UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549



FORM
10-K

(Mark One)

|S                                           | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934    
|------------------------------------------- | ----------------------------------------------------------------------------------------
|                                           
|FOR THE FISCAL YEAR ENDED December 31, 2011
|                                            |                                                                                         
|£                                           | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|                                            |                                                                                         



COMMISSION FILE NUMBER: 814-00852



|GSV Capital Corp.                                             
|--------------------------------------------------------------
|(Exact name of registrant as specified
        in its charter)
|                                                              
|Maryland                                                      
|(State of incorporation)                                      
|                                                              
|2965 Woodside Road                                            
|Woodside, CA                                                  
|(Address of principal executive
offices)                      
|                                                              
|(650) 206-2965                                                
|(Registrant’s telephone
number, including area code)          



SECURITIES REGISTERED PURSUANT
TO SECTION 12(b) OF THE ACT:

|                                        | Name of Each Exchange
|--------------------------------------- | ---------------------
|Title of Each Class                     | on Which Registered  
|                                        |                      
|Common Stock, par value $0.01 per share | NASDAQ Capital Market



SECURITIES REGISTERED PURSUANT TO SECTION 12(g)
OF THE ACT:

None

Indicate
by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.  YES £     Nox



Indicate
by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.  YES £     Nox



Indicate
by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such shorter periods as the registrant was required to file such
reports), and (2) has been subject to such filing requirements for the past 90 days.  YESxNO £



Indicate
by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive
Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such
shorter period that the registrant was required to submit and post such files).  Yes £     No £



Indicate
by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and
will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated
by reference in Part III of this Form 10-K or any amendment to this Form 10-K.  £





1









Indicate by check mark whether the registrant
is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions
of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2
of the Exchange Act. (Check one):



|Large accelerated filer £ |  | Accelerated filer £ |  | Non-accelerated filerx |  | Smaller reporting company £
|------------------------- |  | ------------------- |  | ---------------------- |  | ---------------------------



(Do not check if a smaller reporting company)



Indicate
by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act)  YES £     NOx



The aggregate market value of common stock
beneficially owned by non-affiliates of the Registrant on December 30, 2011, based on the closing price on that date of $13.95
on the NASDAQ Capital Market, was $75,457,377. For the purposes of calculating this amount only, all directors and executive officers
of the Registrant have been treated as affiliates. There were 12,420,100 shares of the Registrant’s common stock outstanding
as of March 13, 2012.





DOCUMENTS INCORPORATED BY REFERENCE



Portions of the registrant’s definitive Proxy Statement
relating to the registrant’s 2011 Annual Meeting of Stockholders, to be filed with the Securities and Exchange Commission
within 120 days following the end of the Company’s fiscal year, are incorporated by reference in Part III of this Annual
Report on Form 10-K as indicated herein.







2













GSV CAPITAL CORP.

TABLE OF CONTENTS





|           |  |                                                                                                              |  | PAGE
|---------- |  | ------------------------------------------------------------------------------------------------------------ |  | ----
|           |  |                                                                                                              |  |     
|PART I.    |  |                                                                                                             
|Item 1.    |  | Business                                                                                                     |  | 4   
|Item 1A.   |  | Risk Factors                                                                                                 |  | 27  
|Item 1B.   |  | Unresolved Staff Comments                                                                                    |  | 41  
|Item 2.    |  | Properties                                                                                                   |  | 41  
|Item 3.    |  | Legal Proceedings                                                                                            |  | 41  
|Item 4.    |  | Mine Safety Disclosures                                                                                      |  | 41  
|           |  |                                                                                                              |  |     
|PART II.   |  |                                                                                                             
|Item 5.    |  | Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities |  | 42  
|Item 6.    |  | Selected Financial Data                                                                                      |  | 44  
|Item 7.    |  | Management’s Discussion and Analysis of Financial Condition and Results of Operations                        |  | 45  
|Item 7A.   |  | Quantitative and Qualitative Disclosures About Market Risk                                                   |  | 52  
|Item 8.    |  | Financial Statements and Supplementary Data                                                                  |  | 53  
|Item 9.    |  | Changes in and Disagreements with Accountants on Accounting and Financial Disclosure                         |  | 71  
|Item 9A.   |  | Controls and Procedures                                                                                      |  | 71  
|Item 9B.   |  | Other Information                                                                                            |  | 71  
|           |  |                                                                                                              |  |     
|PART III.  |  |                                                                                                             
|Item 10.   |  | Directors, Executive Officers and Corporate Governance                                                       |  | 72  
|Item 11.   |  | Executive Compensation                                                                                       |  | 72  
|Item 12.   |  | Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters               |  | 72  
|Item 13.   |  | Certain Relationships and Related Transactions, and Director Independence                                    |  | 72  
|Item 14.   |  | Principal Accounting Fees and Services                                                                       |  | 72  
|           |  |                                                                                                              |  |     
|PART IV.   |  |                                                                                                             
|Item 15.   |  | Exhibits and Financial Statement Schedules                                                                   |  | 73  
|Signatures |  |                                                                                                              |  | 74  







3











PART I

Item 1.	Business



GSV Capital



GSV Capital Corp. (formerly
NeXt Innovation Corp., the “Company”, “we”, “our” or “GSV Capital”) is an externally
managed, non-diversified closed-end management investment company that has elected to be treated as a business development company
under the Investment Company Act of 1940, as amended (the “1940 Act”). Our investment objective is to maximize our
portfolio’s total return, principally by seeking capital gains on our equity and equity-related investments. We invest principally
in the equity securities of rapidly growing venture capital-backed emerging companies. We acquire our investments through secondary
marketplaces for private companies, negotiations with selling stockholders and direct investments with prospective portfolio companies.
We may also invest on an opportunistic basis in select publicly-traded equity securities or certain non-U.S. companies that otherwise
meet our investment criteria. Our investment activities are managed by GSV Asset Management, LLC (“GSV Asset Management”
or “investment adviser”), and GSV Capital Service Company, LLC (“GSV Capital Service Company” or the “administrator”)
provides the administrative services necessary for us to operate.



Our investment philosophy
is premised on a disciplined approach of identifying high-growth emerging companies across several key industry themes which may
include, among others, social media, mobility, cloud computing, software-as-a-service, green technology and education technology.
Our investment adviser’s investment decisions are based on a disciplined analysis of available information regarding each
potential portfolio company’s business operations, focusing on the company’s growth potential, the quality of recurring
revenues and cash flow and cost structures, as well as an understanding of key market fundamentals. Top tier venture capital funds
or other financial or strategic sponsors have invested in many of the companies that our investment adviser evaluates.



We seek to deploy capital
primarily in the form of non-controlling equity and equity-related investments, including common stock, warrants, preferred stock
and similar forms of senior equity, which may or may not be convertible into a portfolio company’s common equity, and convertible
debt securities with a significant equity component.



We seek to create a
low-turnover portfolio that we expect will include diversified investments in 20 to 30 companies. As of December 31, 2011, we have
completed investments in 21 companies for aggregate consideration of approximately $64.9 million (exclusive of transaction fees
and costs), or 85.3% of the net proceeds from our initial public offering and subsequent follow-on offering.



Our common stock is
traded on the NASDAQ Capital Market under the symbol “GSVC”. The net asset value per share of our common stock on December
31, 2011 was $12.95. On December 30, 2011, the last reported sale price of a share of our common stock on the NASDAQ Capital Market
was $13.95.



About GSV Asset Management



Our investment activities
are managed by GSV Asset Management, an investment adviser registered under the Investment Advisers Act of 1940, as amended, or
the ‘‘Advisers Act.’’ GSV Asset Management is led by Michael T. Moe, our president, chief executive officer
and chairman of our board of directors. Mr. Moe is assisted by Stephen D. Bard, our chief financial officer, chief compliance officer,
treasurer and corporate secretary and Luben Pampoulov, our vice-president, whom we refer to collectively as GSV Asset Management’s
senior investment professionals. Mr. Moe co-founded and previously served as chairman and chief executive officer of ThinkEquity
Partners, an asset management and investment banking firm focusing on venture capital, entrepreneurial and emerging growth companies.
Prior to founding ThinkEquity, Mr. Moe served as Head of Global Growth Research at Merrill Lynch and before that served as Head
of Growth Research and Strategy at Montgomery Securities. Mr. Moe has written extensively about investing in the emerging growth
equity markets. His critically-acclaimed book, ‘‘Finding the Next Starbucks,’’articulates Mr. Moe’s
investment process and philosophy which have been refined over more than two decades in the investment community.



We believe we benefit
from the proven ability of our investment adviser’s senior investment professionals and board of advisers (the ‘‘Advisory
Board’’) to identify attractive investment opportunities, conduct diligence on and value prospective investments, negotiate
terms, and manage and monitor a diversified portfolio of those investments. See ‘‘Portfolio Management — Advisory
Board to GSV Asset Management.’’ Our investment adviser’s senior investment professionals and Advisory Board
members have broad investment backgrounds, with prior experience at investment banks, commercial banks, unregistered investment
funds and other financial services companies, and have collectively developed a broad network of contacts that provides us with
an important source of investment opportunities.





4







We pay GSV Asset Management
a fee for its services under the Investment Advisory Agreement consisting of two components — a base management fee and an
incentive fee. The base management fee is calculated at an annual rate of 2.00% of our gross assets, which includes any borrowings
for investment purposes. The incentive fee is determined and payable in arrears as of the end of each calendar year (or upon termination
of the Investment Advisory Agreement, as of the termination date), commencing on December 31, 2011, and will equal the lesser of
(i) 20% of our realized capital gains during such calendar year, if any, calculated on an investment-by-investment basis, subject
to a non-compounded preferred return, or ‘‘hurdle,’’ and a ‘‘catch-up’’ feature,
and (ii) 20% of our realized capital gains, if any, on a cumulative basis from inception through the end of each calendar year,
computed net of all realized capital losses and unrealized capital depreciation on a cumulative basis, less the aggregate amount
of any previously paid incentive fees. See ‘‘Investment Advisory Agreement.’’ Although we do not currently
have any specific plans to incur debt or use leverage, the terms for calculating the management fee create an incentive for our
investment adviser to utilize leverage in the future because our management fee is based on our gross assets, including issuances
of preferred stock and borrowings for investment purposes, rather than our net assets. We will be required, however, to obtain
the approval of our board of directors before we incur any future indebtedness.



Investment Opportunity



The technology industry
is experiencing a convergence of numerous disruptive trends, producing new high-growth markets. The growth of both social networking
and connected mobile devices, such as smartphones and tablets, has opened up new channels for communication and real-time collaboration.
The number of devices and people that regularly connect to the Internet has increased dramatically in recent years, generating
significant demand for always accessible, personalized and localized content and real-time online interactivity. These factors
are creating opportunities for new market participants and significant growth for established companies with leading positions
capitalizing on these trends.



At the same time, the
initial public offering, or ‘‘IPO,’’ markets have experienced substantial structural changes which have
made it significantly more challenging for private companies to go public. Volatile equity markets, a lack of investment research
coverage for smaller companies and investor demand for a longer history of earnings growth have resulted in companies staying private
significantly longer than in the past. In addition, increased public company compliance obligations such as those imposed by the
Sarbanes-Oxley Act of 2002 have made it more costly and less attractive to become a public company. As a result, there are significantly
fewer IPOs today than there were a decade ago, with prospective public companies taking longer to come to market. For example,
from 1991 − 2000, there were 4,361 IPOs in the United States, of which 1,701 were venture-capital backed. From 2001 −
2010, there were 1,016 IPOs, of which 369 were venture-capital backed.



Because private companies
are staying private longer, private investment in late stage companies has increased. Private secondary marketplaces, such as SharesPost
and SecondMarket, have emerged as an alternative to traditional public equity exchanges to provide liquidity to private company
stockholders, including employees, particularly within the technology sector. While such private secondary marketplaces generally
have more limited transaction volume than public exchanges, they do provide accredited investors, such as ourselves, with access
to equity investments in private companies. Such markets also provide a source for exiting private company investments, as well
as price visibility from trading on a marketplace.



Investment Strategy



We seek 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 our publicly traded common stock.



Our investment objective
is to maximize our portfolio’s total return, principally by seeking capital gains on our equity investments. We have adopted
the following business strategies to achieve our investment objective:



| | · | Identify high quality growth companies.Based on our extensive experience in analyzing technology trends and markets, we have identified the technology sub-sectors
of social media, mobility, cloud computing, software-as-a-service, green technology and education technology, as opportunities
where we believe companies are capable of producing substantial growth. We rely on our collective industry knowledge as well as
an understanding of where leading venture capitalists are investing.
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



5









We leverage a combination of
our relationships throughout Silicon Valley and our independent research to identify leaders in our targeted sub-sectors that we
believe are differentiated and best positioned for sustained growth. Our evaluation process is based on what we refer to as ‘‘the
four Ps’’:



| | · | People — Organizations led by strong
management teams with in-depth operational focus
| | - | -------------------------------------------------------------------------------------

| | · | Product — Differentiated and disruptive
products with leading market positioning
| | - | --------------------------------------------------------------------------------

| | · | Potential — Large addressable markets
| | - | -------------------------------------

| | · | Predictability — Ability to forecast
and drive predictable and sustainable growth
| | - | ---------------------------------------------------------------------------------



We consider these to be the core elements
for identifying rapidly growing emerging companies.



| | · | Acquire positions in targeted investments.We seek to build our portfolio by sourcing investments at an acceptable price through our disciplined investing strategy.
To this end, we utilize multiple methods to acquire equity stakes in private companies that are not available to many individual
investors.
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Private
secondary marketplaces and direct share purchases.We utilize private secondary marketplaces as a means to acquire equity investments
in privately-held companies that meet our investment criteria and that we believe are attractive candidates for investment. We
believe that such markets offer efficient execution versus alternative methods and provide a potential source of liquidity should
we decide to exit an investment. In addition, we also purchase shares directly from stockholders, including current or former employees.
As certain companies grow and experience significant increased value while remaining private, employees and other stockholders
may seek liquidity by selling shares directly to a third party. Sales of shares in private companies are typically restricted by
contractual transfer restrictions and company employment policies, which may impose strict limits on transfer. We believe that
our investment professionals’ reputation within the industry and history of investing affords us a favorable position when
seeking approval for a purchase of shares subject to such limitations.

