How the Fund Works:

Private Investments in Pre-IPO Companies

Avoid Liquidity Premiums by Investing in Pre-IPO Companies

Research shows that publicly traded companies are potentially valued higher than comparable private company peers because investors are generally willing to pay a premium for a public stock that they have the option to sell immediately. This means that two companies operating in the same industry with similar revenue, profit margins and growth prospects could have dramatically different valuations based largely on their ownership status, namely whether they are privately or publicly held. Keating Capital’s investment thesis is that this valuation gap can be captured over time by making a pre-IPO, equity capital investment in a private company and then benefiting from a higher valuation multiple as and when the company completes its initial public offering (or IPO).

What is a Business Development Company or BDC?

Congress created Business Development Companies in 1980 in an effort to help public capital reach smaller and growing private and public companies.  A few facts about BDCs:

• A BDC is an investment company that raises a fixed amount of equity capital through a public offering.
• Many BDCs are set up as closed-end investment funds and then are listed and traded on a public stock exchange.
• BDC stocks represent an interest in a specialized portfolio of securities that is actively managed by an investment adviser and which typically concentrates on a specific industry, geographic market, or sector.

Keating Capital is effectively a public, later stage venture capital fund that focuses exclusively on pre-IPO investments.

Buy Privately, Sell Publicly, Capture the Difference

Investors in Keating Capital are able to participate in pre-IPO equity investments which may be acquired at a discount to anticipated IPO prices. Keating Capital intends to invest in the equity securities of private companies at pre-public valuation levels and then sell its shares in the companies in the public markets, where they are potentially liquid and where the valuations can be substantially higher.

Keating Capital’s event-driven strategy is linked to a company’s transformation from private to public status, which potentially triggers a significant expansion in the company’s valuation multiples.  These returns, which Keating Capital believes are independent of the overall stock market return, may potentially exceed returns generated by traditional marketable securities.

Unique Access Vehicle with Double Transparency

Our fund is a unique access vehicle for individual investors seeking high risk/high return characteristics typically associated with investing in initial public offerings (or IPOs). Instead of over-allocating to any one particular pre-IPO private company, investors get the benefit of a portfolio that will typically consist of approximately 20 equally weighted positions. As a publicly traded closed-end fund, Keating Capital provides transparency at both the fund and portfolio company levels.

NASDAQ Listing

Since we are a publicly traded company, investors may buy or sell shares of Keating Capital without causing any changes to be made to the underlying portfolio (as would otherwise be the case with a mutual fund that might have to sell positions to meet redemption requests). And because we do not use borrowed money or leverage to make our investments, Keating Capital never has to worry about margin calls from lenders.