Human to Mars Bond - What is involved with issuing a bond?

clark · 2002-10-10 12:06:25

Could issuing long term bonds be a source of revenue to fund a mars mission?
What is involved with issuing a bond?

I am sure this ahs been floated at some time or other, but I wouldn't mind a refresher course.

Bill White · 2002-10-10 12:43:22

Usually, "bonds" need to be paid back, with interest. Make "doing Mars" sufficiently profitable and perhaps no such bonds are necessary. Anyway, one plan to pay back such bonds is to sell Martian, or lunar, real estate but it would seem that massive legal and political issues remain before anyone can really undertake to do that. Perhaps that question would warrant its own thread.

A slightly different idea would be a Mars endowment fund.

In the US, we would form a 501.c.3 entity and seek donations that - hopefully - would be tax deductible. Money accumulates and is invested (more details, lots of details there - the Fund may wish to locate in Bermuda or Isle of Man with subsidiaries in the US, UK, Australia etc. . .) and the accumulated Fund will eventually be awarded as a prize.

Zubrin has proposed a Mars Prize funded by the US taxpayers. Since that remains well below the radar, maybe we just create our own prize fund one donation at a time.

One possible goal for payout of the prize - to avoid flags and footprints - would be for the fund to be paid out to the mother of the first child conceived and born on Mars - 365 days after the child is born. Live birth and one years survival and the money is paid out. See below for ideas on "assignment" of prize rights.

Suppose this takes 100 years. Assume a 5% or 6% rate of return (doubling every decade) in 100 years $1 million in donations grows to $1 billion. Raise $1 million per year for 10 years and you have $10 billion. Raise $1 million per year for 10 years, wait 110 years and you have $20 billion.

Anyway, the Fund could become a rallying point for the humans in space effort. Ask planetariums and the like to hold joint fundraisers, web drives, media events all focused on raising money for the Fund. Ask schoolchildren to donate $5 or $10 per class as part of an educational outreach. Create strict rules that donations are held tightly in trust, not to be spent on administrators and the like and run the Fund with a suitable board of managers.

I would propose calling it the "First Steps" Endowment Fund - to play on the idea of a baby taking its first steps on Mars. Seems like a logical tie-in with FirstWords.

A female astronaut/settler could voluntarily assign her right to the prize money to another entity ONLY IF done in advance, on Earth, with adequate safeguards that the assignment is truly done by a consenting, competent adult.

So, if a major corporation can get 10 or 20 suitable women to assign their rights to the prize, there would be financial incentive for that corporation to fund a permanent settlement.

Adrian has proposed a wiki project. I was intending to write this up as an executive summary / draft and let us all have a crack at shaping a "First Steps" endowment fund that could be widely popular.

clark, your post prompted me to "jump that gun" so to speak and this post articulates my idea far less clearly than I had hoped.

But anyway, here it is, more later. . .

clark · 2002-10-10 13:29:26

Make "doing Mars" sufficiently profitable and perhaps no such bonds are necessary.

Why don't I turn water into wine while I'm at it!

The premise behind issuing bonds is it allows for us to accumulate capital prior to the result. The result should provide, if structured properly, with enough to pay back the bonds plus the interest.

Prize fund donations is an excellent idea, and your suggestion that the first child born on mars is interesting. However, I'm not sure if I see the economic incentive for any company to try and make a permanent settlement on mars, even with a large prize fund. It also seems that you are suggesting that we look at a century time line for all of this- I hope I am wrong, but if I am correct, I am less optimistic about the plan (but at least you are being realistic).

First Steps, nice ring to it.

Perhaps it would be possible to speed the plan along a bit and tie it into the First Words website now that it is garnering a bit of attention.

"Words followed by Action, let our First Words lead us to our First Steps. Bring Mars closer to us all."

Bill White · 2002-10-10 13:46:19

The premise behind issuing bonds is it allows for us to accumulate capital prior to the result. The result should provide, if structured properly, with enough to pay back the bonds plus the interest.

With all the financially trained MBAs pouring out of US-ian universities, I am inclined to think that if a plausible means for re-paying the bonds could be devised, someone (Lou Dobbs of Space.com / CNN Moneyline?) would be trying to do it.

The Discovery channel once ran a show predicting that humanity's first trillionaire would be made "doing space" and I agree, however IMHO, while Mars bondholders might well eventually see full repayment plus interest, it could take a century or more.

Therefore, just asking for donations seems rather more honest.

And remember that the 100 year timeline is to give birth to a child. That won't happen with MarsOne, Zubrin's First Landing fantasies notwithstanding.

And, kids make great "meme delivery" vectors. . .

clark · 2002-10-10 14:00:33

With all the financially trained MBAs pouring out of US-ian universities, I am inclined to think that if a plausible means for re-paying the bonds could be devised, someone (Lou Dobbs of Space.com / CNN Moneyline?) would be trying to do it.

Perhaps, however, I see no offer for such a bond, and I am inclined to think that maybe the *right* people just don't see things the way many here do.

I was actually thinking alonmg the lines of 20 or 30 year bonds. The full value of the bonds wouldn't come due until well after the mission is completed- which means that the funds to repay the bonds might exsist. The long term bonds provide the security and stability neccessary for planning and executing the missions. The bonds do not have to finance the entire project, but it would serve to defray the risk of other investors- we would need less funds from other sources.

