Introduction


A fundamental shift is well underway in the “outer space sector” – the industry, individuals, and innovation ecosystem that constitute the creation of marketable in-space products, services, and technologies. Over the past two decades, a massive influx of private capital has, through its investment, spurred the creation of a burgeoning commercial space industry.[i] This, in turn, has led to the development of novel capabilities, processes, and business plans, which may lead to the creation of new markets and spheres of economy in outer space.[ii]

These technologies and capabilities include: constellations of cheaply-developed, rapidly deployable small satellites and “CubeSats” capable of continuous Earth imaging, radio occultation, and wireless broadband, internet, and telecommunications services; reusable small- and medium-payload launch services; in-space satellite refueling and robotic repair services; planetary spacecraft, including asteroid prospecting and mining spacecraft and lunar landers; and ground-station, data relay, and data analysis support stations and software. They are often characterized by their utilization of commercial off-the-shelf parts, novel production techniques such as additive manufacturing, iterative design practices, and maintenance of their own intellectual property.[iii]

This shift is significant for several reasons. First, it represents a major departure from the traditional approach to aerospace investment and financing – an approach that, over the past half-century, was defined predominantly by public investment in research and development by the government and managed through federal agencies such as the National Aeronautics and Space Administration (NASA). Rather, much of the current financing of this development is done by private capital and investment, particularly venture and angel investment. Second, and related, it is driven by non-traditional entities and actors, particularly small- and medium-sized enterprises and start-ups, in contrast to the traditional large aerospace corporations and contractors. Third, again and related, it is characterized, by the deliberate search for and utilization of new design and development processes and techniques, the fielding of new technologies and capabilities, and new business practices. Fourth, resulting from above, it is done in deliberate pursuit of new markets and opportunities for profit from the utilization from space. Whereas the space economy has, for most of its history, been defined by two large markets – launch and satellite services, predominately communications and television broadcasting – the trend today is toward new applications such as those listed above.[iv]

Much about this trend has been made in the media, in industry dialogue, and in political/regulatory discussions, with an emphasis placed on the different design, development, marketing, and operating cultures and philosophies that exist in dichotomy between the established and the emerging segments of the industry – between “Newspace” and “old space.” While many debate whether this delineation accurately depicts fundamental differences between these sectors, or indeed whether those differences exist at all,[v] it is nonetheless the case that the outer space sector is being disrupted by new entrepreneurial entrants, new capital, and new business ideas.

Is there an underlying catalyst for that disruption? Innovation, and particularly the forces that drive it, is challenging to specifically quantify. However, this paper argues that, in part, this disruption and innovation is being driven, influenced, and sustained by the sources of capital that are flowing in in investment of it. Much as was the case with other “frontiers” of technology and business such as the internet, computing, and biotechnology, the interactions and dynamics between private investors and entrepreneurs in the space sector aid and abet the innovation process, leading to or reinforcing the aforementioned new technologies, procedures, and business plans.

There exists a broad field of literature analyzing the relationship between private capital investment, the sources of that capital, and innovation and innovative behaviors in market-participating firms. Likewise, there is a growing set of data tracking the investments made into the commercial space sector, along with the breakdown and characteristics of those investors. However, there has been little work done to synthesize and cross-compare this literature with this data. To achieve that end, this paper explores the ecosystem of private capital financing start-up and early-stage companies in the commercial space sector. Drawing from theoretical and empirical literature on innovation and on private equity, it draws conclusions about the recent effects of private investment, particularly venture capital and angel investment, on the outer space sector.

This analysis is important for understanding future trends in the outer space economy. Literature on innovation has indicated that the process of innovation is necessary and vital for continued technological development and economy growth.[vi] Likewise, it has found that small firms such as start-ups are major drivers of economic growth and technological innovation, indeed outpacing larger corporations. Small firms have advantages as sources of innovation because they facilitate structures and organizations that value originality and ideas; they are quick to adapt to new and risky initiatives; and they can reap substantial reward from market share in smaller niche markets, such as the outer space markets.[vii] Analyzing the trends and implications of private investment in the outer space sector and its impact on start-up innovation may suggest the future direction and character the in-space market may take.


