Investing in Outer Space with ProcureAM's Andrew Chanin and Micah Walter-Range - 7investing 7investing
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Investing in Outer Space with ProcureAM’s Andrew Chanin and Micah Walter-Range

Now's the time to invest in the final frontier! 7investing founder Simon Erickson chats with Procure AM, who have created the world's first space-themed ETF. They share their thoughts on the new space economy, space tourism, and when humans will first step foot on Mars.

May 7, 2020 – By Simon Erickson

Outer space has fascinated humankind for decades. And now, it’s becoming a commercial reality.

No longer solely-dominated by government-funded missions, the falling cost of rockets and satellites is allowing private companies to launch their own space-based operations.

Each new improvement in the space economy allows for a new wave of companies to thrive. Governments and early defense contractors like Lockheed Martin (NYSE: LMT) laid the foundational infrastructure for satellite communications companies like Sirius XM (Nasdaq: SIRI) or Dish Network (Nasdaq: DISH), while other innovations like GPS opened the door for companies like Uber (NYSE: UBER) and Lyft (Nasdaq: LYFT). Now, private ventures like Virgin Galactic (NYSE: SPCE) are offering space tourism flights into low-Earth orbit directly to consumers (if you do buy a $250,000 ticket, make sure to get the window seat!)

Between smaller satellites, new technologies, and a changing concept of “risk”, it seems the commercial possibilities for outer space are out of this world.

But how should investors approach this final frontier? Are the traditional defense contractors too conservative? Are the new wave of innovators too risky?

To help us answer those questions, I recently spoke with two outer-space experts.

Andrew Chanin is the CEO of Procure Asset Management and Micah Walter-Range is the President of Caelus Partners and the creator of the S-Network Space Index (and also Strategic Advisor to ProcureAM). Together, they have created the world’s first space ETF, which appropriately goes by the ticker “UFO“. Their ETF gives individuals a way to directly invest in companies who derive the majority of their revenue from space-related activities.

In our 7investing exclusive interview, Andrew and Micah describe why now is the right time to invest in outer space and how it is that companies are currently deriving their revenue. We tackle higher-altitude questions — such as the impact of government-funded technologies on the private sector, how space-based companies are raising financing, and what impact the space tourism industry will have on the rest of the world.

We also have a bit of fun, with Micah offering his prediction of when humans will first step on Mars (is it sooner than you thought?). And both guests describe a few important things that investors should be watching.

Interview timestamps:

  • 0:00 – Podcast Introduction
  • 1:33 – “Why Now” is the right time to invest in space
  • 4:42 – How companies are deriving revenue from outer space
  • 9:55 – Impact of government funding on developing new technologies
  • 12:41 – Impact of Cubesats
  • 16:06 – How space-based companies are being financed
  • 22:12 – Virgin Galactic and how billionaire entrepreneurs are changing the concept of “risk”
  • 31:00 – Impact of space tourism on the planet Earth
  • 34:49 – When will humans first step foot on Mars?
  • 38:49 – What investors and people interested in space should be watching

This interview was initially recorded on March 24, 2020 and was first published as a podcast on April 30, 2020.

Complete Transcript

[0:00] Simon Erickson: Hi everyone! 7investing founder Simon Erickson here. And we are talking today about doing business in outer space. The next time you look up at the skyline, know that there’s a lot going on up there, and it has some significant implications for investors.

This afternoon, I’m honored to welcome my guests from Procure Asset Management. I have Andrew Chanin and Micah Walter-Range. They are the CEO and Strategic Advisor of ProcureAM. Gentlemen, thanks very much for joining me to talk about space this afternoon!

Andrew Chanin and Micah Walter-Range: Thanks for having us.

[1:33] Simon Erickson: Andrew, you have created the world’s very first space-themed ETF. Appropriately, the ticker on that is “UFO”.

There’s a lot of headlines and a lot of buzzwords and a lot of talk about this new space economy.

But I’ve got to lead with the first question for you of “Why now?” What are the catalysts that you’re seeing out there that suggests now is the right time to be investing in space?

