Andrew Chanin, ProcureAM

World of ETFs. And so starting off as a clerk on the floor, working my way up to becoming our lead market maker for international and global equity ETFs on the NYSE ARCA Exchange. As ETF started transitioning to ARCA, started trading those upstairs for the company, eventually was poached by another firm that also had a specialist trading business, but was actually looking to build out a prop trading desk. And they had no experience in ETFs. And they brought me on to help build out the ETF prop trading capabilities. From there, made a lot of relationships with various players in the ETF space across the issuance side, as well as just various service providers.

And eventually helped create a company called PureShares, which went on to sponsor 10 first-to-market ETFs. Later on, I ended up meeting up with industry legend and veteran Robert Tull, where we decided we wanted to build something where we could own and operate our own infrastructure, not only bring out our own ETF ideas that we had, but also potentially help third parties also looking to bring their ETFs out to market. And what better way to create a flagship fund for a company than coming out with something first-to-market that we believed was very relevant timing-wise, and something that we thought we were still in the very early days of that industry. And that brought us to bringing out our first product, being our UFO ProcureSpace ETF.

As well as having launched ETFs, numerous countries around the world working with various regulators and exchanges to help them build up their own capabilities to open up their markets for the ETF industry. we had all the skillset, we had all the knowledge needed to be able to do it on our own. And, it really made sense, especially given the first experience I had.

Also provides your partners with a certain level of trust and confidence as well. And not all providers do something like that. I think we were kind of in a fairly unique spot though, given our pretty vast experiences as white label clients. My partner, Bob Tallinn actually been one of the individuals that helped build that platform that our company and first company ended up sponsoring products on. But, certainly there, there are risks to everything, whether you go at it alone, certainly, you'll hear people talk about the time it takes to get to market, the costs associated with it, the knowledge that's needed, experience, expertise. it's not for the faint of heart. It's not for someone that just wakes up one day and says,

Hey, I've got an idea. I want to build this out. But when you truly have the idea of being able to, hey, this, this is what we want to do. This is where we want to be. And, X amount of years, it's not just a one-off idea concept that we want to see out there and see if it succeeds. But, we want to build a business around this. That said, Procure AM, which is our RIA where we issue our ETFs through, is one of the wholly owned subsidiaries. We need to procure holdings umbrella. So we also do things beyond that, including IP as well as consulting.

Many publicly pure play, as well as diversified space companies that are accessible in the markets. But also some of these transformational changes that were occurring simultaneously in the industry, most notably the advent of reusable rockets. And although SpaceX isn't a publicly traded company, the idea that launch costs can be driven down significantly was something that was opening up the space industry for all different types of players, whether that be customers, technology, inventors, governments, militaries, companies looking to do R&D. It opened up the playing field and expanded, the use cases, capabilities, and costs of accessing space.

So for us, it was an opportunity that had finally matured to the point where people could get diversified exposure to many different companies that were doing things across the industry. And understanding that the industry is, inherently risky. it's a tough industry. Not every time you launch something is it successful. Companies can have setbacks, but it's also a very important and critical industry these days. Governments rely on it, militaries rely on it, companies rely on it. And it's something that is ubiquitous in our everyday lives. anyone walking around with a smartphone is reliant on space technologies and capabilities. This interview that we're doing right now wouldn't be happening without space capabilities. So it was something that, I think people were starting to wake up to how important space was.

And we wanted to be there with specifically a fund utilizing this index. And that was, upon meeting the team behind the index was something that gave us, truly the confidence that that this industry and that this product was ready for its debut.

What drives the, the space report from, from the nonprofit space foundation. And they still use the various inputs that he developed for that model today. So, being able to work with a space expert background in astrophysics and space policy, having worked heavily in this industry for years and truly understood the industries, the technologies, the players, the policies, the highest level to the lowest level of the industry was really important. And in order to be able to call the fund, based on the names rule and whatnot, this corporate space ETF, one thing that had to be demonstrated was that at rebalance, at least 80% of the portfolio was focused on companies deriving a majority of their revenues from space. So that is one of the critical drivers for companies that can go in

And out of this index. So, certainly certain market cap minimums, daily liquidity, daily value traded, our metrics that are in there, but really at the core is looking at companies on mature stock exchanges that derive a majority of the revenues from space related to business entities, activities, services. But also realizing that when you look at the broad global space industry, you have these major players that are, more diversified, think you're diversified aerospace and defense names. lots of times they're referred to as your primes in the industry, realizing that they are major players in the industry, it didn't necessarily make sense to exclude them. But it also didn't make sense to have necessarily, a market cap weighted play,

Because in some cases, it's less than 50%, but greater than 20%. So it made sense for them to have, a position and placement in the index, but only up to 20% at rebalance of the underlying index can be in these more diversified space names. So ones that are still generating significant revenues from space, but maybe that's not the majority focus of their business. So what you're left with are, companies that are, launch companies, satellite manufacturers, satellite operators, companies that help with, connectivity, communications, and it's actually a pretty wide range of companies and people don't necessarily realize all the different, components, players and whatnot that go on to this industry.

