Alice Cruz (6:45)

Alice thanks Maria. We include links to all the original sources of all the stories mentioned throughout our episodes in the selected Readings section of our show Notes. We even include extra stories we think are worth reading up on today. We've included links to a CGTN article covering the latest on the Shenzhou 20 crew operations and a link to an announcement from cyberspace on new software deployment.

Maria Varmazes (7:08)

And as always, those links can also be found on the episode page on our website. Head to space.n2k.com and just click on today's episode title. Hi T minus crew. If you would like daily updates from us directly in your LinkedIn feed, be sure to follow the official N2K T minus page over on LinkedIn. And if you're more interested in the lighter side of what we do, here we are daily on Instagram and that's where we sometimes post videos and pictures from events that we're at or excursions or even sometimes some behind the scenes treats. Links are always in our show notes for you. Hope you'll join us there.

Matthew Linton (8:02)

New adversary tactics and emerging tech to meet these threats is developing all the time. On Threat Vector we keep you a step ahead. We dig deep into the threats that matter and the strategies that work.

Maria Varmazes (8:14)

How do they help that customer know.

Bailey Reichelt (8:16)

That what they just created is safe.

Michelle Dougherty (8:18)

The future is now and our expectations are wrong.

Matthew Linton (8:22)

Join me David Moulton, Senior Director of thought Leadership for Uniformity 2 at Palo Alto Networks and our guest who live this work every day.

Bailey Reichelt (8:30)

We're not just talking about some encryption and paying multimillion dollar ransom. We're talking about fundamentally being unable to.

Maria Varmazes (8:38)

Operate automated eradication and containment. So being able to very rapidly ID what's going on in an environment and contain that immediately. They're hiding in plain sight.

Matthew Linton (8:54)

So if you're looking to sharpen your strategy and stay ahead of what's next, tune in and listen to threatvector, your front line for security insights.

David Moulton (9:09)

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Maria Varmazes (9:46)

Let me hand you on over to Bailey Reichelt now for our monthly Space Law 101 update.

Michelle Dougherty (9:55)

Hi, welcome back. I'm Bailey Reichelt with Aegis Space Law and with me I have a guest host this week, Matthew Linton of Linton Space Law and Strategy. Let me turn it over to Matthew real briefly so he can give you his own background.

Bailey Reichelt (10:10)

Thank you Bailey. It's really wonderful to be here. I appreciate this opportunity. I really serve as an outside general counsel to space AI deep tech companies within that arena. I've got a lot of national security background and experience, dual use strategies for companies and how they're trying to scale and grow and fundraise. There's a lot of focus on regulation, policy, contracts and then a lot of good old fashioned employment law that many companies just have to slog through as they grow.

Michelle Dougherty (10:41)

Awesome. Well, thanks so much for joining Matthew. Today we picked the topic of securities and fundraising1 because Matthew has a great background in that and a lot of really good advice for those of you out there in the industry trying to do fundraising and because we haven't covered this topic before, but it's super important, it's something everyone has to deal with when they're building a business. So let's just get right into it. When people say they're raising capital, what does that even mean? Can you talk about even the forms of capital?

Bailey Reichelt (11:14)

