SuRo Capital Corp (SSSS) 2011 Q3 法說會逐字稿

Good day, ladies and gentlemen, and thank you for standing by. Welcome to the GSV Capital Third Quarter 2011 Earnings Conference Call. During today's presentation, all parties will be in a listen-only mode. Following the presentation, the conference will be open for questions.

(Operator Instructions)

This conference is being recorded today, Thursday, November 10, 2011. And I'd now like to turn the conference over to Alex Wellins of the Blueshirt Group. Please go ahead, sir.

Thanks for joining us on today's call. I'm joined today by Michael Moe, GSV's Founder and CEO; and Steve Bard, the Company's Chief Financial Officer. Today's call and webcast are being recorded. An audio replay of the conference call will be available for seven days.

This conference call is being webcast on our website at gsvcap.com. Replay information is included in our press release that was released after the market close today. Please note that this call is property of GSV Capital Corp. Any unauthorized rebroadcast of this call in any form is strictly prohibited.

I'd also like to draw your attention to the customary disclosure on our press release today regarding forward-looking information. Statements made in today's conference call and webcast may constitute forward-looking statements which relate to future events or our future performance or financial condition. These statements are not guarantees of our future performance, conditional results and involve a number of risks and uncertainties.

Actual results may differ materially from those in the forward-looking statements as a result of a number of factors including those described from time to time in our filings with the SEC. We do not undertake to update our forward-looking statements unless required to do so by law. To obtain copies of our latest SEC filings, please visit our website at gsvcap.com.

With that said, I'll turn the call over to Michael.

Thanks. Good afternoon. Welcome to GSV's third quarter results. Since this is our first call that we are holding as a public company, I want to take a few minutes to review our strategy. I'll then review the progress we've made in the third quarter, recent investment activity, key financial data and our view on the market. Then, we'll open up the call for questions.

So, just in terms of our strategy, we created GSV Capital to provide a publicly traded liquid security to invest in the fastest-growing, most dynamic, VC-backed private companies in the world. And I am pleased to tell you six months after our IPO, our objective of being able to identify and invest these leading companies at good prices -- we're very good about.

In fact, to-date, we have completed 15 total investments in companies. We have a 15% approximate position in Twitter; 15% in Facebook. We have meaningful positions in companies such as Gilt Groupe, and Chegg, and Zynga, and recently gone public, Groupon, and Silver Spring Network that just filed to go public.

And we've got a portfolio that if you look at the revenues in aggregated growth from 2010, the total revenue by our estimate from the 15 companies that we have made investments in is about $3.8 billion; 2011 it grows to $9.7 billion. And by 2012, our estimate is approximately $20 billion. So, some significant growth and consistent with what we stated our objectives to be.

Importantly, why we we're being able to be so efficient and effective at putting this money to work in leading companies in a time-efficient manner, it really boils down to a number of factors that are part of the ecosystem that we participate in.

One is our team and the experience that we have working with Silicon Valley, working with the emerging growth company and a reputation. I think that's really important -- increasingly important, as we've seen to be approved, to be buyers of these shares.

But, it's also our extended network, from a very active and engaged board to key advisory members such as Bill Campbell, who's the Chairman of Intuit, and on the on Board of Apple; and Bob Grady, who's the Chairman of National Venture Capital Association; and its strong relationship with bleeding VCs such as Benchmark, IVP, Kleiner Perkins, Sequoia, the ones that have historically had a disproportionate share of investments in these stars of tomorrow.

The situation that has developed which has provided us this unique opportunity really has developed over the past decade, which is the structural -- dramatic structural changes that have taken place in the capital markets which have resulted in significantly fewer IPOs.

So, the number -- the reasons why the structural changes have occurred is many, some of its policies such as Sarbanes-Oxley or the consolidation the growth investment banks versus historically sponsored small emerging growth companies, or the fact that we have very volatile markets which investors requiring more mature companies who want our earnings history.

The point is there's 100 reasons why this situation has exist -- why it exists, but my point is the genie is not going back in the bottle. These changes are secular, and that's what we're positioned to take advantage of. In fact, if you look at the number of IPOs that -- in the last 10 years, it's decreased by over 65%; VC-backed IPOs has decreased even more than that, and the size of the companies going public has more than doubled.

And so, what that resulted in, in 2000, you had the time from VC investment to monetization to being approximately 3.1 years. In 2010, there's 9.4 years. So, it's tripled in the past decade. And while this obviously impacts the VC model, what it really impacts is the Silicon Valley model, which is essentially people move here from around the world seeking their fame and fortune. They get paid a little salary and a lot of stock, and that works out fine. The company goes public in three or four years.