Direct
equity investments.We also seek direct investments in private companies. There is a large market among emerging private companies
for equity capital investments. Many of these companies, particularly within the technology sector, lack the necessary cash flows
to sustain substantial amounts of debt, and therefore have viewed equity capital as a more attractive long-term financing tool.
We seek to be a source of such equity capital as a means of investing in these companies and look for opportunities to invest alongside
other private equity and venture capital investors with whom we have established relationships.



| | · | Create access to a diverse investment
portfolio.We seek to hold a diverse portfolio of non-controlling equity investments, which we believe will minimize the
impact on our portfolio of a negative downturn at any one specific company. We believe that our relatively diversified portfolio
will provide a convenient means for accredited and non-accredited individual investors to obtain access to an asset class that
has generally been limited to venture capital, private equity and similar large institutional investors.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Competitive Advantages



We believe that we
will benefit from the following competitive advantages in executing our investment strategy:



| | · | Highly experienced team of investment
professionals.Our investment adviser’s senior investment professionals, its Advisory Board and our board of directors
have significant experience researching and investing in the types of rapidly growing venture capital-backed emerging companies
we are targeting for investment. Michael T. Moe, our president, chief executive officer, chairman of our board of directors and
the chief investment officer of GSV Asset Management, co-founded and previously served as chairman and chief executive officer
of ThinkEquity Partners, an asset management and investment banking firm focusing on venture capital, entrepreneurial and emerging
growth companies. Prior to founding ThinkEquity, Mr. Moe served as Head of Global Growth Research at Merrill Lynch and before that
served as Head of Growth Research and Strategy at Montgomery Securities. Since 2006, our investment adviser’s senior investment
professionals have managed private funds that have invested in, and have published research on, the types of privately-held companies
we intend to target for investment. Through our proprietary company evaluation process, including our identification of technology
trends and themes and company research, we believe we have developed important insight into identifying and valuing emerging private
companies.
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | Disciplined and repeatable investment
process.We have established a disciplined process to locate and acquire available shares at attractive valuations by utilizing
multiple sources. In contrast to industry ‘‘aggregators’’ that accumulate stock at market prices, we conduct
valuation analyses and make acquisitions only when we can invest at valuations that we believe are attractive to our investors.
Following this process, we have successfully completed investments in the 21 companies in our portfolio as of December 31, 2011.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------





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| | · | Deep relationships with significant
credibility to source and complete transactions.GSV Asset Management and its senior investment professionals are strategically
located in the heart of Silicon Valley in Woodside, California. During the course of over two decades of researching and investing
in emerging private companies, our investment adviser’s senior investment professionals have developed strong reputations
within the investing community, particularly within technology-related sectors. Our investment adviser’s Advisory Board members
and our board of directors have also developed strong relationships in the financial, investing and technology-related sectors.
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | Source of permanent investing capital.As a publicly-traded corporation, we have access to a source of permanent equity capital which we can use to invest in
portfolio companies. This permanent equity capital is a significant differentiator from other potential financial sponsor investors
that may be required to return capital to stockholders on a defined schedule. We believe that our ability to invest on a long-term
time horizon makes us attractive to companies looking for strong, stable owners of their equity.
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | Early mover advantage.We
believe we are one of the few publicly traded business development company with a specific focus on investing in rapidly growing
venture capital-backed emerging companies. Moreover, we believe we are the only one to focus on acquiring secondary shares as a
key component of our strategy. Despite our limited track record, the transactions that we have executed to date since our IPO have
helped to establish our reputation with the types of secondary sellers and emerging companies that we target for investment. We
have leveraged multiple relationships and channels to acquire the equity of private companies. As we continue to grow our portfolio
with attractive investments, we believe that our reputation as a committed partner will be further enhanced, allowing us to source
and close investments that would otherwise be unavailable. We believe that these factors collectively differentiate us from other
potential investors in private company securities and will potentially enable us to complete equity transactions in top tier private
companies at attractive valuations.
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Operating and Regulatory Structure



GSV Capital was formed
in September 2010 as a Maryland corporation to be an externally managed, non-diversified closed-end management investment company.
We completed our initial public offering in April 2011 and have elected to be treated as a business development company under the
1940 Act. As a business development company, we are required to meet regulatory tests, including the requirement to invest at least
70% of our gross assets in ‘‘qualifying assets.’’ Qualifying assets generally include, among other things,
securities of ‘‘eligible portfolio companies.’’ ‘‘Eligible portfolio companies’’
generally include U.S. companies that are not investment companies and that do not have securities listed on a national exchange.
If at any time less than 70% of our gross assets are comprised of qualifying assets, including as a result of an increase in the
value of any non-qualifying assets or decrease in the value of any qualifying assets, we would generally not be permitted to acquire
any additional non-qualifying assets until such time as 70% of our then current gross assets were comprised of qualifying assets.
We would not be required, however, to dispose of any non-qualifying assets in such circumstances. See ‘‘Regulation
as a Business Development Company.’’ In addition, we intend to elect to be treated for federal income tax purposes,
and intend to qualify annually thereafter, as a regulated investment company (‘‘RIC’’) under Subchapter
M of the Code. See ‘‘Material U.S. Federal Income Tax Considerations.’’



Our investment activities
are managed by GSV Asset Management and supervised by our board of directors. GSV Asset Management is an investment adviser registered
under the Advisers Act. Under our investment advisory agreement, which we refer to as the Investment Advisory Agreement, we have
agreed to pay GSV Asset Management an annual base management fee based on our gross assets as well as an incentive fee based on
our performance. See ‘‘Investment Advisory Agreement.’’ We have also entered into an administration agreement,
which we refer to as the Administration Agreement, under which we have agreed to reimburse GSV Capital Service Company for our
allocable portion of overhead and other expenses incurred.



Investment Process



Concentrated Technology-related Focus



During the course of
over two decades of researching and investing in non-public companies, we have identified five areas from which we expect to see
significant numbers of high-growth companies emerge: new media, communication, alternative energy, education technology, and the
consumerization of information technology. These broad markets produce disruptive technologies, reach a large addressable market
and provide significant commercial opportunities. Within these areas we have identified broad trends that could create significant
positive effects on growth such as globalization, consolidation, branding, convergence and network effects. From within these broad
technology themes, we have selected six sub-segments in which we target companies for investment: social media, mobility, cloud
computing, software-as-a-service applications, green technology and education technology. We remain focused on selecting market
leaders within the sub-segments we have identified, while continuing to review our pipeline to ensure we are tracking the next
phase of leaders.





7









Investment Targeting and Screening



We identify prospective
portfolio companies through an extensive network of relationships developed by our investment professionals, supplemented by the
knowledge and relationships of our investment adviser’s Advisory Board and our board of directors. Investment opportunities
that fall within our identified themes are validated against the observed behavior of leading venture capitalists and through our
own internal and external research. We evaluate potential portfolio companies across a spectrum of criteria, including ‘‘the
four Ps’’, industry positioning and leadership, stage of growth, and several other factors that collectively characterize
our proprietary investment process. Target companies include well-established, late stage companies as well as emerging leaders
that we believe can generate high returns from early investment. Based on our initial screening, we identify a select set of companies
which we evaluate in greater depth.



Research and Due Diligence Process



Once we identify those
companies that we believe warrant more in-depth analysis, we focus on their revenue growth, revenue quality and sustainability
and earnings growth, as well as other metrics that may be strongly correlated with higher valuations. We also focus on the company’s
management team and any significant financial sponsor, the current business model, competitive positioning, regulatory and legal
issues, and the quality of any intellectual property. Each prospective portfolio company that passes our initial due diligence
review is given a qualitative ranking to allow us to evaluate it against others in our pipeline, and we review and update these
companies on a regular basis.



Our due diligence process
will vary depending on whether we are investing through a private secondary transaction on a marketplace or with a selling stockholder
or by direct equity investment. We access information on our potential investments through a variety of sources, including information
made available on secondary marketplaces, publications by private company research firms, industry publications, commissioned analysis
by third-party research firms, and, to a limited extent, directly from the company or financial sponsor. We utilize a combination
of each of these sources to help us set a target value for the companies we ultimately select for investment.



Portfolio Construction and Sourcing



Upon completion of
our research and due diligence process, we select investments for inclusion in our portfolio based on their relative qualitative
ranking, fundamentals and valuation. We seek to create a relatively diversified portfolio that we expect will include investments
in 20 to 30 private companies. We generally choose to pursue specific investments based on the availability of shares and valuation
expectations. We utilize a combination of secondary marketplaces, direct purchases from stockholders and direct equity investments
in order to make investments in our portfolio companies. Once we have established an initial position in a portfolio company, we
may choose to increase our stake through subsequent purchases. Maintaining a balanced portfolio is a key to our success, and as
a result we constantly evaluate the composition of our investments and our pipeline to ensure we are exposed to a diverse set of
companies within our target segments.



Transaction Execution



We negotiate purchase
agreements for each of our private company portfolio investments. Private company securities are typically subject to contractual
transfer limitations, which may, among other things, give the issuer or its stockholders a particular period of time, often 30
days, in which to exercise a veto right, or a right of first refusal over, the sale of such securities. Accordingly, the purchase
agreements we enter into for secondary transactions typically require the lapse or satisfaction of these rights as a condition
to closing. Under these circumstances, we are generally required to deposit the purchase price into escrow upon signing with the
funds released to the seller at closing or returned to us if the closing conditions are not met.



Risk Management and Monitoring



We monitor the financial
trends of each portfolio company to assess our exposure to individual companies as well as to evaluate overall portfolio quality.
We establish valuation targets at the portfolio level and for gross and net exposures with respect to specific companies and industries
within our overall portfolio. In cases where we make a direct investment in a portfolio company, we may also obtain board positions
or board observation rights from that portfolio company in connection with our equity investment. We regularly monitor our portfolio
for compliance with the diversification requirements for purposes of maintaining our status as a 1940 Act business development
company and a RIC for tax purposes.





8







Portfolio Overview



At December 31, 2011,
our portfolio was invested approximately 65.7% in common shares, 27.2% in preferred shares, 7.0% in structured notes and 0.1% in
equity warrants. Such percentages are not inclusive of our holdings in a United States Treasury bill and money market funds.



Our ten largest portfolio
company investments at December 31, 2011, based on the combined fair value of the equity and debt securities we hold in each portfolio
company, were as follows:









|                  |                   |  |          |                              | At December 31, 2011 |  
|----------------- | ----------------- |  | -------- | ---------------------------- | -------------------- | -
|Portfolio Company |                   |  | Industry |                              | Cost                 |  
|                  | Twitter, Inc.     |  |          | Social Communication         |                      | $
|                  | Facebook, Inc.    |  |          | Social Networking            |                      |  
|                  | Chegg, Inc.       |  |          | Textbook Rental              |                      |  
|                  | Gilt Groupe, Inc. |  |          | e-Commerce Flash Sales       |                      |  
|                  | Dropbox, Inc.     |  |          | Online Storage               |                      |  
|                  | PJB Fund LLC      |  |          | Social Gaming                |                      |  
|                  | ZocDoc, Inc.      |  |          | Online Medical Scheduling    |                      |  
|                  | Kno, Inc.         |  |          | Digital Textbooks            |                      |  
|                  | SharesPost, Inc.  |  |          | Online Marketplace (Finance) |                      |  
|                  | Grockit, Inc.     |  |          | Online Test Preparation      |                      |  
|                  | Total             |  |          |                              |                      | $





Set forth below are
descriptions of the ten largest portfolio investments as of December 31, 2011:



Twitter, Inc.



Twitter is a social
networking company. Twitter is a real-time information network that allows users to send and receive information.



Facebook, Inc.



Facebook is a leading
social-networking company. Facebook’s social networking website allows users to create a personal profile, add other users
to the network, and exchange messages, photographs and other information that can be shared across a network.



Chegg, Inc.



Chegg is an online
textbook rental company with a leading market presence in the online education industry. Chegg has built a social education learning
platform that assists students by providing course planning and selection services, textbooks, study materials and homework assistance.



Gilt Groupe, Inc.



Gilt Groupeis
an online shopping destination that offers its members access to discounted prices on merchandise, restaurants and vacations.





9









Dropbox, Inc.



Dropbox is a provider
of cloud storage that enables users to store and share files across the internet.



PJB Fund LLC



PJB Fund is a special
purpose investment vehicle in which we have made a debt investment that is linked until maturity to the value of Zynga, Inc., a
developer of online social games.



ZocDoc, Inc.



ZocDoc is a free online
service for patients to find and schedule doctor and dentist appointments.



Kno, Inc.



Kno is a provider of
education software, digital textbooks and social engagement tools for students.



SharesPost, Inc.



SharesPost connects
venture-backed private companies and their shareholders with the investment community and provides an online marketplace for such
private companies.



Grockit, Inc.



Grockit is an online
test preparation company.



Managerial Assistance



As a business development
company, we are required to offer, and in some cases may provide and be paid for, significant managerial assistance to portfolio
companies. This assistance typically involves monitoring the operations of portfolio companies, participating in their board and
management meetings, consulting with and advising their officers and providing other organizational and financial guidance.



Competition



Our primary competitors
include specialty finance companies including other crossover funds, public funds investing in private companies and business development
companies. Many of these entities have greater financial and managerial resources than we will have. For additional information
concerning the competitive risks we face, see ‘‘Risk Factors — Risks Relating to Our Business and Structure.’’



Employees



While we have executive
officers, they receive no direct compensation from us, and we have no direct employees. Our day-to-day investment operations are
managed by our investment adviser. In addition, we reimburse GSV Capital Service Company for an allocable portion of expenses incurred
by it in performing its obligations under the Administration Agreement, including a portion of the rent and the compensation of
our chief financial officer and chief compliance officer and any administrative support personnel. See ‘‘Investment
Advisory Agreement.’’



Determination of Net Asset Value



We determine the net
asset value of our investment portfolio after the conclusion of each fiscal quarter in connection with the preparation of our annual
and quarterly reports filed under the Exchange Act, or more frequently if required under the 1940 Act.



Securities that are
publicly traded are generally valued at the close price on the valuation date; however, if they remain subject to lock-up restrictions
they are discounted accordingly. Securities that are not publicly traded or for which there are no readily available market quotations,
including securities that trade on secondary markets for private securities, are valued at fair value as determined in good faith
by our board of directors. In connection with that determination, members of our investment adviser’s portfolio management
team will prepare portfolio company valuations using the most recent portfolio company financial statements and forecasts. We also
engage an independent valuation firm to perform independent valuations of our investments that are not publicly traded or for which
there are no readily available market quotations. We may also engage an independent valuation firm to perform independent valuations
of any securities that trade on private secondary markets, but are not otherwise publicly traded, where there is a lack of appreciable
trading or a wide disparity in recently reported trades.



10









For those securities
that are not publicly traded or for which there are no readily available market quotations, our board of directors, with the assistance
of our Valuation Committee, will use the recommended valuations as prepared by management and the independent valuation firm, respectively,
as a component of the foundation for its final fair value determination. Due to the uncertainty inherent in the valuation process,
such estimates of fair value may differ significantly from the values that would have resulted had others made the determination
using the same or different procedures or had a readily available market for the securities existed, and the differences could
be material. Additionally, changes in the market environment and other events that may occur over the life of the investments may
cause the gains or losses ultimately realized on these investments to be different than the gains or losses implied by the valuation
currently assigned to such investments. For those investments that are publicly traded, we generally record unrealized appreciation
or depreciation based on changes in the market value of the securities as of the valuation date. Publicly traded securities that
remain subject to lock-up restrictions are discounted accordingly. For those investments that are not publicly traded and for which
there are no readily available market quotations, we record unrealized depreciation if the underlying portfolio company has depreciated
in value and our equity security has also depreciated in value, and record unrealized appreciation if the underlying portfolio
company has appreciated in value and our equity security has also appreciated in value. Changes in fair value are recorded in the
statement of operations as the net change in unrealized appreciation or depreciation.



We generally determine
the fair value of our investments by considering a number of factors. The following represent factors that could impact our fair
value determinations:



| | 1. | Public trading of our portfolio securities, taking into consideration lock-up requirements and
liquidity;
| | -- | ---------------------------------------------------------------------------------------------------------

| | 2. | Active trading of our portfolio securities on a private secondary market, where we have determined
that there is meaningful volume and the transactions are considered arm’s length by sophisticated investors;
| | -- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 3. | Qualified funding rounds in the companies in which we are invested, where there is meaningful and
reputable information available on size, valuation and investors; and
| | -- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 4. | Additional investments by us in current portfolio companies, where the price of the new investment
differs materially from prior investments.
| | -- | ---------------------------------------------------------------------------------------------------------------------------------------------



There is inherent subjectivity
in determining the fair value of our investments. We expect that most of our portfolio investments, other than those for which
market quotations are readily available and that may be sold without restriction, will be valued at fair value as determined in
good faith by our board of directors, with the assistance of our valuation committee.



Investment Advisory Agreement



Management Services



GSV Asset Management
serves as our investment adviser. GSV Asset Management is registered as an investment adviser under the Advisers Act. Subject to
the overall supervision of our board of directors, GSV Asset Management manages the day-to-day operations of, and provide investment
advisory services to, GSV Capital. Under the terms of the Investment Advisory Agreement, GSV Asset Management:



| | · | determines the composition of our portfolio,
the nature and timing of the changes to our portfolio and the manner of implementing such changes;
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------

| | · | determines what securities we will purchase,
retain or sell;
| | - | ------------------------------------------------------------

| | · | identifies, evaluates and negotiates the
structure of the investments we make; and
| | - | ----------------------------------------------------------------------------------

| | · | closes, monitors and services the investments
we make.
| | - | ------------------------------------------------------



GSV Asset Management’s
services under the Investment Advisory Agreement are not exclusive, and it is free to furnish similar services to other entities
so long as its services to us are not impaired. GSV Asset Management currently serves as the investment adviser for GSV X Fund,
a global long/short absolute return fund. GSV Asset Management does not anticipate that it will ordinarily identify investment
opportunities that are appropriate for both GSV Capital and the other funds that are currently or in the future may be managed
by GSV Asset Management. However, to the extent it does identify such opportunities, GSV Asset Management will allocate such opportunities
between GSV Capital and such other funds pursuant to an established procedure that is designed to ensure that such allocation is
fair and equitable.





11









Management Fees



We pay GSV Asset Management
a fee for its services under the Investment Advisory Agreement consisting of two components — a base management fee and an
incentive fee. The cost of both the base management fee payable to GSV Asset Management, and any incentive fees earned by GSV Asset
Management, are ultimately borne by our common stockholders.



