[Satellite News 07-22-08] The aerospace industry has been dominated by the federal government investments, but Space Angels Network principal and co-founder Burton Lee aims to bring seed- and early-stage financing infrastructure found in the semiconductors, software, life-sciences, bio-tech and other related high-tech sectors into the space industry.
    His network of accredited angel investors is in its first year of operation and expects to close its first deal within the next six months. The group also is planning an “Aerospace Venture Forum,” in Los Angeles in September, where promising aerospace ventures can present their investment opportunities to investors.
    “Our goal is to bring together in one place accredited angel investors from around the country, interesting seed and early-stage space and aviation-related start-up companies, and entrepreneurs who are seeking private equity funding from investors all in a single full-day event,” he said.
    Satellite News News Editor Jeffrey Hill spoke with Lee about the future of his organization, its role in the bigger picture of satellite investments and the needs of an industry that served to create his network.

Satellite News: Why do you see a need for your organization?

Lee: The current market for seed-stage finance for space and aviation start-ups in the U.S. and overseas is extremely fragmented and chaotic. It is very difficult for space and aviation-related entrepreneurs to find angel investors who understand this sector. What we are basically doing is efficiently organizing seed and early-stage deals in one place. Here in the United States as well as globally, we have unique deal flow, which no one else sees in the space and aviation area. On the investor side, we are aggregating investors who have been investing recently in these areas. We are bringing in new investors as well.

Satellite News: Are there any similar space investor groups?

Lee: There are no other similar space angel investor groups. The way most start-up companies get funded from start-up to maturity is initially through the family, friends and founders phase. The entrepreneur self-funds the new company, either by using his or her savings, mortgaging his or her home or using a credit
card. The next step – and we are trying to simplify the process here –  is to go to outside investors, Then you go to outside investors, angel investors, which is typically called the seed stage. The next stage, the early stage, is where you go to venture capital. Once you are passed the venture capital stage, you get into what is generally called expansion. If you are looking to be bought out by a larger company, or to do an IPO, later on you start talking to investment banks.
    So we are at the very front-end of the space and aviation venture-financing pipeline. We are the only angel investor group in the country or globally focusing on space and related seed and early-stage ventures. There are venture capital firms who do fund space-related deals on occasion in the areas of GPS or satellite telecom.

Satellite News: How do you attract investors?

Lee: We are bringing together investors from two different groups — space and aviation — into one organization and framework so that we can basically improve the critical mass of accredited angel investors that are out there. We want to give investors on both sides access to more deals than they would see on their own.

Satellite News: What would Space Angels Network look for in a company when planning to invest?

Lee: We look for the same fundamentals as any other angel group or venture capital firm would look for — solid management team, sustainable competitive advantage with sound intellectual property, strong risk-management practices, a good understanding of the market and other general characteristics that make up a solid start-up company.

Satellite News: Do you plan to expand your forum?

Lee: We eventually plan on hosting two major screening events per year — one on the East Coast and one on the West Coast. We want to put investors in contact with the ventures they are most interested in so that a deal can be reached within three to four months of the deal-screening event. The concrete long-term goal is to get two to four investor deals done with space and aviation related start-ups twice a year from these events.