The Rockies Space Fund: Pioneering Aerospace Investments in Colorado

speaker1

Welcome, everyone, to our podcast! Today, we're diving into the exciting world of aerospace investing with the Rockies Space Fund. I'm your host, and with me is our engaging co-host, [Speaker 2]. We have a lot to cover, from the unique opportunities in Colorado's aerospace industry to the innovative strategies of this venture capital fund. So, let's get started! [Speaker 2], what do you think makes the Rockies Space Fund so special?

speaker2

Thanks, [Speaker 1]! What really stands out to me is how this fund is focusing on early-stage investments in Colorado-based aerospace startups. It's like they're planting the seeds for the next generation of space technology right here in our backyard. But, I'm curious, can you give us a bit of background on the Rockies Space Fund? How did it come about, and what's its primary mission?

speaker1

Absolutely, [Speaker 2]. The Rockies Space Fund was organized in June 2024 to make direct equity and debt investments in early-stage private portfolio companies, primarily in Colorado. The fund is managed by Rockies Space GP, LLC, with the investment management responsibilities handled by Rockies Venture Adviser, LLC. The primary mission is to identify and invest in high-growth potential companies with a clear path to exit and the potential to return ten times or more to Limited Partners. It's a strategic move to capitalize on Colorado's robust aerospace ecosystem, which is the second largest in the United States.

speaker2

That's fascinating! Speaking of the aerospace ecosystem, Colorado is a powerhouse in this industry. Can you tell us more about why Colorado is such a hub for aerospace? What makes it stand out from other states?

speaker1

Certainly! Colorado is home to a plethora of major aerospace companies like Boeing, Lockheed Martin, and Blue Origin. It also has a strong presence of military and government entities, including the U.S. Space Force Command Headquarters, NORAD, and NASA. The state's universities, such as the University of Colorado-Boulder and the Colorado School of Mines, are among the world's best for aerospace education and research. This combination of industry, government, and academia creates a vibrant ecosystem that fosters innovation and collaboration. For example, the Space Domain Awareness (SDA) Lab in Colorado brings together companies to solve complex challenges in space, making it a hotbed for cutting-edge technologies.

speaker2

Wow, that's a lot of resources and talent. Can you give us some specific examples of the investment sectors the Rockies Space Fund is focusing on? What kinds of technologies and companies are they looking at?

speaker1

Sure! The fund is looking at a wide range of sectors within the aerospace industry. For terrestrial space tech, they're interested in geospatial intelligence, satellite imagery, and communications. In orbital space tech, they're exploring satellite manufacturing, propulsion systems, and on-orbit servicing. And for exploratory space tech, they're looking at celestial resources, surface navigation, and interplanetary propulsion. One example is a startup developing advanced satellite communication systems that can provide high-speed internet to remote areas. Another is a company working on propulsion technologies for small satellites, which are crucial for various space missions.

speaker2

Those are some incredible examples! I'm also curious about the role of government and military in this ecosystem. How do they contribute to the growth and success of these startups? And what kind of support do they provide?

speaker1

The government and military play a crucial role in fostering the aerospace industry in Colorado. They provide significant funding through research and development contracts, which help startups get off the ground. For instance, the U.S. Space Force and NASA often collaborate with private companies on projects that push the boundaries of space technology. They also offer access to cutting-edge facilities and expertise, which can be invaluable for early-stage companies. Additionally, the presence of military commands like the U.S. Space Force Operations Command encourages industry growth through space-based research and development activities.

speaker2

That's really interesting. But, of course, with any investment, there are risks involved. Can you talk a bit about the investment strategies and risk factors of the Rockies Space Fund? How do they manage these risks?

speaker1

Absolutely. The Rockies Space Fund has a well-thought-out investment strategy to mitigate risks. They aim to diversify their portfolio by investing in a range of aerospace companies, primarily in Colorado, but also out of state when it makes sense. They focus on companies with a clear path to exit and high growth potential. The fund also has a rigorous due diligence process to ensure that each investment is thoroughly vetted. They work closely with the Rockies Venture Club, which is the longest-running angel group in the U.S., to source and analyze deals. Despite these measures, there are always risks, such as market volatility, regulatory changes, and the inherent uncertainty of early-stage investments. The fund's leadership, with their extensive experience in venture capital and aerospace, is well-equipped to navigate these challenges.

speaker2

That's reassuring to hear. Now, let's talk about the leadership and management of the fund. Who are the key figures, and what makes them stand out in this field?

speaker1

The fund is managed by a team of seasoned professionals. Peter Adams, the author of 'Venture Capital For Dummies', leads the General Partner with his extensive experience in angel investing and venture capital education. Kevin Kudra, the Executive Director of the Rockies Venture Club, brings a wealth of knowledge in angel investing and venture capital activity. Kevin Strait, an engineer-turned-attorney, focuses on the aerospace industry and holds leadership roles within the Colorado Space Business Roundtable. Their combined expertise and network make them a formidable team for guiding the fund's investments.

speaker2

It's clear that the leadership is top-notch. But how does the fund source its deal flow, and what's the process for selecting and investing in these companies? Can you walk us through that?

speaker1

Certainly! The fund sources its deal flow through a robust network, including the Rockies Venture Club, which is a key partner. The RVC provides curated deal flow, analysis, and access to a wide range of investment opportunities. They also have strategic connections with various entrepreneurial organizations, such as Techstars, the Colorado Space Business Roundtable, and the Catalyst Space Accelerator. The process starts with identifying potential investments, followed by a thorough due diligence phase where they assess the company's technology, market potential, and management team. Once a deal is selected, the fund makes direct or secondary equity and debt investments, aiming to create a diversified portfolio of high-growth companies.

speaker2

That's a great overview. Now, let's talk about the tax considerations and regulatory environment. How does the fund navigate these aspects, and what should investors be aware of?

speaker1

The regulatory and tax considerations are crucial for any investment. The fund operates as a partnership for U.S. federal income tax purposes, which means each partner is responsible for their share of the income, gains, losses, deductions, and credits. The fund is exempt from the Investment Company Act, and the Investment Manager, Rockies Venture Adviser, is registered with the SEC as an exempt reporting adviser. This structure provides certain benefits but also comes with its own set of compliance requirements. Investors should consult with their tax advisors to understand the specific tax implications, especially regarding unrelated business taxable income (UBTI) and the potential for audits.

speaker2

That's really important to know. Finally, what impact do you think the Rockies Space Fund will have on local and national aerospace innovation? What's the future outlook, and what are some of the growth potential areas?

speaker1

The Rockies Space Fund has the potential to be a game-changer for the aerospace industry, both in Colorado and nationally. By investing in early-stage startups, they're helping to drive innovation and create new technologies that can have far-reaching impacts. For example, advancements in satellite communications can improve global connectivity, while developments in propulsion systems can make space travel more efficient and sustainable. The fund's focus on diversification and strategic investments will likely lead to the emergence of new companies and solutions that can address some of the world's most pressing challenges. The future is bright, and the Rockies Space Fund is at the forefront of this exciting journey.

speaker2

That's incredibly inspiring! Thank you, [Speaker 1], for sharing all this fascinating information with us. It's clear that the Rockies Space Fund is making a significant impact in the aerospace industry. We're looking forward to seeing how it evolves and continues to drive innovation. Thanks again for joining us today, and we'll be back soon with more exciting content. Stay tuned!