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How does one go about starting a space startup? A lot of YC companies are tech companies where one can go into Ruby on Rails or Java, crank something out with virtually zero capital, get the hockey stick growth and then it's a company but with space startups this definitely isn't the case. What would I need to convince investors?

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You can start making money once you can get a customer's payload into low earth orbit. You want to achieve this initial revenue as soon as possible, by making the simplest orbit-capable rocket you possibly can, which would be a 2-stage (probably non-reusable) rocket with 1 engine per stage. An additional trade-off you can make if your company only wants to carry cargo, not people, is you could use solid instead of liquid fuel to simplify your rocket at the expense of danger.

I would start by planning your rocket architecture and your series of equipment builds, ground tests, and test flights, and leaving plenty of margin for when things inevitably go wrong (SpaceX's first 3 launches failed, so I wouldn't assume you yourself can do any better than 3 failed launches before your first success). Plan out the total cost of all of these builds and tests (including healthy (2X?) margin on the cost), and plan how much revenue you can generate once you start having paying customers. Expect to self-fund most of your initial builds and tests, since I'd guess investors won't believe in you until you've at least built a working engine. Also always apply to any possible government-backed competitions or incentive programs that can provide grant or debt-based financing.

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