The base management
fee (the ‘‘Base Fee’’) is calculated at an annual rate of 2.00% of our gross assets. For the period from
the close of the initial public offering through and including December 31, 2011, the Base Fee was payable monthly in arrears,
and was calculated based on the initial value of our assets upon the closing of our initial public offering in April 2011. For
services rendered after December 31, 2011, the Base Fee will be payable monthly in arrears, and will be calculated based on the
average value of our gross assets at the end of the two most recently completed calendar quarters, and appropriately adjusted for
any equity or debt capital raises, repurchases or redemptions during the current calendar quarter. The Base Fee for any partial
month or quarter will be appropriately pro-rated.



The incentive fee is
determined and payable in arrears as of the end of each calendar year (or upon termination of the Investment Advisory Agreement,
as of the termination date), commencing on December 31, 2011, and will equal the lesser of:



| | · | 20% of our realized capital gains during
such calendar year, if any, calculated on an investment-by-investment basis, subject to a non-compounded preferred return, or ‘‘hurdle,’’
and a ‘‘catch-up’’ feature, and
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | 20% of our realized capital gains, if
any, on a cumulative basis from inception through the end of each calendar year, computed net of all realized capital losses and
unrealized capital depreciation on a cumulative basis, less the aggregate amount of any previously paid incentive fees.
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Our realized capital
gains from each investment, expressed as a non-compounded annual rate of return on the cost of such investment since we initially
acquired it, will be compared to a hurdle rate of 8.00% per year. We will only pay an incentive fee on any realized capital gains
from an investment that exceeds the hurdle rate. We will pay GSV Asset Management an incentive fee with respect to our realized
capital gains from each investment as follows:



| | · | No incentive fee will be payable on the
amount of any realized capital gains from an investment that, when expressed as a non-compounded annual rate of return on the cost
of such investment since we initially acquired it, does not exceed the hurdle rate of 8.00% per year.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | We will pay as an incentive fee 100% of
the amount of any realized capital gains from an investment that, when expressed as a non-compounded annual rate of return on the
cost of such investment since we initially acquired it, exceeds the hurdle rate of 8.00% per year but is less than a rate of 10.00%
per year. We refer to this portion of our realized capital gains from each investment (which exceeds the hurdle rate but is less
than 10.00%) as the ‘‘catch-up.’’ The ‘‘catch-up’’ is meant to provide our investment
adviser with 20% of the amount of our realized capital gains from an investment that, when expressed as a non-compounded annual
rate of return on the cost of such investment since we initially acquired it, exceeds a rate of 10.00% per year.
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | We will pay as an incentive fee 20% of
the amount of any realized capital gains from an investment that, when expressed as a non-compounded annual rate of return on the
cost of such investment since we initially acquired it, exceeds a rate of 10.00% per year.
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



In no event, however,
will we pay an incentive fee for any calendar year that exceeds 20% of our realized capital gains, if any, on a cumulative basis
from inception through the end of such calendar year, computed net of all realized capital losses and unrealized capital depreciation
on a cumulative basis, less the aggregate amount of any previously paid incentive fees.



12









The following is a
graphical representation of the calculation of our incentive fee with respect to a single investment:









For accounting purposes,
in order to reflect the theoretical capital gains incentive fee that would be payable for a given period as if all unrealized gains
were realized, we are required to accrue a capital gains incentive fee based upon realized capital gains and losses during the
current calendar year through the end of the period, plus any unrealized capital appreciation and depreciation as of the end of
the period. It should be noted that a fee so calculated and accrued would not necessarily be payable under the Investment Advisory
Agreement, and may never be paid based upon the computation of capital gains incentive fees in subsequent periods. Amounts paid
under the Investment Advisory Agreement will be consistent with the formula reflected in the Investment Advisory Agreement.



Example: Calculation of incentive fee



Alternative 1:



Assumptions

| | · | Hurdle rate = 8.00% non-compounded annual
rate of return
| | - | --------------------------------------------------------

| | · | Hurdle rate = (purchase price) ×
(8% × (days owned/365))
| | - | --------------------------------------------------------

| | · | Catch-up rate = 10.00% non-compounded
annual rate of return
| | - | -----------------------------------------------------------

| | · | Catch-up rate = (purchase price) ×
(10% × (days owned/365))
| | - | -----------------------------------------------------------

| | · | Year 1: $20,000,000 investment made on
March 15 in Company A (‘‘Investment A’’), and $30,000,000 investment made on February 1 in Company B (‘‘Investment
B’’)
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | Year 2: Investment A is sold on September
15 for $25,000,000, and fair market value (‘‘FMV’’) of Investment B is determined to be $28,000,000
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------

| | · | Year 3: FMV of Investment B is determined
to be $28,000,000
| | - | -----------------------------------------------------------

| | · | Year 4: Investment B is sold on March
1 for $38,000,000
| | - | -------------------------------------------------------



The incentive fee
would be calculated as follows:

| | · | Year 1: None
| | - | ------------

| | · | Year 2: Incentive fee calculation:
| | - | ----------------------------------

| | · | Hurdle rate for Investment A = ($20,000,000)
× (8% × (550 days / 365))
| | - | ----------------------------------------------------------------------

| | · | Hurdle rate for Investment A = $2,410,959
| | - | -----------------------------------------

| | · | Catch-up rate for Investment A = ($20,000,000)
× (10% × (550 days / 365))
| | - | -------------------------------------------------------------------------

| | · | Catch-up rate for Investment A = $3,013,699
| | - | -------------------------------------------

| | · | Incentive fee on Investment A = 20% ×
$5,000,000 (since the hurdle rate has been satisfied and the catch up has been fully achieved)
| | - | ------------------------------------------------------------------------------------------------------------------------------------

| | · | Incentive fee on Investment A = $1,000,000
| | - | ------------------------------------------

| | · | Maximum incentive fee = 20% × (cumulative
realized capital gains – (cumulative realized losses + cumulative net unrealized depreciation)) – (previously paid
incentive fees)
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | Maximum incentive fee = 20% × ($5,000,000
- $2,000,000 (unrealized depreciation on Investment B))
| | - | -------------------------------------------------------------------------------------------------

| | · | Maximum incentive fee = 20% × $3,000,000
| | - | ----------------------------------------

| | · | Maximum incentive fee = $600,000
| | - | --------------------------------

| | · | Incentive fee paid = $600,000 (because
the incentive fee payable on Investment A exceeds the maximum incentive fee, the maximum incentive fee applies)
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | Year 3: None
| | - | ------------

| | · | Year 4: Incentive fee calculation:
| | - | ----------------------------------

| | · | Hurdle rate for Investment B = ($30,000,000)
× (8% × (1,124 days / 365))
| | - | ------------------------------------------------------------------------

| | · | Hurdle rate for Investment B = $7,390,685
| | - | -----------------------------------------

| | · | Catch-up rate for Investment B = ($30,000,000)
× (10% × (1,124 days / 365))
| | - | ---------------------------------------------------------------------------

| | · | Catch-up rate for Investment B = $9,238,356
| | - | -------------------------------------------

13





| | · | Incentive fee on Investment B = 100% ×
($8,000,000 – $7,390,685 (since the hurdle rate has been satisfied, but the catch up has not been fully achieved)
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | Incentive fee on Investment B = $609,315
| | - | ----------------------------------------

| | · | Maximum incentive fee = 20% × (cumulative
realized capital gains – (cumulative realized losses + cumulative net unrealized depreciation)) – (previously paid
incentive fees)
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | Maximum incentive fee = (20% × $13,000,000)
– ($600,000 (previously paid incentive fees))
| | - | -----------------------------------------------------------------------------------------

| | · | Maximum incentive fee = $2,000,000
| | - | ----------------------------------

| | · | Incentive fee paid = $609,315 (because
the incentive fee payable on Investment B does not exceed the maximum incentive fee)
| | - | ---------------------------------------------------------------------------------------------------------------------------



Alternative 2:



Assumptions

| | · | Hurdle rate = 8.00% non-compounded annual
rate of return
| | - | --------------------------------------------------------

| | · | Hurdle rate = (purchase price) ×
(8% × (days owned/365))
| | - | --------------------------------------------------------

| | · | Catch-up rate = 10.00% non-compounded
annual rate of return
| | - | -----------------------------------------------------------

| | · | Catch-up rate = (purchase price) ×
(10% × (days owned/365))
| | - | -----------------------------------------------------------

| | · | Year 1: $20 million investment made on
March 15 in Company A (‘‘Investment A’’), $30 million investment made on February 1 in Company B (‘‘Investment
B’’), and $25 million investment made on September 1 in Company C (‘‘Investment C’’)
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | Year 2: Investment A is sold on September
15 for $50 million, FMV of Investment B is determined to be $25 million, and FMV of Investment C is determined to be $25 million
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | Year 3: FMV of Investment B is determined
to be $27 million and Investment C is sold on December 1 for $30 million
| | - | ------------------------------------------------------------------------------------------------------------------

| | · | Year 4: FMV of Investment B is determined
to be $35 million
| | - | -----------------------------------------------------------

| | · | Year 5: Investment B is sold on March
1 for $20 million
| | - | -------------------------------------------------------



The incentive fee
would be calculated as follows:

| | · | Year 1: None
| | - | ------------

| | · | Year 2: Incentive fee calculation:
| | - | ----------------------------------

| | · | Hurdle rate for Investment A = ($20,000,000)
× (8% × (550 days / 365))
| | - | ----------------------------------------------------------------------

| | · | Hurdle rate for Investment A = $2,410,959
| | - | -----------------------------------------

| | · | Catch-up rate for Investment A = ($20,000,000)
× (10% × (550 days / 365))
| | - | -------------------------------------------------------------------------

| | · | Catch-up rate for Investment A = $3,013,699
| | - | -------------------------------------------

| | · | Incentive fee on Investment A = 20% ×
$30,000,000 (since the hurdle rate has been satisfied and the catch up has been fully achieved)
| | - | -------------------------------------------------------------------------------------------------------------------------------------

| | · | Incentive fee on Investment A = $6,000,000
| | - | ------------------------------------------

| | · | Maximum incentive fee = 20% × (cumulative
realized capital gains – (cumulative realized losses + cumulative net unrealized depreciation)) – (previously paid
incentive fees)
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | Maximum incentive fee = 20% × ($30,000,000
- $5,000,000 (unrealized depreciation on Investment B))
| | - | --------------------------------------------------------------------------------------------------

| | · | Maximum incentive fee = $5,000,000
| | - | ----------------------------------

| | · | Incentive fee paid = $5,000,000 (because
the incentive fee payable on Investment A exceeds the maximum incentive fee, the maximum incentive fee applies)
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | Year 3: Incentive fee calculation:
| | - | ----------------------------------

| | · | Hurdle rate for Investment C = ($25,000,000)
× (8% × (822 days / 365))
| | - | ----------------------------------------------------------------------

| | · | Hurdle rate for Investment C = $4,504,110
| | - | -----------------------------------------

| | · | Catch-up rate for Investment C = ($25,000,000)
× (10% × (822 days / 365))
| | - | -------------------------------------------------------------------------

| | · | Catch-up rate for Investment C = $5,630,137
| | - | -------------------------------------------

| | · | Incentive fee on Investment C = 100% ×
($5,000,000 – $4,504,110 (since the hurdle rate has been satisfied, but the catch up has not been fully achieved))
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | Incentive fee on Investment C = $495,890
| | - | ----------------------------------------

| | · | Maximum incentive fee = 20% × (cumulative
realized capital gains – (cumulative realized losses + cumulative net unrealized depreciation)) – (previously paid
incentive fees)
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | Maximum incentive fee = 20% × ($35,000,000
- $3,000,000 (unrealized depreciation on Investment B)) – ($5,000,000 (previously paid incentive fees))
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------

| | · | Maximum incentive fee = $1,400,000
| | - | ----------------------------------

| | · | Incentive fee paid = $495,890 (because
the incentive fee payable on Investment C does not exceed the maximum incentive fee)
| | - | ---------------------------------------------------------------------------------------------------------------------------

| | · | Year 4: None
| | - | ------------

| | · | Year 5: None
| | - | ------------





14









We seek to deploy capital
primarily in the form of non-controlling investments in our portfolio companies. Although we primarily invest through private secondary
markets, to the extent we make a direct minority investment in a portfolio company, neither we, nor our investment adviser, GSV
Asset Management, may have the ability to control the timing of when we realize capital gains or losses with respect to such investment.
We expect the timing of such realization events to be determined by our portfolio companies in such cases. To the extent we have
non-minority investments, or the securities we hold are traded on a private secondary market or public securities exchange, GSV
Asset Management will have greater control over the timing of a realization event. In such cases, our board of directors will monitor
such investments in connection with their general oversight of the investment management services provided by GSV Asset Management.
In addition, as of the end of each fiscal quarter, we will evaluate whether the cumulative aggregate unrealized appreciation on
our portfolio would be sufficient to require us to pay an incentive fee to our investment adviser if such unrealized appreciation
were actually realized as of the end of such quarter, and if so, we will accrue an expense equal to the amount of such incentive
fee. Any such accrual of incentive fees will be reflected in the calculation of our net asset value.



Payment of our Expenses



All personnel of our
investment adviser when and to the extent engaged in providing investment advisory services, and the compensation and expenses
of such personnel allocable to such services, are provided and paid for by GSV Asset Management. We are responsible for all other
costs and expenses of our operations and transactions, including (without limitation) the cost of calculating our net asset value;
the cost of effecting sales and repurchases of shares of our common stock and other securities; investment advisory fees; fees
payable to third parties relating to, or associated with, making investments, including fees and expenses associated with performing
due diligence reviews of prospective investments (in each case subject to approval of our board of directors); transfer agent and
custodial fees; fees and expenses associated with marketing efforts (including attendance at investment conference and similar
events); federal and state registration fees; any exchange listing fees; federal, state and local taxes; independent directors’
fees and expenses; brokerage commissions; costs associated with our reporting and compliance obligations under the 1940 Act and
applicable federal and state securities laws including costs of proxy statements, stockholders’ reports and notices; fidelity
bond, directors and officers/errors and omissions liability insurance and other insurance premiums; direct costs such as printing,
mailing, long distance telephone, staff, independent audits and outside legal costs and all other expenses incurred by either GSV
Capital Service Company or us in connection with administering our business, including payments under the administration agreement
that will be based upon our allocable portion of overhead and other expenses incurred by GSV Capital Service Company in performing
its obligations under the Administration Agreement, including a portion of the rent and the compensation of our chief financial
officer and chief compliance officer and other administrative support personnel. All of these expenses are ultimately borne by
the Company.



Duration and Termination



The Investment Advisory
Agreement was approved by our board of directors on March 28, 2011. Unless earlier terminated as described below, the Investment
Advisory Agreement will remain in effect for a period of two years from the date it was approved by the board of directors and
will remain in effect from year to year thereafter if approved annually by our board of directors or by the affirmative vote of
the holders of a majority of our outstanding voting securities, including, in either case, approval by a majority of our directors
who are not interested persons. The Investment Advisory Agreement will automatically terminate in the event of its assignment.
The Investment Advisory Agreement may be terminated by either party without penalty upon not more than 60 days’ written notice
to the other. The Investment Advisory Agreement may also be terminated, without penalty, upon the vote of a majority of our outstanding
voting securities.



Indemnification



The Investment Advisory
Agreement provides that, absent willful misfeasance, bad faith or gross negligence in the performance of its duties or by reason
of the reckless disregard of its duties and obligations, GSV Asset Management and its officers, managers, partners, agents, employees,
controlling persons, members and any other person or entity affiliated with it are entitled to indemnification from us for any
damages, liabilities, costs and expenses (including reasonable attorneys’ fees and amounts reasonably paid in settlement)
arising from the rendering of GSV Asset Management’s services under the Investment Advisory Agreement or otherwise as our
investment adviser.



Organization of the Investment Adviser



GSV Asset Management
is a Delaware limited liability company. The principal executive offices of GSV Asset Management are located at 2965 Woodside Road,
Woodside, CA 94062.



