VIDEO: SuRo Capital on Investing in Private Companies and the IPO Market

From Facebook and Twitter to OpenAI, Whoop, and Canva — SuRo Capital (SSSS) has spent 15 years getting onto the cap tables of the world’s most valuable private companies before they ever go public. In this interview, Julie Gillespie at TipRanks sits down with Mark Klein, SuRo Capital CEO, to talk about how the fund works, what they look for in private companies, and why the IPO window of 2026 may be unlike anything we’ve seen since 2021.

Mark also breaks down the Whoop investment — acquired at an 80% discount to the prior round, now worth roughly $151 million from an $11 million cost basis — how SuRo gained exposure to OpenAI, and why he’s calling this moment an “IPO stampede, not an IPO parade.”

At the time of publication, TheStreet Pro Portfolio was long SSSS shares.

Transcript

Julie G (00:00)
Hey everyone, it is Julie here with TipRanks. Now we are living through one of the biggest wealth creation moments in private markets, with big name companies reaching billions, if not trillions, of dollars in valuation before most investors even get a chance to buy in. And my guest today has been navigating that world for a long time. Mark Klein is the CEO of SuRo Capital under the ticker SSSS.

Julie G (00:25)
And they are a publicly traded fund that gives everyday investors access to high growth private names like Whoop, OpenAI, and Canva. So Mark, it is so great to have you here today.

Mark KLEIN (00:36)
Thank you for having me, Julie. Greatly appreciate it.

Julie G (00:37)
Absolutely. Now SuRo Capital has been described as a way for public market investors to gain exposure to big name private companies. So for any of our viewers who are unfamiliar with the company, what exactly is SuRo Capital and what problem is it that you’re solving?

Mark KLEIN (00:53)
Thank you. So SuRo Capital is a publicly traded venture fund. We were established in two thousand eleven. So we’ve been in this business for over fifteen years, providing access for individuals and institutions through our vehicle to own some of the the biggest and best names in the private markets. For example, we owned Facebook when it was Facebook, we owned Twitter when it was Twitter, we owned Spotify and Dropbox and Palantir. And the list is really long.

Of the names that we’ve owned over the last 15 years. And now more recently, we own names like you’ve said, like OpenAI, Whoop, Canva, we own CoreWeave, we own some of the newer names like Click House, et cetera. So a lot of the really either the names that people were talking about six months ago and now are really popular, or the names that people will start talking about six months from now.

Julie G (01:46)
Now, private companies have been staying private a lot longer than they used to, which means that retail investors are missing out on some of the biggest value creation windows. So how does SuRo solve that and how are you guys getting onto these cap tables so early?

Mark KLEIN (02:01)
Well, thank you for asking. The whole premise behind starting SuRo Capital was that companies were going to stay private longer. At the time of public companies coming public with market caps of $100, $200 million, et cetera, those were gone even 10 or 11 years ago when we started this. When we started SuRo, there were only 20 companies that were worth over a billion dollars that were private, Facebook being one of them. Now there’s about 1700 unicorns.

There’s 60 decacorns. There are about eight what you would call, I guess they’re called hecticorns or centicorns. And there are three or four kilocorns, or those companies that are private that are approaching or at a trillion dollars. That was obviously unheard of when we first started this. But the premise behind doing this is the private markets were becoming bigger and bigger.

Individuals were not having access to to invest in these companies. And by the time these companies became public companies, a lot of the value creation was already inert to the benefit of the prior holders. SpaceX obviously is one of the biggest examples coming public at one in one point seven five trillion dollars. So anyone buying that IPO had missed all the rounds leading up to that. And that’s what SuRo was established to do and what we’ve been doing for fifteen years.

How how we access companies, that’s actually a pretty interesting story as well. When we first started, getting on companies’ cap tables was actually a very big deal. In fact, for us to be able to allow be allowed to buy Twitter, about I guess it was probably thirteen years ago, we had to have many folks advocate for us at the Twitter board level for us to even be able to allowed to buy the company’s stock and be placed on on the cap table.

A lot of that has changed a bit as as these markets have evolved. Cap tables have become more open. It doesn’t mean it’s easier to access them, but companies have been more amenable to larger folks, more more people joining their cap tables.

Julie G (04:13)
That is incredible. And I love all the the different words. I never thought what was above a unicorn, like a heckacorn.

Mark KLEIN (04:15)
Right. By definition it was the unicorn.

Julie G (04:24)
I want to dive into Whoop, which is now one of SuRo’s largest positions. a fair value of roughly 151 million in the fund from an original cost basis of just eleven million. What did you see in that company years ago that convinced you it could become a category leader?

