Commercial Launch, Proliferation Creates Investment Opportunities in Ancillary Space Markets

Two barriers to entry have historically defined the relationship between capital markets and the space sector: the need for significant upfront capital and long return on investment (ROI) timelines. These barriers have created a hot-and-cold dynamic between capital markets and the space sector, as demonstrated by Space Capital’s Space Investment Quarterly: Q4 2023 report that found the space economy witnessed a private equity investment of $17.9 billion in 2023, a year-over-year decline of 25 percent compared to 2022.

But projections for the space economy not only remain high, they are quickly accelerating. A recent report by the World Economic Forum and the McKinsey & Company found that the space economy will reach $1.8 trillion by 2035, half a decade sooner than the $1 trillion projection set out by Morgan Stanley last year. As a result, new business opportunities are quickly emerging as a commercial launch market enables cheaper access to space and the Department of Defense (DOD) shifts toward a proliferation of assets across the next warfighting domain.

In this episode of “The Elara Edge: Expert Insights on Space Security,” Eddie Papczun, founding partner at Elara Nova: The Space Consultancy, and Kirk Konert, managing partner at AE Industrial Partners, discuss this hot-and-cold dynamic, as well as the ancillary market opportunities emerging in the space sector.

"The Elara Edge" is hosted by Scott King and produced by Regia Multimedia Services. The full story can be found on Elara Nova's Insights page here. Music was produced by Patrick Watkins of PW Audio.

Transcript

Host: Scott King

Subject Matter Experts: Eddie Papczun, founding partner at Elara Nova (EP); Kirk Konert, managing partner at AE Industrial Partners (KK)

00:02 - 01:39

While investment opportunities in the space economy are quickly emerging, the need for significant upfront capital and long return on investment timelines are creating a hot-and-cold dynamic between the capital markets and the space sector.

According to Space Capital’s Space Investment Quarterly: Q4 2023 report, the space economy witnessed a private equity investment of $17.9 billion in 2023. This figure marks a decline of 25 percent from the previous year. 

But projections for the space economy remain high, and their timelines are accelerating. A recent report by the World Economic Forum and the McKinsey & Company found that the space economy is projected to reach $1.8 trillion by 2035, half a decade sooner than the $1 trillion projection set out by Morgan Stanley last year. 

Driving this projected growth is an increasingly affordable commercial launch market, and a Department of Defense push toward proliferation of space-based assets.

Welcome to “The Elara Edge: Expert Insights on Space Security.” I’m your host Scott King and we have two guests joining us today, to discuss the evolving dynamics of capital markets and the space economy, and how private equity might be leveraged to support national security space needs. 

Eddie Papczun is a founding partner at Elara Nova: The Space Consultancy. He served ten years in the United States Air Force, with experience as a nuclear weapons officer, before launching his career as a serial entrepreneur and executive leader, including as a senior consultant to the Air & Space Forces Association.

Eddie, welcome to the show!

01:39 - 01:41

EP: Thanks for having us, Scott.

01:42 - 02:02

Kirk Konert is a managing partner at AE Industrial Partners, a private equity firm founded in the late 1990s with a focus in aerospace and includes a $6 billion portfolio of middle market capital. Kirk has been with the firm since 2014, specializing in the national security and space markets. 

Kirk, thanks for taking the time to join us today.

02:03 - 02:06

KK: Thanks, Scott. Looking forward to the conversation.

02:07 - 02:14

Kirk, let’s start with you.

How have the capital markets historically viewed or approached the space sector as an investment opportunity?

02:15 - 04:30

KK: The space industry through history has had different cycles. We've seen more recent history, the dot.com, telecom bubble and then the decline in budgets across NASA, and sort of this large, big government driven programs in space, that wasn't necessarily the best place to invest private capital. I think what's changed over the last decade has been access to space has gone down.

That has led to increased opportunities for different business models within space, that's increased the ability to get things in orbit much more cheaply. That's allowed investors to make more returns on space investments and it's increased interest overall for the market. So what we saw was we had a portfolio of companies in aerospace defense and space was always a part of it. You'd have a company that was making a composite part for a space project. But it was always kind of a niche. It was kind of a one-off project. It wasn't really a huge driver of the overall business.

