This involves selling off a percentage of the company to investors. This is very commonly done to raise money, and we don't have to worry about people having vested interests other than space development in this project, unlike with the parent organizations, ASI and LRC.
Although selling equity in the venture dilutes the profit available, it is often the only way to raise capital for a venture like this. For the Artemis Project it also has a great deal of appeal becuase it gets more people involved for a very long time. If people see that the stockholders of our company are well-rewarded for their investment, then the boards of existing companies are more likely to be willing to invest their own stockholders' money.
This involves allowing companies to associate with a much-publicized mission, thereby drawing attention to themselves. It can be done by advertising announcements, putting decals on the fuselage, putting our logo on their products, providing advertising on our documentation, etc.
If we play our marketing cards well, we might get a 5% margin (of retail) from companies having our logo on their products, and announcing in advertising "Official sponsor of the Lunar Sample Return Mission." This would only work if the mission was highly-promoted, but this would be necessary to sell the lunar rock in any event, so piggybacking corporate sponsorships on a marketing campaign is an easy way to gather extra revenues.
For decals on the flight hardware, the advertising value of putting, say, Coca-Cola's trademark on a piece of equipment that will appear on camera is calculated by counting "impressions." For example, if you look at a Coke billboard one time, that's one impression. If you see that billboard every morning on the way to work for 200 days a year, you've racked up 200 impressions. If 100,000 people see that same billboard, that one advertising element has earned 20,000,000 impressions. That's why there are so many billboards.
We'd have to make some broad assumptions about camera work and television coverage to calculate the number of impressions we'd get from that one Coca-Cola logo. It's likely that the logo would get more exposure from the news conferences where Coke announced they were one of the sponsors of the project. The earlier sponsors will enjoy this more.
How much is an impression worth? There doesn't seem to a consistent formula. We need an advertising expert to help us with this.
The only money we have to spend in this approach is for an advertising blitz, but the money spent on that goes towards the main project, and space development in general; it is well spent.
Borrowing money from banks to pay for items which have value, putting the item on the line as collateral, is used very commonly. Startup companies often borrow from the bank, however, you have to pay for compound interest. This can be a major drawback.
Debt financing plays a reasonable and vital role in space projects. Some projects have such great certainty that bank financing is available. Typically, debt financing looks for reasonable, measurable risk and adequate hedge mechanisms.
For example, a building may be necessary to house Earth-side communications and control equipment. That building will sit on real property. It represents an improvement to that property. It is collateral against the funds lent to build it. Although the venture building the facility may go under, the market for real property and buildings is such that there is adequate salvage value for the loan.
Capital equipment to build things can also be debt financed. Even highly specialized machine tools often have multiple applications and hence represent collateral security for debt. Aircraft for weightless training can also be debt financed since they have other uses. Office equipment can be debt financed. Copiers, computers, monitors, printers, faxes, phones, furniture... all these things can be financed with debt.
Section Cost Debt Financable Launcher $110 M Yes (with insurance @15%) Carrier Spacecraft $50 M No Robotic Element $70 M No Mission Control Element $40 M Yes Recovery Operations $30 M N/A Marketing $50 M 90% (post-mission marketing only) Program Wraps $70 M No Total Debt Financed $195 M of $420 M
Some parts of the Sample Return Project can be debt financed, such as resellable items. These include radar tracking dishes, generic spaceship parts, buildings, office furniture, etc.
Also, endeavors sure of success can be debt financed. Launches, for example, assuming they are insured at a typical fee of 15% can be debt financed; the bank will be paid, even if the launcher explodes, by the insurance company. Cash is needed up front, so the bank doesn't have to worry except for between payment and launch about the program dissolving, and by that time we'll have a proven track record.
The flight equipment will probably not be able to be debt-financed. If the program dissolves before launch, the components (all being off-the-shelf) will be able to be sold to another spacecraft company. If the spacecraft malfunctions in flight, however, the bank would not get their money back. It is uncertain if a bank would fund the spacecraft parts, dependent highly upon the perceived risk. Two parallel missions would increase the chances of funding.
