GSV Capital Singing the Facebook Blues

August 30, 2012 James Heinsman In the News

Back in June of 2011 GSV Capital, the closed-end mutual fund, announced its plans to buy into the then privately held Facebook social media internet company. That same day the value of the fund soared 42 percent. Parleying the success of that move GSV then sold $247 million of its shares and took the profits to the hot start-ups of the moment, like Groupon and Zynga.

Only a bit more than one year later, the euphoric bubble has burst, and GSV is in the doghouse.

“We probably benefited from our stake in Facebook more than we deserved on the way up,” said GSV’s chief executive, Michael T. Moe, “and were certainly punished more than we deserved on the way down.”

Facebook’s IPO was a disappointment to many, not least of which to GSV, which stands for Global Silicon Valley. GSV is the largest of a few closed-end mutual funds that allow regular guys to invest in privately held companies indirectly. The investments simulate mini venture capital funds, supporting start-ups and betting that they will become profitable, sell for a profit, or perhaps even go public.

“I think GSV was really innovative in creating a kind of publicly traded venture capital fund,” said Jason Jones, founder of HighStep Capital, which also invests in private companies.

Facebook, GVS Capital, HighStep Capital, IPO, Jason Jones,

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