But also there's some more, consumer focused types of names. So, companies that are providing, satellite radio, satellite television, and other types of communications also have the potential ability to be able to make it into the fund.

What we're seeing is a ramp up in this modern day space race. And if you're paying attention to the news, it's impossible to ignore how intertwined space technology is with modern warfare. And space is viewed as the strategic high ground for modern global conflict. And so any company that's looking or any country that's looking to have, a major presence in the geopolitical sphere needs to take space seriously. And many countries haven't put enough resources into it where they'd be reliant on their own. So you're faced with this predicament of, do I spend an astronomical amount of money in order to build out my space capability so I don't have to rely on third parties? Do I find a contingency where either I lead that group, because I have the most technologies, the most resources,

And allow other players that I feel comfortable with to work alongside us? Do I not have that capability and I need to be completely reliant upon others to help us achieve our space endeavors and desires? And that's, or do you just throw your hands up in the air and say, this is something that we can't do and get left behind. So, there aren't a ton of options. But what we're realizing is the countries that are saying today, hey, we need, we see where things are moving, we need to have a major presence, they're going to be forced to spend a tremendous amount of money. So where, you currently have this roughly 80-20 split, the government side is

Starting to pick up around the world on what they're spending. It's, it's not something where Republicans are saying, no, we need to spend more. Democrats are saying, no, we need to spend more on space. It's pretty much, agreed consensus, on all sides of the aisle, that this is something that needs to be driven forward. And what's really pushing it is that adversarial nations are making tremendous strides forward. So you see what Russia is doing, their ability to launch, having held hostage British satellites at the Bakunur launch base in Kazakhstan at the start of the Russian Ukrainian war was your one major sign pushing us in this direction that, hey, maybe you need to be more cautious about who you rely on

For your space capabilities. And certainly China has been making some tremendous efforts forward, creating their own space station that is currently in operation, allowing others as they see fit to be able to utilize them. But the next big push beyond space stations that we're seeing is a race for the moon. And no one really knows how countries will or won't operate once they get there. But once they get there, they will start doing things. And so there's a new land grab, the moon is extremely strategic, and they call this opportunity, the cislunar economy. And that's something that you look at what China is saying. They see this potentially as a multi trillion dollar industry over the next couple of decades. And that's just the cislunar economy alone. And so I think, we saw governments

And government agencies open up the door saying, hey, we're willing to allow commercial players to really drive this because we don't need to own, operate and be everything for this industry. We can find companies that have the capabilities to allow us to achieve our goals. And that's something that SpaceX has done. So I think, what we're seeing now is governments really starting to ramp up and understand the importance of this new space race. And whether it is riding alongside an ally or going at it yourself, the growing list of companies that are countries that have ambitions for the moon and beyond seem to be growing, every month. And, their timelines are very ambitious as far as when they want to go to or return to the moon. So I think, you know,

It's very exciting. And that's presenting a lot of opportunities, a lot of contracting opportunities for commercial companies as well. But the more we can lower the cost of launch, the more potential

Laid out is, is it mostly commercial or are you seeing it mostly being defense?

Could, could unlock tremendous opportunities here on earth. You talk about, solar energy being something that people are excited about here on earth, but the idea of capturing solar energy and space and beaming it via microwaves down to, to areas down on earth might end up in the long run being the cheapest way of doing it. But, again, until you get launch costs down until you get the technologies, really firing on all cylinders, it doesn't necessarily make sense, but these are, longer term plans that, companies today are working on. So I think, the, the more we build out space infrastructure, whether that be, on the moon or whether that be via space stations, there are a lot of opportunities.

I think that's what makes space so exciting. It's not, no one company is identical to any other company out there and, governments are spending, companies are spending, and consumers are now able to access space. If you want to, spend a lot of money to do some space tourism. So, I'd say the early days of space were very ego driven. Look at, look at what we can do. We're first, and now it's, real applications with, with real impact. And, I think another important thing is when you talk about government spending money, typically people always, focus on the waste and, that the money doesn't necessarily get what you're hoping it does with space. it's been shown, many times that, you know,

Space investment by NASA, in many cases drives a lot of innovation and things that actually help us benefit us here on earth, even if that wasn't the initial intention for why NASA is going off and doing something. So we actually do, in many cases, reap a lot of rewards beyond what the initial goal was for achieving some type of space, space accomplishment.