But we started to see that change. We started to see companies in our portfolio get orders for not just one component, but dozens of components and what we saw was a couple of things.

One, this whole proliferated LEO constellation wave of activity and realized that there was the beginning of an industrialization of the space market. That - it wasn't just one program over ten years for $1 billion that the large primes were doing on a one-off basis. This was dozens of assets that were being procured and wanting to be delivered into space.

So we decided as a firm that we need to invest in the space sector, and we need to find a way to invest in this trend of increased budgets globally for space by governments. This new commercial activity and I think we were one of the first firms to really say that private equity can make investments in this sector.

And we saw, was a lot more followers as it relates to the space investing market and that's sort of pre-2020. What happened between 2020 and 2022, in terms of the amount of activity in sort of the SPAC-craze, but from a pre-SPAC, I think we saw this different activity of opportunity to invest in the space sector.

04:31 - 05:00

EP: It seems like Kirk, that drove a lot of people to come piling in that didn't do their homework, which led to an unfortunate situation with regard to that SPAC-market and I think we're just starting to see the other side of that equation where capital is starting to look at space again in a big way and I know since 21, it seems like we've had a bunch of down years as the segment being invested in. 

What's your take on what the SPAC market did to the - not only the institutional investor, but even the retail investor?

05:01 - 06:04

KK:Yeah, I mean, you see this in a lot of sectors, right? You have this hype cycle. Everybody piles and valuations go up, substantially. Capital flows freely. You see businesses get funded that shouldn't get funded and you see business models that look good on paper, but ultimately don't really have substance behind them.

Space happens to capture the public interest and a lot of companies in the space market that were very early stage went public via the SPAC bubble.

And I think that what's happened is a lot of institutional investors got burned by that. A lot of retail investors got burned by that, as they've seen companies that had great ideas, potentially great technology, but didn't necessarily justify the valuation, the amount of capital they raised for those ideas. So what we've seen over the last 18-24 months is sort of the pendulum swing the other way and now it's harder for the good companies and the great business models to raise capital. 

That's starting to thaw to your point, Eddie, but I think that's been a challenge over the last year for companies to raise capital, especially in the growth equity stage.

06:05 - 06:23

Kirk, you described seeing companies with small components for space projects start scaling those orders pretty quickly - which contributed to this influx of SPACs in 2021.

As you watched this unfold, were you surprised by this development? And what lessons do you think the investment community learned from this SPAC-bubble experience?

06:24 - 08:16

KK: We were very surprised. So we, we had this thesis at RedWire Space before SPACs were a thing. 

This is 2019 we said, space is an investable category. I think it's a generational opportunity to invest in the sector. I think honestly, Virgin Galactic was probably the reason why. They were the first ones to do it. It was kind of ho-hum and then all of a sudden it was like, the market cap exploded, retail interest exploded into the company. And I think that got these SPAC vehicles were starting to make money.

You know, there's all this retail interest in these companies that were capturing the public's imagination. It was in the middle of COVID. It was interest-free money. You had stimulus. There was a lot of different factors that went into this money piling in from the retail sector and the institutional investors were also piling in. 

And the market had different things to say after the interest rates started rising. SPAC interest started waning and valuations came down. So it hasn't played out exactly as we had hoped. Valuations went up a lot higher than we had expected, so it was harder to get deals done. 

But, I think, from our perspective, the SPAC thing caught us by surprise and that so every space company that had some momentum or a good story to tell was going public. So you had a dozen space companies go public and prior to that, there was zero, pure-play space companies. 

Since then, since 2021, over the last few years, we've seen, you know, companies weather the storm of valuations coming down, but still be highly successful. But you've seen other companies, other companies, sort of see that the business models weren't worthy of being either its own company or justification of the valuation they received in 2021, so that's led to a bankruptcy, a near-bankruptcy. Take private at a very low price versus where they were before, and I think that's led us to what I think now as a healthier place in the space market.

