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Suro Capital (NASDAQ: SSSS) Allows The Everyday Investor Opportunities In Potentially High Growth Startups Like Openai And Coreweave

Nov 13, 2024 (MENAFN via COMTEX) --
(MENAFN - News Direct) --News Direct--

By Meg Flippin, Benzinga



There's a reason venture capitalists, investment banks, institutional investors and high-net-worth individuals fawn over startups. The ones that eventually achieve great success, like Meta Platforms Inc. (NASDAQ: META), Dropbox Inc. (NASDAQ: DBX), Palantir Technologies Inc. (NYSE: PLTR) and Spotify Technology SA (NYSE: SPOT), tend to make early backers really rich.

Tens of millions of startups come to the market globally each year, but it's only a small percentage that hit it out of the park, accounting for the majority of investors' returns. Last year about 66 startups achieved unicorn status - valuations of $1 billion - and as of March, 34 have valuations of $10 billion or more. The successful ones often possess high margins, technology differentiation, strong managers and tons of experience. It is those types of companies venture investors are constantly hunting for.

Unfortunately for regular investors, getting access to these potential disruptors isn't an easy feat. Yes, there are venture capital funds, but they are traditionally reserved for wealthy individuals and institutional investors. The funds typically require high minimum investments if you're lucky enough to get access. Crowdfunding sites are another option, but the startups on these platforms tend to be smaller, catering to niche markets. Aside from a handful, the majority may not sport multibillion-dollar valuations. Other avenues like Destiny Tech 100 and Fundrise offer a diverse set of options, albeit in smaller sizes to more accessible names that are typically available on most secondary trading markets like Forge.

Leveling The Playing Field

But that doesn't mean VC investing is absolutely impossible for regular investors. Companies like SuRo Capital Corp . (NASDAQ: SSSS) are giving investors access - through its publicly traded stock.

The New York-based investment firm, which says it has over $235 million in assets under management, has a proven track record. Over the years, it says it has invested in heavy-hitters including Meta, Dropbox, Palantir and Spotify. SuRo Capital seeks to invest in high-growth venture-backed private companies poised to transform their respective markets and give investors access to those companies through its stock. As of the end of September, the investment firm says it had stakes in 36 portfolio companies. SuRo said 32 were privately held, and four were public. Through its stock, SuRo is aiming to level the playing field, giving everyday investors access to that portfolio.

That's particularly true of AI, a sweet spot for SuRo's investments. In the third quarter, the investment firm said it made a $17.7 million investment in OpenAI, one of the biggest artificial intelligence (AI) developers in the world, and increased its position in CoreWeave, an AI neocloud company that is preparing to launch an initial public offering in the middle of 2025. According to several people close to the company, they noted that while CoreWeave's valuation soared from $2B to $19B in the past 18 months, the likely 2025 IPO could value it even higher.

After all, just this week CoreWeave reportedly selected Morgan Stanley, Goldman Sachs and JPMorgan Chase to handle its IPO. With big-name backers like that, it could potentially command a lofty valuation. Previously, SuRo made a $12 million investment in VAST Data, an AI infrastructure data platform focused on providing enhanced productivity and simple data management for the AI-powered world. All told, SuRo Capital says it has allocated more than $55 million to the AI space.

Those investments highlight the company's thesis that AI isn't going away and that AI infrastructure companies are the ones that stand to benefit the most. After all, these companies are AI platform agnostic. It doesn't matter what application is layered on top of them. They are also among the companies bandied about when it comes to successful exits. OpenAI, with a valuation of $157 billion , is among the most valued companies in the world.

For investors who want exposure to OpenAI, SuRo Capital is one option. With its recent investment, it says it has more exposure to OpenAI than nearly any other publicly traded vehicle. That doesn't mean its other investments aren't promising, but with the world moving to AI, investors can potentially get access to a big and growing market through SuRo Capital's stock Not to mention companies that they may not be able to invest in on their own. That, says SuRo Capital, is a big diversifier and one of the reasons investors are interested in its stock.

"For over a decade, SuRo Capital has been the public's gateway to curated venture capital. This access, once reserved only for venture capitalists, has provided exposure to some of the largest, most compelling, and highly sought after private companies in the world before they become publicly traded. Our current portfolio offers exposure to the infrastructure for artificial intelligence, growing consumer brands, and exciting consumer and enterprise software names, among others," said Mark Klein, chairperson and CEO of SuRo Capital.

To learn more about SuRo's VC fund, click here.

Successful Exits

Founded in 2011, SuRo says it aims to invest in high-quality founders who are building exciting and rapidly growing businesses and, at the same time, are focused on enhancing shareholder value. These companies are chasing growth but not at the expense of investor value. SuRo Capital says its sourcing for investments gives it an edge over other VC funds. But finding tomorrow's potential superstars is only part of the equation. Investing at an attractive price is the other. SuRo says it checks off both boxes.

SuRo has made multiple successful exits and realized returns for shareholders over the years, the company says. Take Palantir Technologies Inc . (NYSE: PLTR) for starters. SuRo invested $21.1 million in the company and exited it for $145 million. Then there is Coursera Inc. (NYSE: COUR), the online course provider; SuRo Capital invested $17.4 million. It exited Coursera for $115.3 million. Other successful exits, the company notes, include ride-hailing company Lyft Inc . (NASDAQ: LYFT) and Spotify, the streaming music provider.

Some of its current investments include AI research company OpenAI , WHOOP , which makes data-driven wearables, Canva , the graphics design software company and Liquid Death , a beverage company. Investors get access to those companies and more when they invest in SoRo Capital's stock.

Venture capital investing has long been reserved for ultra-high-net-worth individuals, institutional investors and people with access to insiders, but SuRo Capital is striving to change that by letting investors into the world of startups through its publicly traded stock.

Check out the SuRo fund here.

Featured photo courtesy of Suro Capital.

Benzinga is a leading financial media and data provider, known for delivering accurate, timely, and actionable financial information to empower investors and traders.

This post contains sponsored content. This content is for informational purposes only and is not intended to be investing advice.

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