It doesn't work out so fine if a company is in year seven, eight, nine, ten, Spouses (inaudible) talking about why didn't we -- why are the kids are going to private schools. And so, we step in here as a source of liquidity for early shareholders, existing employees, former employees, where we can buy their stock and we create access to investors that want to participate in the dramatic world that is taking place with these companies.

In the good old days, public investors had access to some of these, what I call, stars of tomorrow -- these rapidly growing emerging companies, because often they went public early in their growth history. Companies like Wal-Mart had a $25 million market capital when it went public. Intel had a $15 million market capital when it went public. Starbucks had a $200 million market cap when it went public.

You have hundreds of examples of these small emerging companies that create billions of dollars of return for public investors that participated in their IPO or certainly thereafter. Today, with this time shift that's going on with private companies staying private longer and the dramatic value creation that's going on in many of these private companies -- the access has been lacking.

And so, when you look at the $80 billion or they're about of Facebook's value, most of that has gone to the handful of private investors. The $20 billion of value creation at Zynga has gone to a handful of private investors. So, GSV Capital steps in here with its publicly traded security to invest in these stars of tomorrow today.

So, just quickly, in terms of the way that we identify and source deals, we have used about a third of investments that we've made. We've used the secondary market, [share scores] between investor and second market. The two leaders that we have a nice relationship with our [third] investments we source there.

Most investments we made have come directly from existing shareholders whether it'd be a former employee or current employee or consultant or somebody who's got the private shares. And then, we've made four direct investments with the company including primary shares.

And the way that we look at this to prioritize where we focus our investment activities, we look at what are the mega-trends that are going on in the growth sectors of the economy, and then we create investment themes around that. So, the six themes that were focused on, social media, where approximately 50% of investments we've made have been in social media companies; cloud services; software as services; we have green technology; and we have education technology; and mobile computing applications. Those are the six themes that we're focused on.

And within that, we create a priority list. We have approximately 150 companies that we've identified as the 150 leading private companies in the world. We literally do an NFL draft, from to the top pick down below. And then do extensive research, bottom up analysis, creating model, creating a price target based on what we believe the return characteristics need to be that we hit our hurdle rates. And then, we go out aggressively to source stocks in the companies that we want to own that we think are the leading companies -- private companies in the world.

So, we're very humble but proud of what we've been able to achieve in the short period of time. We're confident with the fundamental characteristics of the businesses that shareholders -- that are involved with us. We will participate in this dramatic growth that's going on with the underlying portfolio. And we're very focused on being disciplined, executing with our four-piece strategy to be successful.

In terms of what we've done in the third quarter and an update on the portfolio, again, we've completed our initial public offering in April. Since we went public, we've invested in 15 companies based on those six investment themes that I've shared with you. During the third quarter, we invested in seven new companies, and we expanded their portfolio in two existing companies.

So, today, I'll go quickly through the companies that we've invested in, the percent that we own. So Bloom Energy, we own 2.4%; Chegg -- 8.2% of the portfolio in Chegg; Control4, which is a new investment, is 1.4%; Facebook is 14.3%; Gilt Groupe, 7.5%; Grockit, another new investment we made is a social education company which we invested with Benchmark and Atlas; Groupon, which recently went public, is 2.8%.

Kno, 3.1%; like called PJB, which is Zynga's synthetic and we go into that in the questions and answers if people have questions about that -- 5.5%. Serious Energy, 1%; SharesPost, which is a new investment, that's 3.1%; Silver Spring Networks, 1.5%; TrueCar, 2.7% as a new investment and that was a primary investment that we've made; Twitter, 11.6%; ZoomSystems, 0.3%. So, those are our existing -- what the portfolio looks like today as of the third quarter and the end of the third quarter.

We also completed a $30 million secondary offering during the quarter. The fact that we were able to raise money in an environment that was very volatile and very few transactions were being done, we think demonstrate interest in the value proposition that we have. While we went out to raise a greater amount because we think the opportunities in front of us are very compelling, we felt the right thing to do was take the amount that we were able to raise, and we've been very busy and active since completed that transaction September 30th.

With that, I'm going to turn it over to Steve Bard, our CFO.

Thank you, Michael. After the market close today, we filed our Form 10-Q, and we issued press release detailing our financials and operations. And if you'll allow me, I'll provide a brief summary of those filings now.

