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Tyler ReynoQueen’s Space Conference
February, 2016
Starting a Canadian Rocket Company
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Outline• Introduction•Main point• Support of a domestic launch capability•Proposed route of development•Overview of a proposed solution•Wrapping things up
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Introduction• Tyler Reyno• Open Space Orbital Inc.• BEng (Mechanical)• Ongoing MASc (Aeronautical)
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Main Point
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Main Point•Domestic launch capability•Discussed primarily in terms of a private
company
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Support Of A Domestic Launch
Capability
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•Resource-based economy (limited) vs. progressive technology-based economy (unlimited)
2Reasons Why It Makes Sense
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•Technological position among international competitors
Technological Relevance
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•If nation doesn't apply evolutionary pressure on itself, it remains in state of neutrality
Technological Relevance
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•Political position among international competitors
Political Relevance
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•Not mentioned among highest profile nations like US, Russia and China
Political Relevance
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• Space program without access to space
Access
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•Ability to employ large amounts of people with wide skill ranges + high level intellect
Human Resources
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•Should want this degree of genius working in-country
Human Resources
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• Last but not least, it’s necessary• Tendency of something not growing is
to wither
It’s Necessary
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•Decline of space program if we only focus on maintenance without increasing value
It’s Necessary
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Proposed Route Of Development
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• Entry through the smallsat launch industry: • Roughly 250% market growth over next 5
years• Supported by off-the-shelf smallsat
solutions• Smallsat market value (approx. $7.4B)
Entering the Launch Industry
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•Dedicated smallsat launchers seeing increased demand
Entering the Launch Industry
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• Easiest access in term of economics:
*Image credit: Skybox Imaging
Market Accessibility
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•Other notes:• Light lift most attractive among other lift
classes•More in reach of Canada’s budget• Low risk in terms of capital/resource loss
in case of failure
*Image credit: Skybox Imaging
Market Accessibility
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•Regulatory and logistic realities support us
Regulations and Logistics
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•Greater political standing among many European countries
Regulations and Logistics
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• In terms of developing progressively more capable launch capabilities
Stepping Stone
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• There is market share available for multiple smallsat launch capabilities (private or public-private)
Competitive Analysis
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Overview of a Theoretical
Solution
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Operations
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•13-year development timeline•First launch slated for Year 6
Development Timeline
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Outsourcing•Outsourcing key components in the
beginning leads to faster access to market
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Proposed Outsourcing Strategy•Main components:• First stage engines• COPV’s (fuel + oxidizer)
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Result• In-house development programs:• All other components: Year 1-5 (5 years)• First stage engines: Year 4-8 (5 years)• COPV’s: Year 6-10 (5 years)
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• Two primary locations:• Engineering and development facility• Corresponding spaceport
Establishment
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•Close proximity between manufacturing and launch facilities
Establishment
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•Northern Nova Scotia is a good choice• Located between North America and
European space markets
Location
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• SSO and PO accessibility (popular destinations among smallsats)• Flight path above the Atlantic Ocean•Reasonable inclination
Orbital Considerations
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• Lean operation with talent located under one roof is critical•Main focus on high manufacturing and
launch frequencies
Operating Philosophy
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Engineering
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•No reliance on radical, untried technologies•Prioritize simplicity and reliability
Design Philosophy
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•90% of a vehicle’s cost comes in the last 10% of performance
Design Philosophy
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•91% of rocket failures attributed to three areas:• Propulsion• Separation• Avionics
Failure Modes
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•Pressure-fed propulsion systems •Ablatively-cooled nozzles •Vehicle engineering design with small