08:17 - 10:19

EP: I tell you, Scott, from my perspective, what's unfortunate is that SPAC is actually a really good tool, for the investment community, because it's an acceleratant, right?

You're going to raise money quickly, but that money needs to be raised for a company that has sound business fundamentals in place. So you want to accelerate growth. It becomes a corporation, it’s publicly-traded, but you're going to accelerate it, it’s going to merge or be acquired.

And then kind of what Kirk's saying, the SPAC market blew up. What happened was, we had bad actors, people that saw an opportunity to take a tool that is a useful tool and leverage it for personal gain in many cases.

And I truly mean personal gain, like there were some very wealthy people that became much more wealthy as a byproduct of SPACs. And the companies were the ones that ultimately suffered because they weren't ready and we had these crazy valuations to Kirk's point - where companies were being way overvalued when they had a paper product.

What I mean by that is, say you got a paper rocket and you are raising money through a SPAC and you don't have a customer, you don't have a revenue stream. You may be years away from getting approvals that you need and they just burn through the cash when they failed.

You know, so they were buying and spending money, yet they did not mature their service and their product to a point where they could generate revenue and I think, they were counting on the federal government, i.e. the Space Force and others like them in the IC community to come forward and say, ‘Hey, we'll be your customer. This is a great idea.’ 

Well, that's not how things work. You know, number one, budget cycles are 36 months long and the government wants to see proof of concept. And to Kirk's earlier point, the price of launch was coming down and the price of access to space was dropping at the same time that the SPACs were coming up.

I think what we've seen now with regard to SPACs is that maybe at some point, we'll see them used for what their rightful purpose was to accelerate a company with sound fundamentals and get them to a place where they can grow faster and achieve their strategic objectives sooner.

10:20 - 10:36

As mentioned at the top of this episode, Space Capital found private equity investments declined by 25 percent in 2023. 

Eddie, do you think this is a reflection of the fall-out from the SPAC bubble that we've been discussing and why else might the capital markets be a little bit wary of the space sector?

10:37 - 12:52

EP: Well, they don't understand it to start with. Like a lot of equity and capital markets really don't understand space.

You know, General Stephen Whiting who's the Commander of U.S. Space Command. He talks about space in a very interesting way. 

He talks about Lewis and Clark. And he says, ‘Lewis Clark, go West. They map a lot of the West, and then they come home and everybody's excited. Well, this is what's going on with space.’

We went to the moon back in the late 60s, early 70s, and we said, ‘Wow, there's the moon.’ And then we came home and we shared all of this, and we all were excited. And then we lost interest in it because there wasn't a way to get out there.

There wasn't a way for anybody to go West when Lewis and Clark came home. So the first thing they did is they started thinking about, ‘Let's build some infrastructure so we can go West, right?’ So we saw the advent of trains and stuff. The analogy is we're in the same kind of place. It's just that space is a lot harder than building a train track across the country.

We need an infrastructure and that infrastructure is going to be a force multiplier, an accelerant to the space economy, because as soon as you put an infrastructure in place and you can get to the moon and beyond and cislunar and all the things that come with it - suddenly you got a way to get back and forth, and that's going to change everything.

Institutional and even retail investors are looking at space and trying to understand, ‘Wait, how does that work? You're talking about mining the moon. How does that work? How do you get that back?’ 

We're thinking through that as a space enterprise and NASA and private companies across the space economy are thinking about this. But the investor world really doesn't understand it and until they can see it, I think capital is going to be very suspect of - ‘When am I going to see return on investment?’

I can tell you, and I think Kirk would agree, that the venture capital market wants nothing to do with this, because they want to see an ROI on their investment in 2 to 3 year time horizons. And that's not space.
We see that ultimately this is going to be a massive part of the overall economy. Forget about space. When we talk about the GNP of the United States. Space is going to be a massive contributor to that. So that's my perspective. I'm interested in what Kirk thinks.