Mark KLEIN (04:39)
Well, certainly it’s been an outstanding investment for us, one of the best we’ve ever made. When we initially looked at Whoop, we were looking at you know, sort of where individuals were were thinking about tracking health and and and health consciousness. We looked at both Whoop and Aura actually at the same time, with with the thought being being that having connected devices made a lot of sense and the growth would be fairly outstanding. We decided to buy Whoop instead for a couple of reasons. One, we felt that the high-end athlete, and that was who all their ambassadors are and still and were and still are, would be leading the way for folks that were really concerned about their health and health conscious to to follow alongside of that was one of the reasons why we went with Whoop instead of Aura. The second reason is because it was at a period of time where the beginning of very distressed selling was occurring in the private markets. So when we acquired our Whoop shares, the round before, about maybe a year before we bought it, was over a $3 billion round. And we were able to acquire Whoop at an 80% discount to that round. So we started way ahead of the game when we initially bought it. Our biggest concern, and it’s still a concern but ⁓ significantly less, was is Apple just going to come come out with something and that’s going to be the end of everybody else but Apple? And that didn’t obviously that didn’t occur. And Whoop has grown extremely well both domestically and internationally. They recently raised around it of of five hundred and fifty million dollars and over a ten billion dollar valuation. And I believe they have every intention to go public within the next twelve months.

Julie G (06:24)
And of course, we have to talk about OpenAI, another one of your most valuable holdings and arguably one of the most important private companies in the world today. So, what originally attracted you to the opportunity and how has the company’s view on the long-term potential evolved as AI adoption has really accelerated?

Mark KLEIN (06:44)
Great question. So when ChatGPT came out in two thousand end of t two thousand and twenty-two, it was interesting and folks didn’t really know where it was leading. As as we were investing in twenty twenty-three, our main premise was what is going to be enabled by AI and what was going to be disrupted by AI. That that was where we started. As we rolled into twenty twenty four, we we we came to the conclusion why are we worried about what’s going to be disrupted and what’s going to be enhanced? And let’s just worry about how to invest in in in AI at the time. We took the approach that infrastructure and really the core businesses were going to be the ones that were going to be the most valuable. So we made our largest investment ever in anything in CoreWeave before anyone ever heard what CoreWeave was. And then the next largest investment we ever made ever was in OpenAI because it was fundamentally the leader. It it was the engine that is bringing the entire AI train behind it.

And in its it’s an extremely exciting company. We invested in their round that was a hundred and fifty seven billion post money. They recently closed around at eight hundred and fifty two billion dollars post money, as as most of your viewers know. They did file to go public and they left the door open of when they’re going to go public, depending on facts and circumstances in their business and market conditions. But we would expect them to go public at a significant premium from their last round and certainly well over a trillion dollars when they do go.

Julie G (08:12)
That is very exciting. And I also want to talk about your exciting recent quarterly report because Q one of twenty twenty six was SuRo’s strongest quarter since inception, with your nav per share increasing seventy six percent. So what were the biggest drivers behind this strong performance?

Mark KLEIN (08:29)
Well, what what was fun for us is our nav increased in Q one more than our nav was in Q one of the year before. So that’s the sort of acceleration we’re seeing in in our business. A lot of our companies were went back to market. Whoop being one of the companies that went back to market to raise money at a significantly higher valuation. OpenAI also closed around at a significantly higher valuation. Plaid did a secondary tender for employee and early investor shares at an 80% premium to their their their last fundraising. And there were a couple other smaller fundraisings in our portfolio that all occurred in Q1 that that enhanced the value of our portfolio, which was obviously extremely exciting for us and well received by the investment.

Julie G (09:20)
Now, investors often hear about companies raising money at these multi-billion dollar valuations. How do you guys determine when you’re looking at these private companies whether they’re actually worth the price?