Bet there's really a wide range and some of this stuff obviously you can do your research on. But I think space companies tend to follow a pretty typical Silicon Valley tech company model. And so you're going to see the earliest efforts made by founders with perhaps some of their own self funding. Some folks might call this bootstrapping a bit depends on, you know, how your access to capital might be at that time that you can, you can do this yourself. But usually you'll see people jump in, put some of their own money in and kick things off. They'll move to friends and family and what you would call angel investors. Angel investors are going to be folks that are those early smaller checks. They're making a big bet. They're buying the vision, buying really the people. They're looking at that and saying I like these people, I think they can pull this off. And that ideally gets you to what you would call a seed stage or a pre seed. People use different lingo. The real distinction Here between the fundraising you do in those early days and then what comes in the more formal things like you've heard like series A or B is what you would call equity fundraising. And so that's, you know, those early stage investments are going to typically take the form of what's called a safe or a simple agreement for future financing. And this is a two page standard document that is very streamlined. It was established to the Y Combinator folks, allows you to essentially take an investment and you're promising the future equity. You're not issuing stock as a part of this. It's a promise for the future. When you get into that series A B stage, that's when you're doing what's called an equity round. If you're seeking venture capital money, which is certainly, I think, critical in the space arena at this stage point in time, you're going to then be going through the more formal process of diligence with those investors. They're going to review all of your corporate documents and it's a much more complex and bigger process. And then it just goes on from there where people I think are probably a little more familiar, right? You're going to do larger money that comes in, perhaps you're getting closer toward an exit, a sale or go public. We're seeing great news, a couple of companies going public right now in the space industry. And I really hope that's the beginning of a new trend again.

Michelle Dougherty (13:41)

So we talked about equity and we talked about venture capital. There's a couple other mechanisms that are out there that we sometimes see clients use. Things like just traditional debt, taking out a business loan. There's also grants, usually government or institutional or revenue based financing. Would you mind telling us a little bit about any of, any of those and what might be the ideal time to choose one of those instruments instead of just traditional equity.

Bailey Reichelt (14:08)

When it comes to things like grants or perhaps government accelerator programs, I think the number one thing is to think about are, are you giving away any ip, critical IP of your company to that government entity? Hopefully these things are structured in a way that that's not the case, but that's something really people need to be aware of. And two, ultimately what I would say is what are you seeking? It's not just about the money, right? As we know, if I'm based company, obviously you're going to need some money. But what you're looking for is also the support that a particular source of money might bring to your company to help you grow. It could be that your venture capital approach is the right approach because you're really looking for investors that have done this before perhaps and can help show you the way. If you've done it yourself before or you have some sense of how you really want to maneuver your company without the need for the kind of help that you can get with the venture side, perhaps you might look at, okay, look, I'll just take some debt on. I'm not going to dilute the company. What does that mean? I'm not going to give away parts of my company early. Right. So you might want to try to get things moving without giving away a lot of the company. What I would say there again is it's very individual to the company and to the founders and to the people doing the, the fundraising. Because I view for all the clients I work with that the fundraising piece is just really you're choosing in some ways another founder, especially for those early stage investors. And I really think that people can gain significant traction if they choose someone that kind of complements their knowledge or their skills.

Michelle Dougherty (16:04)

Thinking about all of that one, it's a lot, it's a lot to take in. So thank you for defining some of those terms. I think that was really helpful. So if I'm in the shoes of, let's say I'm in grad school and I want to start, I don't know, just, just a rocket company, something that's high capital on the front end, I'm guessing that my best option is going to be probably equity, unless I'm really wealthy or I have some really wealthy close friend groups. Would you say that's accurate?

Bailey Reichelt (16:31)

I think so. I think there's one other angle, but it would tend to come a little later, which is finding sources of what might be strategic investment entities that perhaps could be aligned with a larger prime contractor. Many of them have venture arms now and depending on their own investment thesis, may or may not get involved at the earlier stages. But, you know, so that can be valuable also in different ways. But most likely I think people are going to end up needing to just sell some equity in that company to be able to raise the money that you need for the space industry because it's just incredibly capitally intensive to build, whether it's the hardware or the software side. Talk to anybody right now that's trying to consume a lot of AI credits and how expensive it is. And you also realize space companies as they scale and grow and the amount of AI they will consume in itself becomes quite costly.

Michelle Dougherty (17:36)

Oh man, I already know how much AI I'm Consuming and I just run a law firm. So talking about that equity, when you're starting out and you are looking at some sort of equity based fundraising, is there any advice you could give to a founder that would, that would be applicable in picking the right investors, the right groups to work with your company? Because I know not, not all, not all investors are equal. Right. Some are better than others, some are a better fit for the company. And while a lot of like our clients will go out there and they're pitching and they just want, it feels like sometimes any attention they can get, not all attention is the right attention in my opinion. Can you give us any advice on that?