12:53 - 15:19

KK: No, it's a good perspective. And it's interesting and it's almost surprising to me. I get at least an email or call a week from institutional investor XYZ. They have questions about space. They are definitely curious and interested in the sector. A lot of them did invest in sort of that 2021 timeframe.

But I've seen again a renewed interest in, ‘How can we participate in the sector in a smart way and make return on our investment?’ What needs to happen is just frankly, more wins in this space investing sector.

So I think as you start to see more of those success stories, then you're going to see increased interest from those large institutional investors that can find the opportunities in space and I think that's starting to show the maturity but it's going to take five years for that to really play out.

Where we're going to see, generalist firms that talk about industrials, business services, tech - space is not one of those verticals. I think over the coming years, you'll start to see that change, because I do believe there will be some tremendous success stories.

It's interesting to talk about, like, ‘How does the national security customer play a part in that?’ Because I think there's a lot more conversations going on. I mean, obviously, DoD released their report about commercial space and how they should leverage that. DoD had talked about the national defense industrial supply chain and how to leverage private capital. I think those conversations are also a force multiplier, because we should be listening to the customer.

‘What are your hardest problems? How should our portfolio address those? Where should we be investing to help you?’ If those companies can solve their problems and attract programs of record and attract government funding to deliver those products or solutions that creates more successes, more wins with those portfolio companies.

That attracts investment from the large institutional investors to invest in the space sector. So it’s - I'm not saying it has to be a truly coordinated, ‘pick winners’ type of mentality, but just having the conversations like to the private capital between national security and say, ‘Here are our problems. You go figure out how to solve those via your portfolio companies.’ Again, I’m starting to see those conversations happening and that gives me a lot of encouragement that we're going to see increased collaboration and some opportunities to deliver great solutions to the customer.

15:20 - 16:59

EP: Hey, Kirk. So when we think about national security space and then a commercial company that's trying to figure out, ‘Okay, where is my revenue going to come from?’ I think there's a disconnect.

A lot of these companies are basically saying, ‘Hey, I have this great tech, or I have this great service or this great capability, and it's a perfect fit.’ They have a conversation with somebody in the Space Force and it's probably not a big decision maker. And they're like, ‘Yeah, that's great.’ And what I've heard from senior leadership of the Space Force recently is, ‘Don't look to us to be your customer because you're going to have to be sustainable as an enterprise, so go find other customers, create a business. And oh, by the way, as you're maturing, that business and you want to come and talk to us about possibly becoming one of your customers, well, let's have that. But that'll be after proof of concept, after application.’

And this mentality if I build it, spend all this money. The government's going to be at the front of the food chain. Well, again, 36 month budget cycles. Ultimately, we need these small companies to be thinking about like, ‘Okay, how am I going to succeed in the marketplace? And oh, by the way, down the road somewhere - I want the government as a customer.’

I think to your point, you need to be listening to what the government is signaling because they are telling us, but they're not going to write the requirements for you and then say, ‘Hey, we're going to fund your development of this.’

It's not going to work that way. That's where they're talking about commercial to the degree they are. And I guess my question back to you is, are you seeing all of this? As you guys look at your overall portfolio and how you're investing that you just can't look to the government to be the reason why you're going to be successful?

17:00 - 18:09

KK: I maybe have a provocative view on this - let's be real. The government is the biggest buyer of space. They are the customers. We can talk about commercial activity and there is commercial activity. But by far the government is the biggest buyer of space assets.

So, I think the Space Force and the government space community needs to be real in that, if they want a certain capability fast, because of what they're currently facing from the adversaries, and one particular adversary. 

Then they need to step up and be a customer that says, ‘We have this problem. We need this technology solution, hey, commercial industry, you go fund the technology to go do that, but we're going to be there as a customer.’ And that's an important shift for the Space Force and DoD to think about.

I think that the SDA is doing that. Good example of like, ‘Look, we have this proliferative LEO constellation. It's a necessary architecture for space assets. We need this now and they're creating a marketplace to go address those problems faster.’