15











Board Approval of the Investment
Advisory Agreement



Our Board of Directors
determined at a meeting held on March 28, 2011 to approve the Investment Advisory Agreement. In its consideration of the approval
of the Investment Advisory Agreement, the Board of Directors focused on information it had received relating to, among other things:



| | · | the nature, quality and extent of the
advisory and other services to be provided to us by GSV Asset Management;
| | - | ---------------------------------------------------------------------------------------------------------------

| | · | comparative data with respect to advisory
fees or similar expenses paid by other business development companies with similar investment objectives;
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------

| | · | our historical and projected operating
expenses and expense ratio compared to business development companies with similar investment objectives;
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------

| | · | any existing and potential sources of
indirect income to GSV Asset Management or GSV Capital Service Company from their relationships with us and the profitability of
those relationships, including the Investment Advisory Agreement and the Administration Agreement;
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | information about the services to be performed
and the personnel performing such services under the Investment Advisory Agreement;
| | - | ----------------------------------------------------------------------------------------------------------------------------------

| | · | the organizational capability and financial
condition of GSV Asset Management and its affiliates;
| | - | -------------------------------------------------------------------------------------------------

| | · | GSV Asset Management’s practices
regarding the selection and compensation of brokers that may execute our portfolio transactions and the brokers’ provision
of brokerage and research services to GSV Asset Management; and
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | the possibility of obtaining similar services
from other third party service providers or through an internally managed structure.
| | - | ----------------------------------------------------------------------------------------------------------------------------------



Based on the information
reviewed and related discussions, the Board of Directors concluded that fees payable to GSV Asset Management pursuant to the Investment
Advisory Agreement were reasonable in relation to the services to be provided. The Board of Directors did not assign relative weights
to the above factors or the other factors considered by it. In addition, the Board of Directors did not reach any specific conclusion
on each factor considered, but conducted an overall analysis of these factors. Individual members of the Board of Directors may
have given different weights to different factors.



Administration Agreement



Pursuant to a separate
Administration Agreement, GSV Capital Service Company, a Delaware limited liability company, furnishes us with office facilities,
together with equipment and clerical, bookkeeping and record keeping services at such facilities. The principal executive offices
of GSV Capital Service Company are located at 2965 Woodside Road, Woodside, CA 94062. Under the Administration Agreement, GSV Capital
Service Company also performs, or oversees the performance of, our required administrative services, which includes being responsible
for the financial records which we are required to maintain and preparing reports to our stockholders and reports filed with the
SEC. In addition, GSV Capital Service Company assists us in determining and publishing our net asset value, overseeing the preparation
and filing of our tax returns and the printing and dissemination of reports to our stockholders, and generally overseeing the payment
of our expenses and the performance of administrative and professional services rendered to us by others. Payments under the Administration
Agreement are based upon our allocable portion of overhead and other expenses incurred by GSV Capital Service Company in performing
its obligations under the administration agreement, including a portion of the rent and the compensation of our chief financial
officer and chief compliance officer and any administrative support personnel. While there is no limit on the total amount of expenses
we may be required to reimburse to GSV Capital Service Company, our administrator will only charge us for the actual expenses it
incurs on our behalf, or our allocable portion thereof, without any profit to GSV Capital Service Company. The Administration Agreement
may be terminated by either party without penalty upon 60 days’ written notice to the other party.



The Administration
Agreement provides that, absent willful misfeasance, bad faith or gross negligence in the performance of their respective duties
or by reason of the reckless disregard of their respective duties and obligations, GSV Capital Service Company and its officers,
manager, agents, employees, controlling persons, members and any other person or entity affiliated with it are entitled to indemnification
from us for any damages, liabilities, costs and expenses (including reasonable attorneys’ fees and amounts reasonably paid
in settlement) arising from the rendering of GSV Capital Service Company’s services under the Administration Agreement or
otherwise as our administrator.



GSV Capital Service
Company also provides administrative services to our investment adviser, GSV Asset Management. As a result, GSV Asset Management
also reimburses GSV Capital Service Company for its allocable portion of GSV Capital Service Company’s overhead, including
rent, the fees and expenses associated with performing compliance functions for GSV Asset Management, and its allocable portion
of the compensation of any administrative support staff.





16









License Agreement



We have entered into
a license agreement with GSV Asset Management pursuant to which GSV Asset Management has agreed to grant us a non-exclusive, royalty-free
license to use the name ‘‘GSV.’’ Under this agreement, we have a right to use the GSV name for so long
as the Investment Advisory Agreement with GSV Asset Management is in effect. Other than with respect to this limited license, we
will have no legal right to the ‘‘GSV’’ name.



Regulation as a Business Development
Company



General



A business development
company is regulated by the 1940 Act. A business development company must be organized in the United States for the purpose of
investing in or lending to primarily private companies and making significant managerial assistance available to them. A business
development company may use capital provided by public stockholders and from other sources to make long-term, private investments
in businesses. A business development company provides stockholders the ability to retain the liquidity of a publicly traded stock
while sharing in the possible benefits, if any, of investing in primarily privately owned companies.



We may not change the
nature of our business so as to cease to be, or withdraw our election as, a business development company unless authorized by vote
of a majority of the outstanding voting securities, as required by the 1940 Act. A majority of the outstanding voting securities
of a company is defined under the 1940 Act as the lesser of: (a) 67% or more of such company’s voting securities present
at a meeting if more than 50% of the outstanding voting securities of such company are present or represented by proxy, or (b)
more than 50% of the outstanding voting securities of such company. We do not anticipate any substantial change in the nature of
our business.



As with other companies
regulated by the 1940 Act, a business development company must adhere to certain substantive regulatory requirements. A majority
of our directors must be persons who are not interested persons, as that term is defined in the 1940 Act. Additionally, we are
required to provide and maintain a bond issued by a reputable fidelity insurance company to protect the business development company.
Furthermore, as a business development company, we are prohibited from protecting any director or officer against any liability
to us or our stockholders arising from willful misfeasance, bad faith, gross negligence or reckless disregard of the duties involved
in the conduct of such person’s office.



As a business development
company, we are generally required to meet an asset coverage ratio, defined under the 1940 Act as the ratio of our gross assets
(less all liabilities and indebtedness not represented by senior securities) to our outstanding senior securities, of at least
200% after each issuance of senior securities. We may also be prohibited under the 1940 Act from knowingly participating in certain
transactions with our affiliates without the prior approval of our directors who are not interested persons and, in some cases,
prior approval by the SEC.



We are generally not
able to issue and sell our common stock at a price below net asset value per share. See ‘‘Risk Factors — Risks
Relating to Our Business and Structure — Regulations governing our operation as a business development company affect our
ability to, and the way in which we, raise additional capital.’’ We may, however, sell our common stock, or warrants,
options or rights to acquire our common stock, at a price below the then-current net asset value of our common stock if our board
of directors determines that such sale is in our best interests and the best interests of our stockholders, and our stockholders
approve such sale. In addition, we may generally issue new shares of our common stock at a price below net asset value in rights
offerings to existing stockholders, in payment of dividends and in certain other limited circumstances.



As a business development
company, we are generally limited in our ability to invest in any portfolio company in which our investment adviser or any of its
affiliates currently has an investment or to make any co-investments with our investment adviser or its affiliates without an exemptive
order from the SEC, subject to certain exceptions.



We are subject to periodic
examination by the SEC for compliance with the 1940 Act.



As a business development
company, we are subject to certain risks and uncertainties. See ‘‘Risk Factors — Risks Relating to Our Business
and Structure.’’



17









Qualifying Assets



Under the 1940 Act,
a business development company may not acquire any asset other than assets of the type listed in Section 55(a) of the 1940 Act,
which are referred to as qualifying assets, unless, at the time the acquisition is made, qualifying assets represent at least 70%
of the business development company’s gross assets. The principal categories of qualifying assets relevant to our proposed
business are the following:

| | 1. | Securities purchased in transactions not involving any public offering from the issuer of such
securities, which issuer (subject to certain limited exceptions) is an eligible portfolio company, or from any person who is, or
has been during the preceding 13 months, an affiliated person of an eligible portfolio company, or from any other person, subject
to such rules as may be prescribed by the SEC. An eligible portfolio company is defined in the 1940 Act as any issuer which:
| | -- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | a. | is organized under the laws of, and has its principal place of business in, the United States;
| | -- | ----------------------------------------------------------------------------------------------

| | b. | is not an investment company (other than a small business investment company wholly owned by the
business development company) or a company that would be an investment company but for certain exclusions under the 1940 Act; and
| | -- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | c. | satisfies any of the following:
| | -- | -------------------------------

| | i. | does not have any class of securities that is traded
on a national securities exchange;
| | -- | ---------------------------------------------------------------------------------------

| | ii. | has a class of securities listed on a national securities
exchange, but has an aggregate market value of outstanding voting and non-voting common equity of less then $250 million;
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | iii. | is controlled by a business development company or a
group of companies including a business development company and the business development company has an affiliated person who
is a director of the eligible portfolio company; or
| | ---- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | iv. | is a small and solvent company having gross assets of
not more than $4.0 million and capital and surplus of not less than $2.0 million.
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------

| | 2. | Securities of any eligible portfolio company which we control.
| | -- | --------------------------------------------------------------

| | 3. | Securities purchased in a private transaction from a U.S. issuer that is not an investment company
or from an affiliated person of the issuer, or in transactions incident thereto, if the issuer is in bankruptcy and subject to
reorganization or if the issuer, immediately prior to the purchase of its securities, was unable to meet its obligations as they
came due without material assistance other than conventional lending or financing arrangements.
| | -- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 4. | Securities of an eligible portfolio company purchased from any person in a private transaction
if there is no ready market for such securities and we already own 60% of the outstanding equity of the eligible portfolio company.
| | -- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 5. | Securities received in exchange for or distributed on or with respect to securities described in
1 through 4 above, or pursuant to the exercise of warrants or rights relating to such securities.
| | -- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 6. | Cash, cash equivalents, U.S. government securities or high-quality debt securities maturing in
one year or less from the time of investment.
| | -- | --------------------------------------------------------------------------------------------------------------------------------------------



If at any time less
than 70% of our gross assets are comprised of qualifying assets, including as a result of an increase in the value of any non-qualifying
assets or decrease in the value of any qualifying assets, we would generally not be permitted to acquire any additional non-qualifying
assets, other than office furniture and equipment, interests in real estate and leasehold improvements and facilities maintained
to conduct the business operations of the business development company, deferred organization and operating expenses, and other
noninvestment assets necessary and appropriate to its operations as a business development company, until such time as 70% of our
then current gross assets were comprised of qualifying assets. We would not be required, however, to dispose of any non-qualifying
assets in such circumstances.



Managerial Assistance to Portfolio
Companies



In addition, a business
development company must have been organized and have its principal place of business in the United States and must be operated
for the purpose of making investments in the types of securities described in (1), (2) or (3) above. However, in order to count
portfolio securities as qualifying assets for the purpose of the 70% test, the business development company must either control
the issuer of the securities or must offer to make available to the issuer of the securities (other than small and solvent companies
described above) significant managerial assistance; except that, where the business development company purchases such securities
in conjunction with one or more other persons acting together, one of the other persons in the group may make available such managerial
assistance. Making available managerial assistance means, among other things, any arrangement whereby the business development
company, through its directors, officers or employees, offers to provide, and, if accepted, does so provide, significant guidance
and counsel concerning the management, operations or business objectives and policies of a portfolio company.





18









Temporary Investments



Pending investment
in other types of ‘‘qualifying assets,’’ as described above, our investments may consist of cash, cash
equivalents, U.S. government securities or high-quality debt securities maturing in one year or less from the time of investment,
which we refer to, collectively, as temporary investments, so that 70% of our assets are qualifying assets. Typically, we will
invest in U.S. Treasury bills or in repurchase agreements, provided that such agreements are fully collateralized by cash or securities
issued by the U.S. government or its agencies. A repurchase agreement involves the purchase by an investor, such as us, of a specified
security and the simultaneous agreement by the seller to repurchase it at an agreed-upon future date and at a price which is greater
than the purchase price by an amount that reflects an agreed-upon interest rate. There is no percentage restriction on the proportion
of our assets that may be invested in such repurchase agreements. However, if more than 25% of our gross assets constitute repurchase
agreements from a single counterparty, we would not meet the diversification tests in order to qualify as a RIC for federal income
tax purposes. Thus, we do not intend to enter into repurchase agreements with a single counterparty in excess of this limit. Our
investment adviser will monitor the creditworthiness of the counterparties with which we enter into repurchase agreement transactions.



Senior Securities



We are permitted, under
specified conditions, to issue multiple classes of indebtedness and one class of stock senior to our common stock if our asset
coverage, as defined in the 1940 Act, is at least equal to 200% immediately after each such issuance. In addition, while any senior
securities remain outstanding, we must make provisions to prohibit any distribution to our stockholders or the repurchase of such
securities or shares unless we meet the applicable asset coverage ratios at the time of the distribution or repurchase. We may
also borrow amounts up to 5% of the value of our gross assets for temporary or emergency purposes without regard to asset coverage.
For a discussion of the risks associated with leverage, see ‘‘Risk Factors — Risks Relating to Our Business and
Structure — We may borrow money, which would magnify the potential for gain or loss on amounts invested and may increase
the risk of investing in us.’’



Code of Ethics



We and GSV Asset Management
have each adopted a code of ethics pursuant to Rule 17j-1 under the

1940 Act and Rule 204A-1 under the Advisers
Act, respectively, that establishes procedures for personal investments and restricts certain transactions by our personnel. Our
codes of ethics generally do not permit investments by our employees in securities that may be purchased or held by us. You may
read and copy these codes of ethics at the SEC’s Public Reference Room in Washington, D.C. You may obtain information on
the operation of the Public Reference Room by calling the SEC at (202) 551-8090. In addition, each code of ethics is available
on the EDGAR Database on the SEC’s Internet site at http://www.sec.gov. You may also obtain copies of the codes of
ethics, after paying a duplicating fee, by electronic request at the following Email address: publicinfo@sec.gov, or by
writing the SEC’s Public Reference Section, 100 F Street, N.E., Washington, D.C. 20549.



Compliance Policies and Procedures



We and our investment
adviser have adopted and implemented written policies and procedures reasonably designed to detect and prevent violation of the
federal securities laws and are required to review these compliance policies and procedures annually for their adequacy and the
effectiveness of their implementation and designate a chief compliance officer to be responsible for administering the policies
and procedures. Stephen D. Bard currently serves as our chief compliance officer.



Sarbanes-Oxley Act of 2002



The Sarbanes-Oxley
Act of 2002 imposes a wide variety of regulatory requirements on publicly-held companies and their insiders. Many of these requirements
affect us. For example:

| | · | pursuant to Rule 13a-14 of the Exchange
Act, our chief executive officer and chief financial officer must certify the accuracy of the financial statements contained in
our periodic reports;
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | pursuant to Item 307 of Regulation S-K,
our periodic reports must disclose our conclusions about the effectiveness of our disclosure controls and procedures;
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | pursuant to Rule 13a-15 of the Exchange
Act, our management must prepare an annual report regarding its assessment of our internal control over financial reporting beginning
in 2012, and must obtain an audit of the effectiveness of internal control over financial reporting performed by our independent
registered public accounting firm should we become an accelerated filer; and
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | pursuant to Item 308 of Regulation S-K
and Rule 13a-15 of the 1934 Act, our periodic reports must disclose whether there were significant changes in our internal controls
over financial reporting or in other factors that could significantly affect these controls subsequent to the date of their evaluation,
including any corrective actions with regard to significant deficiencies and material weaknesses.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------





19









The Sarbanes-Oxley
Act requires us to review our current policies and procedures to determine whether we comply with the Sarbanes-Oxley Act and the
regulations promulgated thereunder. We will continue to monitor our compliance with all regulations that are adopted under the
Sarbanes-Oxley Act and will take actions necessary to ensure that we are in compliance therewith.



Proxy Voting Policies and Procedures



We have delegated our
proxy voting responsibility to GSV Asset Management. The Proxy Voting Policies and Procedures of GSV Asset Management are set forth
below. The guidelines will be reviewed periodically by GSV Asset Management and our non-interested directors, and, accordingly,
are subject to change. For purposes of these Proxy Voting Policies and Procedures described below, ‘‘we,’’
‘‘our’’ and ‘‘us’’ refers to GSV Asset Management.



Introduction



An investment adviser
registered under the Advisers Act has a fiduciary duty to act solely in the best interests of its clients. As part of this duty,
we recognize that we must vote client securities in a timely manner free of conflicts of interest and in the best interests of
our clients.



These policies and
procedures for voting proxies for our investment advisory clients are intended to comply with Section 206 of, and Rule 206(4)-6
under, the Advisers Act.



Proxy Policies



We will vote proxies
relating to our portfolio securities in what we perceive to be the best interest of our clients’ stockholders. We will review
on a case-by-case basis each proposal submitted to a stockholder vote to determine its impact on the portfolio securities held
by our clients. Although we will generally vote against proposals that may have a negative impact on our clients’ portfolio
securities, we may vote for such a proposal if there exist compelling long-term reasons to do so.



Our proxy voting decisions
will be made by the senior officers who are responsible for monitoring each of our clients’ investments. To ensure that our
vote is not the product of a conflict of interest, we will require that: (1) anyone involved in the decision making process disclose
to our managing members any potential conflict that he or she is aware of and any contact that he or she has had with any interested
party regarding a proxy vote; and (2) employees involved in the decision making process or vote administration are prohibited from
revealing how we intend to vote on a proposal in order to reduce any attempted influence from interested parties.



