endevaurs are risky and expensive.

 

Solution - Set up specialty space investment fund of which people can purchase stocks/shares. Fund should either be controlled by or some how advised by NASA (or other very trusted and knowledgeable organization). 

 

Supporting Statements

  • If the money for the space investment fund was to come from Congress, it would have to receive special authorization and annual appropriation. Congress as a whole supports the space program, but as expected always notes that the budget is tight.
  • Endorsement by a trusted or knowledgeable organization would give the fund credibility. True.

Dissenting Statements

  • In response to the phrase "Fund should either be controlled by or some how advised by NASA": NASA cannot control the dispursement of an investment fund. The decision was made (supposedly by the Vice President's office during the Bush Administration) that equity investment was not appropriate by NASA and that resulted in the cancellation of a highly-anticipated program called "Red Planet Capital" that was to be run by the NASA HQ Innovative Partnerships Program office.
  • In response to the same phrase, for NASA to be able to advise such a fund, the issue of endorsement, actual or perceived, would have to be addressed. NASA cannot be seen as endorsing a company or organization and goes to great lengths to avoid even the perception of endorsement. For this reason, it would be advised that the space investment fund be controlled or advised by some other trusted or knowledgeable organization.

 

Outstanding Questions:

  • In the statement "Authorizing such activity would allow for private money to be administered to develop commercial capabilities and a commercial industry thus creating jobs and growing GDP WITHOUT government/tax money.", why would there be a need for "authorization" if the money was purely private? Or are the funds to be a combination of government as well as private moneys?

 

Problem - Investment would be very risky and very long term.

 

Solution - Investors understand this risk and are not investing their life savings and perhaps are not concerned with short term return.  Investments are made to own a share of the future of space.  This could include average Joe buying 5 shares at $500 for his children which would include some cool space info/media.  Not as a college savings but as a way of investing in his childrens future and explaining to them why he believe space is important.  They would feel financial ownership in space (perhaps sparking an interest in the field?).  The other potential investors are the people who are sufficiently wealthy to have disposable income (see $35 million in deposits for virgin galactic) but not quite enough to offer a prize or sponsor a company by themselves.  These people could invest $100,000 to > $1 million in the fund to support the idea of a spacefaring civilization without having to understand the technical credentials or various business aspects of a space company. 

 

Just a random idea - not well developed or researched.  If this has already been done/proposed - my appologies.

 

Specific note should be made that the idea of owning shares of space was discussed in a meeting with Buzz Aldrin recently.  His proposal was for the shares to lead to a prize - very different but important to note the contribution to this idea.

 

Ideas? Comments? Assaults?

 

Comments (9)

Michael Mealling said

at 8:23 am on Jun 17, 2008

Back when I was helping run the Artemis Society (asi.org) there was a small cabal of us trying to do this in various forms.

I was looking at it as a private offering to non-qualified investors run under an investment club model. This required someone to run the club who was a licenses stock broker and who had to accept all of the liability. We never found someone stupid enough to do it.

Michael Laine (LiftPort) attempted what are called Regulation D public offerings. These are public offerings of stock that are easier to do than a normal IPO due to limits on the total size of the raise. Search for "Regulation D 504 and 506". These worked well enough but the pool of investors was very small. I don't think Michael ever hit the max raise limit.

Tom Olsen setup something called the Colony Fund (colonyfund.com) which was meant to be a mutual fund where investors would put in 5% of their portfolio for a very long term payout. The fund was balanced so it did give normal returns in the short term. I think this is as close as we came to the model above. IIRC Tom had problems finding the institutional investors to float the majority of the fund while it built up its horizontal "retail" side.

Beyond that you have the old SpaceVest angel group and currently you have the Space Angels network for angel investments. And there area couple of small, private hedge funds out there, too.

The problem is that the SEC just makes it very difficult to bring the average investor in. And then when you do go to the trouble of doing it, those investors don't come on their own. You have to have an aggressive, retail advertising program in order to get the fact that you exist out to your target investor.