But ultimately, like, if the national security community is going to rely on the commercial space industry to take shape and then we're going to just acquire technology from that. It's gonna be too late.

18:20 - 19:45

EP: SDA is obviously a vehicle that the government is using to accelerate deploying assets on orbit that are functioning way faster.

But then when you talk about big government, it's still very slow moving. The acquisition bible is, you could literally stand on it and fall off and break your legs. So we need to skinny that down. I don't think our pacing threat in China has the acquisition regulatory oversight that we have in this country, which isn’t necessarily a net positive for getting things done quickly. 

But it was fascinating. I was at the SatShow or one of these recent events and every investor that was on the stage for the investment segment wanted to talk SDA. That was where everybody wanted to, you know, what is Derek Tournear thinking?

And it is fascinating how that has got everybody's attention. It's kind of like when we went from big, exquisite targets as General John Hyten liked to call them, ‘satellites,’ which were billion-plus dollars. 

And suddenly you looked at the industry and said, ‘We're going to move away from that model because those are big, juicy targets and our adversaries are investing in ASAT capability, and we don't want to put a big, juicy target up there and then we lose it and we degrade the system by multiples. We're going to proliferate these regimes with a lot of spacecraft, so that you could knock out up to a third of it, and we're not going to lose any capability.’
And I remember people that were leading lines of effort for the primes were like, ‘No, no, no, no, no, we're going to stay in the big satellite business. We don't want to get out of the big satellite business.’ So, it's kind of interesting how this is evolving.

19:46 - 20:11

Each of you brought up the SDA - or Space Development Agency - as a driving force embodying this shift to favoring proliferated constellations instead of these large, single satellites. 

Can you elaborate on how this shift in mindset cultivates opportunities for these smaller space companies? And how can agencies like the SDA facilitate funding for technologies that meet both the needs of the commercial marketplace, as well as national security space?

20:12 - 22:28

EP: This was primarily driven, Scott, by - before the Space Force even stood up when General Hyten was out at Space Command, when it was part of the Air Force.

And he hired Mike Dickey, who happens to be one of my fellow founding partners at Elara Nova to architect the future of space from a national security perspective. The idea behind that was proliferating the orbits and so that demand signal was almost a part of the berthing of the Space Force, which is, ‘We're going to move to a model where we're going to get a lot of things on-orbit, and we're going to do it in multiple regimes. We're going to not only be in LEO, we're going to be in Geo and beyond and we're going to have a lot of capacity up there.’

It's interesting because I was listening to Doctor Tournear and there is this thinking about, ‘Let's keep capacity in the barn,’ so to speak. We basically have a satellite in storage near a launch facility as needed. Say we lost some capability, maybe even in a shooting war. You pull it out of the barn, you slap it on a rocket, you process it, we tested it. There was a proof of concept. You can get this thing up in 96 hours, right? That's super, super fast when we're talking about space. 

Derek said, ‘Well, if you want to create capacity, in case, why don't we just keep pushing things up? Why don't we just keep sending things into space? And as I need that capacity, it's on-orbit already.’

I don't pull it out of the barn. I don't slap it on a rocket because what if you lose your launch facility? That's why General Saltzman, the CSO of the Space Force, has said, ‘I need more launch capacity, i.e., I need more places to launch from - globally.’ 

We don't launch from that many places in the United States. We primarily launch from the Cape. We do some national security stuff from the West Coast out of Vandenberg and other states are wanting to get into the space economy and provide that, but it's not that many. And so Derek's point is kind of interesting. Another signal to capital markets is, ‘Let's just keep pushing stuff.’ So SDA as a byproduct of the signaling that was put out there right at the inception of the Space Force, it's basically driving that narrative right now. Let's get as much stuff as we can up there. The more we have up there, the more capacity we have, the more resiliency we have. I'd be interested to hear your take on this, Kirk.

22:29 - 23:48

KK: It reminds me of and I've heard this analogy before, you probably have to. It's similar to, like, an iPhone. You keep upgrading the existing iPhone software. But then you also get a new iPhone every year, every two years. That's how Doctor Tournear’s thinking about it is - you’re launching assets continuously. New technology, new hardware technology replacing the old hardware.