Proxy Voting
Records



You may obtain information
about how we voted proxies by making a written request for proxy voting information to: GSV Asset Management, 2965 Woodside Road,
Woodside, CA 94062.



Privacy Principles



We are committed to
maintaining the privacy of our stockholders and to safeguarding their non-publicpersonal information. The following
information is provided to help you understand what personal informationwe collect, how we protect that information
and why, in certain cases, we may share information with selectother parties.



Generally, we do not
receive any non-public personal information relating to our stockholders, although certain non-public personal information of our
stockholders may become available to us. We do not disclose any non-public personal information about our stockholders or former
stockholders to anyone, except as permitted by law or as is necessary in order to service stockholder accounts (for example, to
a transfer agent or third party administrator).



We restrict access
to non-public personal information about our stockholders to employees of our investment adviser and its affiliates with a legitimate
business need for the information. We will maintain physical, electronic and procedural safeguards designed to protect the non-public
personal information of our stockholders.





20









Material U.S. Federal Income Tax Considerations



The following discussion
is a general summary of the material U.S. federal income tax considerations applicable to us and to an investment in our shares.
This summary does not purport to be a complete description of the income tax considerations applicable to such an investment. For
example, we have not described tax consequences that may be relevant to certain types of holders subject to special treatment under
U.S. federal income tax laws, including stockholders subject to the alternative minimum tax, tax-exempt organizations, insurance
companies, dealers in securities, a trader in securities that elects to use a market-to-market method of accounting for its securities
holdings, pension plans and trusts, and financial institutions. This summary assumes that investors hold our common stock as capital
assets (within the meaning of the Internal Revenue Code of 1986, as amended the ‘‘Code’’). The discussion
is based upon the Code, Treasury regulations, and administrative and judicial interpretations, each as of the date of this annual
report on Form 10-K and all of which are subject to change, possibly retroactively, which could affect the continuing validity
of this discussion. This summary does not discuss any aspects of U.S. estate or gift tax or foreign, state or local tax. It does
not discuss the special treatment under U.S. federal income tax laws that could result if we invested in tax-exempt securities
or certain other investment assets.



A ‘‘U.S.
stockholder’’ generally is a beneficial owner of shares of our common stock who is for U.S. federal income tax purposes:



| | · | A citizen or individual resident of the
United States;
| | - | ------------------------------------------------------

| | · | A corporation or other entity treated
as a corporation, for U.S. federal income tax purposes, created or organized in or under the laws of the United States or any political
subdivision thereof (and an entity organized outside of the United States that is treated as a U.S. corporation under specialized
sections of the Code);
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | A trust if a court within the United States
is asked to exercise primary supervision over the administration of the trust and one or more United States persons have the authority
to control all substantive decisions of the trust (or a trust that has made a valid election to be treated as a U.S. trust); or
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | An estate, the income of which is subject
to U.S. federal income taxation regardless of its source.
| | - | ---------------------------------------------------------------------------------------------------



A ‘‘Non-U.S.
stockholder’’ generally is a beneficial owner of shares of our common stock who is not a U.S. stockholder.



If a partnership (including
an entity treated as a partnership for U.S. federal income tax purposes) holds shares of our common stock, the tax treatment of
a partner in the partnership will generally depend upon the status of the partner and the activities of the partnership. A prospective
stockholder that is a partner of a partnership holding shares of our common stock should consult his, her or its tax advisers with
respect to the purchase, ownership and disposition of shares of our common stock. Tax matters are complicated and the tax consequences
to an investor of an investment in our shares will depend on the facts of his, her or its particular situation. We encourage investors
to consult their own tax advisers regarding the specific consequences of such an investment, including tax reporting requirements,
the applicability of federal, state, local and foreign tax laws, eligibility for the benefits of any applicable tax treaty and
the effect of any possible changes in the tax laws.



Election to be Taxed as a RIC



We intend to elect
to be treated as a RIC under Subchapter M of the Code. As a RIC, we generally will not have to pay corporate-level federal income
taxes on any income that we distribute to our stockholders as dividends. To qualify as a RIC, we must, among other things, meet
certain source-of-income and asset diversification requirements (as described below). In addition, in order to be eligible for
pass-through tax treatment as a RIC, we must distribute to our stockholders, for each taxable year, at least 90% of our ‘‘investment
company taxable income,’’ which is generally our net ordinary income plus the excess of realized net short-term capital
gains over realized net long-term capital losses (the ‘‘Annual Distribution Requirement’’).



Taxation as a Regulated Investment
Company



If we:



| | · | qualify as a RIC; and
| | - | ---------------------

| | · | satisfy the Annual Distribution Requirement,
| | - | --------------------------------------------



then we will not be subject to federal
income tax on the portion of our income we distribute (or are deemed to distribute) to stockholders. We will be subject to U.S.
federal income tax at the regular corporate rates on any income or capital gains not distributed (or deemed distributed) to our
stockholders.



We will be subject
to a 4% nondeductible federal excise tax on certain undistributed income unless we distribute in a timely manner an amount at least
equal to the sum of (1) 98% of our net ordinary income for each calendar year, (2) 98.2% of our capital gain net income for the
one-year period ending October 31 in that calendar year and (3) any income recognized, but not distributed, in preceding years
(the ‘‘Excise Tax Avoidance Requirement’’). We generally will endeavor in each year to make sufficient
distributions to our stockholders to avoid any U.S. federal excise tax on our earnings.



21









In order to qualify
as a RIC for federal income tax purposes, we must, among other things:



| | · | have in effect an election to be treated
as a business development company under the 1940 Act at all times during each taxable year;
| | - | ------------------------------------------------------------------------------------------------------------------------------------

| | · | derive in each taxable year at least 90%
of our gross income from dividends, interest, payments with respect to loans of certain securities, gains from the sale of stock
or other securities or foreign currencies, net income from certain ‘‘qualified publicly traded partnerships,’’
or other income derived with respect to our business of investing in such stock or securities (the ‘‘90% Income Test’’);
and
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | diversify our holdings so that at the
end of each quarter of the taxable year:
| | - | ------------------------------------------------------------------------------

| | · | at least 50% of the value of our assets
consists of cash, cash equivalents, U.S. Government securities, securities of other RICs, and other securities if such other securities
of any one issuer do not represent more than 5% of the value of our assets or more than 10% of the outstanding voting securities
of the issuer; and
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | no more than 25% of the value of our assets
is invested in the securities, other than U.S. government securities or securities of other RICs, of one issuer, of two or more
issuers that are controlled, as determined under applicable Code rules, by us and that are engaged in the same or similar or related
trades or businesses, or of certain ‘‘qualified publicly traded partnerships’’ (the ‘‘Diversification
Tests’’).
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Provided that we satisfy
the Diversification Tests as of the close of any quarter, we will not fail the Diversification Tests as of the close of a subsequent
quarter as a consequence of a discrepancy between the value of our assets and the requirements of the Diversification Tests that
is attributable solely to fluctuations in the value of our assets. Rather, we will fail the Diversification Tests as of the end
of a subsequent quarter only if such a discrepancy existed immediately after our acquisition of any asset and was wholly or partly
the result of that acquisition. In addition, if we fail the Diversification Tests as of the end of any quarter, we will not lose
our status as a RIC if we eliminate the discrepancy within thirty days of the end of such quarter and, if we eliminate the discrepancy
within that thirty-day period, we will be treated as having satisfied the Diversification Tests as of the end of such quarter for
purposes of applying the rule described in the preceding sentence.



We may be required
to recognize taxable income in circumstances in which we do not receive cash. For example, if we hold debt obligations that are
treated under applicable tax rules as having original issue discount (which may arise if we receive warrants in connection with
the origination of a loan or possibly in other circumstances), we must include in income each year a portion of the original issue
discount that accrues over the life of the obligation, regardless of whether cash representing such income is received by us in
the same taxable year. We may also have to include in income other amounts that we have not yet received in cash, such as contractual
payment-in-kind, or PIK, interest (which represents contractual interest added to the loan balance and due at the end of the loan
term) or dividends and deferred loan origination fees that are paid after origination of the loan or are paid in non-cash compensation
such as warrants or stock. Because any original issue discount or other amounts accrued will be included in our investment company
taxable income for the year of accrual, we may be required to make a distribution to our stockholders in order to satisfy the Annual
Distribution Requirement, even though we will not have received any corresponding cash amount.



Although we do not
presently expect to do so, we are authorized to borrow funds and to sell assets in order to satisfy distribution requirements.
However, under the 1940 Act, we are not permitted to make distributions to our stockholders while our debt obligations and other
senior securities are outstanding unless certain ‘‘asset coverage’’ tests are met. See ‘‘Regulation
— Senior Securities.’’ Moreover, our ability to dispose of assets to meet our distribution requirements may be
limited by (1) the illiquid nature of our portfolio and/or (2) other requirements relating to our status as a RIC, including the
Diversification Tests. If we dispose of assets in order to meet the Annual Distribution Requirement or the Excise Tax Avoidance
Requirement, we may make such dispositions at times that, from an investment standpoint, are not advantageous.



Certain of our investment
practices may be subject to special and complex U.S. federal income tax provisions that may, among other things: (i) disallow,
suspend or otherwise limit the allowance of certain losses or deductions; (ii) convert lower taxed long-term capital gain into
higher taxed short-term capital gain or ordinary income; (iii) convert an ordinary loss or a deduction into a capital loss (the
deductibility of which is more limited); (iv) cause us to recognize income or gain without a corresponding receipt of cash; (v)
adversely affect the time as to when a purchase or sale of securities is deemed to occur; (vi) adversely alter the characterization
of certain complex financial transactions; and (vii) produce income that will not be qualifying income for purposes of the 90%
Income Test described above. We will monitor our transactions and may make certain tax elections in order to mitigate the potential
adverse effect of these provisions.





22









Gain or loss realized
by us from the sale or exchange of warrants acquired by us as well as any loss attributable to the lapse of such warrants generally
will be treated as capital gain or loss. The treatment of such gain or loss as long-term or short-term will depend on how long
we held a particular warrant. Upon the exercise of a warrant acquired by us, our tax basis in the stock purchased under the warrant
will equal the sum of the amount paid for the warrant plus the strike price paid on the exercise of the warrant.



The remainder of this
discussion assumes that we qualify as a RIC and have satisfied the Annual Distribution Requirement.



Taxation of U.S. Stockholders



Distributions by us
generally are taxable to U.S. stockholders as ordinary income or capital gains. Distributions of our ‘‘investment company
taxable income’’ (which is, generally, our net ordinary income plus realized net short-term capital gains in excess
of realized net long-term capital losses) will be taxable as ordinary income to U.S. stockholders to the extent of our current
and accumulated earnings and profits, whether paid in cash or reinvested in additional common stock. To the extent such distributions
paid by us in taxable years beginning before January 1, 2013 to non-corporate stockholders (including individuals) are attributable
to dividends from U.S. corporations and certain qualified foreign corporations, such distributions (‘‘Qualifying Dividends’’)
may be eligible for a maximum tax rate of 15%. In this regard, it is anticipated that distributions paid by us will generally not
be attributable to dividends received by us and, therefore, generally will not qualify for the 15% maximum rate applicable to Qualifying
Dividends. Distributions of our net capital gains (which are generally our realized net long-term capital gains in excess of realized
net short-term capital losses) made in taxable years beginning before January 1, 2013 and properly reported by us as ‘‘capital
gain dividends’’ will be taxable to a U.S. stockholder as long-term capital gains that are currently taxable at a maximum
rate of 15% in the case of individuals, trusts or estates, regardless of the U.S. stockholder’s holding period for his, her
or its common stock and regardless of whether paid in cash or reinvested in additional common stock. Distributions in excess of
our earnings and profits first will reduce a U.S. stockholder’s adjusted tax basis in such stockholder’s common stock
and, after the adjusted basis is reduced to zero, will constitute capital gains to such U.S. stockholder.



Under the dividend
reinvestment plan, our stockholders who have not ‘‘opted out’’ of our dividend reinvestment plan will have
their cash distributions automatically reinvested in additional shares of our common stock, rather than receiving the cash distributions.
Any distributions reinvested under the plan will nevertheless remain taxable to U.S. stockholders. A U.S. stockholder will have
an adjusted basis in the additional common shares purchased through the plan equal to the amount of the reinvested distribution.
The additional shares will have a new holding period commencing on the day following the day on which the shares are credited to
the U.S. stockholder’s account.



We may retain some
or all of our realized net long-term capital gains in excess of realized net short-term capital losses, but designate the retained
net capital gain as a ‘‘deemed distribution.’’ In that case, among other consequences, we will pay tax
on the retained amount, each U.S. stockholder will be required to include his, her or its share of the deemed distribution in income
as if it had been actually distributed to the U.S. stockholder, and the U.S. stockholder will be entitled to claim a credit equal
to his, her or its allocable share of the tax paid thereon by us. Because we expect to pay tax on any retained capital gains at
our regular corporate tax rate, and because that rate is in excess of the maximum rate currently payable by non-corporate taxpayers
on long-term capital gains, the amount of tax that individual U.S. stockholders will be treated as having paid will exceed the
tax they owe on the capital gain distribution and such excess generally may be refunded or claimed as a credit against the U.S.
stockholder’s other U.S. federal income tax obligations. The amount of the deemed distribution net of such tax will be added
to the U.S. stockholder’s cost basis for his, her or its common stock. In order to utilize the deemed distribution approach,
we must provide written notice to our stockholders prior to the expiration of 60 days after the close of the relevant taxable year.
We cannot treat any of our investment company taxable income as a ‘‘deemed distribution.’’



As a RIC, we are required
to apportion any items that are treated differently for alternative minimum tax

(‘‘AMT’’) purposes
between us and our stockholders, and such apportionment may affect our stockholders’ AMT liabilities. Although regulations
explaining the precise method of apportionment have not yet been issued by the Internal Revenue Service, we intend in general to
apportion these items in the same proportion that dividends paid to each stockholder bear to our taxable income (determined without
regard to the dividends paid deduction), unless we determine that a different method for a particular item is warranted under the
circumstances.



23









For purposes of determining
(1) whether the Annual Distribution Requirement is satisfied for any year and (2) the amount of capital gain dividends paid for
that year, we may, under certain circumstances, elect to treat a dividend that is paid during the following taxable year as if
it had been paid during the taxable year in question. If we make such an election, the U.S. stockholder will still be treated as
receiving the dividend in the taxable year in which the distribution is made. However, any dividend declared by us in October,
November or December of any calendar year, payable to stockholders of record on a specified date in such a month and actually paid
during January of the following year, will be treated as if it had been received by our U.S. stockholders on December 31 of the
year in which the dividend was declared.



If an investor purchases
shares of our common stock shortly before the record date of a distribution, the price of the shares will include the value of
the distribution and the investor will be subject to tax on the distribution even though economically it may represent a return
of his, her or its investment. A stockholder generally will recognize taxable gain or loss if the stockholder sells or otherwise
disposes of his, her or its shares of our common stock. The amount of gain or loss will be measured by the difference between such
stockholder’s adjusted tax basis in the common stock sold and the amount of the proceeds received in exchange. Any gain arising
from such sale or disposition generally will be treated as long-term capital gain or loss if the stockholder has held his, her
or its shares for more than one year. Otherwise, it will be classified as short-term capital gain or loss. However, any capital
loss arising from the sale or disposition of shares of our common stock held for six months or less will be treated as long-term
capital loss to the extent of the amount of capital gain dividends received, or undistributed capital gain deemed received, with
respect to such shares. In addition, all or a portion of any loss recognized upon a disposition of shares of our common stock may
be disallowed if other shares of our common stock are purchased (whether through reinvestment of distributions or otherwise) within
30 days before or after the disposition.



In general, non-corporate
U.S. stockholders currently are subject to a maximum federal income tax rate of 15% on their net capital gain (i.e., the excess
of realized net long-term capital gains over realized net short-term capital losses) recognized in taxable years beginning before
January 1, 2013, including any long-term capital gain derived from an investment in our shares. Such rate is lower than the maximum
rate on ordinary income currently payable by individuals. In addition, for taxable years beginning after December 31, 2012, individuals
with income in excess of $200,000 ($250,000 in the case of married individuals filing jointly) and certain estates and trusts are
generally subject to an additional 3.8% tax on their ‘‘net investment income,’’ which generally includes
net income from interest, dividends, annuities, royalties, and rents, and net capital gains (other than certain amounts earned
from trades or businesses). Corporate U.S. stockholders currently are subject to federal income tax on net capital gain at the
maximum 35% rate also applied to ordinary income. Non-corporate stockholders with net capital losses for a year (i.e., capital
losses in excess of capital gains) generally may deduct up to $3,000 of such losses against their ordinary income each year; any
net capital losses of a non-corporate stockholder in excess of $3,000 generally may be carried forward and used in subsequent years
as provided in the Code. Corporate stockholders generally may not deduct any net capital losses for a year, but may carry back
such losses for three years or carry forward such losses for five years.



