RiverNorth Long Prime Unicorn Fund 2028, Inc. (UNIU)

UNIU is a closed-end fund — a pool of money, publicly listed like a stock, that exists to invest in private technology companies before they go public. The word “unicorn” in its name refers to a privately held startup valued at over a billion dollars. The fund buys stakes in these private companies, holds them through their growth years, and makes money when those companies eventually go public or get sold to bigger companies.

How it works, in simple terms

Think of it this way. Normally, when you buy a stock, you own a piece of a public company. That company trades on a stock exchange, and you can sell your shares whenever the market is open. But the best companies — the ones that become household names — often spend years as private companies before they go public. Facebook was private for nearly five years before it went public and made early investors billions.

A closed-end fund like UNIU does the following: it raises money from public investors (by selling shares of the fund itself to the public), takes that money, and uses it to buy shares in private companies that are not yet on the stock exchange. So you own a share of the fund, and the fund owns pieces of multiple private companies that you could never buy directly.

RiverNorth Long Prime Unicorn Fund is named after its manager, RiverNorth Capital Management. The “2028” in its legal name reflects the fund’s expected time horizon — the idea being that by 2028, many of the private companies the fund invested in will have gone public or been acquired, and shareholders can cash out.

The capital structure

The fund is closed-ended, which means it raises a fixed amount of capital at launch and does not continuously accept new investors like a mutual fund does. When you buy UNIU shares, you are buying from another shareholder in the secondary market, not putting new money into the fund.

The fund charges shareholders an annual management fee (a percentage of assets under management) and takes a performance fee when investments are sold at a gain. These fees pay for the team of investment professionals who research companies, negotiate deals, and manage the fund’s portfolio.

Because the fund owns stakes in private companies that do not trade publicly, the share price of UNIU itself is based on the fund’s calculation of what those private stakes are worth. This valuation happens quarterly and is not determined by a stock exchange. As a result, UNIU shares can trade at a premium or discount to the fund’s estimated net asset value per share — investors may bid up the price if they are optimistic about the private companies in the portfolio, or sell shares at a discount if they fear those valuations are too high.

What it invests in

The portfolio of a unicorn fund focuses on venture-backed technology companies — software, internet, fintech, cloud services, and similar businesses that typically attract venture capital and private equity investment. These are often loss-making companies early on, but they are betting that a large potential market and strong network effects will create a dominant, highly profitable company later.

A typical portfolio includes companies at different stages: some are relatively early-stage with just a few years of operations, others are mature private companies already generating revenues and approaching profitability. The spread of stages is deliberate — earlier-stage companies offer higher potential returns but more risk; later-stage companies are less risky but may have less upside if they go public.

The bet and the risks

The entire premise of RiverNorth Long Prime Unicorn Fund depends on a simple idea: private companies will eventually go public or get acquired at prices higher than the fund paid for them. The fund profits from the delta between entry price and exit price.

This bet has several layers of risk. First, not every private company goes public. Some remain private indefinitely, sold to another investor at an unfavorable price, or run out of capital and fail. A fund cannot force a liquidity event; it is dependent on founders choosing to go public or on finding a willing buyer.

Second, the valuations private companies command can be inflated. Growth-stage private companies are often valued at multiples of revenue (not earnings) based on forward projections of market size and user growth. If those projections are wrong — if the company’s growth slows or the market does not materialize as expected — the company may go public at a far lower valuation than the fund paid, destroying value.

Third, private equity and venture capital themselves are subject to cycles. In years when capital is abundant, valuations of private companies soar; in years when capital is scarce, valuations collapse. A fund’s entry and exit timing matters enormously.

Fourth, the fund can only distribute capital to shareholders when an investment is exited. Until then, shareholders’ money is locked up. If the fund is wrong about the timeline, shareholders may be tied up longer than expected, delaying access to their capital.

How to think about it

UNIU is a bet on private technology companies and on the venture capital ecosystem’s health. Buying it makes sense only if you believe (1) that the private companies in the fund’s portfolio are good businesses with genuine large markets, (2) that the fund’s managers are skilled at selecting winners and negotiating favorable terms, and (3) that you are comfortable having your capital locked up for years, possibly a full decade, waiting for liquidity events.

The fund’s annual reports list its current holdings and the value the fund assigns to each stake. Reading the latest quarterly report gives you a concrete sense of which companies the fund owns and what valuation the fund managers think is fair. That valuation is the estimate, not a market price — remember that these are private companies. If the valuations seem aggressive (companies valued at very high multiples of their revenues, with losses that do not appear to be shrinking), the fund may be overexposed to a market correction in private valuations.

Watch for the rate at which the fund is exiting positions — selling stakes when companies go public or accepting acquisition offers. That exit velocity tells you whether the fund’s bets are working. A fund where positions are exiting at returns above the entry price is on track; a fund where exits are flat or underwater is struggling.

The fund’s net asset value per share is reported quarterly and should ideally be rising as the private companies grow. If net asset value per share is flat or declining despite the fund making new investments, that is a sign the private companies in the portfolio are not appreciating in value — either they are not growing as expected or the fund is paying too much for new stakes.