9.8 KiB
9.8 KiB
Suborbital Systems - Suggested Edits
BALANCED OWNERSHIP STRUCTURE AND ENHANCED GOVERNANCE
Current Distribution Analysis
CURRENT PROBLEMATIC STRUCTURE:
| Contract Party | Distribution Percentage | Issues |
|---|---|---|
| Suborbital-Systems.net (series) LLC | 25% | ❌ Unclear justification for 25% to series entity |
| {{PARTY1}} | 25% | ❌ High percentage for limited contribution |
| {{PARTY2}} | 50% | ❌ Majority burden, minority voting control |
SUGGESTED REVISED DISTRIBUTION STRUCTURE
Option A: Performance-Based Allocation
| Party/Entity | Initial % | Performance Vesting | Max % | Justification |
|---|---|---|---|---|
| {{PARTY2}} | 60% | +15% performance bonus | 75% | Primary capital, operations, development |
| {{PARTY1}} | 25% | +5% performance bonus | 30% | IP, infrastructure, advisory |
| Suborbital Series LLC | 15% | No additional vesting | 15% | Operational entity, management |
Option B: Investment-Proportional Allocation
| Party/Entity | Ownership % | Capital Requirement | Operational Role |
|---|---|---|---|
| {{PARTY2}} | 65% | $500K+ | Lead operations, development, funding |
| {{PARTY1}} | 20% | $150K+ | Infrastructure, IP licensing, advisory |
| Management Pool | 15% | Sweat equity | Key personnel, performance incentives |
Option C: Hybrid Structure with Milestones
| Party/Entity | Base % | Milestone Achievements | Final Range |
|---|---|---|---|
| {{PARTY2}} | 55% | Revenue/development milestones | 55-70% |
| {{PARTY1}} | 30% | Support/infrastructure milestones | 20-30% |
| Team/Options Pool | 15% | Performance-based vesting | 10-20% |
Enhanced Governance Structure
Board Composition (Recommended)
- {{PARTY2}} Representatives: 2 seats (CEO, COO/CTO)
- {{PARTY1}} Representatives: 2 seats (Strategy, Technical Advisory)
- Independent Director: 1 seat (Industry expert, tiebreaker)
- Employee Representative: 1 seat (if team >10 employees)
Key Decision-Making Authority
{{PARTY2}} Primary Authority
✅ Day-to-Day Operations (No approval needed)
- Product development and engineering decisions
- Customer acquisition and relationship management
- Marketing strategy and execution
- Hiring for non-C-level positions
- Operating expense allocation (<$25K individual, <$100K monthly)
Joint Approval Required (Supermajority: 67%)
🤝 Strategic Decisions
- Annual operating budget and major revisions
- Capital expenditures >$50K
- Strategic partnerships and major vendor agreements
- Intellectual property licensing (in/out)
- Debt financing or equity fundraising
- Major market expansion or pivot decisions
- C-level executive hiring/termination
{{PARTY1}} Reserved Rights (Limited Scope)
⚠️ TSYS Group Integration
- TSYS Group brand compliance and standards
- Inter-entity technology integration requirements
- Infrastructure security and compliance standards
- Reporting requirements for TSYS Group coordination
Management Structure
Executive Leadership
- CEO: Typically {{PARTY2}} nominee, board-approved
- CTO/Chief Engineer: Best qualified candidate, jointly selected
- CFO: Financial management expertise, {{PARTY2}} led selection
- VP Business Development: Joint selection based on network and capabilities
Technical Leadership
- Chief Scientist: Based purely on technical qualifications and vision
- Engineering Manager: Technical expertise and team leadership focus
- Product Manager: Customer-focused, market-driven selection
- Quality Assurance Lead: Compliance and performance focus
Performance Metrics and Accountability
Financial Performance Targets (12-Month Horizon)
- Revenue Milestones: $500K Year 1, $2M Year 2, $5M Year 3
- Development Milestones: Prototype completion, beta testing, commercial launch
- Customer Milestones: Design partners, pilot customers, commercial contracts
- Profitability Timeline: Break-even by Month 18, 15% margins by Month 24
Operational Excellence Metrics
- Product Development: On-time delivery of development milestones
- Quality Standards: Customer satisfaction scores, defect rates, performance metrics
- Team Performance: Employee retention, productivity metrics, skill development
- Market Traction: Customer acquisition rates, market penetration, competitive position
Strategic Value Creation
- IP Development: Patent applications, trade secrets, proprietary technology
- Partnership Development: Strategic alliances, joint ventures, distribution partnerships
- Market Position: Brand recognition, competitive differentiation, market share
- Ecosystem Contribution: Value creation for other TSYS Group entities
Investment and Capital Structure