I'll see if I can get Tom to comment with some of his thoughts.

Also, just because its been done/proposed in the past doesn't mean it can't work in the future. You just need to figure out what happened then, what is different now, and why that matters.

William Pomerantz said

at 9:30 am on Jun 17, 2008

In studying this more, you should look into the proposed Red Planet Capital (aka the Mercury Fund), as well as examples in other sectors, such as In-Q-Tel. It's probably worth discussing why Red Planet Capital couldn't really grow to fruition even during the Griffin administration, despite the fact that Griffin had been the President and Chief Operating Officer of In-Q-Tel prior to joining NASA, so was presumably well versed in that kind of mechanism's strengths and weaknesses.

Michael Mealling said

at 10:18 am on Jun 17, 2008

Will,
IIRC there were "legal" concerns that came up having to do with Red Planet Capital being funded by NASA (from http://www.thespacereview.com/article/887/1):
<blockquote>
However, as Peter Banks, a general partner in Red Planet Capital, recounted, that effort ran into a hitch when “there were concerns in the federal government, at a high level, about the appropriateness of the government investing in private firms.” By early this year NASA informed Red Planet Capital that no money for the fund would be included in the agency’s fiscal year 2008 budget proposal.
</blockquote>
If you look at Red Planet Capital's website it is morphing into Astrolabe Ventuers which appears to be a standard venture fund (although it does seem to aim for "the gap" by doing deals from $250,00 up to $3 million). It also appears to be reviewing its first deals so it has no portfolio as yet. There's also no indication if its funded yet or if its funded by its founders (archangels).

Bradley Cheetham said

at 12:26 pm on Jun 17, 2008

What about if NASA were to not invest any money, but instead served as the technical adviser to the fund. Zero government money, just government employee time to evaluate and present reasoning for its investments. Yesterday Ken mentioned the power of attaching NASA's name to projects, perhaps this is a way in which NASA can put other peoples money where NASA's mouth is?

Thanks for the information that has been posted. I'm going to try to research this a little more this evening!

Michael Mealling said

at 12:37 pm on Jun 17, 2008

Bradley,
That might be possible but that would require some deep discussions with some lawyers...

Michael Mealling said

at 9:37 pm on Jun 17, 2008

Some news on this front: "Space Angels Network announces its founding members" : http://tinyurl.com/5buywt

Bradley Cheetham said

at 7:22 pm on Jul 6, 2008

So if the fund were managed by people such as Ken Davidian ;) or Mike Griffin after he retires (people with technical credibility) we wouldn't need to directly include NASA so there goes the legal problem. Other idea I had was to make proportional investments in 'established' space based companies. Such as direct to home television, communication, and to a lesser extent remote earth sensing. Having these investments as a cornerstone the fund could then invest in new space companies with more security of not going completely broke. Of course the hope is that for the 99 that fail.. you invest in 1 that is a huge success.

Just an idea that developed after thinking about it more. NASA is probably not good to include you're right.

Michael Mealling said

at 8:14 pm on Jul 8, 2008

Bradley,
Well, managing a fund is more about understanding the business and markets than the technical issues. Its easy enough to find technical people who can help a fund do technical due diligence. The key is finding the money to back the fund considering the time-lines you're talking about. Most investment funds have time horizons of five years and most space businesses have slightly longer time-lines. Because of that a space oriented fund is going to have a hard time pitching to the typical institutional investors or make or break any reasonable sized fund.

Michael Mealling said

at 8:22 pm on Jul 8, 2008

What would be really cool is to figure out how to get some visibility for the existing space related investment groups out there. There are meetings such as the Space Investment Summit (http://www.spaceinvestmentsummit.com/) and groups such as the Space Angels Network (http://www.spaceangelsnetwork.com/). Is there a way that NASA, or those at NASA can help them out?

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