As of September 30, the total value of our investments was $41.4 million. Net assets were $73.2 million, resulting in a net asset value per share of $13.26. As Michael mentioned earlier, during the quarter, we'd originated about $25 million in investments in seven new and two existing portfolio companies. Since our inception through today, we've invested a total of approximately $50 million in 15 companies.

Investment income, which is comprised of accrued interest on our loan investments as well as money market fund dividends, was about $53,000 which translates to $2 per share for the quarter, as well as since inception for quarter end. Net investment loss for ongoing operating expenses for the quarter was $680,000 which translates to $0.20 per share, and that compares to a loss of $1.4 million or $0.55 per share for the period from our inception through quarter end.

Net change in unrealized depreciation, which is comprised of transaction costs of just finder's fee, legal expenses and escrow agent fees associated with acquiring portfolio investments, was approximately $494,000 or $0.14 per share for the quarter. And that compares with about $550,000 or $0.23 per share since inception through quarter end.

Because we made our portfolio investments recently, their fair values as of quarter end are being held at their respective purchase prices, which excludes any fees and expenses incurred by us in connection with those purchases.

That all result in a net decrease in net assets resulting from operations for the quarter of about $1.2 million or $0.34 per share, and that compares to $1.9 million or $0.78 per share from inception through quarter end. And as a result of our IPO and secondary offering, we've also incurred about $1.1 million in offering related costs since inception.

Despite the turbulent market environment, we've successfully raised about $30 million in a secondary who's led by Citi. Again, that closed on September 30, and we believe that our ability to complete the secondary during a period of such extreme volatility reflects strong interest in our value proposition.

We ended the quarter with approximately $32 million in cash. Since September 30, we have subsequently invested $3 million in two new portfolio companies, that was Grockit and the Control4 investments which Michael mentioned, and additional $5.5 million in additional purchases of two existing companies, Facebook and Twitter.

As Michael indicated, we're humble but proud of our ability to execute on the strategy that we articulated during the road shows. Our team has been able to identify source and close in what we consider to be extremely compelling investment opportunities.

With that said, I'll turn the call back to Michael for additional commentary. Michael?

Yes. Just in terms of commentary, in terms of what's going on in the market and how that affects us, while we clearly are in an extraordinary time with extreme volatility and -- in a lot of things to be concerned with, really that volatility is the friend of us because it does create opportunities when we have a clear perspective on company's value and what we think they'll be worth a year or two or three years down the road. It creates better pricing for us, and it also has people more anxious to do transaction.

And so, when we try to be very focused, we have our priority list, we have extensive research that we do, we have clear perspective. And so, this volatility that we're living through, while it isn't fun to experience, we really think it's to our long-term benefit and ultimately it will be reflected in our share price.

One comment I'll make about this -- and, ultimately, it's about execution not about concept. But the fact that NAV, while it's an important data point, it really should be a lagging indicator in terms of the intrinsic value of the portfolio. As I mentioned at the beginning of the call, we have a portfolio made up of 15 companies with underlying growth of -- [doing] 150% year-over-year from 2010 to 2011. And so, the value, as long as the companies continue to execute is growing at a higher rate, and we expect that to be reflected in share price overtime.

We also believe strongly that it's going to be a situation because of us being a leader, nobody had one this before. And what we found at being a leader is that we're starting to get the opportunities that are coming to us, and people's understanding of what kind of shareholder that we are for them we're becoming a first call and a shareholder of choice, which again, we're very humble about this.

We're focused on making sure that, that is something that we continue to benefit from, but we think there are definite advantages of us being first and the leader.

So, with that, I want to thank everybody's interest in GSV Capital. We're very excited about where we're at and where we're going. And we're very appreciative of your interest and your support. And I'd love to answer any questions that people may have.

So, operator, if you could put this out to the people on the line, we would like to answer questions now.

Yes, sir. Ladies and gentlemen, I would like to begin the question-and-answer session at this time.

(Operator Instructions)

Our first question comes from the line Chuck Bennett with IBC. Please, go ahead.

Hey, how are you?

Good.

Great. I had a question if this is the part of your investment strategy or not. For example, you guys had the piece of that Groupon, and I was wondering if you guys could sell from day one? Do you have any lock-ups on these investments., and as part of your strategy would you be able to sell it immediately?

Yes. So, thank you for the question. In every situation that we currently have investment, we do have the same lock-up restrictions as generally is the norm with private company shares. So, it's a six-month lock-up. Sometimes, we'll be offered to an opportunity to sell into the IPO with other selling shareholders and, again, depending on the situation, we may or we may not do that. But, with Groupon, we're riding it.