Defining “Innovation”


To begin, the concept of “innovation” needs to first be defined. Innovation, as a favorite catchword of policymakers and of business-people and as a term often used to describe the products of the Newspace sector, cannot be narrowly qualified. Innovations are not necessarily new inventions. Innovations do not need to be technical, nor technological, nor even tangible. Innovations may be new ways of doing or thinking about a product, service, or process; often, innovations build off technologies already in existence. Likewise, innovations do not necessarily, or indeed often, lead to new businesses, new markets, and profits. It is often that innovations fail to gain market traction.

To those points, the Organization for Economic Cooperation and Development formally defines innovation as “the implementation of a new or significantly improved product (good or service), or process, a new marketing method, or a new organizational method in business practices, workplace organization or external relations.”[viii] It expands on these definitions further by offering the following descriptions:

  • Product innovationA good or service that is new or significantly improved. This includes significant improvements in technical specifications, components and materials, software in the product, user friendliness or other functional characteristics.
  • Process innovation: A new or significantly improved production or delivery method. This includes significant changes in techniques, equipment and/or software.
  • Marketing innovation: A new marketing method involving significant changes in product design or packaging, product placement, product promotion or pricing.
  • Organizational innovation: A new organizational method in business practices, workplace organization or external relations.

            Are these forms of innovation already apparent in the commercial space sector? Looking at the activities within broad ecosystem of space start-ups and firms that have emerged in the last two decades, particularly those that have relied on private investment, it would seem so. These examples include (but are not limited to):

  • Product innovation: SpaceX, using reusable rockets to drive down the cost of launch; Bigelow Aerospace, using expandable/inflatable modules to create lower-cost, higher-volume space stations.[ix]
  • Process innovation: Rocket Lab, using 3D printing and carbon fiber for its rocket design.[x] OneWeb, using an end-to-end assembly line for satellite manufacturing.[xi] Ixiom, using discarded rocket upper-stages as space station modules.[xii]
  • Marketing innovation: Spaceflight Industries, offering ‘rideshare’ services that connect small satellite operators with launch companies for tailored launch services and flight opportunities (akin to how vehicular ride-sharing apps such as Uber connect riders to drivers).[xiii]

How, and why, does innovation occur? Its catalysts are fundamental to its definition and characteristics. The economist Joseph Schumpeter, whose early work contributed greatly to the foundations of the study of innovation economics, posited that innovation occurs because industries must revolutionize their economic structure from within by creating better or more effective processes and products. This, in turn, leads to broader market distribution and capture, which then leads to greater profit.[xiv]

This profit motivation is important. Entrepreneurs are continuously looking for better ways to satisfy and grow their consumer base through improved quality, durability of product, services, and prices. Again, these come to fruition through the process of innovation with organizational strategies, marketing techniques, and new advanced technologies.[xv] In short, entrepreneurs and firms seek to innovate so that they may outperform competition (securing a “competitive advantage”), establish new markets where they can hold dominate market share, and return investments made by stakeholders.

This last point is significant in the context of private investment. Private investors seek out companies which hold the promise of long-term profit and market gain, invest financial capital in them, and then, after the company’s product or service has developed, reap a positive return-on-investment. It is intuitive, then, that investors will put capital into companies that are or could be innovative, as these companies hold the potential for the largest positive return-on-investment.


Defining “Investment” and Investors


Investment is broadly defined as the production of goods that will be used to produce other goods.[xvi] In the context of this analysis – discussing business investment – it is often done through the provisioning of capital to a company for their operating, research, and development expenses, in return for shares in the company. While the categories of investors continue to shift and evolve, the generally-accepted typology can be summed as below:[xvii]

  • Angel investors: Individuals or families (to include family offices) that have accumulated a high level of wealth and seek potentially high returns by investing in ventures during their earliest stages.

Angel investors “get in at the ground floor,” in that they invest when a company is just starting development on its product or service. By doing so, an angel investor can realize an attractive potential return, as the early investment will secure a significant foothold and stake in the company. Angel investors generally seek to realize their return in about five to seven years from the date of the investment.

