Main Engine Cut Off - T+179: Meagan Crawford, SpaceFund

Episode Date: January 18, 2021

Meagan Crawford, Co-Founder and Managing Partner of SpaceFund and host of the Mission Eve podcast, joins the show to talk about the financing side of space. We talk about recent rounds of fundraising, acquisitions, holding companies, and she helps me sort through my thoughts on the whole Special Purpose Acquisition Company trend.This episode of Main Engine Cut Off is brought to you by 36 executive producers—Brandon, Matthew, Simon, Lauren, Melissa, Kris, Pat, Matt, Jorge, Ryan, Donald, Lee, Chris, Warren, Bob, Russell, Moritz, Joel, Jan, Grant, David, Joonas, Robb, Tim Dodd (the Everyday Astronaut!), Frank, Julian and Lars from Agile Space, Tommy, Matt, and seven anonymous—and 466 other supporters.TopicsMeagan Crawford (@MeaganMCrawford) / TwitterSpaceFund Venture Capital - Funding the Future | SpaceFund‎Mission Eve on Apple PodcastsMission Eve | Podcast on SpotifySpaceX raises $1.9 billion in equity - SpaceNewsRelativity Space raises $500 million - SpaceNewsOneWeb raises $400 million - SpaceNewsRemote sensing satellite firm completes huge funding round as Chinese space sector activity accelerates - SpaceNewsChina’s Landspace raises $175 million for Zhuque-2 launch vehicles - SpaceNewsChina's First Commercial Rocket Company Raises USD181 Mln to Develop Kuaizhou Series of Carrier RocketsLockheed Martin to Acquire Aerojet Rocketdyne, Strengthening Position as Leading Provider of Technologies to Deter Threats and Help Secure the United States and its Allies - Dec 20, 2020Space holding company Voyager to acquire Nanoracks, which added an airlock to the space station | Voyager Space HoldingsRedwire acquires Made In Space - SpaceNewsRichard Branson’s Virgin Turns to SPAC to Raise Cash - WSJMomentus to go public with Stable Road Acquisition Corp. - SpaceNewsThe ShowLike the show? Support the show!Email your thoughts, comments, and questions to [e-mail] @WeHaveMECOListen to MECO HeadlinesJoin the Off-Nominal DiscordSubscribe on Apple Podcasts, Overcast, Pocket Casts, Spotify, Google Play, Stitcher, TuneIn or elsewhereSubscribe to the Main Engine Cut Off NewsletterBuy shirts and Rocket Socks from the Main Engine Cut Off ShopMusic by Max Justus

Hello and welcome back to Main Engine Cutoff. I am Anthony Colangelo. We've got a special guest with us today. We've got Megan Crawford, who's a managing partner over at Space Fund, also hosts the Mission Eve podcast, and generally an all-around great person. So we're going to talk about the finance side of space today. I don't cover it too much on the show, but I probably should more. So we're going to talk about some of the funding rounds we've seen recently, some of the exits that we've seen by way of acquisition, either outright or to holding companies. I also want to pick a brain about the special purpose acquisition company trend that we've been seeing that I find quite shady. So we're going to talk about all of that. But before we get there, I want to say a huge thank you to everyone who supports Main Engine Cutoff over at

mainengincutoff.com slash support. Last show I mentioned we are almost at 500 patrons. We are now at 502 supporters over there. So thank you all so much for your support. That's an awesome number to hit. And this particular episode was produced by 36 executive producers. Thanks to Brandon, Matthew, Simon, Lauren, Melissa, Chris, Pat, Matt, George, Ryan, Donald, Lee, Chris, Warren, Bob, Russell, Moritz, Joel, Jan, Grant, David, Eunice, Rob, Tim Dodd, the Everyday Astronaut, Frank, Julian, and Lars from Agile Space, Tommy, Matt, and seven anonymous executive producers. Thank you all so much for making this episode possible.