Generally speaking, we know that our shareholders are looking for us to invest in the leading private companies. And when a company becomes public, I think we're not unique -- people can participate in the public ownership. So, we will be looking for the appropriate time to exit pretty quickly after the lock-up is over.

And in most cases, that said, our fiduciary responsibility is to generate the greatest returns for our shareholders. And if it's our estimation that the best return is going to be created by holding on to stock for another six months, another two years, whatever, we'll make that call.

The bottom line is we're here to make our shareholders money, and we're very focused on that. I'd also make the point -- our performance fee is only on realized gains, so the transaction has to take place before performance fee for us to kicks in. But, we're making a judgment about how to create the greatest return for our shareholders.

So, you have roughly about $32 million leftover?

Actually, since we had $32 million at quarter end and we made subsequent investments, we have about $23 million in dry powder remaining as of today.

Okay. Any --

It was [non-closed] but -- yes.

Do you have any area you're looking at in particular?

Yes. The six themes that we've talked about in the call, social media -- if you look at our priority list, I would say it kind of reflects the current investments that we've made. Social media, cloud computing, we have a -- it's huge area and we're very focused on some interesting opportunities there.

Software as a service -- a lot of great businesses that we're doing work on. You've got green technology, which we've made some investments in and we continue to carefully evaluate some -- the readers there. We have the mobile computing applications. I mean, mobile is so awesome in terms of the things that we're seeing. And then, education technology is in our theme that we like.

And so, we're focused really on those six themes. We're active -- we're in the process of completing some investments that aren't completes, but that are not announced. But, we're very excited about what we're seeing and what we're able to do.

One more question. Would you be open to any of the secondary offering like a few months back? Are you looking for more capital?

Well, the balance is twofold. I mean, I'm very sensitive and focused on making our shareholders money. And, again, there's a short-term reality and there's the long-term reality. In the short-term reality is we feel like there were people that invested in both the IPO and secondary, we want them to have a good return before we go and raise more money. That's an objective of mine. That's a short-term objective.

For long-term -- our shareholders are going to benefit from us having more capital. And as we maintain our leadership position, as I've said, in the call, we're very -- I think our excitement about what we're seeing and what we're able to do here is that at very high levels. And so, having more gas in the tank at the appropriate time is something that we will be actively considering, but it's the balance between the both and we're highly sensitive to both.

Thank you. And our next question comes from the line of Jon Hickman with Ladenburg Thalmann. Please, go ahead.

Hi, good afternoon. I was wondering, Steve, if you could tell us a little bit, what's in the $680,000 of operating expenses?

Sure. The $680,000 in operating expenses comprise of management fees to the adviser. There's an overhead allocation, ongoing legal fees, routine fees to our auditors, so on and so forth. So, our burn rate -- our typical burn rate, is in the neighborhood of $200,000 to $225,000 per month.

Okay. And then that other expense category, the depreciation --

Yes.

Do you actually depreciate those or amortize those expenses over --?

No.

-- like the life of the investment or something, or --?

That is an expense that hits the investment. So, as we enter into agreements, for the individual portfolio companies, we track separately the escrow fees, the legal fees specific to that unique investment as well as finder's fees that we pay, and those are all tracked in expense versus --

So, was that like added to the cost of the investments? So, when you go to sell it you --

Exactly. That does add to our cost base, but it does not get reflected in the fair value.

Okay.

Thanks, Jon.

That's pretty much -- oh, one more question. So, you said you had about $25 million in dry powder --

$23 million. Right.

$23 million. And you've made two new investments plus the -- you added some Facebook and Twitter, so how -- can you talk anymore -- how big is the price plan? Are you looking at five more, or what can you say about that?

Yes. So, we're actively working a handful of opportunities. The way that we do this, Jon, is every week, we go through our priority list and kind of do a redraft of our NFL picks. And we pick the evaluation of what we really want to do, what the priorities are and how we get it done and what price we can get it done at.

And so, at any given time, we're actively, actively working -- call it, five situations. And that's in addition to -- I mean, we've entered -- there's -- call it three situations right now which were -- we've entered into agreement. We're just looking to close it. And before it's closed, we wont announce it just because it's not closing until it's closed, but we expect those to happen over the next 10 days or so.

And, again, we're excited about what we're seeing. So, it's about focus and priorities, and we are relentless in terms of scrubbing our list and saying, okay. Because we are -- we don't want to what I call, spray and pray. We are very focused on what we believe are the companies with the most powerful growth fundamentals in the world. And then, we focus on how we get them, and that's what we're active with.