We will send to each
of our U.S. stockholders, as promptly as possible after the end of each calendar year, a notice detailing, on a per share and per
distribution basis, the amounts includible in such U.S. stockholder’s taxable income for such year as ordinary income and
as long-term capital gain. In addition, the federal tax status of each year’s distributions generally will be reported to
the Internal Revenue Service (including the amount of dividends, if any, eligible for the 15% maximum rate). Dividends paid by
us generally will not be eligible for the dividends-received deduction or the preferential tax rate applicable to Qualifying Dividends
because our income generally will not consist of dividends. Distributions may also be subject to additional state, local and foreign
taxes depending on a U.S. stockholder’s particular situation.



We may be required
to withhold federal income tax (‘‘backup withholding’’) from all taxable distributions to any U.S. stockholder
(other than a corporation, a financial institution, or a stockholder that otherwise qualifies for an exemption) (1) who fails to
furnish us with a correct taxpayer identification number or a certificate that such stockholder is exempt from backup withholding
or (2) with respect to whom the Internal Revenue Service notifies us that such stockholder has failed to properly report certain
interest and dividend income to the Internal Revenue Service and to respond to notices to that effect. An individual’s taxpayer
identification number is his or her social security number. Any amount withheld under backup withholding is allowed as a credit
against the U.S. stockholder’s federal income tax liability, provided that proper information is provided to the Internal
Revenue Service.



Taxation of Non-U.S. Stockholders



Whether an investment
in the shares is appropriate for a Non-U.S. stockholder will depend upon that person’s particular circumstances. An investment
in the shares by a Non-U.S. stockholder may have adverse tax consequences. Non-U.S. stockholders should consult their tax advisers
before investing in our common stock.





24









Distributions of our
‘‘investment company taxable income’’ to Non-U.S. stockholders (including interest income and realized
net short-term capital gains in excess of realized long-term capital losses, which generally would be free of withholding if paid
to Non-U.S. stockholders directly) will be subject to withholding of federal tax at a 30% rate (or lower rate provided by an applicable
treaty) to the extent of our current and accumulated earnings and profits unless an applicable exception applies. If the distributions
are effectively connected with a U.S. trade or business of the Non-U.S. stockholder, we will not be required to withhold federal
tax if the Non-U.S. stockholder complies with applicable certification and disclosure requirements, although the distributions
will be subject to federal income tax at the rates applicable to U.S. persons. (Special certification requirements apply to a Non-U.S.
stockholder that is a foreign partnership or a foreign trust, and such entities are urged to consult their own tax advisers.)



In addition, for taxable
years prior to December 31, 2011, U.S. source withholding taxes are not imposed on dividends paid by RICs to the extent the dividends
were designated as ‘‘interest-related dividends’’ or ‘‘short-term capital gain dividends.’’
Under this exemption, interest-related dividends and short-term capital gain dividends generally represent distributions of interest
or short-term capital gains that would not have been subject to U.S. withholding tax at the source if they had been received directly
by a foreign person, and that satisfy certain other requirements. The exemption applies to dividends with respect to taxable years
of RICs beginning on or before December 31, 2011. No assurance can be given as to whether this exemption will be extended for tax
years beginning after December 31, 2011 or as to whether any of our distributions will be designated as eligible for this exemption
from withholding tax.



Actual or deemed distributions
of our net capital gains to a stockholder that is a non-U.S. stockholder, and gains realized by a non-U.S. stockholder upon the
sale or redemption of our common stock, will not be subject to U.S. federal income tax unless the distributions or gains, as the
case may be, are effectively connected with a U.S. trade or business of the non-U.S. stockholder (and, if an income tax treaty
applies, are attributable to a permanent establishment maintained by the non-U.S. stockholder in the United States,) or, in the
case of an individual, the non-U.S. stockholder was present in the United States for 183 days or more during the taxable year and
certain other conditions are met.



If we distribute our
net capital gains in the form of deemed rather than actual distributions, a stockholder that is a non-U.S. stockholder will be
entitled to a U.S. federal income tax credit or tax refund equal to the stockholder’s allocable share of the corporate-level
tax we pay on the capital gains deemed to have been distributed; however, in order to obtain the refund, the non-U.S. stockholder
must obtain a U.S. taxpayer identification number and file a U.S. federal income tax return even if the non-U.S. stockholder would
not otherwise be required to obtain a U.S. taxpayer identification number or file a U.S. federal income tax return.



For a corporate non-U.S.
stockholder, distributions (both actual and deemed), and gains realized upon the sale or redemption of our common stock that are
effectively connected to a U.S. trade or business may, under certain circumstances, be subject to an additional ‘‘branch
profits tax’’ at a 30% rate (or at a lower rate if provided for by an applicable treaty).



Under the dividend
reinvestment plan, our stockholders who have not ‘‘opted out’’ of our dividend reinvestment plan will have
their cash distributions automatically reinvested in additional shares of our common stock, rather than receiving the cash distributions.
If the distribution is a distribution of our investment company taxable income, is not properly reported by us as a short-term
capital gains dividend or interest-related dividend (assuming extension of the exemption discussed above), and is not effectively
connected with a U.S. trade or business of the non-U.S. stockholder (and, if a treaty applies, is not attributable to a permanent
establishment), the amount distributed (to the extent of our current and accumulated earnings and profits) will be subject to U.S.
federal withholding tax at a 30% rate (or lower rate provided by an applicable treaty) and only the net after-tax amount will be
reinvested in common shares. If the distribution is effectively connected with a U.S. trade or business of the non-U.S. stockholder,
generally the full amount of the distribution will be reinvested in the plan and will nevertheless be subject to U.S. federal income
tax at the ordinary income rates applicable to U.S. persons. The non-U.S. stockholder will have an adjusted basis in the additional
common shares purchased through the plan equal to the amount reinvested. The additional shares will have a new holding period commencing
on the day following the day on which the shares are credited to the non-U.S. stockholder’s account.



Recently enacted legislation
that becomes effective after December 31, 2012 generally imposes a 30% withholding tax on payments of certain types of payments
to foreign financial institutions that fail to enter into an agreement with the United States Treasury to report certain required
information with respect to accounts held by United States persons (or held by foreign entities that have United States persons
as substantial owners). The types of payments subject to the tax include U.S. source interest and dividends and the gross proceeds
from the sale of any property that could produce U.S.-source interest or dividends. The information required to be reported includes
the identity and taxpayer identification number of each account holder that is a U.S. person and transaction activity within the
holder’s account. In addition, subject to certain exceptions, this legislation also imposes a 30% withholding on payments
to foreign entities that are not financial institutions unless the foreign entity certifies that it does not have a 10% or greater
U.S. owner or provides the withholding agent with identifying information on each 10% or greater U.S. owner. When these provisions
become effective, depending on the status of a Non-U.S. Holder and the status of the intermediaries through which they hold their
common stock, Non-U.S. Holders could be subject to this 30% withholding tax with respect to distributions on their units and proceeds
from the sale of their common stock. Under certain circumstances, a Non-U.S. Holder might be eligible for refunds or credits of
such taxes.





25









A Non-U.S. stockholder
who is a non-resident alien individual, and who is otherwise subject to withholding of federal tax, may be subject to information
reporting in connection with certain payments on the common stock. A Non-U.S. stockholder may be subject to backup withholding
of federal income tax on dividends unless the Non-U.S. stockholder provides us or the dividend paying agent with an IRS Form W-8BEN
(or an acceptable substitute form) or otherwise meets documentary evidence requirements for establishing that it is a Non-U.S.
stockholder or otherwise establishes an exemption from backup withholding. Any amount withheld under backup withholding is allowed
as a credit against the Non-U.S. stockholder’s U.S. federal income tax liability, provided that proper information is provided
to the Internal Revenue Service.



Non-U.S. persons
should consult their own tax advisers with respect to the U.S. federal income tax and withholding tax, and state, local and foreign
tax consequences of an investment in the shares.



Sunset of Reduced Tax Rate Provisions



Several of the tax
considerations described under the heading ‘‘Material U.S. Federal Income Tax Considerations’’ in the accompanying
annual report on Form 10-K are subject to sunset provisions. These sunset provisions generally provide that for taxable years beginning
after December 31, 2012, certain provisions in the Code that are currently applicable will revert back to earlier versions of such
provisions. As a result, the federal income tax rates applicable to ordinary income, long-term capital gain and qualified dividend
income for taxpayers taxed at individual rates will increase beginning January 1, 2013, absent Congressional action. Consequently,
prospective investors should consult their own tax advisors regarding the effect of sunset provisions on an investment in our common
stock.



Failure to Qualify as a Regulated
Investment Company



If we were unable to
qualify for treatment as a RIC, we would be subject to tax on all of our taxable income at regular corporate rates, regardless
of whether we make any distributions to our stockholders. Distributions would not be required, and any distributions made in taxable
years beginning before January 1, 2013 would be taxable to our stockholders as ordinary dividend income, and provided that certain
holding periods and other requirements are met, could be eligible for the 15% maximum rate to the extent of our current and accumulated
earnings and profits. Subject to certain limitations under the Code, corporate distributees would be eligible for the dividends-received
deduction. Distributions in excess of our current and accumulated earnings and profits would be treated first as a return of capital
to the extent of the stockholder’s tax basis, and any remaining distributions would be treated as a capital gain. To requalify
as a RIC in a subsequent taxable year, we would be required to satisfy the RIC qualification requirements for that year and dispose
of any earnings and profits from any year in which we failed to qualify as a RIC. Subject to a limited exception applicable to
RICs that qualified as such under Subchapter M of the Code for at least one year prior to disqualification and that requalify as
a RIC no later than the second year following the non-qualifying year, we could be subject to tax on any unrealized net built-in
gains in the assets held by us during the period in which we failed to qualify as a RIC that are recognized within the subsequent
10 years, unless we made a special election to pay corporate-level tax on such built-in gain at the time of its requalification
as a RIC. If we fail to satisfy the 90% Income Test or the Diversification Test described above, however, we may be able to avoid
losing our status as a RIC by timely providing notice of such failure to the Internal Revenue Service, curing such failure and
possibly paying an additional tax.







26









Item 1A.	Risk Factors



Investing in our
common stock involves a number of significant risks. In addition to the other information contained in this annual report on Form
10-K, you should consider carefully the following information before making an investment in our common stock. Although the risks
described below represent our material risks, they are not the only risks we face. Additional risks and uncertainties not presently
known to us might also impair our operations and performance. If any of the following events occur, our business, financial condition
and results of operations could be materially and adversely affected. In such case, our net asset value and the trading price of
our common stock could decline, and you may lose all or part of your investment.



Risks Related To Our Investments



Our investments in the rapidly growing
venture capital-backed emerging companies that we are targeting may be extremely risky and we could lose all or part of our investments.



Investment in the rapidly
growing venture capital-backed emerging companies that we are targeting involves a number of significant risks, including:



| | · | these companies may have limited financial
resources and may be unable to meet their obligations under their existing debt, which may lead to equity financings, possibly
at discounted valuations, in which we could be substantially diluted if we do not or cannot participate, bankruptcy or liquidation
and the reduction or loss of our equity investment;
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | they typically have limited operating
histories, narrower, less established product lines and smaller market shares than larger businesses, which tend to render them
more vulnerable to competitors’ actions, market conditions and consumer sentiment in respect of their products or services,
as well as general economic downturns;
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | because they are privately owned, there
is generally little publicly available information about these businesses; therefore, although our investment adviser’s agents
will perform due diligence investigations on these portfolio companies, their operations and their prospects, we may not learn
all of the material information we need to know regarding these businesses and, in the case of investments we acquire on private
secondary transactions, we may be unable to obtain financial or other information regarding the companies with respect to which
we invest. Furthermore, there can be no assurance that the information that we do obtain with respect to any investment is reliable;
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            

| | · | they are more likely to depend on the
management talents and efforts of a small group of persons; therefore, the death, disability, resignation or termination of one
or more of these persons could have a material adverse impact on our portfolio company and, in turn, on us; and
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                                                                                                                                                                                      

| | · | they generally have less predictable operating
results, may from time to time be parties to litigation, may be engaged in rapidly changing businesses with products subject to
a substantial risk of obsolescence, and may require substantial additional capital to support their operations, finance expansion
or maintain their competitive position.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



A portfolio company’s
failure to satisfy financial or operating covenants imposed by its lenders could lead to defaults and, potentially, termination
of its loans and foreclosure on its assets, which could trigger cross-defaults under other agreements and jeopardize our equity
investment in such portfolio company. We may incur expenses to the extent necessary to seek recovery of our equity investment or
to negotiate new terms with a financially distressed portfolio company.



Because our investments are generally
not in publicly traded securities, there will be uncertainty regarding the value of our investments, which could adversely affect
the determination of our net asset value.



Our portfolio investments
will generally not be in publicly traded securities. As a result, although we expect that some of our equity investments may trade
on private secondary marketplaces, the fair value of our direct investments in portfolio companies will often not be readily determinable.
Under the 1940 Act, for our investments for which there are no readily available market quotations, including securities that while
listed on a private securities exchange, have not actively traded, we will value such securities at fair value quarterly as determined
in good faith by our board of directors based upon the recommendation of the Board of Director’s Valuation Committee in accordance
with our written valuation policy. In connection with that determination, members of our investment adviser’s portfolio management
team will prepare portfolio company valuations using the most recent portfolio company financial statements and forecasts. The
Valuation Committee intends to utilize the services of an independent valuation firm, which will prepare valuations for each of
our portfolio investments that are not publicly traded or for which we do not have readily available market quotations, including
securities that while listed on a private securities exchange, have not actively traded. However, the board of directors will retain
ultimate authority as to the appropriate valuation of each such investment. The types of factors that the Valuation Committee will
take into account in providing its fair value recommendation to the board of directors with respect to such non-traded investments
will include, as relevant and, to the extent available, the portfolio company’s earnings, the markets in which the portfolio
company does business, comparison to valuations of publicly traded companies, comparisons to recent sales of comparable companies,
the discounted value of the cash flows of the portfolio company and other relevant factors. This information may not be available
because it is difficult to obtain financial and other information with respect to private companies, and even where we are able
to obtain such information, there can be no assurance that it is complete or accurate. Because such valuations are inherently uncertain
and may be based on estimates, our determinations of fair value may differ materially from the values that would be assessed if
a readily available market for these securities existed. Due to this uncertainty, our fair value determinations with respect to
any non-traded investments we hold may cause our net asset value on a given date to materially understate or overstate the value
that we may ultimately realize on one or more of our investments. As a result, investors purchasing our common stock based on an
overstated net asset value would pay a higher price than the value of our investments might warrant. Conversely, investors selling
shares during a period in which the net asset value understates the value of our investments will receive a lower price for their
shares than the value of our investments might warrant.





27









We may not realize gains from our equity
investments and, because certain of our portfolio companies may incur substantial debt to finance their operations, we may experience
a complete loss on our equity investment in the event of a bankruptcy or liquidation of any of our portfolio companies.



We invest principally
in the equity and equity-related securities of rapidly growing venture capital-backed emerging companies. However, the equity interests
we acquire may not appreciate in value and, in fact, may decline in value. In addition, the private company securities we acquire
are often subject to drag-along rights, which could permit other stockholders, under certain circumstances, to force us to liquidate
our position in a subject company at a specified price, which could be, in our opinion, inadequate or undesirable or even below
our cost basis. In this event, we could realize a loss or fail to realize gain in an amount that we deem appropriate on our investment.
Further, capital market volatility and the overall market environment may preclude our portfolio companies from realizing liquidity
events and impede our exit from these investments. Accordingly, we may not be able to realize gains from our equity interests,
and any gains that we do realize on the disposition of any equity interests may not be sufficient to offset any other losses we
experience. We will generally have little, if any, control over the timing of any gains we may realize from our equity investments.
In addition, the companies in which we invest may have substantial debt loads. In such cases, we would typically be last in line
behind any creditors in a bankruptcy or liquidation, and would likely experience a complete loss on our investment.



Substantially all of our portfolio companies
are currently experiencing operating losses, which may be substantial, and there can be no assurance when or if such companies
will operate at a profit.



