Rockies Space Fund: Elevating Colorado's Aerospace Industry

Peter

Welcome to today’s episode of ‘Elevating Aerospace,’ where we explore the cutting-edge world of venture capital in the aerospace industry. I’m your host, Peter Adams, and with me today is Amanda, an aerospace enthusiast who’s here to dive deep into the exciting world of the Rockies Space Fund. Amanda, thanks for joining us!

Amanda

Thanks for having me, Peter! I’m really excited to learn more about the Rockies Space Fund. So, can you start by giving us an overview of what the Rockies Space Fund is and what it aims to achieve?

Peter

Absolutely, Amanda. The Rockies Space Fund is a venture capital fund based in Colorado. It was established to make direct equity and debt investments in early-stage aerospace startups, primarily in Colorado. The fund’s primary goal is to identify high-growth potential companies with a clear path to exit and a potential to return ten times or more to Limited Partners. It’s all about fostering innovation and helping these startups get off the ground without having to literally leave the launchpad.

Amanda

That sounds incredible! So, why is Colorado such a hub for aerospace innovation? What makes it stand out?

Peter

Colorado is a powerhouse in the aerospace industry for several reasons. First, it has the second-largest aerospace economy in the United States. The state is home to major aerospace companies like Boeing, Lockheed Martin, and United Launch Alliance. Additionally, Colorado has a strong military presence, with the U.S. Space Force and U.S. Space Command headquartered here. This military presence encourages industry growth through research, development, and operations. Moreover, Colorado’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.

Amanda

Wow, that’s a lot of factors coming together. So, how does the Rockies Space Fund approach its investment strategies and objectives? What’s unique about your approach?

Peter

Our investment strategy is centered around identifying and supporting early-stage startups with high growth potential. We focus on companies that are based in Colorado or have a significant presence here, but we also invest out of state to leverage our networks and bring in additional investment dollars to the state. We aim to create a portfolio of between 15 and 30 companies, diversified across various segments of the aerospace industry, from terrestrial space tech to orbital and exploratory technologies. Our goal is to provide accredited investors with a professionally managed partnership that allows them to participate in these exciting opportunities without the need to manage the day-to-day complexities of venture capital investing.

Amanda

That’s really interesting. How do you manage risk and ensure diversification in your portfolio?

Peter

Risk management is crucial in venture capital, especially in a high-growth, high-potential industry like aerospace. We achieve diversification by investing in a wide range of companies across different segments of the industry. We also have strict investment criteria, including a requirement that the companies have a clear path to exit and a strong management team. Additionally, we don’t invest more than 20% of the fund’s capital in any single company without the approval of the Advisory Board. This helps us balance the portfolio and mitigate risks.

Amanda

That makes a lot of sense. I’ve heard that the government and military play a significant role in supporting the aerospace industry. Can you tell us more about that?

Peter

Absolutely. The government and military are instrumental in fostering the aerospace ecosystem in Colorado. The U.S. Space Force and U.S. Space Command, both headquartered in Colorado, provide a robust environment for research, development, and testing. They also offer grants and contracts that support innovation and help startups get the necessary funding to develop their technologies. The Space Domain Awareness (SDA) Lab, located in Colorado, is a prime example of how the government and industry collaborate to solve complex challenges. This lab brings together over 40 companies and institutions to work on space domain awareness, a critical area for national security and commercial applications.

Amanda

That’s fascinating. How does the Rockies Space Fund tap into this network and ensure a steady flow of deal opportunities?

Peter

We have a well-established network that provides a steady flow of deal opportunities. The General Partner, Rockies Space GP, has a long history in the venture capital and angel investing community. We work closely with the Rockies Venture Club, which is the longest-running angel group in the U.S. This network includes over 200 angels who meet regularly at conferences, pitch events, and educational programming. We also collaborate with various entrepreneurial organizations, such as Techstars, the Colorado Space Business Roundtable, and the Catalyst Space Accelerator. These partnerships help us identify and evaluate promising startups, ensuring that we have a robust pipeline of investment opportunities.

Amanda

That’s a really impressive network. Can you share some real-world examples of companies that the Rockies Space Fund has invested in and the impact they’ve had?

Peter

Certainly. One example is a company called Starlink Solutions, which specializes in satellite communications and has developed innovative software to improve data transmission efficiency. With our investment, they’ve been able to scale their operations and secure additional contracts with both commercial and government clients. Another example is TerraData Analytics, a startup that uses geospatial intelligence to provide real-time data for environmental monitoring and disaster response. Their technology has been adopted by several state agencies and has made a significant impact in areas like wildfire management and flood prevention.

Amanda

Those are amazing success stories! What are some of the regulatory and tax considerations that investors in the Rockies Space Fund should be aware of?

Peter

Investors should be aware of several regulatory and tax considerations. The Rockies Space Fund operates as a limited partnership and is structured to be exempt from the Investment Company Act of 1940. This means that the fund is not subject to the same regulatory burdens as a registered investment company. From a tax perspective, the fund is treated as a partnership for U.S. federal income tax purposes. Each Limited Partner will receive a Schedule K-1, which includes their share of the fund’s income, gains, losses, and deductions. It’s important for investors to consult with their tax advisors to understand the specific implications for their individual circumstances, especially regarding passive activity loss limitations and unrelated business taxable income (UBTI) for tax-exempt investors.

Amanda

That’s really helpful to know. Looking ahead, what are the future prospects and growth opportunities for the Rockies Space Fund and the aerospace industry in Colorado?

Peter

The future looks incredibly bright. The aerospace industry is poised for significant growth, driven by advances in technology, increased commercial activity, and growing interest in space exploration. Colorado’s strong ecosystem, combined with the support from the government and military, positions us well to capitalize on these opportunities. We’re also seeing a surge in interest from investors who recognize the potential returns and the positive impact of supporting innovative startups. Our goal is to continue to build a robust portfolio of companies that not only achieve financial success but also contribute to the broader advancement of the aerospace industry.

Amanda

That’s really inspiring. What are some of the key challenges and opportunities that the Rockies Space Fund and the aerospace industry in Colorado will face in the coming years?

Peter

One of the key challenges is the intense competition in the aerospace industry. We’re seeing a lot of activity from established players and new entrants, which makes it crucial for startups to differentiate themselves and secure a competitive edge. Another challenge is the regulatory environment, which can be complex and ever-changing. However, the opportunities are vast. The race to the Moon and Mars, the development of new technologies like space tourism and in-space manufacturing, and the growing need for sustainable space solutions present enormous potential. By staying agile, fostering innovation, and building strong partnerships, we’re confident that the Rockies Space Fund and Colorado’s aerospace industry will continue to thrive.

Amanda

That’s a fantastic outlook. Thank you so much, Peter, for sharing all this valuable information with us today. It’s been a pleasure!

Peter

Thank you, Amanda. It’s always a pleasure to discuss the exciting world of aerospace and venture capital. We hope our listeners have found this episode informative and inspiring. Until next time, keep looking up to the stars!