he resounding success of the Space Venture Finance Symposium hosted

in May in Dallas by the National Space Society and Innovarium Ventures offers an important snapshot of the current state and future direction of commercial space finance and investment in the United States

and Europe. Taken together with XCOR’s June 7 announcement of the

investment by a major angel network in a launch startup –

Boston Harbor Angels

– these two milestone events indicate a growing potential to attract investors toward commercial space ventures, and improved maturity and professionalism by space entrepreneurs.

The May 24 conference addressed core issues related

to successfully attracting capital to space-related enterprises at all phases of development, and focused particular attention on funding constraints faced by space startups during the critical formative stages.

In 2006 approximately 234,000 angel investors in the United States invested $25.6 billion

in 51,000 deals across all industries. Total


angel funding for new space ventures, however, amounted to at most $10 million spread over approximately 10 deals, which were sourced entirely from individual investors.

The disparity in these figures clearly demonstrates both the absence of an educated and space-savvy angel investor community, as well as a pressing need for companies to show

potential investors

better business models and more experienced management teams. U.S. venture capital investment in 2006, in contrast, reached

$25.8 billion

, and was spread over slightly more than 3,000 deals with no known investments in core space infrastructure startups.

Many commercial space entrepreneurs seem confused about whether they are





early stage

startups, and if they should be seeking angel or venture capital

funding. One goal

in Dallas was

to have each participating entrepreneur

leave the conference with a clear understanding of where they fall in the technology startup financing pipeline;

which investor community might be best matched to their particular financing needs;

how to present information to these investors;

and where they might find investors such as individual angels and angel networks.

Most space startups can be classified as


companies, which means
they are at an early point in their development where angel investors – and not venture capital – are typically the more appropriate source of equity investment. Few entrepreneurial space companies are

ready today for venture capital, and are unlikely to attract

venture capital investors at this stage of their development due to their long-term business models and uncertain exit strategies. The overwhelming majority of the

17 featured companies in Dallas were seed-stage startups in need of angel investors. Addressing the persistent bottleneck in funding for


space companies requires the commercial space industry to focus its attention on educating – and listening to – angel investors and angel networks.

Another major theme that emerged in Dallas is that the commercial space community – and U.S. space advocacy groups in particular – need to rethink how they present the industry to domestic and international investors. Traditional definitions of “NewSpace” and “alt.space” tend to emphasize high-risk Earth-to-





applications, such as

space tourism, rocket launchers, on-orbit refueling facilities, on-orbit servicing and space solar power.

These definitions ignore the wider expanse of lower-risk


and Earth-to-Earth

startups such as


Earth observation, navigation and mapping, telemedicine, space-themed attractions, and many other mainstream applications

. JoergKreisel, a financial advisor to the European Space Agency

and European space startups, suggests that although

space-to-Earth companies may be less sexy or far from the cutting edge of moving humanity into space, they do offer superior investment prospects and a track record of successful exits that are well understood by the mainstream investor community around the globe.

Improving the image of commercial space with investors can be achieved by demonstrating a broader range of investment opportunities that offer a variety of entry points and risk-return profiles. Presenting sound space-to-Earth

deals to angel network and venture capital investors with the goal of educating them about space – and bringing them on board for riskier

Earth-to-space startups down the road – offers a credible path to attracting new capital to our industry.

Keynote speaker Lon Levin is an

excellent example of a savvy investor. He

cut his teeth on


satellite telecom

as co-founder of XM Satellite Radio

and now


moved to


launch vehicle development and

space station resupply markets as chief strategic officer with Transformational Space Corp. (t/Space)

. We need to replicate this model with other investors.

Focusing dialogue with the investment community around

convergence themes

appears to be an excellent way to bridge current mainstream technology investment trends with important segments of the space community. Space-and-information technology (IT), space-and-aviation, and space-and-nanotech convergence all found resonance with investors and entrepreneurs in Dallas. This approach was strongly supported by veteran

venture capitalists

, including SpaceVest and Astrolabe Ventures, as well as new entrants Atrium Capital and E-Synergy Ltd. of London, all of whom broadly define the range of


space-themed investment opportunities and markets


The Dallas conference also achieved several notable milestones. Th

is was
the first time

Microsoft financially sponsored

a commercial space investment conference.

Bill Gail, director of strategic development, provided a riveting tour through Microsoft Virtual Earth, a competitor to Google Earth. Cisco senior executive Rick Sanford also presented his vision for extending mobile Internet protocol

communications and networking infrastructures into air and space applications. The presence of Microsoft and Cisco talking IT-space-aviation convergence did not go unnoticed in venture capital

, Silicon Valley, IT and aerospace industry circles.

Additional “firsts” included the first-time participation of five major angel investor networks from

California, Texas and New York,

as well as a panel on state equity investment in space startups and spaceports, featuring state officials from Texas, New Mexico and Florida. States now are

entering the aerospace sector as major players, with significant equity funds at their disposal with which to influence manufacturing and headquarters location decisions.


media coverage crystallized the image challenge facing the industry. One veteran space blogger reported that the primary achievement of the symposium was the


creation of a new acronym

– and regrettably passed over the eight hours of solid content, commentary

and lively question and answer

sessions. Many national and financial media leaders were absent, underscoring the need for better outreach to communicate the events, merits

and potential of the industry.

Upcoming commercial space finance symposia are expected to focus on aggregating and educating the angel investor community and networks in key U.S. and European technology clusters; improved coaching and presentation formats for space entrepreneurs; bringing in

new blood

in the form of more

space-to-Earth startup companies and investors; sustained support for


themes with other key technology sectors such as IT and software, semiconductors, alternative energy, cleantech, greentech, nanotechnology and biosciences; the use of prizes in space startup financing; and improved finance media awareness and representation.

All in all, the Dallas symposium represented a milestone space finance conference that set a new professional standard and benchmark for future events scheduled for later this year and beyond.

Burton Lee

is managing partner of Innovarium Ventures

and served as conference chairman and organizer of the Space Venture Finance Symposium, along with co-Chairs John Higginbotham, SpaceVest; and

Peter Banks, Astrolabe Ventures.