In an announcement on LinkedIn, Spaced Ventures co-founder Aaron Burnett revealed that the company is changing its strategy. The company has changed its name to “Mach33 Financial Group,” part of a refocusing effort on catering to accredited investors. Burnett called it a “bittersweet day.”
What was Spaced Ventures?
Spaced Ventures was founded as a equity-granting crowdfunding platform for space companies. As detailed in earlier SpaceQ coverage, Spaced Ventures was intended to go beyond crowdfunding platforms like Kickstarter by allowing the general public to acquire an equity stake in space startups.
By and large, prior to a company going public via an Initial Public Offering (IPO) or other event like a merger with a SPAC, only “accredited investors” are permitted to invest in a company. In Canada, that generally includes people with at least $5 million in net assets, or professionals investing on their behalf. The general public of “retail” investors can participate in crowdfunding startups in exchange for considerations, but not purchase a share of the company.
Burnett and and co-founder J. Brant Arseneau were looking to get around this problem. By listing various investment opportunities on the Spaced Ventures website, and contracting to invest in the companies on people’s behalf, they were looking to provide an opportunity for retail investors to get involved in space startups. Investors whose chosen companies went public would be provided either cash or shares by Spaced Ventures, out of the portion of the company that it owned.
The company had several successful funding rounds for companies like Infinite Composites, Xairos, and Exo-Space, and looked forward to more. But, with this announcement, Burnett made it clear that they’ll be refocusing on accredited investors.
Regulatory hurdles were named as chief reason for change
While Burnett and J. Brant Arseneau said that they had no further comment when contacted, an email from Burnett to the Spaced Ventures community on February 7th provided further details. The email stated that the regulations on retail investment made the effort impossible, and that the change was “effective immediately.”
In the email, Burnett said that the company had faced “regulatory challenges that made it increasingly difficult to serve small companies and manage risks for larger ones,” and that “our space investing specialization further constrained opportunities within the existing regulatory framework.” Burnett said that “the regulations in place for RegCF are too burdensome for the best companies to be able to open opportunities to non-accredited investors.”
Burnett also said that the shift to Mach33, and the refocusing on accredited investors, was primarily “a strategic decision influenced by regulatory complexities, the apprehension of companies willing to deal with said regulations and our commitment to providing quality investments across the space ecosystem.” Pointing to the difficult investment environment facing many technology-related companies right now—or at least those outside the current generative AI boom—Burnett said that “to ensure vision success in a tightening environment, [Mach33] must focus on high-end investment opportunities.”
Burnett also said that “while the number of deals available to non-accredited investors will likely decrease significantly, we are actively monitoring legislative changes like “The Equal Opportunity Investment Act”…[and are] advocating for policy that broadens investment opportunities for a wider audience.”
For readers who are accredited investors, he said that “you can expect more and higher quality investment opportunities to show up.” For retail investors who had already invested, Burnett said in the email that the change “does not affect your investments already made,” and that they will “persist until a liquidation event.”
“Quietly executing” on the shift to Mach33 Financial Group
In the LinkedIn announcement, Burnett said that this move was part of Burnett and Arseneau’s shared “vision…to accelerate humanity’s expansion into space through dedicated financial products and services”. He added that “[i]f we don’t accelerate substantially, I’m honestly afraid we won’t see humans meaningfully off-planet in my lifetime.”
Burnett revealed that they had “spent all of 2023 quietly executing on that vision” and that they had “already laid the foundation for our group,” adding over $14 million in assets under management (AUM), along with “best-in-breed deep dives into SpaceX and Relativity [Space] … we’ve got much more in store for this year and beyond.”
He also announced staff changes: Tim Chrisman (Investor Relations), Christopher Reichelt (Ops/Shared Services) and Vlad Saigau (Research Analyst) have joined Mach33.
For his part, Arseneau said in a comment on LinkedIn that it was “a pivotal day.” He likened it to “when JP Morgan invested in early infrastructure that helped form the 2nd American Industrial Revolution in the 1880’s,” adding that “[w]e believe the same capital formation is required for the expansion of humanity…[and] our journey into the stars.”