  • Venture capital firms: Groups of investors that invest in start-up, early stage, and early growth companies that have high growth potential, doing so while accepting a significant degree of risk.

Venture capital funding generally comes in stages (or rounds), usually designated by “series.” The form of investment is equity; specifically, venture capital firms generally seek to acquire stock in the company in which they are investing, so that they take an ownership stake in the company. These shares are usually convertible to common stock upon the time of a stock market launch, an initial public offering, or if the company is sold.

  • Private equity: Private equity firms are formed by investors to directly invest in companies. They generally invest in established companies at large transaction sizes or acquire an entire company or group of related companies that can be merged.
  • Corporations: Corporations have long provided funding necessary to bring technology start-ups to initial operating capability, and to sustain their ongoing programs.

Corporations both invest internally, or provide funding for a venture in the form of either straight equity or sometimes in the form of debt with the option to convert the instrument into equity. Some companies may also invest through a corporate venture fund, which doubles as company-owned VC equivalent.

  • Banks: Banks are heavily involved in providing funding for research and development programs managed by large, established firms. Investment banks often focus on very-large transactions, typically in the hundreds of millions to over one-billion-dollar range.

As banks tend to be risk-adverse in their investments, they are less likely to have major roles in providing financing for start-up ventures. Even before the financial crisis of the last decade, banks were reluctant to lend to small and young firms because of their perceived riskiness and their lack of available collateral.[xviii] As such, they have largely been absent in the emerging entrepreneurial space sector.


The Role of Private Investment in Innovation


Where do these sources of capital fit in to the start-up ecosystem, and how do they contribute to innovation? Entrepreneurs that launch a technology-based venture, such as a space company, face high risks as they innovate while assessing technological feasibility, the credibility of their business model, and the viability of their product or service. Given the high risks of early-stage entrepreneurialism, capital sources are heavily limited. Angel investors and venture capitalists, who often invest in portfolios that manage these risks, fill the need for capital by assuming risk alongside the entrepreneur in exchange for equity in the company. As these sources of capital are often the first from which new firms in the space sector receive investment, this paper first turns to them.

First, venture capital. Literature suggests that venture funding has a strong positive impact on innovation.[xix] This is done through at least three different “transmission” mechanisms by which venture capital exerts an influence on overall economic performance:[xx]

  • Financing function: Venture capital markets generate new business cases that may not have had access to adequate financing through traditional sources of capital.

As noted earlier, this function is particularly useful for companies that are pursuing high-risk products or exist in immature markets. These ventures require significant amounts of capital to move from inception to their early stages, yet struggle to find that capital from larger sources such as banks.[xxi] Indeed, research has indicated that financing from loans is often not available for nearly half of start-ups, and over 90 percent of venture capital backed firms have said that further financing through their ownership alone had been either impossible or insufficient.[xxii] This gives start-up firms with innovative ideas but not the capital wherewithal to execute on them the opportunity to begin research and development.

  • Selection function: Venture capital funds and venture capitalists vet and select projects with the best prospect of profitability given their risk, and allocate financial resources proportionally to those that have higher chances of innovative success. In effect, ‘selectively breeding’ the most innovative firms.

Venture capital firms often go through rigorous vetting processes by which they select start-ups with the most mature or lucrative business plans, the most realistic or ready technologies, or the highest levels of technical expertise, management experience, and industry knowledge.[xxiii] Research has shown that venture equity tends to finance firms deemed “above average” in their levels of innovative culture. While it is difficult to evaluate or determine whether a start-up’s innovative approach will be successful in the long-run, venture capital succeeds by allocating resources to innovation probabilities, which, through large sums of investment across wide portfolios, ultimately produces innovation “wins.”[xxiv]

Moreover, research suggests that the optimal behavior of companies that are competing for the same financial resources from a venture capital firm is to differentiate and focus on distinct lines of research, development, and business. This “proximity” of venture capital deters convergence of innovative activity for similar companies, and instead forces companies to seek different areas of specialization. This creates broader innovation across entire industries and fields.[xxv]

  • Value added function: Venture capital firms contribute not only capital, but also managerial experience, access to informal networks, and offer professional business models and entrepreneurial training to the owners of the firms in which they are investing.

