How the Fund Works:

Private Investments in Pre-IPO Companies

Avoid Liquidity Premiums by Investing in Pre-IPO Companies

We intend to maximize our potential for capital appreciation by taking advantage of the premium we believe is generally associated with having a more liquid asset, such as a publicly traded security. Typically, we believe investors place a premium on liquidity, or having the ability to sell stock more quickly and efficiently through an established stock exchange than through private transactions. Specifically, we believe that an exchange listing, if obtained, should generally provide our portfolio companies with greater visibility, marketability and liquidity than they would otherwise be able to achieve without such a listing. As a result, we believe that public companies typically trade at higher valuations – generally 2x or more – than private companies with similar financial attributes.

Buy Privately, Sell Publicly, Capture the Difference

Our strategy is to evaluate and invest in a broad range of companies, including technology, Internet and software, and cleantech companies prior to the valuation accretion that we believe occurs once our portfolio companies complete and initial public offering (“IPO)”. This strategy can be summarized as buy privately, sell publicly, capture the difference.

Five Core Benefits

We believe we provide five core benefits to our stockholders as follows:

  • Publicly traded investment vehicle. We believe we are the first and only publicly listed investment fund dedicated to pre-IPO investing in the U.S. Unlike private venture capital funds, we believe that our fund is transparent and provides liquidity to our stockholders who may buy or sell our common stock on the Nasdaq Capital Market.
  • Access to qualified Pre-IPO opportunities. We provide access to later stage, pre-IPO investments in innovative, emerging growth companies that would otherwise be inaccessible to most individual investors and to institutional investors that either do not, or are not permitted to, invest in private companies at any stage. In addition, we believe many institutional investors would prefer to leverage our investment adviser’s highly developed network to access these private, pre-IPO investment opportunities and its experience in negotiating, structuring and closing these specialized transactions with issuers and selling stockholders.
  • Non-controlling structure drives deal flow. Because of our profile as a flexible, non-controlling investor, we believe we are well positioned to participate in the last round of private financing that high growth companies typically need before they complete an IPO. We believe we can be a provider of choice for pre-IPO financing rounds and, if requested, establish the price and other terms where existing venture capital investors, who are also likely to have board seats and as such may be conflicted, prefer to have a new investor lead the financing round without granting a board seat to us.
  • IPO market insights. We believe our investment adviser’s experience in taking companies public and its insights on the trends affecting the IPO market and what contributes to a successful IPO positions us to evaluate prospective deals in a disciplined manner based on current pricing trends, investor sentiments, favored or out-of-favored industries or sectors, marketing and distribution concerns, etc.
  • Patient investor. Finally, we believe that the perpetual nature of our corporate structure enables us to be a patient investor in our portfolio companies, allowing them flexibility to access what may be shorter and more unpredictable IPO windows when the timing and pricing may be best for the company and us. In the event of a prolonged closure of the IPO markets, we can be flexible as our portfolio companies wait for a market recovery or seek alternative exit strategies. We are not subject to requirements to return invested capital to investors nor do we have a finite investment horizon. Capital providers that are subject to such limitations are often required to seek a liquidity event more quickly than they otherwise might, which can result in a lower overall return on an investment.

    • Unique Publicly Traded Fund

    Our fund has been structured as a high risk/high return investment vehicle. We seek long-term capital appreciation through investments principally in equity securities that we believe will maximize our total return. Our investment objective is to maximize capital appreciation by making investments in the equity securities of later stage, typically venture capital backed, pre-IPO companies that are committed to and capable of becoming public. We seek to invest in equity securities of principally U.S.-based private companies with equity values between $100 million and $1 billion.

    NASDAQ Listing

    Since Keating Capital’s shares are listed on Nasdaq under the ticker symbol KIPO, 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.