If you want to help join over there and support the show, you also can get Miko Headlines in your podcast feed every single Friday. I run through all the stories of the week, talk about everything big to small to anything in the middle that I have thoughts on or that is important to know about. So head over to mainenginecutoff.com slash support,

join up there, the $3 a month level or more, and you will get that show every single week. It's a whole extra podcast in your feed every week. So anyway, let's talk to Megan. It's going to be a great conversation. I'm really excited and it's long overdue. So let's give her a call. Well, Megan, welcome to Main Engine Cutoff. This has been, I don't know, a year overdue at this point, an entire pandemic overdue, maybe. I'm happy that you're finally here talking to us. I'm really thrilled to be here. Thank you for having me, Anthony. So to start, I want everyone to meet you because you're awesome. So you are a member of SpaceFund.

You also have this podcast, Mission Eve. That is fantastic. Can you tell everyone a little bit about you? Sure. Yeah. I'm co-founder and managing partner of Space Fund, where it's a venture capital firm investing exclusively in the new space ecosystem. So very kind of targeted fund. And then I also have my podcast, Mission Eve, which I interview the most amazing women in the space industry. It's just been a thrill and just so much fun to do and in the hopes of inspiring more women to join us here in the space industry. So that's a project

that's near and dear to my heart. I'm also on the board of several nonprofits. I need to do a quick shout out to the Space Frontier Foundation, the Center for Space Commerce and Finance, Mars Initiative, and the Earthlight Foundation, where I spend an inordinate amount of my time helping those nonprofits. So I think that's probably about it. So we're going to talk about a bunch of different angles on like the finance side of stuff, which I occasionally touch on, but probably not as deeply as I should, in many cases. There's some fundraising that has happened in the past year that has been particularly notable for the size, specifically like SpaceX and Relativity have been getting gargantuan amounts of money. There's some

acquisitions that have happened recently. And then there's a whole trend of holding companies that I find quite interesting, as well as a trend that I find less interesting and more shady, which is this whole special purpose acquisition company trend. So those are the things I want to pick your brain about. Is there an order? Would you like to start with fundraising and then get into what happens after you've gotten a bunch of funding and actually accomplish things? What's the right order there? Yeah, well, I think I'd like to start with this kind of startling statistic that I like to bring up a lot. And it's one of the reasons that Space Fund was founded, actually, is, you know, currently, launch comprises less than 2% of the global space economy, yet has received 47% of the venture capital to date. Right? It sounds crazy, but it makes such intuitive sense to like, you know, somebody who watches the market. But exactly. That's crazy. Yeah, it's crazy.

Yeah. You know, it's like it, when you hear that, you're like, Oh, yeah, that seems right. But holy crap, that's crazy. Just hear those numbers right um and now the one question i've had i would have is does that include any spacex funding as launch yes that includes spacex funding it includes the you know that big relativity round it includes all of that well i guess that's my that would be my stipulation is like how how do you separate out what of that is going to starlink does that count the satellites then? Does that skew it? Or is it not big enough to actually skew anything, no matter how you classify their couple billion? Yeah. So, you know, regardless, it's a huge number, even if you were to try and take Starlink

out of the kind of the SpaceX portion of that, it's still going to be 40% of the venture capital. It's not going to change the impact of that number. Exactly, exactly. And so, you know, when my partner Rick Tomlinson and I were contemplating founding SpaceFund, you know, this was one of the things that was really bothering us. We were kind of looking around the industry at all of our friends and colleagues who are these brilliant entrepreneurs who are going up and down Sand Hill Road and couldn't get any funding.

colleagues who are these brilliant entrepreneurs who are going up and down Sand Hill Road and couldn't get any funding. And meanwhile, you know, well, all these other VCs are just pouring good money after bad into launch company after launch company because, well, Elon has a launch company and Bezos has a launch company and Jared Leto is invested in relativity space, so I need a launch company, right? And Space Fund is currently tracking 162 active launch companies around the world. Now, over time, we've tracked over 200. So that means more than 40 of them have already failed or bowed out in some way. But it's just insane, right? There's currently nine active launch companies around the world. We expect there to be room in the market for maybe six more. So a total of 15 launch companies will completely cover all of the demand for launch.

