Welcome back to my series on How to make a space mission! Previously, we talked about how making a space mission has never been easier and my preferred method for coming up with a space mission idea. Some of our more enterprising readers might’ve already come up with a few ideas for space missions!
Now, ideas are great, but execution of an idea is what creates success. A bad idea with great execution will always beat a great idea with terrible execution. But to execute on an idea, you need two resources: time and money. While the focus of this blog post will be how to get money to fund your space mission idea, it is worth remembering that money can buy time in the form of partners, subordinates, and contractors.
Before we get into the meat of funding sources and how to get them, we first need to discuss how you will execute your space mission idea. Generally, you will fall into one of the three below:
- This refers to a space mission that you plan to execute without payment and without expecting outcomes for anyone other than yourself. Developing an amateur space mission can be considered a hobby, like amateur radio.
- A research space mission plans to produce outcomes that expand the sphere of human knowledge. This can be done by individuals, but is most often done through research institutions, such as universities and companies.
- A commercial entity conducting a space mission is expected at some point to generate revenue greater than the costs incurred. Our previous example of taking images of cars from space and selling them to the government would fall under this category.
At BLUEsat, we fall under the Amateur and Research categories. This means that there are avenues of funding that we cannot follow that a commercial entity can. On the other hand, this gives us the ability to be less strict with our resources and bring in students that a company might not hire and turn them into space engineers by the time they finish. There are pros and cons to whichever category or categories you choose to fall under, so make sure you think carefully about yourself and your ideas and choose wisely!
Once you have made your choice/s, you can consider the following funding opportunities. Note that my list is not exhaustive. There are likely other opportunities out there. Nonetheless, I hope the following is informative. The list of funding sources I have considered are:
- Yourself – applicable to all three categories
- Sponsorship – applicable to amateur and research
- Grants – applicable to research and commercial
- Investment – applicable to commercial
- Bootstrapping – applicable to commercial
Now let’s discuss these funding sources in a little more detail.
Self funding is simultaneously the easiest and hardest funding method we’ll discuss today. It’s simple because it has the least administrative barriers out of all the other funding methods. If you want to spend your own money on items related to your space mission idea, all you have to do is open your wallet. There’s no one else to tell you what to do, and no one is going to expect you to produce funding request forms or documentation. You’re accountable to no one but yourself.
But that self-accountability makes it hard as well. After all, this is your money that you worked hard to get. Every dollar of your money that you spend on a space mission is a dollar less that could go to credit card repayments, to that trip to Europe you’ve been saving up for, or even to a smashed avo on toast you wanted for lunch. Surely you should keep your savings invested wisely in a bank or a safe fund, and not waste it on frivolous things like a space mission. Wait, frivolous? Is spending money on achieving your dreams really that frivolous?
These are difficult questions that you’ll have to ask of yourself if the time comes when you might have to invest some money in a space mission or other activity or venture. The difficulty of these questions makes it clear why getting money from others is so difficult. They’re asking themselves these exact same questions!
When we think of sponsors, the sports-minded among us think of sports events and TV shows with announcements saying: “This program is proudly brought to you by this company and that company.” This essentially makes sponsorship the provision of money or resources in exchange for advertisement of the sponsor. The sponsor may also be able to derive other benefits from the relationship. Sponsorship works best with highly visible activities that are followed by the demographic groups sponsors are interested in. And as it just so happens, space activities almost never fail to generate significant public interest!
BLUEsat’s biggest sponsor is UNSW Engineering. In return for their monetary and in kind support, BLUEsat performs regular outreach events to appeal to the next generation of UNSW students, conducts high visibility activities (such as balloon launches and rover competitions) that produce positive PR for UNSW, and gives UNSW students an incredible educational experience they can’t get anywhere else.
