When it comes to investing in space and defense tech, Leonid Capital Partners is doing something different.

What we do is we allow companies, especially early-stage companies working in technology and research-specific environments,

to borrow money against their government contracts, which is actually, you know, oddly, a weirdly unique space in the market in the sense that there's not really been a functional way for people to leverage those government contracts for to bring in additional growth capital to their businesses.

Unlike venture capital firms, which typically provide funding in return for an equity stake,

Leonid Capital Partners is in the private credit business.

It's kind of like asset-based lending, but instead of securing that loan using machinery or

real estate, companies can borrow against their government contracts.

The firm's co-founder and president, James Parker, a former NASA flight controller,

says the perceived credit quality associated with this type of lending doesn't actually match

what the data show. We just ask a very simple question, which is recognizing the government

has the right to cancel these contracts, how often do they actually do so, right? And what we found, it was, you know, it was a four terabyte proprietary data set.

It's about 20 years of contracting history.

What we found is when you cohort it down into our specific subset of the market, i.e.

overweight national security and overweight critical technology development,

the cancellation rate is exceedingly low. And so much so that it creates a pretty compelling

investment thesis, especially on a credit perspective on that. There's just sort of a disconnect

between the risk and the actual reward on the environment.

Founded five years ago, Leonid counts canopy aerospace, ABL space systems, and phase four among its clients.

It's one of just 20 investors in the Defense Department's trusted capital provider marketplace,

which was created to help startups in emerging technology sectors critical to national security access capital. On this episode, which was created to help startups in emerging technology sectors critical

to national security access capital. On this episode, which was taped in September, so well

before the presidential election, Leonid's Parker discusses the investing landscape and what's enticing

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