As for repayment- it is merely a matter of issuing more bonds as the older ones come due- keep rolling the bonds until an established base is able to provide a plausible return of investment- move the project from being financed by the bonds to producing something to pay off the debt. It may take a hundred years to pay it all off, but I think it would work.

Unfortunetly it does require faith that the goal is doable, otherwise, who would buy the bond? I wonder how we could guareentee the bonds...

Bill White · 2002-10-10 14:28:04

I was actually thinking alonmg the lines of 20 or 30 year bonds. The full value of the bonds wouldn't come due until well after the mission is completed- which means that the funds to repay the bonds might exsist. The long term bonds provide the security and stability neccessary for planning and executing the missions. The bonds do not have to finance the entire project, but it would serve to defray the risk of other investors- we would need less funds from other sources.

I am very far from being an expert on such things. . . :0

However, if I were to attempt to become one, I would start by studying the venture capital structure for any high-tech or bio-tech start up company. Earning an MBA and a CFA wouldn't hurt, either. We have discussed before whether we could sell bonds backed by media rights to a mission. I believe we could do that but if I recall you were more skeptical.

More loosely, consider this metaphor I once read in a mutual fund document concerning high tech investing. The piece compared investing in the internet with investing in the old American West. Money was made in the Wild West in different ways

(1) Head west and stake a claim. In the internet world this meant founding a dot-com and in space would mean seeking to build an actual mining facility on Phobos or claim an NEO or other asteroid.

Great upside potential, but like many of the poor folk slogging West in covered wagons, great potential for sudden and impoverished death.

(2) Sell supplies in St. Louis or Kansas City. In theory Cisco Systems did this for the dot-com world, selling switches. Cisco never carved out a web niche, they sell equipment to those that do. Dots-coms fell so fast that Cisco's stock price was badly hurt but the business is still sound even at much lower stock valuations. In space, this would be selling greenhouses and habitats to permanent settlers.

Less upside potential - less downside risk.

(3) Build the railroads. This wasn't in the materials, its my idea. In the dot-com world, the fiber-optic backbones got way overbuilt, so the railroad strategy crashed and burned. In space, Buzz Aldrin's free return cyclers could be the Santa Fe railroad or Union Pacific of the 21st century. Selling bonds to build cyclers would be totally feasible - IMHO - but only after permanent settlers are on Mars.

Thus, Boeing might well contribute to a FirstSteps fund intending to recover its donation by building and selling cyclers after the first families start raising children on Mars.

All rather like St. Louis dry goods merchants buying ads in Europe touting the glories of the American West - don't head west young man, persuade some other dude to head west so you can sell him wagons.

As for repayment- it is merely a matter of issuing more bonds as the older ones come due- keep rolling the bonds until an established base is able to provide a plausible return of investment- move the project from being financed by the bonds to producing something to pay off the debt. It may take a hundred years to pay it all off, but I think it would work.

Unless the Feds shut you down first, yelling "PONZI!"

clark · 2002-10-10 15:17:10

We have discussed before whether we could sell bonds backed by media rights to a mission. I believe we could do that but if I recall you were more skeptical.

Hmm, I seemed to remember it differently- my view was that a buisness plan predicated on selling media rights wouldn't work becuase the media rights only exsist as a product once the mission is secured. I was skeptical about using the sale of media rights as the primary means to fund the mission.

Perhaps issue bonds, and use a lottery system to generate funds to pay the interest on the bonds. The lottery would raffle off trips to ISS or LEO by purchasing tickets ala Tito. The profits are used for interest payments and further funding.

This is a basic model that would provide the short term capital to meet the payments on the larger long term capital that is neccessary to get everything off the ground. With the sales of the bonds, the funds would be available to make a mission to mars realizable- which makes selling media rights less of a risky proposition, so that should attract more investors- which further soldifies the overall position.

It's like building a fire, we just need some kindling.

Bill White · 2002-10-10 17:48:27

Are we talking only amongst ourselves?

my view was that a buisness plan predicated on selling media rights wouldn't work becuase the media rights only exsist as a product once the mission is secured. I was skeptical about using the sale of media rights as the primary means to fund the mission.

Fair enough. I must not have been clear. I had intended to propose the sale of media rights to bridge any shortfall between what can be raised by other means and actual mission costs.

clark · 2002-10-11 07:26:58

Looks like we're the only loud mouths for now.

I apoligize for misunderstanding your intent. I would think that the sale of the media rights only becomes a reality when you can show that you will have something (read content here) for them to have rights to- which in my mind can only come about when the financing for the entire project is secured.

I wonder if a telethon might be another option.

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#1 2002-10-10 12:06:25

Re: Human to Mars Bond - What is involved with issuing a bond?

#2 2002-10-10 12:43:22

Re: Human to Mars Bond - What is involved with issuing a bond?

#3 2002-10-10 13:29:26

Re: Human to Mars Bond - What is involved with issuing a bond?

#4 2002-10-10 13:46:19

Re: Human to Mars Bond - What is involved with issuing a bond?

#5 2002-10-10 14:00:33

Re: Human to Mars Bond - What is involved with issuing a bond?

#6 2002-10-10 14:28:04

Re: Human to Mars Bond - What is involved with issuing a bond?

#7 2002-10-10 15:17:10

Re: Human to Mars Bond - What is involved with issuing a bond?

#8 2002-10-10 17:48:27

Re: Human to Mars Bond - What is involved with issuing a bond?

#9 2002-10-11 07:26:58

Re: Human to Mars Bond - What is involved with issuing a bond?

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