So, you could identify something in the top, say, XYV company. And then you could click evaluation on it, and then you can triangle out and find the source for that security. And if you can't find the source of that, for the period of time you drop down to the next one. Is that --?

Yes, exactly. I mean, we've had -- I would tell you that there is only one situation where it's been a priority of ours and we haven't been able to do it. And I can't tell you which situation that is because hopefully, at some point, we will. But we just are relentless in terms of working on sources, working at secondary marketplaces, working in all the different things that we can do when we said that, okay, we want it on XYZ and this is the price.

And then -- and by the way, you see things at prices we wont do and we pass. But that's why it's so important to be working multiple sources. And those sources, by the way, understand that we are going to others, and they know they can see that we've been successful as what we've talked about in the past.

So, they know that when we talk about the price and what we're looking to do, they know we're serious about it and they know that we're not table talking. And I think that feeds on itself, by the way, because they see what we say is what we mean, and that works to our benefit.

Okay. Thank you.

Thanks, Jon.

Thank you. And we have a question coming from the line of [Stephen Oganaru] with MIDAS. Please go ahead.

Well, my question was around the timing of your secondary, but Michael addressed it.

Great. Thank you.

And we also have a question from the line of Andrew Rivera with Pine River Capital. Please, go ahead.

Hi, guys. Congratulations, on a good quarter.

Thank you.

I had a couple of questions for you. The first is where -- as of the quarter end, what was your basis for the Groupon where you carry it on the balance sheet?

We'll give you the precise number, but -- I'm going to let Steve give you the precise number.

Sure. Yes, we held Groupon at $50.88, and that was pre-split. So $25.44.

So, $25.44 is what the -- a split adjusted to compare it to where Groupon trades today --

Correct.

-- is what your September 30 mark price was for Groupon.

Correct.

Okay. My second question for you is recently, we're fortunate enough to kind of attend the panel, talking about the secondary market for private shares, and then there was Wall Street Journal article.

And one of the themes that's come up a little bit is that VCs are starting write the articles of the incorporations for these companies in the way that they make them much more difficult for employees and shareholders to sell their shares on these exchanges wanting to kind of get rid of the distraction or the noise that this brings. Are you seeing that in new companies? Are you worried about that trend? Is that something that is on your radar at all?

No. It's absolute -- definitely a trend. It actually is beneficial to us because what's happened is effectively the companies are getting much more of a process around who's approved and who's not approved. And basically, to be approved -- and I'll tell you, we've literally gone in and free of situations where we had to go to a process to be approved.

And so, the fact that we're approved and then they look and see the quality of the companies -- we have a situation where we're closing transaction right now -- a fantastic company where they basically are restricting who can buy their secondary shares.

Literally, one of the things that's sold them most on us is they looked at the other companies that we own, Facebook and Twitter, and the like, and they say, okay, that's the right list and you're approved. So, it's a trend -- and again, I think it's -- I think the benefits are accrued to the leaders. And so -- whether that continues to be the case or not as it relates to kind of you see that happening with the incorporation, we'll see, but right now we're actually a beneficiary of it.

Okay. And then my next question is, did I get that number right for your monthly burn, let's call it like an OpEx burn? And assume that this is entirely outside of the management fee, but approximately $225,000 per month.

Yes. And that number actually includes the management fee.

So, that's not in and above the management fee, but that's inclusive on the management fee?

That's correct.

So, all in, before incentives, you guys, I'd say, on average capital or is that expenses work out to about 4% or 4.5%?

Closer to 5%.

Closer 5%, okay -- on average on that one. At what point do you think you'll think to start get some scale and we'll start to see -- as you raise capital, we'll start to see that come down as a percentage?

Yes. I mean, most of the -- I mean, the costs that kill me are mostly fixed. So, I mean, literally, there's very few expenses that we have in that kind of other category that don't have substantial operating leverage to them. So --

Right. So, let's say, we use $225,000 average a month, what percentage of that do you say is fixed?

Actually, Andrew, I want to correct myself. The $225,000 does not include the management fees. My apologies for the confusion.

Okay. So, again, of the $225,000 though, what part do you think is fixed versus -- what percentage of that do you think is fixed?

There's about -- the majority of it is fixed. The vast majority of it is fixed. There are very few variable expenses there with the exception of the management fees.