Mark KLEIN (09:32)
Look, that I mean that’s that’s a great question. We’ve done actually a fair amount of backward looking research, if you will, because we’re in a cycle that is pretty robust, I guess is the best way. So we looked at sort of nineteen ninety nine to two thousand and one and twenty nineteen to twenty twenty two to see these really accelerations of of valuations and what the end state was. And candidly the end state’s not great. So in the the Dot-com bubble 1999, 2001, basically one in 10 companies that were high flyers were around five years later, or certainly around at a higher valuation. And there were some well-documented sort of implosions that occurred during that. We see a little bit of the similar from the valuations that were afforded people the in the 19 the 2019 to 2022 range, where really it’s like 10% of these companies come out the other side that have a value at or greater than where they were at these peak raises. That gives us a bit of concern. So we’re we we’re we we are certainly thoughtful about it. When we look at how we invest, we look at where the tailwinds are, what industries have tailwinds, we then look at in the sectors and subsectors what makes sense and then you come down to a company. It’s basic investing and and when you get to the one company in a space or two that may that seem to be the right ones, do they have the right to win or not? Or are they just going to get run over by the next greatest iteration of one of the frontier models? And then you have to say, okay, with all of that, are they ever going to grow what do they have to do to continue to grow into the valuations that are being put forward right now? And those are tough. We haven’t made a lot of it. We made only a couple of investments this year. I don’t think we want 2026 to be the vintage of a lot of our investments. We have select selected ones that we’ve spent time in that are structured appropriately. But we’re in you know pretty ebulient times in the private markets. We have companies literally raising money three, four, five times a year in a year from a valuation starting at a billion and by the end of the year twenty-two to twenty-five billion. Though those are that’s cut you have to be careful. And we’re trying to be thoughtful and careful as we deploy capital.

Julie G (11:52)
Yeah, that’s a lot to consider. Now when you guys look across your portfolio today, what are some of the trends that you’re most excited about over the next, let’s say, three to five years?

Mark KLEIN (12:02)
Gosh, three to five years used to be able to be a a time frame when everything wasn’t tra changing every three to five days. the the you know the rate of change in what’s going on in technology is in my 40 years, I’ve never seen anything like it. I don’t know that it’s ever really existed. We still believe in and around infrastructure, where that leads beyond infrastructure on AI, companies that are enhanced by deployment of AI and and and agents.

Those are where we’re really interested. I I don’t think AI is a sector anymore. Everything is infused with with with AI. But we still believe there’s an awful lot to do, staying closer to where a lot of the capital is being deployed right now. I guess, you know, Goldman’s last number was five trillion by two thousand and thirty. Whatever the number is, it’s an outrageous amount of money. And to stay close to where the money is flowing into is w and and where the companies that are

Winning in those spaces is where we’re excited.

Julie G (13:03)
Now you guys have been waiting on several names to go public. I know we mentioned a couple of big ones there, especially OpenAI. But what’s your honest read right now on the IPO window and is there a name in your portfolio that you’re watching closest to IPO?

Mark KLEIN (13:16)
Another great question. So if you if if you look at just the capital that will be raised by SpaceX, Anthropic and OpenAI, that’s about three times the capital that was raised last year and in IPOs. And it’s probably somewhere in the three quarters of the amount that was raised in the entire really frothy IPO bubbles of around 2021. So that’s just a frame of reference. There’s 70 companies that have gone public already this year. There’s another 120.

That are filed to go public exclusive to the SPAC market, which is its own orbit in and of itself. So it is what we’ve been waiting for. I mean, it this is it’s not really an IPO parade, it’s more of an IPO stampede. And we think that there’s a lot of exciting companies that will come public that allow com the public investor a chance to participate in them. Obviously, we have open AI, we’re really excited about that. Lime is in our portfolio, they just set a price range, I guess earlier this week. Canva will come public in the next twelve months. Whoop will come public in the next twelve months. Vest will come public in the next twelve months. Perhaps Click House in the next twelve to eighteen months. So we’re we’re loaded for bear. We’re very excited about the IPO market and look forward it for it to continue to move in the direction it’s moving in right now.

Julie G (14:36)
Absolutely, that is a lot of names to keep an eye on this year. That’s very exciting. Now to wrap it all up, if you could give retail investors one piece of advice about investing in innovation and emerging technologies over the coming years, what would it be?

Mark KLEIN (14:50)
Well, it’s certainly again one of the most exciting times ever in company formation and technology and the speed of of technology. I think like any other investment, you just have to understand what you’re buying and what you know, the value you’re ascribing to that. And and it’s challenging in a time where valuations seem to be, especially in high flying stocks, moving to extremes. But yeah, this isn’t public service announcement to retail, but I think you just have to be careful about where valuations are and perhaps owning a portfolio of growth in companies makes more sense. A vehicle like ours at least gives an opportunity for individual investors to own them before they come public. But it is it’s a fun, exciting time in a time where a lot of companies are gonna do extraordinarily well. And unfortunately some won’t live up to the expect expectations that people have.

Julie G (15:47)
Very good. I so appreciate your insights, Mark. This is really interesting to learn about, especially in such a a popular time of these private companies and IPOs. So thank you so much for joining me today.

Mark KLEIN (15:57)
Thank you very much, Julie. Greatly appreciate it.

Julie G (15:59)
And for all of our viewers, you can head on over to SuRo Capital to learn more or check out the stock SSSS over on the TipRanks website. Links will be in the description down below and we will see you back here next time.