So what are those other 150 companies going to do, right? So the launch market is just absolutely ridiculous. It's extremely oversupplied for the demand that we see coming for launch. And again, this is one of the reasons Space Fund was founded is because we see launch as a solved problem, right? We now have this low cost, frequent, reliable access to space that didn't exist five years ago. And so what comes next? What are the things that are being launched? And that's where Space Fund

really has come into the market to try and finance those other things, those other parts of the space ecosystem that are so important. And so when you look at things like the recent relativity round, to us, that's just insane. One, the valuations are way too high. Now, we're investors in SpaceX. Okay, so I do need to give that caveat. Although I do think their valuation is way too high, but I like to see it continue to go up because we're investors. But we think that the valuations are way too high in the launch industry. We think there's way too many companies and it's going to just be way too competitive. And so, we wanted to come in and look at the rest of the industry and say, what are the business models that closed today that didn't close five

years ago? And when you look at what I call the constellation craze, these 50,000 satellites that are going to launch in the next five to seven years, we're not necessarily betting on those constellations either. It's not about who's going to win the broadband internet war. It's not about who's going to be the best internet of things constellation. It's not about who's going to be the best SAR constellation. What we're interested in is what are the products and services that every one of those 50,000 satellites are going to need. And that's where we see the opportunity for huge value creation and where there's so little capital available today to help those companies get stood up. And so that's kind of the hole that Space Fund is hoping to fill is to fund those other companies that are not launch companies that are really

doing amazing things right now. One thing I'm curious with the launch funding, I try to look at it in a way where like, okay, Relativity and SpaceX are good examples for this idea that I'm trying to get at. They are launch companies that have another thing that I would assume investment money is interested in. And in the case of SpaceX, that is Starlink. In the case of Relativity, they're putting so much effort and emphasis on their printing technology behind the scenes that I could see that attracting a lot of the investment

attention. And the fact that it's a launch company makes it a shiny object that's attractive in its own right. But do you separate at all, when you're watching launch companies get funding, the ones that have another aspect to them versus, we're going to make some small launcher that is pretty traditional and it looks vaguely like a Falcon 9, but it's 10 times smaller. Do you separate those out at all? Or is it at this point, you're just kind of looking at launches saying, not something we're interested in?

Yeah, that's a really great question. And in fact, the only reason we invested in SpaceX is because we believe that Elon's going to roll Starlink out and IPO it in the near future. Because he said publicly multiple times that he's not going to take SpaceX public until after they land on Mars. And regardless of what he says his timeline is, we're quite sure that the Mars landing is not going to happen within the lifetime of our 10-year venture capital fund, right? And so, we've got to have that exit in mind and we're going to be talking about exits a lot today. And so, the potential to spin out Starlink and IPO that separately gives us the potential of an exit within the lifetime

of the fund, which is the only reason we went ahead and made the SpaceX investment. Because without that, we wouldn't have that possibility of exit. Although there is a robust secondary market for SpaceX stock, you can always get rid of it. That's not a problem. But still, wanting to have that kind of exit event that of course has a valuation increase is really important. And you're right about relativity. I think that their 3D printing technology is really kind of where the value is in that company. And not necessarily the value of 3D printing rockets, right? There's a lot of parts of rocket engines that are simply like, you know, 12 cent plastic hoses that you can buy at Home Depot. It doesn't necessarily make sense to 3D print those things out of metal from an economics perspective, it doesn't make sense. So, you know, good on them for trying to figure that out.

But I really think that the value there is much more in their, you know, really large 3D printers than it is in the rocket engines themselves. Yeah, that's kind of always been my sense. I had Tim Ellis on a couple months ago. And the thing that's always bugged me and that I finally got a chance to ask him was, are you a launch services company that does it by way of 3D printing? Or are you a 3D printing company who currently does launch services? He was, you know, well, no, we like launch services. I still think it's a 3D printing company that just wants to make a launch vehicle because that's an easy first target. But I would hope that that's the way they're thinking about their company. One would hope. So before we get into the specific acquisitions and things we want to talk about, one other kind of internationally focused thing that I want to pick your brain on is

two different stories. One is OneWeb. They've got, you know, they recently got bought out by the British government and Bharti Global. I'm curious if you think that kind of government level involvement and whatever plans that may bring changes the game for constellations generally who currently were, you know, focused on the private industry. That seems, you know, they're still putting a lot of money in. I just saw news this morning they raised another $400 million. So does that influence any of the constellation thoughts that you have? Yeah, that's a great question. And so, you know, obviously anytime any government is involved,