All right. And then the 5% that you set on average capital, was that inclusive -- that's not inclusive of the management fee either. Right? So, the management fee will be on --

That is.

That is.

Okay.

My apologies.

All right. I just want to make sure I don't penalize you twice for it.

Thank you.

And then, that is -- I think that is kind of it.

I just want to make sure -- okay.

Thanks, Andrew.

(Operator Instructions)

Our next question comes from the line of Lonnie Ogulnick with Ladenburg Thalmann. Please, go ahead.

Yes. My question was regarding a legislation going through Congress right now, with the 500 upwards now moving towards 2,000 shareholders before a company has to proclaim itself to go public. How does that affect the investments that we're currently invested in, like a Twitter or Facebook, not having to go public? Is that something that's on your radar?

Yes. I mean, there's positives to it and negatives to it. It really doesn't -- first of all, by the way, just philosophically, it should go up. The 500 shareholder rule is an arbitrary number. There's no magic to it. They haven't changed it for 35 years. And there's reason why companies are staying private longer, and that trend is going to continue.

So, making that amendment is both likely and probably the right thing to do. How that helps us, of course, is that this problem that exists with existing shareholders or early investors as well employees and (inaudible) is going to persist more. And so, we, being there to acquire shares of leading companies that benefits us.

The flip-side is we certainly want a robust IPO market, where our companies can ultimately get public. And so, if that is not as much of a catalyst -- as Facebook, for example, will they be going public early next year, and I think they will, if they didn't have the 500 shareholder rule that they blew through last year, you know, maybe not.

And so, we do want to be able to see -- that you're going to see that. But, by and large, I think why companies are going public is when they're ready to go public. And so, I don't think our perception of who's going to public and when they're going public really changes much if that rule gets legislated.

One other thing to this.

Yes.

I think I got your point. As far as like a Twitter and a Facebook, is there a cap as to how much money you would put into that? Let's say hypothetically you guys just love Twitter because you thought it was the best thing since sliced bread, would you overweigh to ex them out, or it's like 15% the cap you'd put in to any one idea?

Yes. So, we restricted from putting more than 25% in terms of initial investment of our overall portfolio. But from a practical standpoint, where we're comfortable, our outside debt is the 15% position which we have in Facebook and Twitter.

Obviously, what that signals is that we have -- in terms of our NFL draft and our view of fundamentals of both of those business, we think those are the two leading private companies in the world, and our position on those reflects that. And you can sort of judge by our weighting in a position to sort of our level of confidence and view of the business and the opportunity.

Thank you. And our last question comes from the line Dan O'Neill with Ladenburg Thalmann. Please, go ahead.

Thanks very much. Good afternoon, guys. I was wondering if you could just talk a little bit about your stake in Zynga, or this PJB Fund LLC loan.

Yes. So, the situation in Zynga -- and you may have seen the Wall Street Journal article. Zynga has been very restrictive, I mean more than the companies that we know of in terms of other shareholders into their cap table. So, from the moment we public because Zynga was very high on our list in terms of the companies that we wanted to own stock in, we pursued aggressively shares in Zynga only to be thwarted every way that we went.

We, ultimately, were able to get into a situation with a shareholder who desired some liquidity -- a small part of liquidity for some personal issues, and yet what we were concerned with is that going to the direct root of purchasing the shares might ultimately result in Zynga not approving it.

So, we created a partnership that basically allows us to have -- that we set a price on the value of Zynga shares. We are protected on the downside significantly if the shares of Zynga were below what we valued them at that.

And then, on the upside, we take the first 20% and then we have a participation with the shareholders. So, it was -- it's not a structure that we will do routinely, but we felt like this was a very creative way and a compelling risk reward way to participate in Zynga, which is by far the hardest company that we've had to deal with in terms of acquiring shares.

So, we thought it was a compelling risk/reward situations for us. We thought it was basically -- but it's a unique structure, and it was done specifically because of the situation that existed. Thank you.

Okay. And so, is there a dollar amount? By being you give us a dollar amounts on the other one, did you give us a dollar amount on Zynga?

So -- it was $4 million investment.

Okay. And one other question just from one of your last comments, did you say just before any conference call that you feel that it's possible Facebook will go public next year?

Yes. I think it's very likely that they'll go public next year. If I just --

Thank you, and that --

Sorry.

Go ahead, sir.

The point is obviously things could change, but I think they're gearing up for a first half of 2012 IPO, so I hope it will stay.

And, ladies and gentlemen, that concludes the question-and-answer session along with the conference today. We appreciate your participation, and you may now disconnect.