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Fair Value Measurements
 12 Months Ended
Dec. 31, 2022
Fair Value Disclosures [Abstract]  
Fair Value Measurements
(3)     
Fair Value Measurements
 
The Fund’s Fair Valuation Procedures incorporate the principles found in Rule 2a-5 of the 1940 Act in conjunction with Topic 820 (“ASC 820”) of the Financial Accounting Standards Board (“FASB”). Rule 2a-5 was created to address valuation practices with respect to the investments of a registered investment company and the oversight role performed by the Board in the valuation process. The Board has appointed the Adviser to serve as the Valuation Designee to perform fair value determinations.
 
ASC 820 was created to establish a framework for measuring fair value through the use of certain methods and inputs and shall be used by the Adviser in combination with the directives of Rule 2a-5 of the 1940 Act. ASC 820 defines fair value as the price of an asset that one would observe in an orderly purchase and sale transaction between market participants at a specific point in time. Data inputs used to perform a valuation are categorized as follows:


Readily Available (Level I) - Investments that trade frequently, for which pricing quotations in active markets are easily accessible.

Limited Availability (Level II) - Investments lacking easily recognizable market data, but where certain other observable data points exist such as market quotes for similar investments, and other observable market conditions such as interest rates, yield curves, default rates, etc.
 
Unavailable (Level III) - Investments where there is virtually no market data available, with no observable market data points or inputs. Fair value may be derived from professional judgments and assumptions in the form of an analysis that considers relevant factors and criteria determined in good faith, using a methodology such as liquidation basis, present value of cash flows, income approach, etc. or an independent third-party appraisal, should the committee feel the need to engage one.
 
Investments in publicly traded securities are generally carried at the closing price on the last trading day of the reporting period, while private investments are carried at fair value, estimated using applicable methodologies or are valued at their NAV as a practical expedient. In instances where a public or private real estate market transaction is not sufficiently similar to the investment being valued, alternative valuation methodologies shall be utilized. The determined fair value may be discounted even further on account of factors including but not limited to capital and risk structure, restrictions on resale, and ownership structure.
 
The Fund is registered under the 1940 Act. The Fund’s investments will be fair valued on a monthly basis and the Fund will calculate its NAV as of the close of each business quarter. Fluctuations in an investment’s fair value may be caused by volatility in economic conditions, among other factors. Such fluctuations in the fair value are classified as unrealized gains or losses in the Fund’s statement of operations. Upon the disposition of an investment, the corresponding gain or loss is classified as realized and will also be noted in the statement of operations.
 
Investments in private financial instruments or securities for which no readily available pricing is available may be valued by an independent reputable third-party service provider on a quarterly basis or as needed. This includes securities for which the use of NAV as a practical expedient is permitted under U.S. GAAP because their value is not based on unadjusted quoted prices. In conjunction with input from the independent third-party valuation agent, the
Adviser, as the
Valuation Designee
,
shall value each Level III Investment on a monthly basis.
 
The methods commonly used to develop indications of value for an asset are the Income, Market, and Cost Approaches. Each valuation technique is detailed in ASC 820.
 
The Income Approach uses valuation techniques to convert future amounts (for example, cash flows or earnings) to a single present amount (discounted). The measurement is based on the value indicated by current market expectations about those future amounts. Those valuation techniques include present value techniques; option-pricing models, such as the Black-Scholes-Merton formula (a closed-form model) and a binomial model (a lattice model), which incorporate present value techniques.
 
The Market Approach uses prices and other relevant information generated by market transactions involving identical or comparable assets or liabilities (including a business). For example, valuation techniques consistent with the market approach often use market multiples derived from a set of comparables. Multiples might lie in ranges with a different multiple for each comparable. The selection of where within the range the appropriate multiple falls requires judgment, considering factors specific to the measurement (qualitative and quantitative).
 