all that does is slow things down and make it harder, right? The more government involvement you have in a business, the slower things move and harder it is to get things approved and to innovate. So I think that that is going to slow them down. I think probably the British government is maybe a little bit better than the US government, just because it's a little smaller and a little bit more nimble. But you know, OneWeb has had problems since the beginning. And the amount of money that has been poured, the billions of dollars that have been poured, the billions of dollars

that have been poured into that company for as of yet no results, you know, really concerns me. I think OneWeb and SpaceX are the two single, you know, largest fundraisers in the space industry. But SpaceX has results. OneWeb doesn't. So that does really concern me about that company. What I mentioned about the launch industry is like good money after bad, right? That I'm concerned about continuing to pour money into a company that hasn't been able to deliver anything. And like I mentioned earlier, from the Constellation perspective, we're not really interested in investing in really any of these constellations. I think that it's going to be kind of a commodities market. There's not

going to be a whole bunch of wiggle room for profit here because it's so competitive. Because you're not only competing with other broadband internet satellite constellations like Starlink, only competing with other broadband internet satellite constellations like Starlink, but you're also competing with your terrestrial internet providers, right? And so, really, where we see the excitement coming is not the delivery of internet from orbit. It's not It's not connecting smart devices. It's not that sort of stuff. It's about what comes next. It's about all of these other products and services that can come from space. And so we're not making any bets in that market.

We're not interested in investing in really in any constellations with the exception of we have made one constellation investment and that's SEN, S-E-N, it's doing 4K HD video from space. And, you know, we think that's, that's really interesting and very different and kind of a different edge on the earth observation market. But again, it's, you know, it's about the new possibilities, not kind of the same old, same old, yay, we're going to do internet from space idea that everybody's had for 30 years,

you know. The last thing that I have on the on my funding list here, and this might be something that you are like, no, let's not talk about that. There's been this recent, and it's kind of murky at that, this opening of private capital to the Chinese market. There's been a privatization push for whatever that term means over in China. We've seen giant amounts of money go towards an imaging constellation, the Jilin-1 constellation that is sort of like a planet competitor. constellation, the G-Lin-1 constellation that is sort of like a planet competitor. There's one that's a SAR competitor. And then launch companies are now raising $170, $180 million. None of those specifically, I'm just kind of curious if you've thought about that at all in terms of how that entrance or the opening of a market affects the market that we know today. Is it going to be a pretty insular thing over there for the first little while? Is it going to be something that pulls investors away from some

of the companies that you and I are talking about here? Or how's that play out in your mind? So the way I contextualize the Chinese market is there is no commercial market in China. Everything is government owned, no matter what they tell you. Right. I agree. So, as far as investing in the Chinese market, it's not something we would ever do because of the kind of government control aspect there. But, you know, from, and I think that most American investors are the same way. They're just very wary of the Chinese market. Um, and I'm sure you're aware, keenly aware of ITAR restrictions and CFIUS restrictions

and all of those things that make it very difficult for American companies to work with Chinese companies. Um, and so, you know, we have to look at China as a competitor in general. China as an entity is a competitor to everything America is doing in space or in the rest of the world in general. But I don't see them being super competitive in the commercial market because so many – the hot spots where space is really taking off, United States, Europe, Australia, Israel, those countries also have similar restrictions on working with China. And so, the Chinese launch companies, for example, they might be able to serve some markets. There's some countries that will do business with China, but it's not the majority of the world. And it's certainly not the big space commercial activity centers of the world are not able to do business with China, not able to launch on a Chinese rocket, the market. My biggest concern is from a defense perspective and the new kind of race to the moon and all of that stuff. I think they'll be very competitive there, but I don't see them being super competitive in the commercial markets. That's good context. All right, so let's get into the good stuff. Some of the acquisitions we've seen recently, the exits, which ones are top of mind for you?

