Space has always been one of the most forward‑looking industries, but when we think of accounting services, it is often overlooked. The space industry is in a time of rapid growth, and businesses – especially small emerging companies – in this area need qualified advisors who can help facilitate their progress.
The Canadian space industry
My clients in this area have had to be laser‑focused on building the hardware and software tools necessary to place and manage equipment in orbit. Whether they are startups developing innovative launch systems or veterans manufacturing key satellite hardware, these companies keep an eye on their technology, as there is no room for error in space. For young companies working in this industry, there are only a few established success strategies for “making it”, and these always seem to involve government grants or contracts at an early stage. As a founder, it is hard to prioritize anything beyond the hard technical challenges, but now that the industry is becoming more commercial, these companies need to dedicate more of their time to the integration of more traditional sources of capital and strategic tools. This opens the niche space industry up to a wide range of corporate service providers, especially those that have devoted space geeks in their ranks.
From passion to progress
My passion for space started in my mid‑20s after I discovered Phil Plait’s Bad Astronomy blog in 2008. My reading was focused on the exciting futures described in science fiction (including the novels of Isaac Asimov and Iain Banks, but especially James S. A. Corey’s Expanse saga). I started to realize this wasn’t distant fantasy, as there is a vast industry coming to life on the back of new space companies.
As my interest in this sector grew, I started attending conferences and meeting other people with a passion for the space industry. I eventually started my own space company, Expanse Microtechnologies, with a couple close friends. Like many space entrepreneurs, we found a space problem and built a company around the terrestrial analogs. In our case, thinking of space‑based resources, we attempted to tackle the problem of how to additively manufacture from diverse, non‑ideal feedstocks. Despite the potential, our terrestrial revenue streams were insufficient, and we eventually pulled the plug, but the experience was invaluable.
Today, my goal is to create a network of service providers – including financial, legal and accounting advisors – who can work together while assisting space industry clients. The hope is that we’ll all speak the same language and be driven by a shared passion for this industry. Our Scientific Research and Experimental Development (SR&ED) service line is already well established in this regard, and we are now in the process of tailoring other accounting and advisory services to the unique needs of our clients in the space industry.
A launchpad for success
From an investor standpoint, space is an intriguing opportunity, but it differs from other industries. For one, these businesses rarely turn a significant profit in the first year or two. As a result, they require a more long‑term commitment from investors, and there are a number of risks. For example, you might be developing a product that requires a new launch system that isn’t available yet. Until that launch system is introduced, the product is not viable, which results in an unpredictable timeline.
With all this mind, Baker Tilly Windsor can play an important advisory role in helping businesses work with investors and manage their expectations. In our interaction with investors, we go to great lengths to ensure they see the potential of the product in question, while defining a realistic timeline and expectation for revenue. We also provide valuable assistance with bookkeeping, hiring and accessing research and development (R&D) incentives. In my role, I serve as a kind of translator, ensuring the Baker Tilly team understands the needs of our space clients and our space clients understand the accounting and corporate side of things.
What’s next?
Recent developments in the space industry are making it increasingly affordable to send satellites and equipment from Earth into orbit. This is changing the game in space, and will open up the moon and other planets to private enterprise. (You currently need the funding of an entire country to even consider this kind of activity.) There are many people in the space industry who are holding their breath, particularly with the next generation class rockets, because this would introduce a complete paradigm shift in terms of launch costs, and it could drastically increase what’s possible.
Wherever the industry goes next, we’ll be there to provide the support businesses need to grow and embrace these exciting new opportunities. It’s just one more way Baker Tilly Windsor works to be the full‑service advisory firm of choice for business, both on the ground and in space.
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