Equity crowdfunding to the Space Industry with Aaron Burnett

Interviewee‍

Aaron Burnett is the Founder and CEO of Spaced Ventures, the first platform applying equity crowdfunding to the space industry. Focused on building a community of enthusiast investors and connecting them with space startups looking for seed funding to help ignite innovation.

Transcript‍‍

Aaron Burnett: Aaron Burnett, I'm the founder and CEO of Space Ventures and, and what we're doing is really trying to create, you know, the world's largest community's face investors because ultimately what we want to see happen is a future where there are a million people off planet, whether on the moon Mars or you know, million more people off planet, whether Moon, Mars, Venus, what have you. All that stuff excites us and that's the future we wanna see. So we are investors who invest in that. And so what that fun fundamentally means is that we are an equity crowdfund platform that does that and invests in space companies specifically.

So, you know, my background is a little bit indifferent. I don't come from space engineering or, which is a lot of people in the space industry or I don't come from traditional finance. My original roots are in Fortune 500 marketing and tech, you know, community building and things like that. I saw the Falcon Heavy with a Tesla on top, on a live stream. It's actually Ecuador at the time, and I saw that happening and I said, wow, I need to be a part of this industry because I've been a hobbyist investor since I was 12. My mom opened a brokerage account for me. I've been watching as much science fiction and things like that as I could.

But when I saw that happening in front of me, I said, the future's here. I need to be a part of it. I need to make it go even faster. So that's really what kind of got me in, made me figure out how we can help the industry move faster over the course of time. Eventually what happened was, putting two and two together probably took longer than I'd wanna admit, but we realized there was an opportunity to bring in normal people, democratize access to space through ownership, and get early stage companies funded at the very beginning stages of their life cycle and get them moving faster. So those two things, those two problems that were problems, you know, lack of access and lack of funding kind of solved each other by bringing them together. So that's what we're doing and yeah, just trying to spread that message and, and let people know that that's what we're doing and we see the future a little bit brighter than most.

Elisa Muñoz: Wow. Really interesting. And especially because you have like non a non-traditional background.  And I wanted to ask, what kind of investors do you normally have? Because I mean, what you guys are doing is not the most common thing.

Aaron Burnett: No, it's definitely not. And, what we're doing involves high risk. Any time you're investing early stage venture capitalists and all this stuff, you know, you lose way more than you win. And so what you do is you create a kind of a portfolio where there's gonna be maybe nine losses and one winner, and that one winner offsets all of your losses, right? That's, it's a very kind of high risk sort of game, if you will. But, you know, there's people that put these portfolios together and have done it for a long time. Some are more successful than others, but, so what we do is invest in space companies, which often take even longer and have even higher risk of failure. I mean, you're putting things on rockets, which is essentially a giant bomb. Everything else could go right? And the rocket launch could go wrong and you could lose everything, right? Years of work, millions of dollars. So there is a level of risk associated with what we do, that is pretty intense. And so one of the things that we look for are people that understand that, right? So our investors are, could be anyone really, like we, we tend to have a lot more people from the US invest, but anyone over the age of 18 can invest legally. And so we allow them to invest through the platform. We have all these things they have to do to make sure they're, you know, staying legal in their investment.

And we're making sure the companies are staying legal in how they disclose things, but the individual on our platform can be absolutely anybody. So we have people from the industry, we have engineers, people that are building rock, that are literally building rocket engines and also investing in other space companies. And then we have people that are truck drivers, right? But I want to be part of the industry in some way, shape, or form. Okay? And so you can really have that whole gamut. But at the end of the day, I think the, the, the key thing that unites us all is that we want to invest in a future that we wanna see happen, right? We wanna invest in it and own a piece of it.

Elisa Muñoz: Great. Do you remember who your first investor was or the first investor that really caught your attention? 

Aaron Burnett: Yeah, I mean we had, I mean, there were several surprises. Like, like no specific one person was really like, you know, super surprising to me. We've had some folks though that were, like I said, we were setting this up for, so we started in 2020. We started like this, the company as far as the paperwork is concerned, we weren't really able to do any kind of launch of anything until the following year because we have to get licenses, we have to build the product, all of that stuff. So that took time and we were putting that all together. So we had some familiarity. And during that time, you build relationships with folks. I think some of the things that surprised me is, you know, you have teachers, you have, like I mentioned, truck drivers. You have a variety of different people that just really wanna be a part of it. But there's also kind of surprises me just how much people are excited about it too, and willing to invest quite a bit because, you know, our average check sizes can be quite substantial too. We've had people that have invested in us that are part of the space industry. That's always been very, very important to us because for us, what we think about is this is really a relationship business when it comes to the companies because, you know, we need to help them, you know, guide them.