Initial Capital Requirements
| Investment Type | {{PARTY2}} Contribution | {{PARTY1}} Contribution | Total Required |
|---|---|---|---|
| Development Capital | $400K (80%) | $100K (20%) | $500K |
| Working Capital | $150K (75%) | $50K (25%) | $200K |
| Infrastructure | $75K (50%) | $75K (50%) | $150K |
| Marketing/Sales | $200K (80%) | $50K (20%) | $250K |
| TOTAL INITIAL | $825K (73%) | $275K (27%) | $1.1M |
Future Funding Rounds
- Series A Planning: Joint fundraising with external investors
- Anti-Dilution Protection: Pro-rata rights for both parties in future rounds
- Valuation Methodology: Professional third-party valuation for all funding rounds
- Control Provisions: Maintenance of joint control through investor rounds
Intellectual Property Framework
IP Ownership Structure
- Core Platform IP: Joint ownership between {{PARTY1}} and {{PARTY2}}
- Development IP: Owned by Suborbital Systems entity, licensed back to parties
- Background IP: Each party retains ownership, grants necessary licenses
- Customer IP: Customer-specific developments owned by customer with platform licensing
IP Protection and Development
- Patent Strategy: Joint patent filing and prosecution for core innovations
- Trade Secret Protection: Comprehensive confidentiality and protection protocols
- Licensing Framework: Clear licensing terms for internal and external use
- IP Committee: Joint oversight of IP strategy and protection decisions
Market Development and Go-to-Market Strategy
Market Focus and Positioning
- Primary Markets: [Define specific target markets and applications]
- Value Proposition: [Clearly articulated unique value and competitive advantages]
- Customer Segments: [Specific customer types and use cases]
- Competitive Strategy: [Differentiation and competitive positioning]
Sales and Marketing Approach
- Sales Strategy: Direct sales, channel partners, or hybrid approach
- Marketing Investment: Brand development, lead generation, customer education
- Partnership Development: Strategic alliances and distribution partnerships
- Customer Success: Ongoing customer support and relationship management
Exit Strategy and Liquidity Planning
Exit Mechanisms
- Strategic Acquisition: Sale to strategic buyer in aerospace/defense industry
- Financial Buyer: Private equity or venture capital exit
- IPO Preparation: Public offering track for high-growth scenarios
- Management Buyout: Internal acquisition by management team
Valuation and Distribution
- Valuation Methodology: Multiple professional valuations using industry-standard methods
- Distribution Waterfall: Preferred returns, return of capital, then pro-rata distribution
- Tax Optimization: Structure to minimize tax impact for all parties
- Transition Planning: Orderly transition of operations and relationships
Risk Management and Mitigation
Technical and Development Risks
- Technology Risk: Diversified technology approach, prototype validation
- Development Risk: Phased development with clear milestones and checkpoints
- Regulatory Risk: Early engagement with regulatory bodies and compliance planning
- Competitive Risk: Strong IP protection and rapid market development
Business and Market Risks
- Market Risk: Diversified customer base and multiple market applications
- Customer Risk: Multiple design partners and pilot customers
- Financial Risk: Staged capital deployment and milestone-based funding
- Operational Risk: Strong management team and operational controls
Partnership and Relationship Risks
- Partner Risk: Clear agreements and performance metrics for all partnerships
- Key Person Risk: Management succession planning and cross-training
- Dependency Risk: Diversified vendor base and alternative sourcing options
- Integration Risk: Clear interfaces and integration protocols with TSYS Group
SUMMARY OF KEY CHANGES:
- ✅ Rebalanced ownership to reflect actual contributions and risks
- ✅ Created performance-based vesting and milestone achievements
- ✅ Implemented balanced governance with clear decision-making authority
- ✅ Established proportional capital contribution requirements
- ✅ Added comprehensive IP protection and development framework
- ✅ Created detailed performance metrics and accountability structures
- ✅ Developed exit strategy and liquidity planning mechanisms
- ✅ Implemented comprehensive risk management and mitigation strategies
IMPACT: This transforms Suborbital Systems from an imbalanced structure into a professional, performance-driven joint venture with clear governance, balanced risk-reward allocation, and comprehensive business planning.