We have limited information
about the financial performance and profitability of our portfolio companies. While according to public filings with the SEC, certain
of our portfolio companies have earned net income in recent periods, we believe that substantially all of our portfolio companies
are currently experiencing operating losses. There can be no assurance when or if such companies will operate at a profit.



The lack of liquidity in, and potentially
extended holding period of, our many investments may adversely affect our business, and will delay any distributions of gains,
if any.



Our investments will
generally not be in publicly traded securities. Although we expect that some of our equity investments will trade on private secondary
marketplaces, certain of the securities we hold will be subject to legal and other restrictions on resale or will otherwise be
less liquid than publicly traded securities. In addition, while some portfolio companies may trade on private secondary marketplaces,
we can provide no assurance that such a trading market will continue or remain active, or that we will be able to sell our position
in any portfolio company at the time we desire to do so and at the price we anticipate. The illiquidity of our investments, including
those that are traded on private secondary marketplaces, may make it difficult for us to sell such investments if the need arises.
Also, if we are required to liquidate all or a portion of our portfolio quickly, we may realize significantly less than the value
at which we have previously recorded our investments. We will have no limitation on the portion of our portfolio that may be invested
in illiquid securities, and a substantial portion or all of our portfolio may be invested in such illiquid securities from time
to time.



In addition, because
we will generally invest in equity and equity-related securities, with respect to the majority of our portfolio companies, we do
not expect realization events, if any, to occur in the near term. We expect that our holdings of equity securities may require
several years to appreciate in value, and we can offer no assurance that such appreciation will occur. Even if such appreciation
does occur, it is likely that initial purchasers of our shares could wait for an extended period of time before any appreciation
or sale of our investments, and any attendant distributions of gains, may be realized.





28









Our portfolio may be concentrated in
a limited number of portfolio companies or market sectors, which will subject us to a risk of significant loss if the business
or market position of these companies deteriorates or market sectors experiences a market downturn.



A consequence of our
limited number of investments is that the aggregate returns we realize may be significantly adversely affected if a small number
of investments perform poorly or if we need to write down the value of any one investment. For example, as of December 31, 2011,
over half of our portfolio company investments was comprised of investments in four portfolio companies. Beyond our income tax
asset diversification requirements, we do not have fixed guidelines for diversification, and our investments could be concentrated
in relatively few issuers. In addition, our investments may be concentrated in a limited number of market sectors, including in
technology-related sectors. As a result, a downturn in any market sector in which a significant number of our portfolio companies
operate could materially adversely affect us.



Technology-related sectors in which
we invest are subject to many risks, including volatility, intense competition, decreasing life cycles, product obsolescence, changing
consumer preferences and periodic downturns.



Given the experience
of our investment adviser’s senior investment professionals and its Advisory Board members within the technology space, we
expect that a number of the companies with respect to which we invest will operate in technology-related sectors. The revenues,
income (or losses) and valuations of technology-related companies can and often do fluctuate suddenly and dramatically. In addition,
because of rapid technological change, the average selling prices of products and some services provided by technology-related
sectors have historically decreased over their productive lives. As a result, the average selling prices of products and services
offered by our portfolio companies that operated in technology-related sectors may decrease over time, which could adversely affect
their operating results and, correspondingly, the value of any equity securities that we may hold. This could, in turn, materially
adversely affect our business, financial condition and results of operations.



We may be limited in our ability to
make follow-on investments, and our failure to make follow-on investments in our portfolio companies could impair the value of
our portfolio.



Following an initial
investment in a portfolio company, we may make additional investments in that portfolio company as “follow-on” investments,
in order to: (1) increase or maintain in whole or in part our equity ownership percentage; (2) exercise warrants, options or convertible
securities that were acquired in the original or subsequent financing; or (3) attempt to preserve or enhance the value of our investment.



We may elect not to
make follow-on investments, or may otherwise lack sufficient funds to make those investments or lack access to desired follow-on
investment opportunities. We have the discretion to make any follow-on investments, subject to the availability of capital resources
and of the investment opportunity. The failure to make follow-on investments may, in some circumstances, jeopardize the continued
viability of a portfolio company and our initial investment, or may result in a missed opportunity for us to increase our participation
in a successful operation. Even if we have sufficient capital to make a desired follow-on investment, we may elect not to make
a follow-on investment because we may not want to increase our concentration of risk, because we prefer other opportunities, or
because we are inhibited by compliance with business development company requirements or the desire to maintain our tax status
or lack access to the desired follow-on investment opportunity.



In addition, we may
be unable to complete follow-on investments in our portfolio companies that have conducted an initial public offering as a result
of regulatory or financial restrictions.



Because we will generally not hold controlling
equity interests in our portfolio companies, we will likely not be in a position to exercise control over our portfolio companies
or to prevent decisions by substantial shareholders or management of our portfolio companies that could decrease the value of our
investments.



Generally, we will
not take controlling equity positions in our portfolio companies. As a result, we will be subject to the risk that a portfolio
company may make business decisions with which we disagree, and the stockholders and management of a portfolio company may take
risks or otherwise act in ways that are adverse to our interests. In addition, other shareholders, such as venture capital and
private equity sponsors, that have substantial investments in our portfolio companies may have interests that differ from that
of the portfolio company or its minority shareholders, which may lead them to take actions that could materially and adversely
affect the value of our investment in the portfolio company. Due to the lack of liquidity for the equity and equity-related investments
that we will typically hold in our portfolio companies, we may not be able to dispose of our investments in the event we disagree
with the actions of a portfolio company or its substantial shareholders, and may therefore suffer a decrease in the value of our
investments.





29









Investments in foreign companies may
involve significant risks in addition to the risks inherent in U.S. investments.



While we invest primarily
in U.S. companies, we may invest on an opportunistic basis in certain non-U.S. companies, including those located in emerging markets,
that otherwise meet our investment criteria, although in no event will the aggregate value of our non-U.S. investments exceed 30%
of the aggregate value of our total investment portfolio. Investing in foreign companies, and particularly those in emerging markets,
may expose us to additional risks not typically associated with investing in U.S. issues. These risks include changes in exchange
control regulations, political and social instability, expropriation, imposition of foreign taxes, less liquid markets and less
available information than is generally the case in the United States, higher transaction costs, less government supervision of
exchanges, brokers and issuers, less developed bankruptcy laws, difficulty in enforcing contractual obligations, lack of uniform
accounting and auditing standards and greater price volatility. Further, we may have difficulty enforcing our rights as equity
holders in foreign jurisdictions. In addition, to the extent we invest in non-U.S. companies, we may face greater exposure to foreign
economic developments.



Although we expect
that most of our investments will be U.S. dollar-denominated, any investments denominated in a foreign currency will be subject
to the risk that the value of a particular currency will change in relation to one or more other currencies. Among the factors
that may affect currency values are trade balances, the level of short-term interest rates, differences in relative values of similar
assets in different currencies, long-term opportunities for investment and capital appreciation, and political developments.



We may expose ourselves to risks if
we engage in hedging transactions.



If we engage in hedging
transactions, we may expose ourselves to risks associated with such transactions. We may utilize instruments such as forward contracts,
currency options and interest rate swaps, caps, collars and floors to seek to hedge against fluctuations in the relative values
of our portfolio positions from changes in currency exchange rates and market interest rates. Hedging against a decline in the
values of our portfolio positions does not eliminate the possibility of fluctuations in the values of such positions or prevent
losses if the values of such positions decline. However, such hedging can establish other positions designed to gain from those
same developments, thereby offsetting the decline in the value of such portfolio positions. Such hedging transactions may also
limit the opportunity for gain if the values of the underlying portfolio positions should increase. It may not be possible to hedge
against an exchange rate or interest rate fluctuation that is so generally anticipated that we are not able to enter into a hedging
transaction at an acceptable price. Moreover, for a variety of reasons, we may not seek to establish a perfect correlation between
such hedging instruments and the portfolio holdings being hedged. Any such imperfect correlation may prevent us from achieving
the intended hedge and expose us to risk of loss. In addition, it may not be possible to hedge fully or perfectly against currency
fluctuations affecting the value of securities denominated in non-U.S. currencies because the value of those securities is likely
to fluctuate as a result of factors not related to currency fluctuations.



Risks Relating to Our Business and Structure



We are a new company with little operating
history, and our investment adviser has only a limited history of investing experience.



We were initially formed
in September 2010 and completed our initial public offering on April 28, 2011. As a result, we have limited financial information
on which you can evaluate an investment in our company or our prior performance. In addition, our investment adviser, GSV Asset
Management, was formed in November 2009, and has only a limited history of investing experience managing a pool of assets substantially
smaller in size than the net proceeds that were received in the initial public offering. We are subject to all of the business
risks and uncertainties associated with any new business, including the risk that we will not achieve our investment objective
and that the value of your investment could decline substantially or fall to zero. We anticipate that it will take us up to six
to 12 months to invest substantially all of the net proceeds of our follow-on offering, which closed in February 2012, in our targeted
investments. During this period, we will invest in temporary investments, such as cash, cash equivalents, U.S. government securities
and other high-quality debt investments that mature in one year or less. In addition, we will retain a portion of the net proceeds
from the follow-on offering for purposes of funding our ongoing operations.





30









Any failure on our part to maintain
our status as a business development company would reduce our operating flexibility.



We intend to continue
to qualify as a business development company under the 1940 Act. The 1940 Act imposes numerous constraints on the operations of
business development companies. For example, business development companies are required to invest at least 70% of their gross
assets in specified types of securities, primarily in private companies or thinly-traded U.S. public companies, cash, cash equivalents,
U.S. government securities and other high quality debt investments that mature in one year or less. Furthermore, any failure to
comply with the requirements imposed on business development companies by the 1940 Act could cause the SEC to bring an enforcement
action against us and/or expose us to claims of private litigants. In addition, upon approval of a majority of our stockholders,
we may elect to withdraw our status as a business development company. If we decide to withdraw our election, or if we otherwise
fail to qualify, or maintain our qualification, as a business development company, we may be subject to the substantially greater
regulation under the 1940 Act as a closed-end investment company. Compliance with such regulations would significantly decrease
our operating flexibility, and could significantly increase our costs of doing business. If we do not remain a business development
company, we might be regulated as a closed-end investment company under the 1940 Act, which would subject us to substantially more
regulatory restrictions under the 1940 Act and correspondingly decrease our operating flexibility.



We are dependent upon GSV Asset Management’s
senior investment professionals for our future success, particularly Michael T. Moe, Stephen D. Bard and Luben Pampoulov. If we
lose any of our investment adviser’s senior investment professionals, our ability to implement our business strategy could
be significantly harmed.



We depend on the diligence,
skill and network of business contacts of the GSV Asset Management’s senior investment professionals. These senior investment
professionals, together with other investment professionals employed by GSV Asset Management, evaluate, negotiate, structure, close,
monitor and service our investments. Our future success will depend to a significant extent on the continued service and coordination
of our investment adviser’s senior investment professionals, particularly Michael T. Moe, Stephen D. Bard and Luben Pampoulov.
None of Messrs. Moe, Bard or Pampoulov is subject to an employment contract, and none receive any compensation from us. None of
Messrs. Moe, Bard or Pampoulov devote all of their business time to our operations, and each have other demands on their time as
a result of their other activities. The departure of any of these individuals could have a material adverse effect on our ability
to achieve our investment objective.



None of the GSV Asset Management’s
senior investment professionals or Advisory Board members, including Michael T. Moe, Stephen D. Bard and Luben Pampoulov, are subject
to employment agreements, and there can be no assurance that our investment adviser will be successful in retaining its senior
investment professionals.



None of the members
of GSV Asset Management’s senior investment professionals or its Advisory Board members, including Michael T. Moe, Stephen
D. Bard and Luben Pampoulov, are subject to employment agreements. As a result, although Messrs. Moe, Bard and Pampoulov comprise
the principals of GSV Asset Management, they are free to terminate their employment with GSV Asset Management at any time. In addition,
none of our investment adviser’s senior investment professionals or the Advisory Board members, including Messrs. Moe, Bard
and Pampoulov, are subject to any non-compete agreements that would restrict their ability to provide investment advisory services
to an entity with an investment objective similar to our own in the event they were to terminate their employment with GSV Asset
Management, or if GSV Asset Management were to no longer serve as our investment adviser. There can be no assurance that our investment
adviser will be successful in retaining its senior investment professionals or the Advisory Board members, including Messrs. Moe,
Bard and Pampoulov. The departure of any of Messrs. Moe, Bard or Pampoulov could have a material adverse effect on our ability
to achieve our investment objective.



Our growth will require
that GSV Asset Management retain and attract new investment and administrative personnel in a competitive market. Its ability to
attract and retain personnel with the requisite credentials, experience and skills will depend on several factors including, but
not limited to, its ability to offer competitive wages, benefits and professional growth opportunities. Many of the entities with
which GSV Asset Management will compete for experienced personnel, including investment funds (such as private equity funds and
mezzanine funds) and traditional financial services companies, will have greater resources than it.





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Our financial condition and results
of operations will depend on our ability to achieve our investment objective.



We are a newly organized
company. As such, we are subject to the business risks and uncertainties associated with any new business enterprise. Our ability
to achieve our investment objective will depend on our investment adviser’s ability to identify, analyze and invest in companies
that meet our investment criteria. Accomplishing this result on a cost-effective basis is largely a function of our investment
adviser’s structuring of the investment process and its ability to provide competent, attentive and efficient services to
us. We seek a specified number of investments in rapidly growing venture capital-backed emerging companies, which may be extremely
risky. There can be no assurance that GSV Asset Management will be successful in identifying and investing in companies that meet
our investment criteria, or that we will achieve our investment objective.



In addition to monitoring
the performance of our existing investments, GSV Asset Management is required to offer, and may be called upon, to provide, managerial
assistance to some of our portfolio companies. GSV Asset Management also currently manages GSV X Fund, LP (“GSV X Fund”),
a global long/short absolute return fund, in which we have no economic interest. These demands on their time may distract them
or slow the rate of investment. Even if we are able to grow and build upon our investment operations, any failure to manage our
growth effectively could have a material adverse effect on our business, financial condition, results of operations and prospects.
The results of our operations will depend on many factors, including the availability of opportunities for investment, readily
accessible short and long-term funding alternatives in the financial markets and economic conditions. Furthermore, if we cannot
successfully operate our business or implement our investment policies and strategies as described herein, it could negatively
impact our ability to pay dividends.



We will likely experience fluctuations
in our quarterly results and we may be unable to replicate past investment opportunities or make the types of investments we have
made to date in future periods.



We will likely experience
fluctuations in our quarterly operating results due to a number of factors, including the rate at which we make new investments,
the level of our expenses, variations in and the timing of the recognition of realized and unrealized gains or losses, the degree
to which we encounter competition in our markets and general economic conditions. These fluctuations may in certain cases be exaggerated
as a result of our focus on realizing capital gains rather than current income from our investments. In addition, there can be
no assurance that we will be able to locate or acquire investments that are of a similar nature to those currently in our portfolio.
As a result of these factors, results for any period should not be relied upon as being indicative of performance in future periods.



Our business model depends upon the
development and maintenance of strong referral relationships with private equity and venture capital funds and investment banking
firms.



We are substantially
dependent on our informal relationships, which we use to help identify and gain access to investment opportunities. If we fail
to maintain our relationships with key firms, or if we fail to establish strong referral relationships with other firms or other
sources of investment opportunities, we will not be able to grow our portfolio of equity investments and achieve our investment
objective. In addition, persons with whom we have informal relationships are not obligated to inform us of investment opportunities,
and therefore such relationships may not lead to the origination of equity or other investments. Any loss or diminishment of such
relationships could effectively reduce our ability to identify attractive portfolio companies that meet our investment criteria,
either for direct equity investments or for investments through private secondary market transactions.



There are significant potential risks
relating to investing in securities traded on private secondary marketplaces.



We have and expect
to continue to utilize private secondary marketplaces, such as SharesPost and SecondMarket, to acquire investments in our portfolio.
We generally have little or no direct access to financial or other information from the portfolio companies with respect to which
we invest through such private secondary marketplaces. As a result, we are dependent upon the relationships and contacts of our
investment adviser’s senior investment professionals, its Advisory Board members and our board of directors to obtain the
information for our investment adviser to perform research and due diligence, and to monitor our investments after they are made.
There can be no assurance that our investment adviser will be able to acquire adequate information on which to make its investment
decision with respect to any private secondary marketplace purchases, or that the information it is able to obtain is accurate
or complete. Any failure to obtain full and complete information regarding the portfolio companies with respect to which we invest
through private secondary marketplaces could cause us to lose part or all of our investment in such companies, which would have
a material and adverse effect on our net asset value and results of operations.





