(Data below is sourced from the Suro Capital website unless otherwise stated.)
Written by George Spritzer, co-produced by Alpha Gen Capital
Many retail investors are looking for a way to participate in venture capital investing, but in most cases they are shut out, unless they are accredited investors. Accredited investors can participate in many venture capital funds, but their money is illiquid and locked up for extended periods.
Suro Capital (NASDAQ:SSSS) is an exchange-traded BDC with a shareholder-friendly management that provides a good way to invest in pre-IPO companies. It is a liquid vehicle with no lockups.
Fund History
SSSS has an interesting history. It was originally created as a venture capital BDC in 2011 and had the name GSV Capital with the ticker GSVC. It used external management with very high management and incentive fees. Performance for GSVC was volatile over the years, but overall performance was mediocre, largely because of the very high expense burden.
But starting in 2018, things started to improve dramatically. In February, 2018, management agreed to forfeit $5 million of previously accrued, but unearned incentive fees. They reduced the ongoing management fee from 2.0% to 1.75%. They also waived management fees on cash balances until a 5.25% convertible notes were retired or repurchased.
In July, 2019, there was a new CEO, Mark Klein, and the company name was rebranded to Sutter Rock Capital Corp. But more important, the fund converted from external to internal fund management. The CEO Mark Klein announced this change as follows:
“As an internally managed BDC with significant investable capital, we look forward to constructing our portfolio by continuing to execute on our stated strategy of making investments in leading, institutionally-backed private companies with clear paths to liquidity”
Sutter Rock Capital did a $10 million shareholder-friendly "Dutch Auction" tender offer in November, 2019.
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