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1920 (Special Edition)||Listen to the show!|
|Aired on December 30th, 2012|
|Guest: Hoyt Davidson|
|Guest: Hoyt Davidson. Topics: Commercial space financing, markets, and risks. Please direct all comments and questions regarding Space Show programs/guest(s) to the Space Show blog, http://thespaceshow.wordpress.com. Comments and questions should be relevant to the specific Space Show program. Written Transcripts of Space Show programs are a violation of our copyright and are not permitted without prior written consent, even if for your own use. We do not permit the commercial use of Space Show programs or any part thereof, nor do we permit editing, YouTube clips, or clips placed on other private channels & websites. Space Show programs can be quoted, but the quote must be cited or referenced using the proper citation format. Contact The Space Show for further information. We welcomed Hoyt Davidson to the program to discuss commercial space from the perspective of markets and financing. Mr. Davidson, founder and managing Partner of near Earth LLC (www.nearearthllc.com) shared with us his expertise and experience in a very instructive discussion on these important topics. While much of the focus was on the commercial satellite industry, the applications apply across the board in the commercial space industry. One of the topics we discussed in great detail was market risk. In fact, our gust suggested market risk was a bigger challenge and more of a possible road block than technical or regulatory risks. Mr. Davidson also said what many others in the commercial space arena say and that is that the companies prefer to see themselves within their overall general industry such as media and communications rather than as a space company. We talked about several popularly touted possible commercial space industries from a market perspective, the length of time needed for a return on investment, and what is referred to as Death Valley for space entrepreneurs. Death Valley refers to an opportunity being too large for an angel investor but too small for venture capital. In talking about market risks, we also talked about getting investor partners to strengthen the deal. XM Radio was cited as an example. The pursuit of market research was discussed, both from the perspective of using a market research company and doing the market research in-house. Other potential commercial space industries were examined including space tourism, citizen science for orbital with cubesats as well as suborbital, space solar power, satellite internet services, and the use of public/private partnerships. In our second segment, a listener wanted to know about space focused investment banking career opportunities for MBA graduates. Next, we talked at length about public/private partnerships and being "pure" regarding what constitutes a commercial space company. In this context, pure refers to not having a mix of government and private capital, instead being 100% private. SpaceX with Cots and Commercial Crew served as one of our company examples but we also noted that no such 100% pure private company was out there given the costs and challenges of space ventures. Listeners asked about private capital financing for NASA science missions such as a Europa mission. Other listeners wanted to know about commercial opportunities for human spaceflight. Here, our guest suggested the opportunities were more with the robotic missions that come before the human missions. Toward the end, a listener asked how higher tax rates might impact risky commercial space investments. We also talked about geographical areas of special investment expertise in the U.S. and in other countries. Silicon Valley is not the only player in this field. Please post your comments/questions on The Space Show blog above. You can email Hoyt Davidson through me or by using his website.|
|About our guest...|
Hoyt Davidson is the founder and Managing Partner of Near Earth LLC, a CT based investment bank and advisory firm focused on the commercial satellite industry, aerospace and wireless telecom. Near Earthís clients include: major satellite companies, private equity and hedge funds, small to medium sized aerospace companies and early stage entrepreneurial firms seeking private capital. Before founding Near Earth, Mr. Davidson was a Managing Director in the Telecom Group at Credit Suisse First Boston. Mr. Davidsonís investment banking career began in 1987 at Donaldson, Lufkin & Jenrette where he was a co-founder of the firmís Space Finance Group in 1993, Wall Streetís first dedicated industry coverage group for the commercial satellite industry. While a member of the Space Finance Group, Mr. Davidson was an integral participant in public and private debt and equity financings totaling over $15 billion (e.g. PanAmSat, Loral, Globalstar, XM Satellite Radio) as well as being involved in several M&A transactions such as the sale of Comsat to Lockheed Martin. Mr. Davidson received his Science Masters in Management (MBA) in 1987 from MITís Sloan School where he was awarded the Henry B. duPont III Scholarship for academic excellence. Before entering Sloan, Mr. Davidson worked as a Senior Research Engineer at Lockheed Missiles and Space Company (Sunnyvale, CA) from 1979 to 1985 where he held a top secret clearance. Mr Davidson received a BS in Physics from MIT in 1979.
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