Andrew Chanin: So there are several reasons why we chose to go after this theme and why we chose to go after it when we did. And for me, having created many thematic ETF historically, I’ve learned a lot of lessons of dos and don’ts and the things that you should be considering and things that, you know, might make a fund to work and might not.

When looking at where the space industry has initially evolved from to where it is today, we’ve seen this incredible transformation of an industry. One that was, in its early days, really driven almost entirely by government spending. To one that is now well beyond a passion project of government and something that is being used and driven by commercial interests and even used by everyday citizens and consumers such as ourselves.

So when looking at how important the current space industry is to us, as well as looking forward and seeing the many different innovations that companies and billionaires and governments around the world are looking to do within the space industry, the ability to offer investors exposure to this burgeoning space industry was something that we thought was a great way to provide investors with a new potential investment opportunity.

And like you said, the potential catalysts. To me, I think that when someone is looking at making an investment into a thematic ETF, in many cases they are looking at what potential things could be positive for that broader industry down the road.

And like you said, as far are some catalysts, I think that there are several interesting things going on in the space economy around the world that could potentially benefit the broader space industry.

At a very high level, a couple of those things are that space is less reliant upon government spending and is now driven by kind of the commercialization of space. Another being that governments around the world are actually starting to build up their own military and defense programs focused on space. Just in the U.S. alone, we’re hearing about Space Force. And then on top of that, although space hasn’t been as reliant upon government spending as it had been in its early days, we are seeing things like the U.S. government increasing their budget towards NASA.

So there are many different things happening around the world. And I’m sure Micah can tell you many other things, but these could potentially help to expand and provide much-needed capital to the space industry.

[4:42] Simon Erickson: Well Micah, let me bring it over to you as well. And we’ll touch on those entrepreneurs and those governments a little bit later in the interview.

But I’d like to start with the transformation that Andrew is talking about. About commercial players now getting out into outer space.

Micah, I know that you are also the president of Caelus Partners. That’s kind of enabling the commercial viability of companies getting into outer space. Where are the companies that are doing business out there? How are they deriving their revenue?

Micah Walter-Range: I think we need to make a distinction, Simon, between the businesses that exist today and are publicly-traded that can be accessed through the ETF or some other means, versus the ones that are still in the early stages and will ultimately grow hopefully to the point where they become part of the ETF.

And we actually have one really good example of that. Startup Virgin Galactic started in response to a competition that was held at this point more than a decade ago to see if it was even possible for a privately developed vehicle to carry humans into space.

And so there was a competition. There was a winner. The intellectual property from that competition then gradually turned into this company. And I won’t walk you through all the steps that took place to make that happen. But the company has grown. It’s developed. They’ve gone through a flight testing program. They had an accident. They recovered from that. Now, this is the sort of thing that you expect from a space program, because pretty much every major nation has gone through that.

They’re getting to the point where in the near future, they hope to start launching flights, carrying passengers — paying passengers — aboard. That was possibly going to happen this year. Now, with everything that’s happening, I honestly have no idea if that’s going to get pushed back or rather how much that’s going to get pushed back. But last year, it started trading publicly. And so it became eligible for inclusion in the ETF.

And now you can access Virgin Galactic through the ETF along with this portfolio of other stocks that are companies that are already out there.

Now, the distinction I’d like to make, though, between those newer companies and the ones that are already publicly traded: many of the publicly traded ones focus on two main sectors. One is communications. And the largest subsection of that is broadcasting. This is one area that I haven’t seen any numbers coming out yet. But with all of the lockdowns associated with the coronavirus (and I’m sorry, you knew that was going to come up; I’ll try not to dwell on it too much), you know, direct to home satellite television. It’s a wonderful way for people to pass the time when they can’t get out, can’t go and do these other things that they would normally be doing. One of the fantastic things about it is unlike, say, streaming over the internet, which is constrained by internet capacity — and we’ve seen things like Netflix being asked to downgrade the quality of its streams because there are so many people using it — when it comes to broadcasting from space, those satellites just send out the signal and anyone with a receiver can pick it up. It really doesn’t matter how many people are tuning in. You’re not going to get a degradation in the signal quality because of that. So we’re definitely seeing some advantages there.

