When All You Need is Cash

Larry Peterson (Angel Investment, El Paso, Texas)
* Investments in NM

Lon Levin (t/Space)
- XM founder
- Challenge of introducing new technologies

Brian Birk (Sun Mountain Capital)
- Have assets of $500M
- One of the few companies looking at aerospace startups, e.g. Eclipse

Patrick ? (Rocket Racing League)
- Experience with building entreperneurial businesses
- Be very selective in raising early money

Q&A:
What kind of money, e.g. $50M, out there?
Levin - Lots of money but less now for startups, more for less risky. Still aftermath of Internet bubble.
Birk - Aerospace investment levels are usually too high, ~$400M, for comfort level of venture capital.

Money for govt.:
Petterson: Govt money often for early technology R&D. DARPA has a venture capital fund. (NASA's fund has been canceled.)

Birk: Challenge to have examples of entrepreneurial aerospace companies that have made money.

Levin: Investors should spread out their funding to infrastructure companies.

Patrick: Try to mature the technology as far as possible, as close to market as possible, before trying to raise money.

Investor ROI requirements:
Petterson: Different investors have different timelines on their ROI. Other factors for whether they decide to invest include the size of the market, the various risks, etc.
Levin: Every investor wants ROI. The markets for space, like cargo service to ISS, are definitely there. How to commercialize them is the question.
Birk: No cadre of managers for the personal spaceflight industry to whom an investor can call on for advice and recruit from if there is a serious problem that needs to be fixed in a particular company.
Levin: NASA becomes the de facto "expert".

Where do you find good management?
Petterson: Often the inventor is not a good manager. Sometimes the investors will help you find a management team.
Levin: Quickest way to gain credibility is to tell potential investors that you are willing to move over to make way for a professional manager.
Patrick: Founder has to be willing to give up control.

Does a product oriented company have appeal compared to a service.
Petterson: All comes down to perceived risk. Too many other mitigating factors to say services are preferred over products.
Birk: Services often have earlier cash flow and that can make them easier to finance.

Biggest mistake in looking for money:
Patrick: Letting ego get in way of taking money. E.g. not willing to take more dilution that threatens one's control.
Levin: Don't lose perspective. Just because an investor wants control, doesn't mean they are going to fire you. In fact, it means they believe in you.
Petterson: Often see very bad business plans.
- Must have realistic expectations.
Birk: Need a sense of trust between you and your investors. When they look at a CEO, will he or she always give the full story, good or bad, of what's happening.

Professional services:
Levin: Get lawyers, etc. who understand space or other business that you are in.

When do you know that it's time to move on:
Birk: If you start to think about that question, you probably should have left several months before then.
Patrick: Write down what you would sell the company for right now then put that away. When an offer comes, take out that paper to get a perspective on what you really need.
Levin: A friend said he made all his money by selling too soon.