Research shows various mechanisms behind the value added functions that venture capital contributes. First, venture capital firms facilitate communication among companies in their portfolio and enable the diffusion of knowledge within their networks.[xxvi] The literature on innovation suggests that “networks” play major roles in fostering innovation n, particularly within single industries. Firms that promote open forms of collaboration benefit from having access to different capabilities and knowledge; this enhances their competitiveness and accelerates the process of innovation. For start-ups, it allows them to partner with each other and take advantage of different resources.[xxvii]

Second, venture capital firms appear to certify the value of particular innovations to the general public. Venture funding increases awareness of companies’ innovations and spurs follow-on innovations and technologies by other inventors. Likewise, having access to venture funding adds a level of credibility to the firm being invested in – as that firm has to go through the vetting process – and therefore opens market opportunities for that innovative approach to more easily access and exploit.[xxviii]

Next, angel investment; in many ways, angel investment provides the same benefits to innovation as venture capital, though at lower levels which correspond with the lower level of investment. Angel investors who are investing their own money, tend to be more flexible and less focused on immediate financial returns, allowing longer-term experimentation which can lead to more innovative products or services. In addition to providing start-up capital, angel investors play a key role in providing new firms strategic and operational expertise as well as social capital through their personal networks, expanding the knowledge network upon which firms can draw.[xxix] They often have deep knowledge of the industry they are investing in and of other entrepreneurs that drive them. As a result of these value-added benefits, start-ups that have been financed initially be angel investors tend to have much greater success rates in attracting subsequent venture capital – hence angel investment often serving as a “gap” for very early-stage start-ups.[xxx]

Finally, corporation venture funds may abet innovation. Corporate venture capital tends to invest in start-up firms in earlier stages than venture capital firms, and in less mature markets and more research and development intensive industries. It is thus more tolerant of failure, and allows for wider latitude of experimentation on technologies and business plans, thereby creating the environment for innovation to flourish.[xxxi]


Capital in the Space Sector


Having reviewed the impact of and relationship between private investment and innovation, this paper returns to the case-study of the space industry by exploring the status of capital in the space sector. Since 2000, “start-up” space ventures – defined as space companies that began as startups backed by angel- and venture capital – have attracted over $18.4 billion in investment, including $6.3 billion in early- and late-stage venture capital, $2.3 billion in seed financing, and $4.5 billion in debt financing.[xxxii]

More start-up space companies reported private investment in 2017 than in any previous year, surpassing the total from 2016 by nearly one-third. In 2017, 164 investors put nearly $2.5 billion into 73 start-up space ventures across 77 deals. The number of companies that reported new funding in 2017 likewise broke records from any previous year.

Figure 1

More than 250 venture capital firms have invested in the space sector since 2000. In 2017 alone, 87 VCs invested in start-up space companies, nearly returning to the peak level seen in 2015 and surpassing the 2016 total. Of the 87 VCs that invested in start-up space companies in 2017, 44 had reported investment in start-up space companies in previous years, while 43 appear to be new additions.

Since 2000, over 140 angel investors have invested in start-up space companies. While specific data about the level of investment funding that these angels have provided is not available, as it is often kept proprietary, data suggests that the number of angels investing in start-up space companies and the number of start-ups that benefit from angel investment are both increasing.[xxxiii]

Figure 2

Notably, while private equity investment in space start-ups has totaled $1.7 billion since 2000, there has not been any reported private equity investment in 2016 or 2017.

In terms of corporations and corporate venture capital funds, 103 have invested in start-up space companies since 2000. The number of corporations investing increased over forty percent from 2016 to 2017, from 32 to 45.  Both space companies and non-space companies are investing in start-up space ventures. According to data, existing space corporations represent 35 percent of this investor group, while non-space corporations represent 65 percent.