Similarly, as people are trying to work from home and put a much greater strain on communications infrastructure, satellite communications are a critical part of the global communications network. Just bringing those signals all around the world and enabling people to go on as best they can under these conditions.

Now, you know, there are some downward pressures on that, obviously, because one of the benefits of satellite is that it can be very effective for in-flight Wi-Fi. There aren’t a whole lot of flights going on right now. So that part of the business is probably quite a bit of a hit.

But then the other really major part of the commercial sector is all of the location based services. You think about Uber or delivery services. We’re seeing all of these restaurants switching over to delivery-only. Well, how did those drivers find your house? They do it because they carry around handy little Smartphones that have that location based service right in them. Whether it’s DoorDash or GrubHub or any of these other companies. They’re able to find your house quickly and efficiently because of that service. And that is based on a signal that is broadcast from space.

So we’re really seeing how space is playing an incredibly important role right now in the midst of everything that’s going on with coronavirus. But in general, these are major sections of the economy that are growing and developing all the time. And space is fundamental to their success.

[9:55] Simon Erickson: And Micah, GPS was originally designed by the Air Force for guiding missiles. And like you said, now it’s guiding food delivery across the nation. And helping Uber pick up riders and matching riders and drivers.

Are there other government-funded technologies that you’re seeing being developed right now? That you think would have a similar impact on the commercial economy down the line?

Micah Walter-Range: Well. So another area that the government has really been strong on developing is just Earth observation. Satellite imagery. And people think about satellite imagery in the context of something like Google Maps. Where you can see that picture.

But there are all kinds of other types of sensing that are done from space. So everything from tracking different pollutants in the air. It’s been fascinating, again, seeing how when different parts of the world shut down, major parts of their industry, the air quality improves substantially.

And now, as some of those regions are getting back to work, particularly in China, we’re seeing the air pollution tick up again slowly. So it provides another gauge of that type of activity.

But how is that relevant to people in their everyday lives? Well, you think about how important air quality is. And it’s something that a lot of people in the United States take for granted. But elsewhere in the world, that can be something that people need to know on a daily basis. Do I need to wear a mask going out today for air quality reasons as opposed to other reasons? Do I need to stay home? Do I need to run an air purifier? Things like that.

Similarly, just understanding the importance of weather and being able to track that and forecast that with even greater accuracy. And down to even the level of an individual field. It’s very helpful for you and me as we go about our day and figure out what our weekend plans are going to look like. But it can also be incredibly important for farmers as well. So these are all different areas that people are working on, that space can contribute and has contributed. So much of this technology still resides in the government. People are taking it and turning it into commercial systems and then building services based on those. And as those systems continue to be developed, I think we’re going to see it become even more accessible to regular users like you and me.

Simon Erickson: And one more for you, Micah. We mentioned satellites there quite a bit: for communications, for GPS, for imagery. A lot of applications based on satellites. And satellites aren’t costing millions of dollars anymore. We’re starting to hear about CubeSats, which are very small, very low fixed cost.

Can you talk about the impact that you think CubeSats are going to have on the commercial economy, or just space in general?

Micah Walter-Range: Right. So CubeSats, they are literally small enough to fit in your hand. And they’re not as capable certainly as the gigantic car or bus sized satellites that are still being produced for many different purposes. So if you want to, say, provide television coverage over an entire continent, you need a large satellite to do that. That’s just a matter of simple physics.

But with these smaller satellites, some of them at the level of CubeSats, CubeSats are fantastic for experimentation and rapid prototyping. And yes, you can build them inexpensively. You can launch them inexpensively. A lot of the time they just ride along as a secondary passenger along with the big satellites.

So you can send them up in large quantities and just figure things out much more rapidly than you could in the past. Now, the thing that some people have done is they’ve taken the CubeSat format, which is a cube with sides that are 10 centimeters, and then they’ve taken those and they’ve stuck a bunch of them together. So it’s not technically a CubeSat anymore, but it’s still very small. And so some of those are now operational systems. Where you have companies that are flying 100 or more of them and they’re picking up all kinds of data. Doing things like ship tracking on the oceans. Even monitoring parts of the atmosphere. Because you can see how the GPS. signals bounce around in the atmosphere and you can figure things out about the different layers of air. And that, it turns out, is actually useful for weather forecasting. So all kinds of fantastic things that are underway there.

