How Spaced Ventures is helping us invest in space
Private investors couldn’t invest in space until a few decades ago. Up until the early 80s all space launches were carried out by governmental organizations. Though space has continued to gain private investment momentum, space remains the domain of governments and billionaires.
Space Services Inc. (SSIA) was the first private company to launch into suborbital space. Since then, billionaires have jumped into the space fray including Elon Musk with SpaceX, Jeff Bezos with Blue Origin, Richard Branson with Virgin Galactic to name a few.
It isn’t easy to invest in new space
While the opportunity to invest in public space industry companies has been possible for many years, most of these companies are large aerospace and defense companies. There hasn’t been a way to invest in up and coming new space startups as non-accredited investors. Even accredited investors haven’t had extensive access to new space investing.
At the same time, space startups have a difficult time landing seed funding at a level required to get to a revenue generating state. Space is expensive. Timelines to cash tend to be longer than other startup markets. This means many venture capitalists (VCs) and institutional investors tend to steer clear of pre-revenue space companies. Even VCs with a bent toward space don’t have the track record in the industry yet.
Filling the investment gap
There’s a team looking to fill the gap for new space funding with private investors through a yet to be launched crowdfunding platform. Brant Arseneau of 9Point8 Capital partnered with Aaron Burnett to create Spaced Ventures. If they have anything to say about it, everyday investors like you and I will soon be able to invest in the next SpaceX.
Brant Arseneau | Partner, 9Point8 Capital
Brant brings over 30 years of Wall Street investment experience to the organization and has launched several fintech startups. Most recently, Brant has advised space startups as a Partner at 9Point8 Capital and has been a supporting board member in Spaced Ventures. As CEO of Spaced Ventures, Aaron, a self-proclaimed space geek, has a knack for creating movements, viral loops and growth engines. Plus, he started investing through a brokerage account when he was only 12 years old.
Invest before revenue
“Spaced Ventures is looking to plug the gap. Most VCs may not be willing to drop into the pre-revenue space startup market, but space enthusiasts and individual accredited and non-accredited investors are,” explains Brant. “We will become a pre-processor for VCs. Our platform will allow new space companies to get the investments they can’t get today while allowing VCs and other institutional investors to come in once these startups begin generating cash.”
Space is for everyone
Aaron Burnett | CEO, Spaced Ventures
“Space is no longer just for billionaires and the government,” says Aaron. “We are looking to play a role in changing the world and helping others join us in doing so by making it possible for them to invest in space. Think about how central GPS is to our everyday lives today. You wouldn’t have so many of today’s services without GPS. It’s satellites in space that have made those companies possible. Without satellites and without space they couldn’t realize the success that they have,” shares Aaron.
Brant sat down with us to share the lessons he has learned through his 30-year Wall Street career and more recently, his space startup career.
“When it comes to pushing markets forward, it is always about the risk and reward equation. If you create something of value, people are willing to take a look at the risk.” – Brant Arseneau, Partner, 9Point8 Capital
Lesson 1: Keep early career aspirations alive
When you ask adults what career they wanted to grow up to have when they were kids, most people will say they are not doing that career today. Though its seldom that we end up doing what we had planned to do in our childhood, there’s something to be said for keeping those dreams alive and to invest in dreams.
“I wanted to be an astronaut when I was young. When I was a child, I would make R2-D2 robots out of old washers,” shares Brant of his youth. “Ultimately, I figured out what you needed to do to be an astronaut. When I learned you either needed to be a fighter pilot or have an engineering degree, I went for the engineering degree. My engineering degree didn’t lead me to space, but to neural networks where I spent my early career. I ended up on Wall Street on the trading floor and had a very successful career, but space still called to me. Today, I’m using my experience to help early stage space companies get the funding they need to make their space dreams a reality,” explains Brant.
Lesson 2: Answer the call of career transitions
Most careers resemble a meandering path rather than a straight line. This is truer today than in any other time in history. With technology so central to our daily lives and ever-changing, the opportunity to take on new roles and challenges is more available and makes for exciting career opportunities.
“My career has shifted gears many times over the years. I did apply to be an astronaut, but that path didn’t take hold for me,” remembers Brant. “Instead, I ended up working on neural networks. This was a burgeoning area of study in the 80s. I ended up doing my post-graduate work on neural networks in the early 90s. In 1994, I walked onto the trading floor for the first time and I loved it. I worked on an initiative related to Basel I international banking regulations and regulatory capital. More recently, I have gotten involved in the Creative Destruction Lab and advising new space companies. What I’ve realized throughout my career is that being open to career transitions can take you to unexpected and wondrous places,” says Brant.
Lesson 3: Use your unique competencies
As you progress in your career, you end up with a unique set of experiences that, in combination, often help set you apart from other people in your industry. Identifying ways to take advantage of those experiences can lead to an entirely new set of opportunities.
“After spending nearly 30 years on Wall Street and working on several fintech startups, I had a unique set of competencies,” says Brant. “This is when I started to think of the space industry again. I noticed that the space industry didn’t have a fully functioning investment ecosystem because the government had traditionally funded the investments in space technologies and exploration. This industry is desperately in need of entrepreneurs that understand how to raise capital. They need people that understand how institutional investors think and assess companies for potential investments. And, the industry needs people that understand how a fully functioning investment ecosystem works. Those are missing pieces I knew I could fill,” explains Brant.
Lesson 4: Turn risks into assets
Regardless of the industry, investing in early stage startups is risky business. Yet, it is also an opportunity to realize amazing returns. However, for the space industry, investing has been limited to governments and billionaires. Space is very capitally intensive.
Risk and reward
“When it comes to pushing markets forward, it is always about the risk and reward equation. If you create something of value, people are willing to take a look at the risk,” says Brant. “In the space industry I saw that the capital that was forming was happening from the top down. It was government agencies giving large contracts to subcontractors. Then the billionaires began to come in. The ability to raise funds from capital investors really wasn’t there. Startups in space needed to start making money for institutional investors to take a look at them. At the same time, there are nearly 200 new space startups launching every year, but there wasn’t a means for them to get funding to get them to revenue. The entire supply chain is just forming. I see an opportunity to help these companies get off the ground. Accredited and non-accredited investors want to get involved in space,” shares Brant.
Lesson 5: Get to cash faster
There are a lot of grand visions out there. With space, cash can be many years out into the future. As with startups in all industries, there needs to be a path to revenue that is tangible. Finding a way to fill the gap in the space industry is a challenge Brant and Aaron as anxious to take on.
“The most important thing is to have milestones in between to get to cash faster. Space startups need to push commercialization earlier in their development. The more they think like business people, the more success they will have. Here’s the thing, traditional VCs are not ready for space yet. Although space companies need a lot of money to launch, there isn’t enough money coming into the industry yet. We are seeking to fill that gap with other space industry enthusiasts,” concludes Brant.
Let’s Review the Lessons
- Keep early career aspirations alive
- Answer the call of career transitions
- Use your unique competencies
- Turn risks into assets
- Get to cash faster
The future
“I expect in five to ten years the investment supply chain for space will be more traditional. In the meantime, Spaced Ventures is looking to plug the gap with private investors via SEC rules. We have a space-only investment and advisory board that will vet startups. VCs may not be willing to drop in now, but it will mature over the next decade or so,” says Brant.
As Elon (Musk) has put it, “We need more space companies in the funnel. None of the crazy ideas are being funded.”
“There are high barriers to entry. We are aiming to change that both for space startups and for everyday investors that want to be a part of the next moonshot,” concludes Brant.
Learn more about Spaced Ventures’ planned space investing portal and sign up to get their latest updates www.spacedventures.com.