Bailey Reichelt (18:19)

It's really great question and it relates directly to the law as well because choosing the right investor could end up with legal implications that are not desired. Excuse me, choosing the wrong investor. And so if you choose the wrong investor, it's a bit like choosing the wrong founder or choosing the wrong early team members. Why? Because again, these folks, they're likely going to have a role on your board, especially if they're a larger check. They will be actively involved in the business potentially. And you're going to want someone who you can work with. It's not just taking the money. And so, you know, there's a lot of really great investors now that are very savvy in the space industry. And I would look at that subject matter expertise of either their firm that they have or their group that they're pulling together. I would be very hesitant to counsel companies to accept capital from investors who are not particularly doing more than dabbling perhaps in the space industry or the AI or deep tech industries. Right. And they're just looking to kind of spread some things around. I'd be looking for somebody that really wants to partner for the long term because that's the other thing which I'll stop with is the space industry is going to be a long term bet. There's not going to be a quick return necessarily in most circumstances. And so you're going to be looking for somebody that's going to go the distance, is going to be willing to go through some failures. Because name a space company that hasn't failed spectacularly multiple times, they don't exist. And failure is part of the way in which we innovate in this industry. And so I think knowing how you're going to get through some of those down times or harder times as well with that investor is going to be critical.

Michelle Dougherty (20:19)

Yeah, really good advice. And I think summing all that up, what I heard was. Investors are often part of your team so you need to pick your team wisely, have a strategy.

Bailey Reichelt (20:31)

I agree.

Michelle Dougherty (20:32)

Thanks Matt. And hopefully if anyone has any more comments on fundraising or they want us to go do a deeper dive on anything, they can drop those comments to us. Send them to N2K.

Maria Varmazes (20:57)

We will be right back.

Ceedee Lamb (21:01)

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Maria Varmazes (21:34)

Welcome back. Today we're noting the passing of the torch of the best title ever and the competition isn't even close. That is the post of Astronomer Royal and as you might guess, it is a UK based position. And yes, it's a real job whose job nowadays is to be an advisor to the King on all matters astronomical. One wonders what stellar questions keep King Charles up at night anyway. And the post of Astronomer Royal has actually been around since 1675 and it has historically always been by men until this week when the previous appointee, Lord Rees, retired from the job. And now the title of Astronomer Royal has been given by the King of England to Professor Michelle Dougherty. She is the very first woman to have this role on the job's 350 plus years of existence. It is an honorary title for astronomy professionals who definitely have the bonafides in the case of Professor Daugherty. She is also Executive Chair of the Science and Technology Facilities Council, the President Elect of the Institute of Physics, and a Professor of Space Physics at Imperial College London. A very worthy honor to a very worthy honoree indeed. Congratulations Professor Dougherty, Astronomer Royal and that's T minus. Brought to you by N2K CyberWire we would love to know what you think of our podcast. Your feedback ensures we deliver the insights that keep you a step ahead in the rapidly changing space industry. If you like our show, please share a rating and review in the podcast app. Please also fill out the survey in the show notes or send an email to space2k.com we're proud that N2K CyberWire is part of the daily routine of the most influential leaders and operators in the public and private sector. From the Fortune 500 to many of the world's preeminent intelligence and law enforcement agencies. N2K helps space and cybersecurity professionals grow, learn, and stay informed. As the nexus for discovery and connection, we bring you the people, the technology and the ideas shaping the future of secure innovation. Learn how@n2k.com N2K Senior Producer is Alice Carou. Our producer is Liz Stokes. We are mixed by Elliot Peltzman and Trey Hester with original music by Elliot Peltzman. Our executive producer is Jennifer Ibin. Peter Kilfi is our publisher and I am your host, Maria Varmazes. Thanks for listening. We'll see you tomorrow.

Bailey Reichelt (24:17)

T minus.