The thing that really excites me about it is it’s making space more accessible. The more experimentation we can do, the more development, the more rapid iteration, then the more space is going to look like other parts of the high tech economy.

And this is, I think, one of the reasons why venture capital firms have gotten involved in the past decade, really mostly in the past five years, in terms of the actual dollars invested. Because it looks a little bit more now like the software industry. Still not quite there. But it’s more like that than, say, a slow moving government industry.

So they’re able to say “Alright, you know, I understand the business model. I understand how quickly you’re going to be able to test scale this up. And I’m willing to put some money in. Because I think it’s going to work within the timeline for my fund.”

And so that’s taken us to this place where some of these systems are out there, they’re working away, and we’re seeing the data coming from them. So it’s very exciting to start to see the benefits from those systems and from those investments.

[16:06] Simon Erickson: Andrew, Micah just mentioned VC firms. I wanted to ask you a little bit about the financing for this.

You know, obviously it seems like the costs are coming down. We’ve got CubeSats. We’ve got lower cost satellites.

Even if the fixed costs are coming down, a lot of these operations are still predominately in the future. There is so much of the cash flows that bank loans are dependent upon are still in the future. And I would think that would make traditional financing very difficult for some of these companies.

Are the companies that you all are investing in, or at least the ones that are doing operations in space right now, are they still being backed by VC firms? Or are there other forms of financing you’re seeing?

Andrew Chanin: So Micah, given his background, could probably even give you many other answers, even possibly directly with what specific deals that he’s looking at.

However, for the for the majority of the portfolio, these companies are currently operating in space. Virgin Galactic is one of the rare exceptions in the fund where they’re actually still building out their technology and running tests and are hoping to bring actual customers into space.

For the most part, a lot of these companies already are actually in business. So they have all different types of financing. Some have strong cash positions. Some are reliant upon current and future revenues from other business lines. And some are not one of the largest companies in the fund, but a company like Boeing that is in the fund that happens to have its own diversified businesses — you’ve seen them do things like draw down on credit lines and things like that. And also look for potential government financing to keep certain operations going.

So, the current situation, it was unexpected for a lot of different companies. But, I think looking at something such as an ETF, it gives investors a way to get exposure to many different companies specializing in all different areas of the space industry, in all different spots on that own company’s lifecycle.

So you kind of have this diversified exposure to all different companies doing different things that have their own types of financing capabilities, needs, or demands. So you are getting kind of all different types of companies with various needs for the build out of their future projects in R&D and things like that.

So it’s tough to paint any group of these companies with one brush and say that’s what they’re doing or that’s what the challenges are. I think the nice thing about the current structure of the fund is that a lot of these companies are generating revenues currently. So they’re able to have a lot more flexibility. As opposed to, say, a company that is looking 50 years, 30 years down the road, saying “We want to do this. We need money to do that.” There might not be as much capital for some of those expenditures or goals at the immediate time.

But when you look at different things, like when it comes to government spending and how China, say, they want to build a permanent lunar base on the moon or other ambitious goals like that. So far from what we’ve seen, that money is still being made available for those projects.

And maybe if their timeline gets pushed a little bit further out, it’s not because they’re not funding it. And they’re waiting until they have more money and they don’t have to divert the money.

It’s more so just because different testing things are getting kind of slowed down. But when it comes to your government’s providing its contractors and whatnot the capital they need to help them achieve their various missions. Whether it’s a national mission or goal or an actual militaristic goal. We’re so far seeing that funding has not dried up and is there because it is a very important necessity for those countries. And they see this as a long term play and one that they cannot slow down on. At they’re full steam ahead on.

So I think that’s a really interesting indicator for the industry. And one that also, I think, provides a little more comfort for these companies. Knowing these governments that we were building various products and are doing these services for. They’re here. They still want. And they’re providing that financing that we need.

Micah Walter-Range: And I’d actually like to just add a couple things to that.