You're also upgrading existing things on-orbit continuously via software upgrades and you create this flywheel of not just new technology going into orbit, but also a sustained supply chain within the U.S. that's able to deliver satellites at scale and you have a healthy ecosystem, continuous demand, sustainment of that supply chain, which I think we've lacked.

You look at the space industry over the last few decades, it's very episodic, right? You've got a big program, then it goes away and you get another big program then it goes away. But if you have a healthy supply chain of continuous demand, there's going to be winners and losers, but it's going to create a very healthy marketplace to deliver the best capabilities to the warfighter and to the U.S. government. And that's, again, going to create increased technology development for the SDA, for the Space Force. So I think he's onto something significant for the space industry and for national security.

23:49 - 25:09

Then that drives these ancillary markets, right? A lot of talk in the last year has been about now that you proliferated the heck out of all these different orbit regimes. 

Suddenly companies are thinking about debris in very creative ways, you know, that maybe there's going to be a bond market emerge where you got to take out a bond before you are licensed to fly, because you're going to have to make a commitment de-orbit or to push that satellite into a junkyard beyond the orbit regimes.

And I like that idea, actually, because you know, money will drive people to actually act more responsibly. But as I look at what's going on with regard to proliferation, ultimately these new industry lines of effort are going to emerge. I’d like to get your take as an investor. General John Hyten and Major General Roger Teague wrote an op-ed in the Hill. They talked of Russia and China - pacing threats. 

But one of the things they brought to the attention of the reader to, was the unsexy part of space, because the satellite is the sexy part, right? And launch is sexy, but we those things are just useless unless they can talk back terrestrially to the ground. So the ground-based network, which is in dire need of investment and upgrading. Do you guys see ground-based systems as an investment opportunity, especially as it relates to national security space? But all space affects commercial, as well?

25:10 - 25:24

KK: We agree. We've been looking at the ground segment extensively.

To your point, it's great to have all this great new technology and these new communication channels, but if you can’t get it back down into the hands of the user at a reasonable time frame. Then it's not worth it.

25:25 - 25:47

We've been talking about all these different opportunities for small, up-and-coming space companies in the space economy, whether it be in proliferation, ground, infrastructure, what have you.

But what should these start-up space companies be doing to be attractive to capital markets, whether they're looking for that SPAC-funding accelerant that Eddie was talking about, or positioning themselves as a quote unquote ‘win,’ like you were referencing there, Kirk.

25:48 - 26:27

KK: Entrepreneurs looking to start a space space company and looking for seed capital. I would encourage them to look at where the market will be in ten years, versus where it is today. Like, if I see another, launch company to fund. I'm going to be pretty, pretty upset because we see them every, every day. It's kind of insane to me. Like, you know, you've sort of missed that opportunity. 

I would be focused on what some of Eddie said, like on-orbit servicing, lunar economy, decommissioning of satellites, the trends are there, right? You're going to see proliferation everywhere. How do you play in that market? I think is how I would encourage people to think about as they're starting a new idea, new company.

26:28 - 26:55

EP: I would challenge that person. Go look at our resiliency on the ground so that we can talk to these satellites. 

You know, nobody's really thinking about that to any great degree. I think the whole idea of that op-ed piece was to try to get everyone's attention, that this is something we cannot just sit out of sight, out of mind until the moment that you really need it and it's not there and then you're like reacting. We need to proactively address this issue. I would challenge people that want to get into this space economy to be thinking about that as well.

26:56 - 27:02

So it seems like what you’re both saying is that the future space economy is in these niche services type of opportunities?

27:03 - 27:48

KK: To use Eddie's analogy, right? Lewis and Clark. You gotta assume the railroads will be built and you're not going to be the next railroad provider. There's only a few. So how do you make money with the new railroads, right? You provide goods and services that benefit from that new access. 