Getting sponsorship is a difficult process, but the rewards are obvious. You need to develop your space mission idea to a high level of detail. You must then be able to communicate to potential sponsors what exactly you will need, and what benefits they will receive in return. There isn’t any real formalised process for getting sponsorship, so just pick up the phone and start calling!
The line separating grants and sponsorship is not completely clear to me, personally. If I had to guess, I would say that unlike sponsorships, grants are provided without the grant provider expecting a direct return. The grant provider will likely stipulate how the money should be spent, however. The grant provider will typically want the grants they provide to go to activities that they believe society will benefit from.
An example of this is the grant BLUEsat received under the Science and Engineering Student Competition Sponsorship Program from the NSW Government to participate in the 2016 European Rover Competition (ERC). While the NSW Government did not directly benefit from this, they understand that encouraging BLUEsat’s participation in competitions like the ERC helps produce skilled engineers and future tax payers capable of contributing to the industries of tomorrow.
Application to grants will typically involve a formalised process of filling out forms and producing justifications for how the grant money will be spent. Grants are typically awarded on a competitive basis, so if you’re interested in a grant, make sure your application is top notch by developing your space mission idea as much as you can.
Investment is a funding source that is only really available for commercial entities. Groups invest in companies because they anticipate the value of their investment rising (capital growth) and/or income from profits (dividends). If your space mission idea is not intended to produce revenue down the line that is greater than the expenditure required to start, then you cannot qualify for investment. While there are many loss-making companies that receive significant investment (Twitter, Uber, Tesla), they are able to continue receiving investment because they have convinced investors that they will experience significant capital growth and will produce dividends in the future.
Investment money is most often provided in exchange for a portion of a company (equity). For example, suppose Company X has managed to persuade investors that they have a shot at great success down the road. Investors will assess Company X’s records and business plans and ultimately decide to provide an appropriate sum of money in return for a sizeable portion of the business. In the seed investment round, when a business is just starting out, 20-30% of equity is usually exchange for anywhere between a few hundred thousand dollars to millions of dollars, depending on the perceived potential of the business model and the team running it.
Just like all the other funding sources, investment isn’t easy to get! While a well developed idea is all you’ll need for the previous funding sources, for investment you must show that there are customers waiting to pay for the solution your space mission is selling. This can be in the form of letters of interest, letters of intent, or some other official documentation. Applying to space friendly accelerator programs, such as MoonshotX, the Founder Institute, or UNSW’s own Textbook Ventures can help as well. But the best proof of all is getting customers to actually pay! Which brings us to…
Bootstrapping is an odd phrase, originally referring to the impossibility of raising your entire body into the air by pulling on the straps of your boots. Nowadays it is used to refer to companies that have not taken significant outside investment and have only used revenue from selling products or services to grow. A bootstrapped business is funded entirely by customers. The humble lemonade stall is a common example of a bootstrapped business.
It goes without saying that only a commercial space mission has the potential to bootstrap. And considering the significant costs involved in affording space hardware and launching it to space even with the CubeSat revolution, bootstrapping a space mission is incredibly challenging. After all, a commercial space mission must be in space to create revenue. But without revenue, a space mission cannot be bootstrapped to space! While bootstrapping has its place, it clearly cannot often substitute the initial funding required to get things going. However, a space business that can be bootstrapped is more likely to receive investment. Quite a catch-22!
We now have an idea of what the sources of funding for a space mission are. Now we just need to go and get them! Polish your ideas with as much detail as you can furnish, and start probing! Ask everyone who you believe might be relevant for advice, resources, or money. After all, you never get what you don’t ask for.
However, as you progress in your efforts, you will be met with frustration as people ignore you or turn you down for no good reason. How is it that the Elon Musks of the world can offer up an idea and immediately have investors lining up behind them? What do they have that you don’t? My answer to this is that they have experience, knowledge, and connections that you and I can barely dream of. If summed up in one word, I would say that they have credibility.
Join me in Part 4, where we’ll discuss strategies for how you can go about gaining credibility in your field.