So one of the ways that I think about the split in funding sources is that the startups today, they’re still mostly getting their money from a combination of government grants and a little bit of contracting. But angel investing and venture capital. Those are the big sources for them.

And then, for the more mature companies, the kinds that are represented in the ETF, they’re getting their money from government. But it’s contract revenue rather than grants, for the most part. They’re providing actual operational services, as Andrew said. And commercial services, commercial revenues that go along with that.

And then because they are established, because they have a track record, they’re able to get loans and other sources of debt funding. So that’s more or less the division between the startups and the established companies.

But then there’s this interesting intersection, because most of the established companies are also doing venture-style deals with the startups. So they’re putting some of their capital in. So even though the startups can’t access the debt market, the established ones can. And then they invest in startups. Because they see that as a way to rapidly develop new technology that will ultimately be beneficial for their own businesses.

[22:12] Simon Erickson: Well, let’s double click on one of those companies that is – I guess you still call them a startup – Virgin Galactic. You know I have to ask more questions about this one!

And a reminder for anybody listening that if you do buy into Procure AM’s ETF, with the ticker UFO, you get a wide basket of companies there. They’re investing in a wide variety of publicly traded companies.

Virgin Galactic, last I checked, gentlemen, is the third largest holding in your ETF. So I know that you guys have some opinions on this one.

This is one that was started by Sir Richard Branson. High-profile billionaire entrepreneur. Has dreams of opening up space to everyday people. Right now, Virgin Galactic is offering $250,000 flights into orbit.

My question, though – without getting too into the weeds of Virgin Galactic – is more of the concept of “What is the impact going to be of billionaire entreprenuers, whether it’s Branson, whether it’s Bezos, or whether it’s Elon Musk, that are bringing billions of dollars of their own capital. And then also billions of dollars of others that are that are following them into these ventures.

They have a very different concept of risk than the U.S. government has of the concept of risk.

And do you see this having a huge impact on the goals that are being accomplished by the companies now? Rather than just the government, but the companies, that are doing operations out there?

What’s going to be the impact of billionaire entrepreneurs starting businesses that are going into outer space?

Micah Walter-Range: Andrew, would you like to take this one first?

Andrew Chanin: I think it’s exciting and encouraging. I think it shows that if you have maybe not even your own capital, but you have the access to capital and you have a good enough idea that people believe in. That you can, viven the current landscape of space policy and government approvals and whatnot, you’re able to try to achieve those goals.

Certainly Elon Musk and SpaceX, Elon has his own goals of certain things that he would like to do. But in the process, he is doing tremendous things to help governments achieve their goals.

So I think that this competition is actually very healthy for the industry. And not every single technology is going to work. And every single technology is going to work within a certain time horizon and timeline that may be set up or might be the goal.

But the current environment is allowing for these different ideas to come to market. And some of the greatest things that are being accomplished is allowing the U.S. government to be less reliant upon foreign nations to help them achieve their military goals.

Other things are the actual technologies being developed are revolutionary. And the idea of being able to build reusable rockets are not just going to help those individual companies. But if they’re successful in being able to create reusable rockets and things such as that, we’re going to be able to see these companies helping other companies achieve their goals. Or at least test out what they think that they can do in space.

And it’s lowering the barriers to entry. Because the costs are coming down so dramatically.

So part of that is these companies competing with each other and that driving down the costs. But truly the input costs for them to send items into space are going down because they don’t need to rebuild a rocket from scratch every single time they want to send something into space.

I think what they’re doing is helping the next wave of entrepreneurs and technologies to become at least potentially economically viable. Whereas, you might have an idea but say “Wow, that’s just way too expensive. You know, it’s just going to be an idea forever. I’m not going to get to try it or test it.” To now where the costs have come down so dramatically because of the competition, between companies as well as new technologies being developed, that it’s allowing for new entrants to R&D. Different things that may not have been possible 5, 10 years ago.

And that is going to hopefully create the next the next iteration of technologies to go out there. Which the next technologies after that will be able to build off of.

