Adam Bates, principal at SuRo Capital Corp., was recently a guest on Benzinga's All-Access.
SuRo is a publicly traded venture fund that seeks to invest in high-growth, venture-backed private companies. The fund seeks to create a portfolio of high-growth, emerging private companies via a repeatable and disciplined investment approach, as well as to provide investors with access to such companies through its publicly traded common stock.
SuRo is a publicly traded venture fund that seeks to invest in high-growth, venture-backed private companies. The fund seeks to create a portfolio of high-growth, emerging private companies via a repeatable and disciplined investment approach, as well as to provide investors with access to such companies through its publicly traded common stock.
Category
🗞
NewsTranscript
00:00It is my pleasure to welcome you to the Principal of Surrow Capital.
00:11That's Adam Bates.
00:12Adam, fantastic to be with you today.
00:14Dan, great to be with you as well.
00:16And just one quick note, Nick Lindstrom was my childhood idol from a sports perspective.
00:20So glad to see a wingspan, even though I'm a Stars fan by heart.
00:24You already loved you.
00:25But now you're one of my heroes.
00:26I've been covering Nick Lindstrom for a long time, one of the classiest athletes at any
00:30level in any sport I've ever covered.
00:32So well, it speaks very well of your credibility, my friend, among many other things.
00:36I appreciate it.
00:37Of course, let's start off with this.
00:39Give everyone an overview of Surrow, if you would.
00:41Absolutely.
00:42So Surrow has been around for about a decade and a half.
00:45And we are functionally a publicly traded venture fund.
00:48What that means is you can buy our stock through any brokerage app that you have.
00:53And we provide curated access to venture capital.
00:56For about 15 years, we've owned names like Facebook, Twitter, Lyft, Spotify, Dropbox.
01:01Nowadays, we own names like CoreWeave, OpenAI, Lime, Whoop, LiquidDeath.
01:07The thought has been that for too long, there has been this part of the market in private
01:12equities that has been roughly inaccessible to the large part of the market.
01:17And we found that this publicly traded vehicle is a way not only to provide access, because
01:22I think there's multiple different ways that investors can access these types of companies,
01:27but to provide access in a way that matters from a valuation perspective.
01:31So we have a team internally that does a lot of work in the same way that every other venture
01:35capital fund does.
01:36We source, we diligence, we execute on opportunities that we think are compelling at compelling
01:41prices.
01:42The only difference is you can go on your Robinhood app and go and buy our stock and
01:46immediately have access to all those names.
01:48So again, I think the key reason why we exist in the market and why Sura has been around
01:54for almost 15 years now is because we have a track record.
01:58You can go and look at other folks that simply provide you access to certain names.
02:02If you look at Forge Global, for example, you can go and buy secondary shares in SpaceX,
02:07you can go and buy secondary shares in Databricks.
02:09But what you really don't have is this price discovery.
02:12And that is what my team and I really focus on, is how do we execute not just to get access,
02:18but to give access at compelling prices.
02:20Beautifully explained.
02:21And as you mentioned, a great track record in that indeed.
02:23Adam, let's talk about what some of the companies that your fund has provided access to and
02:30what kind of returns did you achieve?
02:32Absolutely.
02:33So in the past, we own names, like I said, like Palantir, like Lyft.
02:38One of the things that we focus on is this late stage venture market with these companies
02:42that are likely to go public or be acquired by public companies one day.
02:46That's really our bread and butter.
02:48So if you look at Palantir, we were almost at a 7x return on that.
02:51Lyft, we had quite a good exit.
02:52Coursera, we had roughly a 6.6x multiple uninvested capital.
02:56So you've seen our track record sort of through the late teens, early 2020s.
03:01And nowadays, we're in a very similar position as we were in 2020.
03:05So if you look at 2020, you had this sort of coil that was ready to extend of names
03:10like Palantir, names like Coursera.
03:12Now you have Service Titan, which we own, that just went public.
03:16You have CoreWeave, which is our largest investment ever that just filed for their IPO a few weeks
03:20ago.
03:21And we have a couple of other names that are likely, we hope, to go public within the next
03:24two years.
03:25Like I said, names like Whoop, like Liquid Death, like OpenAI.
03:29And I think one of the things that we've been pretty good at over time is, while late stages
03:34are bread and butter, we've identified strategies that really have worked.
03:38So take the SPAC boom, for example.
03:41We just finished out our Oklo investment and sold that for roughly a 20x return on
03:46invested capital.
03:47We then went a little bit further and said, okay, what other strategies can we execute
03:51on?