And, again, there's parts of the supply chain. We can definitely improve technology and invest in those areas and I want to go out for that trillion dollar space economy, if it comes true. It's really around - where is the space economy going in the next decade?

And you're only doing it if you believe that the railroad tracks are there. And Eddie I know your Rob Meyerson - what he's doing. Like that's a great example. Where you're taking a bet on new resources being unlocked by this access.

27:49 - 29:30

EP: Scott, you're thinking about on-orbit manufacturing, on-orbit servicing. The railroad analogy is kind of interesting because these little towns popped up along the route, right to get out West. And then obviously an accelerant to drive traffic faster was the gold rush.

You know, suddenly they found gold, and now everybody wanted to get there quickly. Well, to Kirk's point, Rob Meyerson knows there's gold on the moon and not gold. I'm using that as just that there's precious commodities on the moon that are worth a lot of money back here and Rob is way out in front of a lot of people in thinking about this problem.

And how do I get there? How do I mine it? How do I bring it home? I couldn't agree more with Kirk about this. The track is going to get laid. Where are we going to be in that economy? Are you going to be doing 3D printing up there? Are you going to be servicing? We've talked about fuel resupply, debris removal. I mean, and I would imagine the part that everybody gets excited about - tourism.

Someone will throw a hotel up there at some point and people will stay up there and pay a lot of money to do that. But to me, that's just a little ancillary element of this. It's going to be so much more about bringing things back. But, people are thinking about Mars and beyond and it's just going to continue to grow and space is going to become more and more and more relevant. 

The domain is massive, because remember when you start talking about money and you start talking about economics, then you got to start worrying about how do we protect it? You know, how do we protect this as a country, as a nation? Against bad actors trying to take it from us and so there's all kinds of stuff here. It's fascinating. I mean, it'll be fun over the next 20 years to watch this as it unfolds, as that railroad gets laid down.

29:31 - 30:04

KK: Definitely. That's my advice on if you’re starting a new company and things like we didn't mention like things that you can build in microgravity like drug development, pharmaceuticals. But again it's really about what can space do for us terresterially and I think, Eddie, you threw out some great examples. You know, not dissimilar to any other sector.

Space you can make money at. We invest in companies that make money. We're not big investors and companies that are burning cash. We invest in companies that make money today, have technologies that work today and space has the opportunity for a lot of those companies in the next few years.

30:05 - 30:18

Now, Eddie, Elara Nova has just reached its one-year anniversary as a consulting firm dedicated to national security space.

Can you talk about what Elara Nova has learned in its first year and how it’s evolving to meet national security space needs?

30:19 - 31:30

EP: Thanks, Scott. It's kind of interesting. When I was thinking through this with my fellow founding partners, we saw an opportunity obviously, in helping primarily I think initially the government. We thought about the government, national security space a lot. There's this thing called the ‘frozen middle.’ We spoke to it in general terms in this conversation. But it's difficult for the government to move quickly. And it's very hindered by regulatory oversight. And we call that sometimes ‘the frozen middle.’ 

And the idea behind Elara Nova was, ‘Hey, let's create an entity on the other side of that frozen middle and help pull things through.’ So, you got people like Mike Guetlein when he was out running Space Systems Command. He's trying to push things through the frozen middle and the whole idea of General John Hyten and others who set up Elara Nova said, ‘Let's help pull things through.’ 

And so it's amazing to me where we are now because here I am having a podcast with Kirk from AE talking about the investment community. I did not foresee that being such an important part of what we were going to do. But we are now an interlocutor between so many different parts of - we'll call the traditional economy and how it sees space.

31:31 - 32:07

This has been an episode of The Elara Edge: Expert Insights on Space Security. As a global consultancy and professional services firm focused on helping businesses and government agencies maximize the strategic advantages of the space domain, Elara Nova is your source for expertise and guidance in space security.

If you liked what you heard today, please subscribe to our channel and leave us a rating. Music for this podcast was created by Patrick Watkins of PW Audio. This episode was edited and produced by Regia Multimedia Services. I’m your host, Scott King, and join us next time at the Elara Edge.