that was acquired by Redwire. It was our first exit from our fund. Most venture capital funds, it's several years in before they start to see exits. We got our first exit just a couple months into fund one with the acquisition of Maiden Space. So that was really fantastic. And so that one is a really great example. And I know we want to talk about Redwire and Voyager a little bit as we get into this. But that one was the most top of mind and the most relevant to me because we were investors in Maiden Space. And that's an interesting case where... So they recently, Redwire also purchased... I don't know how to pronounce it. Is it Rocker? Rockor? Do you know how to pronounce that also purchased i don't know how to pronounce it is it rocker rock rocker you know how to pronounce that one i don't know how to

pronounce it r-o-c-c-o-r yeah yeah um and they focus on deployable spacecraft structures so it's something that could connect to a lot of the projects that we've heard out of maiden space recently and uh redwire purchased load path as well oh i gotta put this down on my list here i had a i had a list off the top of my head and that was not on there. But all that to say is that it's interesting in the case of Redwire that you see these companies that go well together

getting purchased up by the same holding company. And is that something that makes everyone happy? Is it something that you expected to see? What is that trend like in terms of somebody who's investing in these companies and then you're finding a home for them in this holding company? It's exactly what we want to see in the market, right? And you see this in a lot of other markets as well. We have these private equity firms that are rolling up different companies to create a conglomerate that's more efficient and effective. This is exactly what Voyager Space Holdings was founded to do. And it's perfect

for a venture capitalist to have these players in the market. I would love to see five, six, 10 of these private equity or conglomerates formed, kind of buying up all of these different startups and putting them together into these kind of bigger packages, right? And so it's really a positive thing for the industry overall. And I think it's going to make a lot of these companies more efficient, more effective, and more profitable. Voyager, for instance, our good friends over there, Dylan Taylor and Matt Kuda, are focusing a lot on back office, right? And so taking the accounting and the marketing and all of that stuff out of the hands of

your technical founders and entrepreneurs and allowing them to really focus on what it is that they do best and not have to worry about putting together financial statements and W-2s because it's January and the rest of us are all doing that. The folks that have been purchased by Voyager aren't worrying about that stuff, right? Because Voyager is taking care of all that for them. And so, again, I think it brings a lot of like with the companies that Redwire is buying, you know, Maiden Space and Rokor and Loadpath, putting those all together into a single entity, you know, allows for operations to scale much more effectively and all the rest. So, yeah, I think it's a wonderful trend and something that we're, of course, watching very carefully and are very excited to see happening. So, so far, Redwire or any industrial partners, however, you know, however you want to classify them, they made five acquisitions last year, right? acquisitions last year, right?

Adcol Space, Deep Space Systems, Loadpath, Maiden Space, and Rokor. Voyager did three. Launch Company, Pioneer Astronautics, and NanoRacks. And AAC Clyde Space did two acquisitions, right? And you're also seeing Rocket Lab bought Sinclair Interplanetary. I think that that's just the beginning for Rocket Lab. I really think that they're going to be growing through acquisition and that you're going to see them kind of start eating up the most important parts of the satellite supply chain. So they become a fully integrated company where you just come to Rocket Lab and not only can they

launch you, but they can build your satellite for you, right? And with their new kickstage and all the rest, it could be a complete solution. You just come to Rocket Lab and say, I have an idea for a thing that I need to go to space. I need to get to space and Rocket Lab says, perfect, we'll build it, we'll launch it, we'll get it exactly where you need to go, done. I think you're going to see something similar with space flight. With the recent Mitsui kind of acquisition of the majority of space flight, they're sitting on a whole bunch of capital right now. What are they going to do with it? Likely you're going to start seeing some M&A activity from them as well. And so, yeah, so I think that that's a really good signal, shows that the market is maturing, shows that we're, you know, for a long time,

the space industry has kind of been, you know, the redheaded stepchild, right? It's something that everybody was interested in and watching, but it didn't really kind of seem like a real market yet. And this is exactly the type of activity that's signaling to the rest of the world that no, space is a real market. It's a real investment opportunity. You have real exits that are quickening in pace year over year. 2020 was a really hard year for the entire world, but the space industry continued to grow. And in 2019, we had 21 exits. And in 2020, we had 18 exits. And so, even in the worst year for economics in recent history that anybody can remember, we still had 18 exits in the space industry. I mean,

that's phenomenal. And so, I'm just really excited about all of that stuff and where it's all going. One that I want to zoom in on there that you mentioned was Nanoracks. They were looking for, I think it was a $20 million round of funding was rumored or reported, I don't remember how confirmed that was, but they were looking to raise money. And then they eventually went the way of getting acquired or a majority stake taken by Voyager Space Holdings. And I did see a note, CNBC said that Voyager's planning to put more than $50 million or something over the coming year into NanoRacks. As somebody who has kind of been on, you know, not the investment side, but also, you know, having a stake in a company that went to a holding company.