safety factors
Possible Simplification Methods
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• Two-stage format •50 kg payload capacity •14 m length, 0.9 m diameter •13,500 kg vehicle mass•90-second first stage burn time
Proposed Rocket Characteristics
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•New level of transportability •Requirement for economically feasible
commercial smallsat launcher
Proposed Rocket Characteristics
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• First stage engine:• 35,000 lbf first stage
thrust• LOX/ethanol• Pintle injector• Sea level specific impulse
of 220 s
Proposed Propulsion Characteristics
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Financials
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•Always a matter of economics• Limiting factor facing customer base is
launch cost
Economics
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•Human resources• Supporting infrastructure and
technology•Regulatory and legal considerations
Capital Requirements
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•5-year development timeline and budget:• Year 1: $2,000,000• Year 2: $18,000,000• Year 3: $11,000,000• Year 4: $16,000,000• Year 5: $10,000,000
• Total: $57,000,000
Proposed Financial Plan
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• Federal budget illustration:• 2016: 0.41% of CSA budget• 2017: 4.70% “• 2018: 3.41% “• 2019: 4.96% (extrapolated)• 2020: 3.01% (extrapolated)
Public Enterprise
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•Value received over investment is high•Development of:• Critical new infrastructure• Space-supporting resources and
technology
Public Enterprise
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•Operational and pricing target:• $2,000,000 launch cost• $40,000 per kg at 50 kg total payload
capacity • 50 launches per year (approx. weekly
launches)
Business Goal
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•Progressively increase launch rate:• Year 1-5: No launches• Year 6-8: 3 launches per year• Year 9-10: 6 launches per year• Year 11: 18 launches per year• Year 12: 30 launches per year• Year 13+: 50 launches per year
Launch Rate Strategy
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•Progressively decrease cost:• Year 1-5: No launches• Year 6-8: $6M per launch (3 launches )• Year 9-10: $5M per launch (6 • Year 11: $4M per launch (18 • Year 12: $3M per launch • Year 13+: $2M per launch (50
lyear)
Pricing Strategy
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•Progressively refined profit margins:• Year 1-5: No launches• Year 6-8: 11.8% (3 launches per year)• Year 9-10: 30.8% (6 launches per year)• Year 11: 72.5% (18 launches per year)• Year 12: 48.3% (30 launches per year) • Year 13+: 59.8% (50 launches per year)
Profit Margins
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• Progressively increase launch rate while decreasing cost • Year 1-5: No launches• Year 6-8: $6M per launch (3 launches per year)• Year 9-10: $5M (6 launches per year)• Year 11: $4M (18 launches per year)• Year 12: $3M (30 launches per year) • Year 13+: $2M (50 launches per year)
•119 performed launches
Stage
Employment Spending ($M)
Operational Spending ($M)
R&D Spending ($M)
Total Spending ($M)
Gross Revenue ($M)
Net Revenue ($M)*
Net Revenue ($M) [After Taxes]*
Year 6-13 101.4 15.5 170.365 287.265 583 280.95 210.71
Launch Period Spending
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2028+ (Year 13+) Financial Summary
Employment spending (per year) $13MOperational spending (per year) $0.05MR&D spending (per year) $27.125MTotal spending (per year) $40.175MGross revenue (per year) $100MNet revenue (per year)* $56.834MNet revenue (per year) [After Taxes]* $42.625MPrice per launch $2MExpenditure per launch $0.804MAverage profit per launch $1.196MAverage profit per launch assuming 5% failure $1.136MAverage profit per launch (5% failure) after taxes [25%]) $0.852MYearly profit (after taxes) $42.625M
Proposed Financial Plan Summary
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2028+ (Year 13+) Financial Summary
Employment spending (per year) $13MOperational spending (per year) $0.05MR&D spending (per year) $27.125MTotal spending (per year) $40.175MGross revenue (per year) $100MNet revenue (per year)* $56.834MNet revenue (per year) [After Taxes]* $42.625MPrice per launch $2MExpenditure per launch $0.804MAverage profit per launch $1.196MAverage profit per launch assuming 5% failure $1.136MAverage profit per launch (5% failure) after taxes [25%]) $0.852MYearly profit (after taxes) $42.625M
Proposed Financial Plan Summary
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• *Net revenues consider 95% mission success rate• Year 13+ profit margin is 59.8%•Cash positive at Year 6•Maximum market share of 16%
Details
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Wrapping Things Up
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Review• Illustration:• Need for a domestic launch capability• Potential operational, engineering and
financial philosophies
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Review• The time is right for this sort of
advancement• The technologies exist• The talent exists
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Review• Study of economic feasibility suggests
there may be impressive ROI• Forward thinking and commercialization
will support us
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• It’s going to have to be public-private
My Thoughts
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•Public-private better in terms of:• International government cooperation • True growth of Canada’s space program
My Thoughts
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Thank You•QSC sponsors and delegates•Attendees•Company members, partners and
supporters