The Program Wraps will not be able to be financed by debt because most of that is spent on labor, with nothing to show as collateral. The spacecraft, robotic element, mission control element, and recovery operations also don't sound like good candidates for debt financing unless we can get the service provider to carry the loan. For instance, recovery operations won't be needed unless the mission successfully returns the lunar samples, so would could probably retain a service provider for 10% up front and a promise of cash once the goods are sold.
We might be able to borrow money for Marketing after the samples are home. If we have the samples in the vault at the North Carolina National Bank, there would be no problem in asking that same bank to lend us a few million to launch a massive marketing campaign to sell them. About 90% of the marketing money would be spent after the samples have returned.
Companies buy rock in advance, to be paid back after the mission. Incentives such as guaranteed access at full price, or a reduced advance price, can be used. This is open not only to resellers, but to private citizens who want more rock for their money (albeit at a risk) or if supply is predicted to be low (i.e., making sure you'll be able to get some after splashdown.)
There may be substantial sentimential motivations to purchase rock from the first mission, rather than from some subsequent mission, not only for the obvious reasons, but also to help along the lunar base, which would not have flown yet. Intereest in subsequent missions will likely fall after the first mission is complete, and there will be a large fall-off in the motivation of helping to fund the return to the moon.
On the other hand, buyers might hold off until a later flight, when the price of lunar rock would drop due to supply and demand. However, we are selling more then just specks of dirt; we're selling a chance to contribute to manned space flight and space development. A second sample return mission will not increase the supply of moonrock associated with fundraising one bit. Because this is moonrock, presumably from where the lunar base will be constructed, both the psychological and physical links to the Reference Mission will be strong enough to generate additional impetus to pay.
For investors, and ignoring sentimental values, assuming 90% percieved chance of success, a 20% advance sale discount would be in order, assuming there will be enough rock to go around at the targeted price. Perhaps more of a reduction will be needed to lure actual investors, as the ROI in this instance is only 10% spread over a number of years. At a small price reduction, the takers will mostly be people wanting to stake out their claim or get more rock for their money.
Thus, to make this work the rock must be made inaccessible, so advance orders will be more-or-less required to ensure rock is avaliable for your wife, museum, university, etc. The best way to do this would be to sell it off very slowly, after a large marketing campaign to drive up demand. The cost would be raised accordingly.
Or, one could simply require advance orders for sale of all$ 3 billion worth of rock returned (or some similar sum), and fund the spaceship development with that. Debt financing could get the project to the point where advance sales would be credible, or an 86% refund offer could be made in case the spaceship explodes at translunar insertion (assuming 1:6 cost:revenue ratio, or about $3 billion of rock sales).
Aside from the obvious opportunity to study more lunar rock, the Sample Return Mission has many scientific possibilities. There is a fair potential for exploitation of the mission's serious scientific value.
With this mission, there is an opportunity to sample rock from a class of site never before explored. Of the nine sites sampled by robotic probes, the Mare Anguus site has never been explored. One of the largest problems for lunar science is the lack of data--so few sites have been detailed for such a diverse planetoid. Data and rock from this site would be invaluable to scientists.
Also, this gives data for the manned mission planning. The sample return vehicle will likely land at the manned project's slated landing site, so advance experimentation and data collection for resources and resource extraction would be essential before committing to a specific site. Also, the telerobot's visual data and opportunity to explore the site early on would prove very useful both for the Artemis Project and science in general.
There is also the opportunity for scientific research at the landing site. Carrying scientific payloads to the moon, such as sounding explosives for examining subselene structure, would be able to fill in gaps in scientific knowledge, and provide information for the Artemis Project's manned mission planning staff. There is now the opportunity to perform experiments that were not available for earlier missions to the moon at a mission-enabling cost for the researchers.
-- Simon Rowland, Gregory Bennett, Jim Davidson