Is that a thing that NanoRacks and others have to like get their a company that went to a holding company. Is that a thing that Nanorex and others have to get their mind around that that was a possibility? Because they were just looking for funding and they ended up getting acquired. Is that a different mental model that you have to get into? Did it take them convincing or like you were saying before, does this just make so much sense that we'll see more of this than just pure fundraising in the future? we'll see more of this than, you know, just pure fundraising in the future. So I think that it's really one of the things that's missing from the market right now is growth capital. Okay, so there's venture capital funds like Space Fund, our good friends Mike Mealing and Steve Jorgensen over at Starbridge, you've got, you know, Lisa and Jeff Rich over at

Hemisphere. And so you've got kind of a good market developing for that early stage capital seed series A. But what's really missing from the market is the growth capital, right? Where is the money for that, you know, $100 million series C that a lot of these companies are going to need? That doesn't exist right now, right? Another thing that I often like to quote is that right now in the US, if you take all of the space-focused venture capital firms, so we would kick Hemisphere out of this because space is only one of their sectors of interest. But if you look at Space Fund, Starbridge, the Space Angels Fund, there's only tens of millions of dollars under management in that world. There's not enough capital for the growth stage that these space companies need,

because those growth stage rounds are typically pretty large. And so Voyager is really helping fill a gap there so that they can come in and provide that capital for that growth stage that doesn't otherwise exist in the market. And Voyager is unique in that it's not really a private equity company, although it kind of behaves like one. And they don't necessarily buy the entire company, they'll buy a majority stake, which means that the entrepreneurs and the employees get to maintain their ownership of the company, which is really valuable and really good for motivation and keeping everybody aligned. And so I think that that's really the value of a company like Voyager is being able to provide that growth capital to take these companies who, who have some revenue, who have had some success,

whose technology has been proven, but need those larger dollar value rounds in order to go to that next level. And so, you know, I think that you will see some later stage vc starting to pop up certainly it's something that space fund is looking at and thinking about but you know until that happens companies like voyager are are really really valuable to the market this might be a little outside your general focus and something that you pay little mind to but um recently we heard the news that uh aerogent rocket time was going to be getting acquired by lockheed martin this is you know kind of the old school model where big aerospace prime acquires another big aerospace contractor do you keep your eyes on any of that stuff does the price tag there was

right around five billion dollars something like that? Does that, you know, per your evaluations are crazy comment earlier? Does the price tag interest you at all? Is there anything that you can draw from there in terms of wisdom? You know, those sorts of transactions are, again, valuable to the marketplace. Any sort of activity like that is a good signal to investors from outside the space industry that there's good activity going on. But I'd much rather see Lockheed out in the startup ecosystem innovating through acquisition. So we all know that the big primes are not set up to innovate. And I mentioned earlier the new moon race with China. And it's

a space race with China right now. And if the US and its partners are going to win that race, we need to do what America does best and innovate. And that's not going to happen inside a Lockheed Martin or a Boeing or a ULA. And so, yeah, it's great that they're kind of rolling up Aerojet into what they're doing. But really what I'd like to see them do is be out in the startup market acquiring some of these new and exciting companies that really have innovations that can help. You know, Lockheed's primary customer is the US government, right? And so, what are the things that the US government needs to be competitive in the space arena? And why is Lockheed not out buying up those companies? So, I'm hoping that as kind of the aviation market comes back, that Boeing will start doing this.