03:52So we have Suro Capital Sports, which is functionally meant to take advantage of this growing boom
03:57in not only sports betting and sports gambling, but also the growth of sports team valuations
04:01and media rights.
04:03And so we have that early stage part of the market that is very curated in a specific
04:06industry.
04:07So no matter which way you slice it, we have really focused on and executed against specific
04:13strategies that have proved to be really good return on investments.
04:18The latest one that we've really identified is this AI infrastructure play.
04:21We've invested over $50 million in AI infrastructure, over three key bets within CoreWeave, Vast
04:27Data, and OpenAI.
04:29If you want to own OpenAI and you're a public investor, there are really few places to do
04:34it.
04:35And I believe that we are one of the largest.
04:36We invested $17.5 million in OpenAI last quarter.
04:40We also are $12 million investors in Vast, and like I said, we have $25 million in CoreWeave.
04:45That's a fascinating time to be alive, Adam, when it comes to AI, obviously.
04:50And let's kind of delve into the CoreWeave situation.
04:54What can we expect from the IPO?
04:58You know, if I could tell you exactly what was going to happen, I'd probably be retired
05:01on a beach somewhere.
05:02But what I can tell you is that if you read the S-1 that they filed, you had a company
05:07that was doing $16 million in revenue that's now doing $1.9 billion in revenue.
05:12It's been reported from the information that this company should 4X their revenue in 2025.
05:17You have the recent deal with OpenAI that's roughly $11.9 billion in contract value.
05:23You have AI exploding on the enterprise side, on the consumer side, the use cases are endless.
05:28You're only getting more ROI for AI, not less.
05:34And you have these data centers that are popping up everywhere.
05:36So the demand is all out there.
05:38And what we believe to be a really good return on investment is investing in the supply side
05:43of it.
05:44So CoreWeave is a perfect example of a pure play AI tool that you can now invest in the
05:49public markets once they complete their IPO.
05:52But more importantly than that, you can invest before they IPO through our stuff.
05:55By the way, just send me that information in a Harry Potter aisle.
05:58We'll both retire.
05:59It'll be great.
06:00Let's talk about future IPOs, Adam.
06:02What companies might be next to your portfolio?
06:05Absolutely.
06:06So if you look at our portfolio right now, names like Canva have rumored that they want
06:11to go public soon.
06:12Names like Lime, names like Liquid Death and Whoop have stated that they would like to
06:16go public someday soon.
06:17And then OpenAI, of course, is sort of the talk of the town when it comes to consumer
06:21AI and enterprise AI as well.
06:23So you have a whole litany of companies across consumer, across enterprise software, across
06:29AI that are sort of itching to go public.
06:31And you can sort of look and see the line of companies that are lined up to IPO.
06:36And I think what's interesting is Service Titan was sort of the beginning of the IPO
06:40window opening.
06:42Now you have CoreWeave, which is the notable blockbuster, if you will.
06:46And then you have this line of companies over the next year and a half, a lot of which we
06:50own.
06:51And I think similar to 2020, our portfolio we're excited about probably more than ever
06:55because a lot of those companies that are waiting in line or close to waiting in line,
06:59we own.
07:00And we, like I said at the beginning of the show, we own them at pretty compelling prices.
07:03As you can see, a very tasty portfolio, which we all love.
07:06We want to keep eating that food.
07:08Let's talk about Q4 financials.
07:09Can you break down your Q4 report?
07:11What were the highlights?
07:13Absolutely.
07:15The biggest highlights were our new investments.
07:17Like I said, investing in CoreWeave, investing in open AI, very big for us.
07:21We're excited to take advantage of the AI infrastructure play.
07:27Our financials aren't similar to many others in the public markets.
07:31We are an investment fund.
07:32The key things to look at are the new investments that we're making, our outlook on sort of
07:37where our portfolio sits in the broader market.
07:41I think the most important thing to take a look at when you look at our Q4 announcements
07:44is the top five positions that CERO currently owns.
07:48Those are top five positions that we believe have a pretty good chance of entering the
07:52public markets one day.
07:53And like I said, we have invested them in compelling prices, and we're really excited.
07:58Very exciting times at CERO Capital.
07:59It was an absolute pleasure talking with you today, Adam.
08:02Thank you so much for your time and your love for the perfect human, Nick Lindstrom.
08:06Exactly.
08:08Thank you so much.
08:09I appreciate it.
08:10Have a good day.
08:11That was the principle of CERO Capital.
08:12The Nasdaq ticker is S-S-S.