So I think it’s actually a really incredible thing for the broader space industry. And yes, there certainly is a potential that they could be incredible standalone companies on their own. But the fact that they’re also helping to enable other companies and technologies and government goals and missions, I think is something that is extremely imperative for the growth of this industry. And they’re helping enable this one day at a time.

Micah Walter-Range: And to that I would add a couple of things.

One is that there’s really only one company that I can think of that is solely funded by a billionaire. And that is Blue Origin funded by Jeff Bezos.

So Space-X, yes. Elon Musk did put some of his own capital in. But at this point, it’s mostly other people’s money. For Virgin Galactic, I believe that is also the case. Where Richard Branson certainly put in quite a bit to get it started. But there were other sources of capital. And indeed, that was part of the reason that the company went public. Which we were delighted to see that happen. They needed one final round, they say, of funding, to just cross those last few hurdles and begin operations. And so that’s what all the investors who now have shares, that’s what they’re looking forward to.

The other thing that I would say just looking at the broader impact on the culture of space. Yes, absolutely I agree with what Andrew said on the operational aspects of it. But the culture, I think has changed because of what these people have done. And some of it is hype and personality. Just these larger than life egos that get involved. But some of it is also what they have done.

So the fact that they did have to go out and find other parties to put very substantial amounts of money into their companies, that sent a signal to the rest of the industry that, yes, you can go out and do it and you can get non-space investors to put money into space. Even at those early stages, if you have credible leadership and a credible plan.

And then the other thing that I think has happened that has really been a huge change is you look at SpaceX and how frequently they change their plans. Or modify them, in one way or another. The space industry historically has been very conservative. Very much develop a plan, tried to stick to the plan, only change the plan when you run out of money. Or there’s a major technological problem that you have to somehow work around.

But with SpaceX, that culture that I think comes very much from the Silicon Valley background of Elon Musk and some of the other leaders, is you pivot as often as you need to, to improve the product. To improve the company. To change your goals. If a product line just isn’t working, then you drop it.

And so the very first rocket that they built, that design — they were planning to keep it and keep flying it for many more years than they ultimately did.

But what happened is they got to a point where they said, “Nope. We’re happy with our next rocket design. That’s much larger. It’s more powerful. And instead of launching these two smaller ones, which we thought we would keep in production, we’re just gonna get rid of that product line. And we’ll launch two satellites: a large rocket instead.”

They were willing to change their business very, very quickly. And and it helps that SpaceX is a company that is controlled by a few people rather than larger groups.

So would it be as successful at making those changes as rapidly if it were a publicly traded company at this point? Well, maybe. It depends on how they structure it. If it’s more like Google, where founders retain a substantial amount of control. Or if it’s more like, say, Lockheed Martin, where where the culture is very different.

I think that has really led to some changes in the way that the space industry thinks about itself. And I think it has been a very healthy thing.

[31:00] Simon Erickson: I spoke last week with Dr. Sandy Magnus, who is a former NASA astronaut. Spent four and a half months on the International Space Station. I asked her what’s the best thing of being on the ISS? She says “The view. It’s amazing.” And everybody wanted to ask her about what it was like on there as soon as she came back from from that mission.

And she had some interesting thoughts about the impact that it will have on society now that we have we have non-government people going into outer space on this new space tourism movement.

A lot of these people are are very well spoken. They are media figures. They have big personalities. They have a lot of people listening to what they say. And they’ll have an opinion on what it’s like being out in space.

I just wondered if you guys think that since space tourism is really something that’s kind of focused on the consumer market itself, if you think this is going to have any big trends that develop from this? Socially, environmentally, whatever it might be.

Do you see anything really impacting the world from this space tourism movement?

Andrew Chanin: I’ll start with that. I think that there are two things that could occur from that.

I think one, every time, like you said, you talk to someone that’s actually been in outer space and they get to turn around from afar and look back at the tiny planet that we actually live on. They get a greater appreciation for Earth. And I think that’s extremely important for the preservation of the planet and how we treat it and even how we treat each other.

And I think that everyone has that ability to get that perspective in their lifetime. Which probably not in our lifetime and maybe not even in our children’s lifetime, would everyone have that opportunity. But for those that do have that opportunity, I think it would be nearly impossible for them not to gain that type of appreciation for the plant that we live on. And I think that that is something that could be an incredible result of something like that.