Analysis


As can be seen, particularly by Figure 1, the amount of private investment flowing into the emerging space sector is growing at an accelerating pace. Accordingly, considering the relationships identified between innovation and private investment, it can be extrapolated that the rate of innovation, or at least the possibilities for innovation, will concurrently grow. Indeed, according to venture capitalists involved in space investments, the decision to invest in outer space firms is borne largely out of the possibilities for innovative new products that may disrupt established markets or establish whole new markets.[xxxiv]

Several of the factors identified above can be seen in the case-study of space. This is particularly true for the value-added function of venture investment. Venture firms in the space sector have established several incubators and business accelerators that they run concurrently with their investments, drawing in the entrepreneurs in which they invest.[xxxv] Likewise, rich ecosystems of space-startups funded by angel or venture capital have emerged in distinct regions, such as Hawthorne in California or in Cape Canaveral, where they have access both to these accelerators, to established sources of venture capital, and to the resources of space start-ups, universities, and other entities which contribute to the innovation-incubating knowledge environment.

It has, again, been found that small firms contribute almost half of the innovation in the economy. Looking at this further, however, research has indicated that small firms tended to be more important in less concentrated, immature industries.[xxxvi] This is particularly the case for the space industry, which remains at present an immature industry. Moreover, it has been shown that newer, smaller firms choose risky product introduction strategies when compared to more established firms; they fail at higher rates, but are also successful at bringing risky, high-impact innovations to the market quicker and more often.[xxxvii] Looking at the samples of innovation in the space sector listed at the beginning of this paper, these innovations were predominately produced by small or medium-sized firms that have entered the market within the recent decades. As such, the sources of capital that finance these firms, such as venture and angel funding, are important for spurring this innovation.

Finally, it is important to remember that, although government-funded investments in research are important components of an innovate economy, particularly at the basic research level, innovation in an advanced economy is predominately funded by the private sector.[xxxviii] Again, the fact that private sector funding for the space sector is growing and accelerating suggests that higher rates of innovation will follow.


Outstanding Issues


The next few years could, if trends in investment continue, radically alter the start-up space ecosystem. Investors will be closely monitoring dynamics in revenue and operational performance of maturing startup space firms, particularly those that have benefited from venture and angel capital. The coming years are a “proving period” in which many of the services and products that attracted investment are deploying or planning deployment shortly and investors are seeking indications they will realize returns.

This presents a major outstanding issue for innovation in the emerging space sector. Many, if not most, of the innovative business plans, technologies, and processes that are currently driving and being driven by private investment have yet to demonstrate their market value; instead, they are currently still going their stages of preliminary research, design, and testing.

Investors, particularly venture capitalists, focus on valuations and “exits” – the opportunity to sell their stock in an invested company either through a stock offering or the sale or acquisition of the company itself. However, at present, some financial analysts caution that companies in the emerging space sector hold exaggerated valuation and risk not having initial public offerings for several years.[xxxix] While billions have flown into space startups in the last several years, there have only been a handful of “exits” that offer investors an opportunity to recoup their investment.[xl] A lack of available exits, whether it be through an initial public offering or a merger or acquisition, puts a heavy strain on angel and venture investment and enthusiasm for future investments.[xli]

There is also the issue of capital needed for more high-risk, high-innovation businesses in the space sector. While many startups have been successful in raising capital on the order of tens or hundreds of millions of dollars, the most ambitious and potentially disruptive ideas – such as long-term asteroid mining initiatives, interplanetary landers and tugs, or satellite mega-constellations, will likely require billions of dollars from private equity investors. These will require much larger pools of capital than what early-stage venture capitalist and angel investors are capable of or willing to offer. As such, some analysts in the industry see a bifurcation in business plans for emerging space companies, where many will attempt to reach a minimum viable product – though one that may not be as potentially innovative or disruptive of the market – in order to secure an early winning of investment from venture capital firms.[xlii] This may have a dragging effect upon innovation in the sector over the long-term.