The Cost Approach is based on the amount that currently would be required to replace the service capacity of an asset (often referred to as current replacement cost). From the perspective of a market participant (seller), the price that would be received for the asset is determined based on the cost to a market participant (buyer) to acquire or construct a substitute asset of comparable utility, adjusted for obsolescence. Obsolescence encompasses physical deterioration, functional (technological) obsolescence, and economic (external) obsolescence and is broader than depreciation for financial reporting purposes (an allocation of historical cost) or tax purposes (based on specified service lives).
 
At various times, the Fund may utilize Special Purpose Vehicles (“SPV”)
and similar funds
in the investment process. The Fund advances money to these SPVs for the specific purpose of investing in securities of a single private issuer (an “SPV Investment”). When the Fund makes an SPV Investment, the investment is held through the Fund’s interest in the respective SPV. The Fund presents and fair values its SPV Investments in the financial statements as if they were owned directly by the Fund and
has
disregarded
the SPVs
for presentation purposes as a result of the following: (1) an SPV Investment is the sole activity of the SPV; (2) the Fund’s underlying ownership of
an
SPV
investment
is proportionate to the
Fund’s
 
contributions made
to
the SPV; and (3) the Fund will receive
its proportionate share of the
cash proceeds as the SPV Investment is monetized and distributed. The Schedule of Investments presents the direct investment of the SPVs with material positions in the Fund. The SPVs may incur a tax liability associated with distributions made by underlying portfolio investments. If an SPV charges management fees, those fees will adjust the cost of the SPV.
 
Investments in SPVs consist of an investment by the Fund in an entity that invests directly in the common or preferred stock of a Portfolio Company. Investments in SPVs are generally valued using the same fair value techniques for the securities held by the Fund once the investment has been made by the SPV into the underlying portfolio company and are categorized as Level 3 of the fair value hierarchy. The investments in an SPV that have yet to purchase the underlying securities are held at cost and are categorized in Level 3 of the fair value hierarchy.
 
The Warrants issued were fair valued by a valuation consultant. As of December 31, 2022, the valuation consultant used a valuation methodology that used a probability distribution of the common stock price at the forecast time of the public listing combined with the probability-weighted average formula for the value of a call option to value the Warrants.
 
The following table summarizes the levels within the fair value hierarchy for the Fund’s assets and liabilities measured at fair value as of December 31, 2022:
 
Assets
 
Investments
 
Level 1
 
 
Level 2
 
 
Level 3
 
 
Total
 
Agreement for Future Delivery of Common Shares
(a)
   $       $       $ 2,267,317     $ 2,267,317  
Common Stocks
     —       —       35,500,566     $ 35,500,566  
Convertible Notes
     —       —       5,634,867       5,634,867  
Preferred Stocks
     —       —       6,201,358       6,201,358  
Total
   $ —     $ —     $ 49,604,108     $ 49,604,108  
 
Liabilities
 
Level 1
 
 
Level 2
 
 
Level 3
 
 
Total
 
Warrants
     —       —       (3,571,824 )     (3,571,824 )
Total
   $ —     $ —     $ (3,571,824 )   $ (3,571,824 )
 
(a)
Certain investments are held through SPV
s
that holds forward contracts. Forward contracts involve the future delivery of shares of a portfolio company upon such securities becoming freely transferable or the removal of restrictions on transfer. The counterparties are shareholders of the portfolio company. See Schedule of Investments.
The changes in fair value of investments and liabilities for which the Fund has used Level 3 inputs to determine the fair value are as follows:
 
Assets
 
Investments
  
Balance as of
December 31,
2021
    
Purchase of
Investments
    
Proceeds
from Sale of
Investments
(a)
    
Net Realized
Gain (Loss) on
Investments
    
Net Change
in Unrealized
Appreciation (Depreciation)
on
Investments
    
Balance as of
December 31,
2022
  
Agreement for Future Delivery of Common Shares
(b)
  
$
—
    
$
4,589,153
    
$
—
    
$
—
    
$
(2,321,836
)
  
$
2,267,317
  
Common Stocks
    
38,727,109
      
25,208,683
      
(10,280,000
)
    