Further, I think any time you allow people to experience a revolutionary technology, it’s something that changes their perspectives and how they think opens up just more opportunities.

So the first hundreds if not thousands of people that go up in space. You know, it’s not an inexpensive trip that just everyone’s going to be able to take. People have to have substantial amounts of money to be able to afford to go up there.

And those people have their capital and ability in many cases to actually go out and invest or become enlightened when you put their money to work and things that they think might be a new kind of breakthrough technologies or ideas and things like that.

So, I think having that experience and people that actually have the ability to drive, impact and change with their own investing habits as well could lead and usher in a new wave of space entrepreneurs. And people saying, “You know what, this can be done. There’s so much opportunity, you know, beyond this planet.” And they may be so touched by the experience that it has them develop their own ideas or invest towards other people’s ideas to help the human race achieve brand new ideas, thinkings, and technologies.

Many of those could be not pointed back at Earth, but beyond. And I think — we won’t know until that happens — but I think being able to show that we can safely take people off of our planet and show them what our planet looks like from afar is something that could really change the mindsets of people. I think it could be very encouraging and lead to the next wave of new technologies for the space industry.

[34:49] Simon Erickson: Well, guys, we last spoke last year. We spoke in July of 2019, which was actually a very eventful month for you all and for space in general. Because it was the 50th anniversary of the Apollo 11 lunar landing. We actually put people on the moon in July 1969. And then here we are 50 years later, celebrating a huge, huge step for mankind here.

Now we know this is a big deal for Procure because you guys actually just initiated a dividend for your ETF, too. As a shareholder myself, thank you for that. I’m very much enjoying it!

But I’ve got to put you on the spot here and ask — and I’m not going to hold you to this, but just to ask the question anyway to both of you — What year will it be where we actually see a human being step foot on the planet Mars?

Andrew Chanin: That’s a Micah question!

Simon Erickson: [Laughs.] You can be off by a couple of decades. I don’t mind.

Micah Walter-Range: Well, I’m glad you’re not going to hold me to it.

I think probably no earlier than the mid 2030s.

Simon Erickson: And why is that?

Micah Walter-Range: And that’s assuming some fairly ambitious efforts.

I think ultimately there is still a lot that we need to understand about living and working in space. And this is barring some fantastic breakthrough in propulsion technology or something like that, that reduces the travel time to a few weeks rather than months or years. So we simply need to know more.

And this is one of the areas where the tourism potentially gets to be extremely helpful. So setting aside trips like the ones on Virgin Galactic, which are only a few minutes long and probably aren’t long enough to do in any serious long term research on the effects of space on the human body. Although maybe you could do that with the pilots and crew since they’d be making repeated trips.

But when we’re looking ahead to the next stage and there are already companies that are working to develop private space stations. So that individuals who are not government astronauts can spend extended durations in space. Starting off with maybe just a week or two. But ultimately, that could grow in length.

From all of that, we’ll have a much larger group of people to study. And not everyone will participate. But some probably will. And the thing about space is that it’s still only a few hundred people who have ever been to space in all of human history. So our understanding of how the human body adapts to those conditions is still very limited. And it’s certainly not the most diverse group of people that you could imagine.

So as more people go, we have the opportunity to learn more and to develop better ways of protecting people for long journeys like the one to Mars. So I simply think that’ll take a while. At least a decade to really gain the knowledge and understanding that we would need and then to develop the associated technology to get to the point where we can send someone there and return them safely.

So that’s that’s my best guess at this point.

Simon Erickson: OK, duly noted Micah. But make sure to lock me in for an interview on the month that someone actually does land on Mars. I would love to chat with you about it when that happens!

Micah Walter-Range: [Laughs] I’ll be sure to do that.

[38:49] Simon Erickson: Last question for both of you. Our audience at 7investing is individual investors. They want to learn more about space. You all are the experts that are living this on a daily basis.

What is one thing that you would recommend that people who are interested in this should be following, to follow up on the progress being made out there right now?

Andrew, let’s start with you.

