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Keating Capital
Keating Capital is an equity partner for private companies primed to become public.

Keating Capital, Inc. (KIPO) is a publicly-traded Business Development Company (or BDC) that specializes in making pre-IPO investments in innovative, high growth companies that are committed to and capable of becoming public. As non-controlling investors Keating Capital does not require board seats and observation rights. Keating Capital is managed by Keating Investments, LLC, an SEC-registered investment adviser founded in 1997.

History
The Greenwood Village, Colo.-based firm was founded in 1997 and for years served as a traditional investment bank and adviser for micro-cap companies looking to go public. Like many I-banks, it would also invest small sums of equity in its clients, but didn’t have a traditional venture fund.

That changed in 2008 when it began to transition to a pure asset management model as a business development company. “We didn’t want to be a fee-based adviser anymore,” Keating Chief Investment Officer Kyle Rogers told VentureWire in 2009. “We saw the merits of investing at private company valuations, then taking them public, increasing the value of the company. We’re all incentivized to do the same thing.”

Performance
Chart and analysis
 * As of November 2011, Keating Capital had net assets of $76,750,350 and, based on 9,283,604 shares of common stock outstanding, a net asset value per common share of $8.27.
 * As of September 30, 2010, Keating Capital had net assets of $13,479,904 and, based on 1,762,971 shares of common stock outstanding, a net asset value per common share of $7.65.
 * As of December 31, 2009, we had net assets of $3,719,496 and, based on 569,900 shares of common stock outstanding, a net asset value per common share of $6.53.

Investment Criteria
Keating Capital aims to invest in companies that fit right into the pre-IPO sweet spot.

An attractive investment candidate for Keating Capital meets the following criteria.
 * Revenue: $10 million+ in trailing 12-month period.
 * IPO Timing: Within 18 months (from our investment date).
 * Return Potential: Expectation of 2x return over an anticipated 3-year holding period.

A Business Development Company
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.

Business development companies (“BDCs”) are a category of closed-end funds that are operated for the purpose of making investments in small and developing businesses and financially troubled businesses. See Section 2(a)(46) of the Investment Company Act. BDCs make available significant managerial assistance to those portfolio companies. See Section 2(a)(48) of the Investment Company Act. BDCs are provided greater flexibility under the Investment Company Act than are other investment companies in dealing with their portfolio companies, issuing securities, and compensating their managers. See Sections 54 through 65 of the Investment Company Act. In addition, BDCs are not required to register as investment companies under the Investment Company Act. They are, however, required to register their securities under the Securities Exchange Act of 1934. See also Adoption of Permanent Notification Forms for Business Development Companies; Statement of Staff Position, SEC Release No. IC-12274 (Mar. 5, 1982), and Interim Notification Forms for Business Development Companies, SEC Release No. IC-11703 (Mar. 26, 1981), for a discussion of the regulatory system applicable to BDCs.

A Closed End Fund
A "closed-end fund," legally known as a "closed-end company," is one of three basic types of investment company. The two other basic types of investment companies are mutual funds and unit investments trusts (UITs).

Here are some of the traditional and distinguishing characteristics of closed-end funds:

Closed-end funds generally do not continuously offer their shares for sale. Rather, they sell a fixed number of shares at one time (in an initial public offering), after which the shares typically trade on a secondary market, such as the New York Stock Exchange or the Nasdaq Stock Market. The price of closed-end fund shares that trade on a secondary market after their initial public offering is determined by the market and may be greater or less than the shares’ net asset value (NAV). Closed-end fund shares generally are not redeemable. That is, a closed-end fund is not required to buy its shares back from investors upon request. Some closed-end funds, commonly referred to as interval funds, offer to repurchase their shares at specified intervals. The investment portfolios of closed-end funds generally are managed by separate entities known as "investment advisers" that are registered with the SEC. Closed-end funds are permitted to invest in a greater amount of "illiquid" securities than are mutual funds. (An "illiquid" security generally is considered to be a security that cannot be sold within seven days at the approximate price used by the fund in determining NAV.) Because of this feature, funds that seek to invest in markets where the securities tend to be more illiquid are typically organized as closed-end funds. Closed-end funds come in many varieties. They can have different investment objectives, strategies, and investment portfolios. They also can be subject to different risks, volatility, and fees and expenses.

Keep in mind that just because a fund had excellent performance last year does not necessarily mean that it will duplicate that performance. For example, market conditions can change and this year’s winning fund could be next year’s loser. To understand the factors you should consider before investing in a mutual fund, read Mutual Fund Investing: Look at More Than a Mutual Fund's Past Performance. In addition, you should carefully read all of a fund’s available information, including its prospectus and most recent shareholder report before purchasing mutual fund shares.

Closed-end funds are subject to SEC registration and regulation, which subjects them to numerous requirements imposed for the protection of investors. Closed-end funds are regulated primarily under the Investment Company Act of 1940 and the rules adopted under that Act. Closed-end funds are also subject to the Securities Act of 1933 and the Securities Exchange Act of 1934. You can find the definition of "closed-end company" in Section 5 of the Investment Company Act.