Fieldfisher's Space Business Summit 2015 brought together a full house of C level representatives from major space businesses to discuss growing and financing space business in Europe and worldwide.
Growth prospects and challenges for the space sector
Among the highlights, a panel of distinguished speakers from ViaSat, Laser Light, Phasor, and Lunar Mission One debated the challenges and emerging opportunities for space businesses. At a time of continued growth in High Throughput Satellites and an increasing wave of new global constellations, some commentators are asking whether the industry is in danger of over-capacity.
Against this background, the panellists unanimously concluded that super-saturation of capacity (and the resulting downward pressure on pricing) is not a substantial risk. In their view, the demand side pressures for increasing capacity across all forms of communications, especially for mobility applications, will require significant additional infrastructure. With mobile broadband access rapidly becoming a fundamental expectation, the growth in the variety and quantity of data available is driving new applications, and consumers and business users alike are increasingly expecting to have information at their fingertips.
The current heavy reliance on fixed network infrastructure accessed via wireless links presents an opportunity for satellite service providers to deliver seamless, ubiquitous, mobile data access. Continuing growth in network traffic and demand for additional mobile capacity will likely require additional high bandwidth infrastructure, which may be best delivered by satellite. Chris McIntosh, CEO of ViaSat UK, felt that in addition to meeting current demands, the increased availability of bandwidth allows current applications to expand to new locations (for example video streaming on aircraft), and encourages the development of new applications specific to the new mobile context.
Financing space business
The Summit also addressed the vital issues about how innovative space businesses are best financed, whether through public or private funding sources. Looking at public sources, Philip Haines, Head of Telecom Business Development at the European Space Agency, highlighted the ARTES and ATLAS programmes, which provided around 4.4 Billion Euros in funding during 2015 to programmes such as earth observation; navigation; telecommunications and integrated applications; launchers; technology support; and robotic exploration. Businesses in the UK can access funding from ESA's ARTES programme through the UK Space Agency - this funding is designed to open up green-field markets which the private sector can then develop and exploit.
Turning to private funding sources, the largest challenge for an early stage company in the space industry can be obtaining the all-important seed and first round capital. The finance panel with specialists from Portland Advisers, UK Export Finance and Fieldfisher commented on the importance of managing the business' approach to working with investors and lenders. Both debt and equity financiers will want to see clear and coherent plans for financing the business – typically, it will therefore be necessary to coordinate the engagement with debt and equity financiers. The panel discussed the need for new ventures and expanding businesses to strike a balance between debt and equity finance, with most space businesses requiring the input of each to support growth. In any event, a bankable business proposition will remain crucial for both lenders and investors.
Making space businesses bankable
When it comes to bankability, Matthew Rocksborough-Smith, Chief Strategic Finance Officer of Laser Light Global, highlighted the vital issues which any space business needs to resolve: who is your customer, what assets do you have which can be used to leverage a competitive advantage in addressing the customer's real requirements, and are you aiming to be a disruptor or partner with existing players? John Worthy, Head of Satellite and Space Projects at Fieldfisher, added that investors and financiers will look at how far the supply chain and customer contracts protect the business and support the revenue forecasts, and what unique intellectual property the business brings to the table. Where the business relies on spectrum or an orbital slot, it will also need to demonstrate how the key licensing and frequency coordination risks can be mitigated effectively. Understanding what is on the legal and regulatory hit list for space investors and financiers enables the business to be prepared and smooth the path to financing (and to commercial success). This is especially important when markets and technologies are changing fast - losing time in the financing stage may mean that customer expectations have moved on before the product comes to market.
The Space Business Summit provided a great opportunity for space professionals to exchange views on the future development of the space industry, and we would like to extend our thanks to all delegates, and particularly our distinguished speakers.
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