Andrew Chanin: I think that’s a tough thing to say. There is so much research, there’s so much information, there’s so many people around the world that are focusing on this. There’s just so much information to try to digest. I think you have to keep an open mind, but you also have to stay grounded and realistic with expectations and projections.

But I think being a fan and someone that’s interested in space and reading what you can, learning what you can and staying up to date is, by all different means and outlets, is probably the best way to do it. And I’m just really happy that we were able to partner with Micah and his company and our partners at S-Network as well.

And we’re able to put out our own research and thought pieces and things like that. And it’s not all just to promote the fund. It’s also to share different ideas and in some ways to interact with others as well. To get their opinions.

So we’re on social media and doing different things. But, you know, I love to see the various engagements on Twitter from across the space community. There is just a wealth of information coming from astronauts and people who have actually been in outer space. And advocates for policymakers.

And so I really enjoy doing different searches on Twitter, regularly, to see what’s going on. What’s new. What people are saying.

And some of it’s, you know, absolutely bogus and wild and out there. But you can really filter through it and sort through it and find some incredible people doing incredible things on a daily basis. Whether they’re entrepreneurs, astronauts, scientists, employees working for the aerospace and defense industry. It’s exciting to see what they say because they’re even more so on the frontlines of this industry.

And for us, or at least for me personally, get to sit back and watch what some of these incredible entrepreneurs and companies are doing and get to have exposure to those companies by having this portfolio of them in our fund. But I think you want to read and look for the craziest “out there” ideas and the most near-term ideas as well. Because it is such a collaborative global industry. And it’s one that many people don’t fully understand what’s involved, who’s involved, what’s currently happening, what the goals are.

But it’s something that truly could unite us as a planet if we had everyone excited on helping the human race expand our capabilities beyond just Earth. And I think that’s what makes us so excited for the the broad implications and potential achievements for this industry as it grows in the future.

Micah Walter-Range: And to that, I would just add that, yes — there is all of that activity that is very much focused on space. The other thing that I think people should really try to pay attention to is how space connects to Earth

And how it can be a part of economic development in local communities and at the regional and national level. And there is this ongoing debate — and I’m sorry, there is no easy way to track it because it’s taking place in all these different locations — about just what is the value of space for the economy? And this is being studied at the national level of the United States right now. Because people really want to know that answer. The policymakers want to know that answer. “What is the value of space and what is the best way to invest in space — in the way that government does — to ensure that this country continues to reap the benefits of whatever the next wave of space innovation is?”

In the way that we’ve reaped the benefits of the innovation for the past several decades. And so at Caelus Partners, the way we’re looking at it is, how can space be a part of that local economic development? How can it be a part of your community? And so a number of the partners and clients that we’ve been working with have really been seeking to answer that question.

And again, circling back to the coronavirus — we’re seeing a fundamental shift, I think, in the way that the economy is going to be structured.

I don’t know what all the implications are going to be. But I think we’re going to see this push toward more remote work. More automation of manufacturing facilities. I think the world is not going to want to risk the economic damage happening again if there is some other virus that sweeps through.

So what are the fundamental changes that are going to be made to the economy. And at Caelus Partners, we’re looking at “How do you make space a part of that re-engineering of the system? How do you use space to make your community more resilient, both at the economic level and just the general health and well-being of the population?”

And so that’s raising a host of fascinating questions. And we’re still sorting through it. I don’t have the best answers for you yet. But we have a process that we’re working through. And I think you’re going to see some really interesting things coming out of that.

Simon Erickson: Well it certainly sounds like an opportunity for investors. Once again, Andrew Chanin and Micah Walter-Range are both from Procure Asset Management. Their ETF with the ticker “UFO” is the world’s first space-themed ETF.

These guys are really the innovators out there. The investments that these companies are putting to work and taking from individual investors like us are truly directing the future of the progress that’s being made in outer space right now.

Gentlemen, thank you very, very much for the time with 7investing this afternoon!

Andrew Chanin and Micah Walter-Range: Thank you. Thank you, Simon!

Simon Erickson: And once again, thank you for tuning in. Here at 7investing, we are empowering you to invest in your future. Thanks for listening, and until next time.

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