I've in fact had some conversations with the folks at HorizonX, Boeing's venture capital arm. And I know that they're starting to think that way and starting to kind of transition their strategy to be more focused on that. But of course, it's difficult to turn that boat, right? Yeah, it's a big ship. Right, right, exactly. So I think that the acquisitions are good, you know, from the big guys are important, but I'd rather them be acquiring the startups than the other primes. Yeah, and certainly we've seen, we've seen Lockheed Martin, their venture capital arm invested pretty early on in Rocket Lab. That was like 2017 or something like that. So

they clearly had eyes on the market. The Aerojet thing kind of destroyed my working theory that they seem to be getting pretty cozy with the Firefly. And I know Aerojet in the past had tried to buy United Launch Alliance. So I was like, oh, maybe they'll like, you know, try to get Firefly and get a new young company that's doing something interesting. But there goes funding round, which they haven't done. You know, they've been internally funded kind of through their entire development. And so, yeah, it'll be very interesting to watch Firefly as they hopefully have this successful launch in Q1. There's a thing happening there.

Yeah. I don't know. I forget. I think I talked about it on the podcast a couple weeks ago that, like, Max Polyakov have been removed from the website. They had scrubbed any references to him. And, there was another partner,

Mark Watt or something like that. So I was like, okay, they haven't announced anything yet, but there's changes on their infrastructure side of their site and all that, that I'm like, something's happening over there. Yeah.

Something's definitely happening as they're preparing for this launch. And, um, and I think that they, they likely will go out for a funding round, but I don't think that they have any interest in being acquired just yet. Now, once you have outside investors, that changes the conversation, right? Because those investors are looking for an acquisition and looking for an exit. So they may kind of change their tune

once they get some outside investment in. Yeah. And certainly once they're flying, that helps everything. As you mentioned earlier, people that are doing things are generally looked at more fondly. Okay. The last bone to pick I have is the special purpose acquisition situation. We've seen Virgin Galactic go public this way. We've seen Momentus either has or is going to, I forget where they're at in their process there. What is up with this? Is it as shady as it feels? What do you make of that? Yeah, so SPACs are all the rage right now, not just in the space industry, but in general. And there's a couple of points here. One is that going public is really difficult. It's

really expensive. It's really time consuming. There's so many regulatory hurdles. And the great thing about SPACs is that you get to kind of skip all the BS, right? And so that's why SPACs have become so popular is that these special purpose acquisition companies are put together. They go through all the trouble of going public and doing all the paperwork and getting all the regulatory approvals. And then seen a general decline in the IPO market over the last few years, specifically for this reason, because it's just too hard to go public and too much expense and crap to deal with, right? And so, in general, the SPAC idea, I think, is valuable to the IPO market overall. But in the case of the two space SPACs that you mentioned, Virgin and Momentus, I really do have some concerns there because both of those companies are pre-revenue. And it's not unheard of for a company to go public when it's pre-revenue, but it's a

little shady, as you mentioned, right? And so, it just doesn't make sense to me for a company to go public when it's pre-revenue. Now, Virgin, I can see that because Virgin is such a well-known, popular company, because there's so much excitement about what they're doing. That one kind of makes sense to me. Um, but they are very much a pre-revenue company. Their technology has not yet been to space. And so I'll let you and the listeners determine why a company would want to go public prior to their technology being tested and being shown to work in space? Why would you want to go public before that? You know, in my world, as an investor, I would want to see you get to that TRL 9. I would want to see, you know, happy customers with missions that have gone perfectly because that would greatly increase the valuation of the company. So why are you going public before you get to space?

Pregnant pause. There is also this other storyline where, is it the CEO that, I saw something in the news recently,'m gonna get the story wrong uh i should look it up before anything oh um yeah mikhail kokarich um who i you know has been ceo chairman i'm not sure exactly what his title is over there but um mikhail is the one who founded Momentus and formerly founded Astro Digital. But there's been continuous problems with Mikhail and his ability to even work on the technology as a foreign national. There's CFIUS issues, there's ITAR issues. There were serious problems with Astro Digital when he was there.