They're engineers, they're not necessarily worrying about engineering the financial side of what they're doing. So we wanna help them throughout their journey, make those companies successful so that we get, make money, all of our investors make money, all of that. So, you know, the industry's always been important to us. So we do have a lot of folks in the industry and that's always been really nice to see.

Elisa Muñoz: Is there something specific that people should know before getting their first investment into space?

Aaron Burnett: Yeah, I mean, generally speaking, and I mentioned this earlier, right? The people that invest in our platform are risk takers, right? They understand that there is risk fundamentally no matter where you're investing, when it's these early stages, it's not the same as investing in a stock on the public markets, right? They, those companies have to be more mature, they have to go through several stages of things with the scc.

These companies have a far higher chance of failure. And that's not comparing us to other platforms or other early stages, it's just in general early stages. So we do our best to really try to, you know, reduce any kind of fraudulent activities and all that other stuff to keep it as high a potential opportunity as possible, as highest chance of success. But you know, we, there's no way to know, there's just a hundred thousand different ways a company can fail. They can be the best team, the best market and you know, a hurricane, you know, can mess up their buildings and set them back years or you know, like I mentioned a launch, whatever. There's so many things. And so we do, look, we do make sure everyone understands there's just inherent risk.

So whenever someone is investing, they need to think about this in that portfolio theory mindset, okay, we invest in 10, try and invest in 20 because make those check sizes smaller if you need to because there's a good chance of failure. There's a high, high chance of failure as much as 80, 90% chance that they're just gonna totally fail no matter how good they are, no matter how good we think they are, it just won't matter because there's just too many, too many variables. And so that's what we like to make sure everyone is aware of, make sure they're thinking about that. And there have been, you know, there are massive pe very rich people that have been minted to be billionaires off of essentially single investments or a hundred million or more on returns on things like this. So it happens, but you can't bank, you can't bank roll on that, right? You have to think about, you know, your financial success and what that looks like for you and understand that there's a very good chance you lose this one investment, the next investment, or the third investment. And potentially there's one out of 10 or one out 20 that are.

Elisa Muñoz: How often should investors expect for any kind of updates? Or it depends on the kind of company?

Aaron Burnett: Yeah, so generally speaking, when you're talking about venture capital, they tend to expect a return on their money within five to seven years, right? So that's what they generally expect. So in space that can even be longer, that can be seven to 10 years, right? So you do have to think about that as you're putting that down.

Elisa Muñoz: What would you say it has been the biggest challenge that you have managed to solve while finding the company? 

Aaron Burnett: I think from a challenge perspective, it kind of hearkens back to what you mentioned before about, you know, someone not from the industry or what have you. I think that level of knowing and being kind of an imposter, if you will, having that feeling of being an imposter, overcoming that, is that it takes time. You have to have confidence in your own ability to just understand stuff, but you know it, you know, that passion or whatever can really help. So I feel like that is something I can look back at as a massive challenge and I still have quite a ways to go of course, but I do think that's a pretty big hurdle that I was able to overcome basically with just a lot of passion and grit and determination.

Elisa Muñoz: And last but not least, do you have any advice for future entrepreneurs or people starting in this space industry?

Aaron Burnett: Yeah, so future, what is it that you want to do with the rest of your life? If, to me, and, and some people are motivated heavily by money, right? So, and that's not a negative thing. I'm not trying to say sometimes there's a very strong motivation to just make a ton of money and do something else with your life, right? So that can be very motivating. That was never the thing that motivated me. And so, you know, if you have something that really motivates you, if it's something you can see and find as like, I wish I could do this every single day of my life. That level and that interest and that passion, that self-motivated interest is gonna push you through those obstacles that will come because invariably gonna fail probably a hundred times before you're successful. So as that happens, what is it? You know, what is it that will motivate you to the next step?

Make sure you understand that, making sure you have a clear vision of what I think is helpful for any entrepreneur, whether in space or not. And then in space, I would just say like, you know, know they really need to understand their financial plan. A lot of them are so focused on the engineering side of things that it is way very difficult and I'm glad that they're thinking about that. But there's a lot of options when they're thinking about their capital plans. And so whether that's us or other people or other products, right? Think about how you can effectively and efficiently raise money for something that's a big challenge that will take, in many cases, tens of millions of dollars. How are you gonna do that? 

Elisa Muñoz:  Really, really good advice. Thank you so much for being here with us and sharing your experiences Aaron.

Aaron Burnett: Thanks for having me, Elisa. It's been fun.