A to point B. And, many people don't realize that space is this connective tissue. This it's the toll operator on the digital data superhighway. And so it is an absolutely critical industry that many people don't have exposure to. And when you do a comparison of other, um, sectors or industries, um, and funds and whatnot, you do a, uh, uh, an overlap analysis, there's very little overlap with other funds out there. So if you're looking to get diversified exposure to it, an industry that's absolutely critical and one that, governments and militaries around the world have acknowledged that, um, this is this, this industry, these capabilities are only becoming more important for them as time goes on. Um, it seems like an interesting

Sleeve, whether it's an innovation sleeve, whether it's, um, a very specific, part of aerospace and defense, just the space part of it, um, which, doesn't necessarily get covered as much by, existing aerospace and defense funds. Um, when you're talking about building out the major infrastructure, over this next decade, that, um, is going to potentially help pick the winners and losers on a, on a global scale over the next several decades, this, looks to be a really interesting, um, industry that I think people, may want exposure to, and, by being able to play with diversification, um, you don't necessarily have to put all your eggs in one company's basket.

Which we've seen the economic toll from natural disasters has, uh, over the years, it seems to be getting worse. And, there are things that you could do before a natural disaster. So there's construction, consulting, engineering companies that help you better build out new, new development in a way that's going to take into account, different models, different risks of types of natural disasters. So you can build more hardened infrastructure. Um, you have companies that help, alert you prior to a natural disaster coming saying, Hey, this is, this is going to be an issue. This is what, you should be doing. You have companies that during a natural disaster are helping in, providing, um, data recovery, uh, tracking and monitoring,

Uh, companies that are helping actually put out, wildfires via helicopters or tracking the spread of wildfires. Um, so they're, or they're making the equipment that firefighters are using to help put out fires and things like that. And then ultimately after a natural disaster, uh, evades, you're trying to figure out how do we rebuild. And so, a lot of those construction consulting engineering companies are coming back in and helping rebuild. And, this is something that is, I believe a really important, uh, industry. It's, when you think of natural disasters or making money, when they're a natural disaster, as many people think of, opportunist, opportunistic, um, price gouging, things like that. what we see is, you know,

This is a really interesting basket of, those companies are helping us in our deepest, darkest times of need. So, you even have, um, the, the retail focus side, you have, your companies like Home Depot, Lowe's, West Farmers that are helping you, whether it's buying the plywood to put up over your windows before hurricane comes, or you're buying paint and tiles and everything to rebuild your home. Um, it takes a lot of different companies that help us. And these are companies that I think should be championed, um, when these events happen, but you also have the ability, similar to what they talk about in medicine and other areas that, uh, an ounce of prevention is worth a pound of cure. Um, you know,

There are steps that can be taken to help minimize the effects of natural disasters. And you're seeing it with, um, building of, canals and flood, flood walls, things like that to help better protect, um, various parts of infrastructure developments, um, and, and hopefully saving human life in the process. So to me, it's a really important industry. It's one that I don't think people have necessarily considered as much, but as you see, devastating tolls of natural disasters and also man-made and man-accelerated disasters. Some of these companies are helping there when we saw the, um, not too far from where you reside, the East Palestinian train derailment in Ohio. Um, there were companies that were called on with, hazardous waste removal and things like that, that are really

Important for natural disasters as well. When you look at, countries that are going through, um, attack and, having their infrastructure destroyed, you need major companies, global companies, multinationals coming in and helping in those age recovery efforts as well. And, in a lot of cases, companies within FIXT are, are ones that are being called when, before disaster strikes in the middle of disasters and after the disasters have already struck.

Probably one of the best ways is, these, these public appearance opportunities, where we get to, share this information with people, let them know that these products are there and hopefully when they're ready for them, they'll consider us. And so, um, it takes a lot of different types of, uh, efforts, whether it's digital, whether it's, conferences, whether it's sponsorships, you name it. Um, all of them need to be considered, but you never know which one's going to work. And I think many cases, the best opportunity is, letting individuals know that these funds are out there when they're ready. Sometimes the media themselves, pick up on these opportunities and say,

Hey, by the way, there actually is a space ETF or wow. generators are really important. What kind of fund would you have generator companies and their fund? And you have something that's there waiting for them. And so, some, sometimes we're early. I, I had the first, um, AI fund, which was the big data analytics focused ETF that was launched back in 2015. And no one understood how important necessarily that opportunity may be. And now there's numerous AI funds that are out there. Uh, so sometimes, we're on the early stage and takes people time to realize, how important these themes are. Sometimes, uh, you have an event like where you have the first cybersecurity ETF and two weeks later,

The Sony breach happens and cybersecurity is all everyone's talking about. So, we like to position ourselves, um, first to market ideas and, ways providing very interesting exposures, um, that people aren't necessarily able to,