—
      
(18,155,226
)
  
$
35,500,566
  
Convertible Notes
    
3,000,000
      
2,000,000
      
—
      
—
      
634,867
      
5,634,867
  
Preferred Stocks
    
9,891,214
      
7,980,997
      
(3,030,000
)
    
—
      
(8,640,853
)
    
6,201,358
  
Total
  
$
51,618,323
    
$
39,778,833
    
$
(13,310,000
)
  
$
—
    
$
(28,483,048
)
  
$
49,604,108
  
 
(a)
Sale proceeds from investments is comprised entirely of returned funds held within an SPV.
(b)
Certain investments are held through SPV
s
that holds forward contracts. Forward contracts involve the future delivery of shares of a portfolio company upon such securities becoming freely transferable or the removal of restrictions on transfer. The counterparties are shareholders of the portfolio company. See Schedule of Investments.
 
Liabilities
 
   
Balance as of
December 31,
2021
    
 Issuance of
Liabilities
    
Conversion of
SAFE Notes to
Common Stock
    
Net Realized
Gain (Loss) on
Conversion of
Liabilities
    
Net Change
in Unrealized
Appreciation
(Depreciation) on
Liabilities
    
 Balance as of
December 31,
2022
  
SAFE Notes
  
$
(88,351,247
)
  
$
(2,398,501
)
  
$
64,697,000
    
$
25,375,657
    
$
677,091
    
$
 —  
Warrants
    
(4,906,756
)
    
(106,529
)
    
—
      
—
      
1,441,461
      
(3,571,824
)
Total
  
$
(93,258,003
)
  
$
(2,505,030
)
  
$
64,697,000
    
$
25,375,657
    
$
2,118,552
    
$
(3,571,824
)
 
The following is a summary of quantitative information about significant unobservable valuation inputs for Level 3 Fair Value Measurements for investments held as of December 31, 2022:


Level 3 Investments
  
Fair Value
as of December
31, 2022
  
Valuation
Technique
  
Unobservable Input
  
Ranges of

Inputs/(Average)
Assets
Agreement for Future Delivery of Common Shares
(a)
  
$2,267,317
   Market Approach   Adjusted Recent Transaction Price  
$436.61
        Market Approach   Indicative Broker Quote  
$32.50
Common Stocks
  
$35,500,566
   Market Approach   Recent Transaction Price  
N/A
        Market Approach   Discount Factor  
30%-65%/(52%)
        Market Approach   Volume Weighted Average Price  
$6.00-15.00/($10.63)
        Market Approach   Indicative Broker Quotes  
$20.00-$26.50/($22.44)
Convertible Notes
  
$5,634,867
   Market Approach   Acquisition Price  
N/A
Level 3 Investments
  
Fair Value as of December 31, 2022
  
Valuation Technique
  
Unobservable Input
  
Ranges of Inputs/(Average)
        Market Approach   Recent Transaction Price  
N/A
Preferred Stocks
  
$6,201,358
   Cost Approach   Acquisition Price  
N/A
        Market Approach   Recent Transaction Price  
N/A
        Market Approach   Indicative Broker Quote  
$25.00
        Market Approach   Volume Weighted Average Price  
$9.50-$34.95/($11.75)
        Market Approach   Discount Factor  
65%
Total
  
$49,604,108
            
 
Liabilities
Warrants
  
(3,571,824)
   Probability- Weighted Average   Monte Carlo Simulation/Time to Public Listing  Black-Scholes-Merton  
0.25 Years-0.75 Years/
(0.50 Years)
        Probability- Weighted Average   Model/Estimated Volatility  
32.5%
Total
  
$(3,571,824)
            
 
(a)
Certain investments are held through
an
 
SPV that holds forward contracts. Forward contracts involve the future delivery of shares of a portfolio company upon such securities becoming freely transferable or the removal of restrictions on transfer. The counterparties are shareholders of the portfolio company. See Schedule of Investments.