There are also issues related to the ownership structure that comes with venture capital. Investors expect excess returns from the companies that they invest in, which may sour long-term business prospects regardless of the level of innovation that a company can achieve. More troublesome, however, is that venture capital firms often require entrepreneurs to relinquish control rights over their intellectual property to outside investors. Control over intellectual property is fundamental to innovation, particularly within technology-based industries such as the space industry, as patenting that innovation is often the only means to ensure profit from that innovation and thus invest the time and effort into producing it.[xliii]

Finally, while it does not appear likely that the commercial space sector will have an “exit” through an initial public offering soon, there are issues associated with the quality and capacity of innovation produced in firms that have “gone public.” Some have suggested that a major “brain drain” occurs in these firms. IPOs lead to different management incentives, and executives at publicly held companies may become more cautious because they are subject to market pressures and worry more about career threats and takeovers. Hence, once a small firm “goes public,” it loses many of the qualities that once made it innovative and disruptive.[xliv]


Conclusion


The innovative nature of a company – its capacity to produce disruptive products and innovative solutions that capture new shares of or establish entirely new markets – is the result of multiple different, though often interrelated – features. One of them is the source of capital which they use during their early stages. As noted in this paper, the commercial space sector is experiencing a massive influx of private capital that is financing a segment of emerging companies. The impact on innovation that this capital and its source has can be anticipated as feeding into the commercial space sector.

As research suggests, there is a general consensus that private capital, particularly from venture capital firms and angel investors on small- and start-up companies, can support and abet their innovative nature. This capital comes with several functions beyond simply offering financing that may not be available from traditional loaning sources because of the risks involved in an immature market such as outer space services. Venture capital firms offer value-added functions by connecting entrepreneurs with other entrepreneurs, creating a knowledge ecosystem that reinforces innovative thinking and the sharing of ideas. Likewise, venture capital can help entrepreneurs develop the skills – or be offered the service of the skills by the investor – of managing and running a business so that their innovative ideas can actually come to market.

However, there are serious challenges that innovation through private capital and investment presents. Investors expect returns on investment. It does not appear likely that that return on investment will materialize in the space sector within the near- to mid-term. If it does not, there is a risk that innovation in the sector could stall or, worse, “bust” following this current boom. Moreover, the innovation that is currently seen is driven in part by the character of the emerging space sector being small; small firms, as noted, are empirically more capable of innovation than larger, more established firms. If markets do materialize, it should be expected that the current rate of innovation will slow, especially as firms begin pursuing public offerings of stock.

At any rate, the commercial space sector serves as an interesting case-study for how private sources of capital may assist innovation in an emerging market; likewise, it demonstrates some of the challenges and outstanding issues that arise in “frontiers” of technology that largely rely on private capital to create innovations for markets which do not yet exist.


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[ii]. Joshua Hamosin, “The Future of Space Commercialization,” Niskanen Center, January 25, 2017.             https://science.house.gov/sites/republicans.science.house.gov/files/documents/TheFutureofSpaceCommercializationFinal.pdf. pg. 4

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[iv]. “New Space: Private Capital And Public Support Enabling Growth of a Wider Array of ‘Space Players,” LCA, November 5, 2017.             http://www.unoosa.org/documents/pdf/hlf/HLF2017/presentations/Day1/Session_1/Prese ntation5.pdf. pg. 9.

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[vi] “Executive Summary,” U.S. Chamber of Commerce Foundation,             https://www.uschamberfoundation.org/enterprisingstates/assets/files/Executive-  Summary-OL.pdf, pg. 1.