You know, Russian money is not really looked upon very well by the US government when you're working on space projects. So, there's a lot of issues there with Mikhail, with the money, with the investors. There's this issue with the technology not being tested. There's a lot of issues there with that company that make one's eyebrows raise, if you will, and make the SPAC seem very... The timing of it is all very interesting. Okay, so maybe I should reassess my vibe

because I'm not a big fan of Virgin Galactic for a variety of reasons of which I have talked for too much length on this podcast to go into again. This whole momentous situation is interesting. So am I unfairly looking at SPACs when I should just be making an assessment of these particular companies

and it's the actual like mechanism is not shady and it could be applied properly or yes i i that's i think that's exactly right so the mechanism itself is something that could be very valuable to the space industry to to the ipo market in general you know well outside of the space industry uh SPACs themselves are fine. It's these particular companies that make SPACs seem shady to the space industry. And from our perspective, as a venture capital fund that very much wants to see as many exits as possible, especially unicorn IPOs, right? That's exactly what the VC wants to see in the market. But our concern is that these particular companies are not representing the industry well. And that the wider public investment market, if this is what they're getting from the new space startup ecosystem, it's not representing the rest of the industry well.

And it could potentially sour the possibility of IPOs or SPACs in the future from companies that are really good companies, that really do deserve to go public and have good valuations. that really do deserve to go public and have good valuations. If investors get burned on Virgin Galactic and Momentus, they're going to have less interest in the good companies when they do come along. So I appreciate that. Are there any other stories we should have talked about? I've made it through my list and I'm like feeling great about things at this moment, but did I miss anything that we should have covered? From an exits perspective, I think that was, I think that's pretty good. You know, what I think is really interesting too is that we are seeing, you know, it seems like once a week at this point, we're seeing new venture capital firms pop up that either have space as one of their sectors or space as their focus all over the world. There's a new one in Italy just a couple of

weeks ago that popped up. And so I think that that's a really important signal to the market as well, is that, you know, I mentioned earlier, this kind of missing growth stage capital, but the growth stage capital can't really develop until we've got a really robust early stage funding environment. And so that's developing really, really well. And so I think that that's a great signal you've got. And then on the other end, you've got the exits increasing in pace and value year over year. And so overall, I think that's really great news for the space market in general. The over 2,000 space startups that Space Fund is currently tracking.

The good news to you guys is that there is going to be capital available for you to grow your business. And so overall, I think that the space investment market is rapidly improving, rapidly increasing in scale. And, and you're going to see a lot more exit activity in 2021. You know, my prediction is that, you know,

and I don't want to put too sharp numbers on it here, but, you know, I mentioned we had 21 exits in 2019, 18 in 2020. I fully expect to get to 25 or 30 exits in 2021. And so that's good news all around. Megan Crawford, thank you so much for coming on. Is there anything else you want to plug for people to go check out? You mentioned something when we were emailing about this, that you had some work happening that might be coming out like this week or next. Is that something that people should look out for? Yes. Yeah. We're putting together a report right now on the 2020 exit environment,

which is why I had all these numbers and names right at my fingertips for today's podcast. So yeah, definitely be looking for that. And generally on the Space Fund website, we have all of our databases, our reality rating databases where we're going through sector by sector, cataloging every company,

rating them on how real they are. Are they just a PowerPoint company or are they fully operational? And, you know, lots of other research available on our kind of market intelligence side of our website. And so do check that out if you're interested in kind of where the startup environment is going and what it looks like. There's a lot of data available there that can be really useful. And to the entrepreneurs out there, I would say, you know, go check the Space Fund database before you start a company and make sure that there's not too many competitors. Make sure that you can do something new and unique and different than what's being done before.

Don't start a launch company. There's 162 of them. Go start something else. But do take a look at spacefund.com and all the really fun and exciting data there. Thank you so much, Megan. It's a pleasure talking with you. I hope I can see you in person again sometime soon. But we'll get there when we get there, I guess. Absolutely. Thanks again to Megan for coming on the the show it was a fantastic conversation and uh we should definitely check in more on that topic than than we do uh typically here on the show but uh anyway for now that is all i've got this week thank you all so much for listening for your support as always over at mainenginecutoff.com support if you have questions or thoughts email me anthony

at mainenginecutoff.com or hit me up on Twitter at WeHaveMiko. And until next time, hope you have a good week. I'll talk to you soon.