[vii]. C J Isom & David Jarczyk, “Innovation in Small Businesses: Drivers of Change and Value Use,” Small Business Administration, March 2009,            https://www.sba.gov/sites/default/files/rs342tot_0.pdf. Pg. 7

[viii]. “Innovation,” OECD, September 9, 2005. https://stats.oecd.org/glossary/detail.asp?ID=6865

[ix]. Loren Grush, “Bigelow Aerospace wants to put an inflatable space habitat in orbit around the Moon,” The Verge, October 17, 2017.        https://www.theverge.com/2017/10/17/16488646/bigelow-aerospace-united-launch- alliance-b330-habitat-lunar-depot

[x]. Tim Fernholz, “A 3D printed, carbon fiber rocket flew for the first time in New Zealand,” Quartz, May 25, 2017. https://qz.com/991156/rocket-labs-electron-test-flight-succeeds-a-3d-printed-carbon-fiber-rocket-flew-for-the-first-time-in-new-zealand/

[xi]. Kendall Russell, “OneWeb Satellites Inaugurates Production Line for its First Satellites,” Via Satellite, June 27, 2017. https://www.satellitetoday.com/innovation/2017/06/27/oneweb-satellites-inaugurates-production-line-first-satellites/

[xii] Loren Grush, “How one company wants to recycle used rockets into deep-space habitats,” The Verge, June 14, 2017. https://www.theverge.com/2017/6/14/15783494/nasa-nanoracks-ixion-nextstep-habitats-rocket-upper-stage

[xiii]. Melissa Crowe, “Satellite ride-share: Spaceflight Industries prepares for outer space revolution,” Puget Sound Business Journal, July 6, 2017.             https://www.bizjournals.com/seattle/news/2017/07/06/spaceflight-industries-satellite-ride-sharing.html

[xiv].  J.A. Schumpeter, “Capitalism, Socialism, and Democracy (6 ed.),” (Routledge 1943): pg. 81–84.

[xv]. P. Heyne. P.J. Boettke, & D.L. Prychitko, “The Economic Way of Thinking (12 ed.),” (Prentice Hall 2010): pg. 317–18.

[xvi]. Kevin Hassett, “Investment,” Library of Economics and Liberty,             http://www.econlib.org/library/Enc/Investment.html

 [xvii]. “Start-Up Space Report,” Bryce Space and Technology, Spring 2018, pgs. 7 -12.

[xviii]. “Financing High-Growth Firms: The Role of Angel Investors,” OECD, 2011, https://www.oecd.org/sti/ind/49310423.pdf, pg. 9.

[xix]. Sameul Kortum & Josh Lerner, “Assessing the Contribution of Venture Capital to Innovation,” Harvard Business School, http://www.people.hbs.edu/jlerner/vcinnov.pdf., pg. 4.

[xx]. Michael Peneder, “The impact of venture capital on innovative behavior and firm growth,” Austrian Institute of Economic Research,          http://citeseerx.ist.psu.edu/viewdoc/download?doi=10.1.1.587.7492&rep=rep1&type=pdf   pg. 4.

[xxi]. Supradeep Dutta & Timothy Falta, “A comparison of the effects of angels and venture capitalists on innovation and value creation,” Northeastern University,      http://www.law.northwestern.edu/research-            faculty/searlecenter/events/innovation/documents/Dutta_angel_VC.pdf

[xxii]. Michael Peneder, “The impact of venture capital on innovative behavior and firm growth,”   Austrian Institute of Economic Research,          http://citeseerx.ist.psu.edu/viewdoc/download?doi=10.1.1.587.7492&rep=rep1&type=pdf   pg. 4.

[xxiii]. Alexander Popov & Peter Roosenboom, “Does Private Equity Investment Spur Innovation?” European Central Bank, June 2009,   https://www.ecb.europa.eu/pub/pdf/scpwps/ecbwp1063.pdf?8ad255c424c32d3fbf0de610 c5a8da85

[xxiv]. Michael Peneder, “The impact of venture capital on innovative behavior and firm growth,” Austrian Institute of Economic Research,          http://citeseerx.ist.psu.edu/viewdoc/download?doi=10.1.1.587.7492&rep=rep1&type=pdf   pg. 4.

[xxv]. Juanita Gonzalez-Uribe, “Venture Capital and Innovation,” Columbia University, 2013

[xxvi]. Supradeep Dutta & Timothy Falta, “A comparison of the effects of angels and venture capitalists on innovation and value creation,” Northeastern University,      http://www.law.northwestern.edu/research-            faculty/searlecenter/events/innovation/documents/Dutta_angel_VC.pdf

[xxvii]. “Collaborative Innovation: Transforming Business, Driving Growth,” World Economic Forum, August 2015, http://www3.weforum.org/docs/WEF_Collaborative_Innovation_report_2015.pdf

[xxviii]. Supradeep Dutta & Timothy Falta, “A comparison of the effects of angels and venture capitalists on innovation and value creation,” Northeastern University, http://www.law.northwestern.edu/research-            faculty/searlecenter/events/innovation/documents/Dutta_angel_VC.pdf

[xxix]. “Financing High-Growth Firms: The Role of Angel Investors,” OECD, 2011,  https://www.oecd.org/sti/ind/49310423.pdf

[xxx]. Antonio Davila, George Foster, & Mahendra Gupta, “Venture-Capital Financing and the Growth of Startup Firms,” August 2002,             http://citeseerx.ist.psu.edu/viewdoc/download?doi=10.1.1.201.2971&rep=rep1&type=pdf

[xxxi]. E. Chemmanur, X. Loutskina, & Tian X, “Corporate venture capital, value creation, and innovation,” unpublished working paper, cited in M. Da Rin, T.F. Hellmann and M. Puri,  A Survey of Venture Capital Research, 2011, pg. 54

[xxxii]. “Start-Up Space Report,” Bryce Space and Technology, Spring 2018

[xxxiii]. “Start-Up Space Report,” Bryce Space and Technology, Spring 2018

Figure 1. “Space Investment Quarterly,” Space Angels, Q1 2018,             https://spaceangels.docsend.com/view/t3axt46

Figure 2. “Start-Up Space Report,” Bryce Space and Technology, Spring 2018, pg. 13.

[xxxiv]. Jeff Foust, “Surge of new space companies has impressed even veteran industry observers,”  SpaceNews, March 7 2018, http://spacenews.com/surge-of-new-space-companies-has-impressed-even-veteran-industry-observers/

[xxxv]. Robert Jacobson, “Accelerating Space Startups: How to Break into the Next Trillion-Dollar Industry,” Observer, August 9, 2017, http://observer.com/2017/08/space-startup-   accelerator-incubator-aerospace-entrepreneurs/

[xxxvi]. Zoltan Acs & David Audretsch, “Entrepreneurship and Innovation,” Max Planck Institute of Economics, May 2005,             https://pdfs.semanticscholar.org/205c/86cfc095a22f5510a76826338600cac5c3d5.pdf

[xxxvii]. Josh Lerner & Joacim Tag, “Institutions and Venture Capital,” Industrial and Corporate Change, Vol. 22, 2013.

[xxxviii]. Daniel Waggoner, “High Risk Finance,” in Innovation Policy: A Practical Introduction,  (New York: Springer 2015): pg. 85.

[xxxix]. “Start-Up Space Report,” Bryce Space and Technology, Spring 2018, pg. 24.

[xl]. Jeff Foust, “Surge of new space companies has impressed even veteran industry observers,” SpaceNews, March 7 2018, http://spacenews.com/surge-of-new-space-companies-has-impressed-even-veteran-industry-observers/

[xli]. John Callahan & Steven Muegge, “Venture Capital’s Role in Innovation: Issues, Research and Stakeholder Interests,” Carelton University, November 2002, http://citeseerx.ist.psu.edu/viewdoc/download?doi=10.1.1.202.5710&rep=rep1&type=pdf

[xlii]. Jeff Foust, “Surge of new space companies has impressed even veteran industry observers,”   SpaceNews, March 7 2018, http://spacenews.com/surge-of-new-space-companies-has-impressed-even-veteran-industry-observers/

[xliii]. Mario Cardullo, “Intellectual Property – The Basis for Venture Capital Investments,” World Intellectual Property Organization,             http://www.wipo.int/sme/en/documents/venture_capital_investments_fulltext.html

[xliv]. Shai Bernstein, “Does Going Public Affect Innovation,” Stanford University, July 3, 2014, https://www.gsb.stanford.edu/sites/gsb/files/publication-pdf/IPOInnovation%20-  %20July2014.pdf