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In addition, while
we believe the ability to trade on private secondary marketplaces provides valuable opportunities for liquidity, there can be no
assurance that the portfolio companies with respect to which we invest through private secondary marketplaces will have or maintain
active trading markets, and the prices of those securities may be subject to irregular trading activity, wide bid/ask spreads and
extended trade settlement periods, which may cause an inability for us to realize full value on our investment. In addition, wide
swings in market prices, which are typical of irregularly traded securities, could cause significant and unexpected declines in
the value of our portfolio investments. Further, prices in private secondary marketplaces, where limited information is available,
may not accurately reflect the true value of a portfolio company, and may in certain cases overstate a portfolio company’s
actual value, which may cause us to realize future capital losses on our investment in that portfolio company. If any of the foregoing
were to occur, it would likely have a material and adverse effect on our net asset value and results of operations.



Investments in private
companies, including through private secondary marketplaces, also entail additional legal and regulatory risks which expose participants
to the risk of liability due to the imbalance of information among participants and participant qualification and other transactional
requirements applicable to private securities transactions, the non-compliance with which could result in rescission rights and
monetary and other sanctions. The application of these laws within the context of private secondary marketplaces and related market
practices are still evolving, and, despite our efforts to comply with applicable laws, we could be exposed to liability. The regulation
of private secondary marketplaces is also evolving. Additional state or federal regulation of these markets could result in limits
on the operation of or activity on those markets. Conversely, deregulation of these markets could make it easier for investors
to invest directly in private companies and affect the attractiveness of our company as an access vehicle for investment in private
shares. Private companies may also increasingly seek to limit secondary trading in their stock, such as through contractual transfer
restrictions and employment policies. To the extent that these or other developments result in reduced trading activity and/or
availability of private company shares, our ability to find investment opportunities and to liquidate our investments could be
adversely affected.



Due to transfer restrictions and the
illiquid nature of our investments, we may not be able to purchase or sell our investments when we wish to do so.



Most of our investments
are or will be in equity or equity-linked securities of privately-held companies. The securities we acquire in private companies
are typically subject to contractual transfer limitations, which may include prohibitions on transfer without the company’s
consent and may require that shares owned by us are held in escrow. In order to complete a purchase of shares we may need to, among
other things, give the issuer or its stockholders a particular period of time, often 30 days, in which to exercise a veto right,
or a right of first refusal over, the sale of such securities. We may be unable to complete a purchase transaction if the subject
company or its stockholders chooses to exercise a veto right or right of first refusal. When we complete an investment, we generally
become bound to the contractual transfer limitations imposed on the subject company's stockholders as well as other contractual
obligations, such as tag-along rights. These obligations generally expire only upon an IPO by the subject company. As a result,
prior to an IPO, our ability to liquidate may be constrained. Transfer restrictions could limit our ability to liquidate our positions
in these securities if we are unable to find buyers acceptable to our portfolio companies, or where applicable, their stockholders.
Such buyers may not be willing to purchase our investments at adequate prices or in volumes sufficient to liquidate our position,
and even where they are willing, other stockholders could exercise their tag-along rights to participate in the sale, thereby reducing
the number of shares sellable by us. Furthermore, prospective buyers may be deterred from entering into purchase transactions with
us due to the delay and uncertainty that these transfer and other limitations create.



Although we believe
that secondary marketplaces may offer an opportunity to liquidate our private company investments, there can be no assurance that
a trading market will develop for the securities that we wish to liquidate or that the subject companies will permit their shares
to be sold through such marketplaces. Even if some of our portfolio companies complete IPOs, we are typically subject to lock-up
provisions that prohibit us from selling our investments into the public market for specified periods of time after IPOs. As a
result, the market price of securities that we hold may decline substantially before we are able to sell these securities following
an IPO.





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Due to the illiquid
nature of most of our investments, we may not be able to sell these securities at times when we deem it advantageous to do so,
or at all. Because our net asset value is only determined on a quarterly basis and due to the difficulty in assessing this value,
our net asset value may not fully reflect the illiquidity of our portfolio, which may change on daily basis, depending on many
factors, including the status of the private secondary markets and our particular portfolio at any given time.



There are significant potential risks
associated with investing in venture capital and private equity-backed companies with complex capital structures.



We invest primarily
in rapidly growing venture capital-backed emerging companies, either through private secondary transactions or direct investments
in companies. Such private companies frequently have much more complex capital structures than traditional publicly-traded companies,
and may have multiple classes of equity securities with differing rights, including with respect to voting and distributions. In
addition, it is often difficult to obtain financial and other information with respect to private companies, and even where we
are able to obtain such information, there can be no assurance that it is complete or accurate. In certain cases, such private
companies may also have preferred stock or senior debt outstanding, which may heighten the risk of investing in the underlying
equity of such private companies, particularly in circumstances when we have limited information with respect to such capital structures.
Although we believe that our investment adviser’s senior investment professionals, our Advisory Board members and our board
of directors have extensive experience evaluating and investing in private companies with such complex capital structures, there
can be no assurance that we will be able to adequately evaluate the relative risks and benefits of investing in a particular class
of a portfolio company’s equity securities. Any failure on our part to properly evaluate the relative rights and value of
a class of securities in which we invest could cause us to lose part or all of our investment, which in turn could have a material
and adverse effect on our net asset value and results of operations.



A disruption in the capital markets
or the credit markets could negatively affect our business.



As a business development
company, we need the ability to raise additional capital for investment purposes. Without sufficient access to the capital markets,
we may be forced to curtail our business operations or we may not be able to pursue new business opportunities. Disruptive conditions
in the financial industry and any new legislation in response to those conditions could restrict our business operations and could
adversely impact our results of operations and financial condition.



Although we do not
anticipate borrowing funds for investment purposes, to the extent we do utilize leverage and the fair value of our assets declines
substantially, we may fail to maintain the asset coverage ratios imposed upon us by the 1940 Act. Any such failure would affect
our ability to issue senior securities, including borrowings, and pay dividends, which could materially impair our business operations.
Our liquidity could be impaired further by an inability to access the capital markets. For example, we cannot be certain that we
will be able to raise additional equity capital to provide funding for normal operations, including new investments. Reflecting
concern about the stability of the financial markets, many institutional investors have reduced or ceased providing funding to
certain borrowers. This market turmoil has led to increased market volatility and widespread reduction of business activity generally.



We operate in a highly competitive market
for direct equity investment opportunities.



A large number of entities
compete with us to make the types of direct equity investments that we target as part of our business strategy. We compete for
such investments with a large number of private equity and venture capital funds, other equity and non-equity based investment
funds, investment banks and other sources of financing, including traditional financial services companies such as commercial banks
and specialty finance companies. Many of our competitors are substantially larger than us and have considerably greater financial,
technical and marketing resources than we do. For example, some competitors may have a lower cost of funds and access to funding
sources that are not available to us. In addition, some of our competitors may have higher risk tolerances or different risk assessments,
which could allow them to consider a wider variety of investments and establish more relationships than us. Furthermore, many of
our competitors are not subject to the regulatory restrictions that the 1940 Act imposes on us as a business development company.
There can be no assurance that the competitive pressures we face will not have a material adverse effect on our business, financial
condition and results of operations. Also, as a result of this competition, we may not be able to take advantage of attractive
investment opportunities from time to time, and we can offer no assurance that we will be able to identify and make direct equity
investments that are consistent with our investment objective.





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The incentive fee may induce GSV Asset
Management to make speculative investments.



The incentive fee payable
by us to GSV Asset Management may create an incentive for GSV Asset Management to make investments on our behalf that are risky
or more speculative than would be the case in the absence of such compensation arrangement. Although no leverage is currently contemplated,
the way in which the incentive fee payable to GSV Asset Management is determined, which is calculated as a percentage of the return
on invested capital, may encourage GSV Asset Management to use leverage to increase the return on our investments. In addition,
while we currently do not use borrowings or other leverage for investment purposes, the fact that our base management fee is payable
based upon our gross assets, which would include any borrowings for investment purposes, may encourage GSV Asset Management to
use leverage to make additional investments. We will be required, however, to obtain the approval of our board of directors before
we incur any future indebtedness. Under certain circumstances, the use of leverage may increase the likelihood of default, which
would disfavor holders of our common stock. Such a practice could result in our investing in more speculative securities than would
otherwise be the case, which could result in higher investment losses, particularly during cyclical economic downturns.



In addition, our investment
adviser has control over the timing of the acquisition and dispositions of our investments, and therefore over when we realize
gains and losses on our investments. As a result, our investment adviser may face a conflict of interest in determining when it
is appropriate to dispose of a specific investment to the extent doing so may serve to maximize its incentive fee at a point where
disposing of such investment may not necessarily be in the best interests of our stockholders. Our board of directors monitors
such conflicts of interest in connection with its review of the performance of our investment adviser under our Investment Advisory
Agreement, as well as during its quarterly review of our financial performance and results of operations.



We may borrow money, which would magnify
the potential for gain or loss on amounts invested and may increase the risk of investing in us.



Borrowings, also known
as leverage, magnify the potential for gain or loss on amounts invested and, therefore, increase the risks associated with investing
in our securities. Although we do not currently anticipate incurring leverage, if we do so we may borrow from and issue senior
debt securities to banks, insurance companies and other lenders. Lenders of such senior securities would have fixed dollar claims
on our assets that are superior to the claims of our common stockholders. If the value of our assets increases, then leveraging
would cause the net asset value attributable to our common stock to increase more sharply than it would have had we not leveraged.
Conversely, if the value of our assets decreases, leveraging would cause net asset value to decline more sharply than it otherwise
would have had we not leveraged. Similarly, any increase in our income in excess of interest payable on the borrowed funds would
cause our net income to increase more than it would without the leverage, while any decrease in our income would cause net income
to decline more sharply than it would have had we not borrowed. Leverage is generally considered a speculative investment technique.
Our ability to service any debt that we incur will depend largely on our financial performance and will be subject to prevailing
economic conditions and competitive pressures. Moreover, as the management fee payable to GSV Asset Management will be payable
on our gross assets, including those assets acquired through the use of leverage, GSV Asset Management may have a financial incentive
to incur leverage which may not be consistent with our stockholders’ interests. In addition, our common stockholders will
bear the burden of any increase in our expenses as a result of leverage, including any increase in the management fee payable to
GSV Asset Management.



There are significant potential conflicts
of interest, which could impact our investment returns and limit the flexibility of our investment policies.



We have entered into
an Investment Advisory Agreement with GSV Asset Management. GSV Asset Management is controlled by Michael T. Moe, our president,
chief executive officer and chairman of our board of directors, Stephen D. Bard, our chief financial officer, chief compliance
officer, treasurer and corporate secretary, and Luben Pampoulov, our vice-president. Messrs. Moe, Bard and Pampoulov, as principals
of GSV Asset Management, collectively manage the business and internal affairs of GSV Asset Management. In addition, GSV Capital
Service Company provides us with office facilities and administrative services pursuant to an Administration Agreement. Mr. Moe
is the managing member of and controls GSV Capital Service Company. While there is no limit on the total amount of expenses we
may be required to reimburse to GSV Capital Service Company, our administrator will only charge us for the actual expenses it incurs
on our behalf, or our allocable portion thereof, without any profit to GSV Capital Service Company.



In addition, our executive
officers and directors, and the principals of our investment adviser, GSV Asset Management, serve or may serve as officers and
directors of entities that operate in a line of business similar to our own, including new entities that may be formed in the future.
Accordingly, they may have obligations to investors in those entities, the fulfillment of which might not be in the best interests
of us or our stockholders, such as, for example, the management of GSV X Fund by GSV Asset Management.





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While the investment
focus of each of these entities tends to be different from our investment objective, it is possible that new investment opportunities
that meet our investment objective may come to the attention of one of these entities, or new entities that may be formed in the
future in connection with another investment advisory client or program, and, if so, such opportunity might not be offered, or
otherwise made available, to us. However, our executive officers, directors and investment adviser intend to treat us in a fair
and equitable manner consistent with their applicable duties under law so that we will not be disadvantaged in relation to any
other particular client. In addition, GSV Asset Management does not anticipate that it will ordinarily identify investment opportunities
that are appropriate for both GSV Capital and the other funds that are currently or in the future may be managed by GSV Asset Management.
However, to the extent it does identify such opportunities, GSV Asset Management will establish a procedure to ensure that such
opportunities are allocated between GSV Capital and such other funds in a fair and equitable manner. Our board of directors will
monitor on a quarterly basis any such allocation of investment opportunities between GSV Capital and any such other funds.



GSV Asset Management
is the owner of the “GSV” name and marks, which we are permitted to use pursuant to a non-exclusive license agreement
between us and GSV Asset Management. GSV Asset Management and its principals also use and may permit other entities to use the
“GSV” name and marks in connection with businesses and activities unrelated to our operations. The use of the “GSV”
name and marks in connection with businesses and activities unrelated to our operations may not be in the best interest of us or
our stockholder and may result in actual or perceived conflicts of interest.



In the ordinary course
of business, we may enter into transactions with portfolio companies that may be considered related party transactions. In order
to ensure that we do not engage in any prohibited transactions with any persons affiliated with us, we have implemented certain
written policies and procedures whereby our executive officers screen each of our transactions for any possible affiliations between
the proposed portfolio investment, us, companies controlled by us and our executive officers and directors. We will not enter into
any agreements unless and until we are satisfied that doing so will not raise concerns under the 1940 Act or, if such concerns
exist, we have taken appropriate actions to seek board review and approval or exemptive relief for such transaction. Our board
of directors will review these procedures on an annual basis.



We have also adopted
a Code of Ethics which applies to, among others, our senior officers, including our chief executive officer and chief financial
officer, as well as all of our officers, directors and employees. Our officers and directors also remain subject to the fiduciary
obligations imposed by both the 1940 Act and applicable state corporate law. Our Code of Ethics requires that all employees and
directors avoid any conflict, or the appearance of a conflict, between an individual’s personal interests and our interests.
Pursuant to our Code of Ethics, each employee and director must disclose any conflicts of interest, or actions or relationships
that might give rise to a conflict, to our chief compliance officer. Our board of directors is charged with approving any waivers
under our Code of Ethics. As required by the NASDAQ corporate governance listing standards, the Audit Committee of our board of
directors is also required to review and approve any transactions with related parties, as such term is defined in Item 404 of
Regulation S-K. In accordance with Item 404, related parties generally include our directors and executive officers, any nominees
for director, any immediate family member of a director or executive officer or nominee for director, and any other person sharing
the household of such director, executive officer or nominee for director.



Finally, we pay GSV
Capital Service Company our allocable portion of overhead and other expenses incurred by GSV Capital Service Company in performing
its obligations under the Administration Agreement, including a portion of the rent and the compensation of our chief financial
officer and chief compliance officer and any administrative support personnel, which creates conflicts of interest that our board
of directors must monitor.



Our investment adviser has the right
to resign on 60 days’ notice, and we may not be able to find a suitable replacement within that time, resulting in a disruption
in our operations that could adversely affect our financial condition, business and results of operations.



Our investment adviser
has the right, under the Investment Advisory Agreement, to resign at any time upon not more than 60 days’ written notice,
whether we have found a replacement or not. If our investment adviser resigns, we may not be able to find a new investment adviser
or hire internal management with similar expertise and ability to provide the same or equivalent services on acceptable terms within
60 days, or at all. If we are unable to do so quickly, our operations are likely to experience a disruption, our financial condition,
business and results of operations as well as our ability to pay distributions are likely to be adversely affected and the market
price of our shares may decline. In addition, the coordination of our internal management and investment activities is likely to
suffer if we are unable to identify and reach an agreement with a single institution or group of executives having the expertise
possessed by our investment adviser and its affiliates. Even if we are able to retain comparable management, whether internal or
external, the integration of such management and their lack of familiarity with our investment objective may result in additional
costs and time delays that may adversely affect our financial condition, business and results of operations.





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The lack of experience of our investment
adviser and its management in operating under the constraints imposed on us as a business development company may hinder the achievement
of our investment objectives.



The 1940 Act imposes
numerous constraints on the operations of business development companies. For example, business development companies are required
to invest at least 70% of their total assets primarily in securities of U.S.-based private companies or public companies with market
capitalizations of less than $250 million, cash, cash equivalents, U.S. government securities and other high quality debt instruments
that mature in one year or less. In addition, qualification for taxation as a RIC requires satisfaction of source-of-income, diversification
and distribution requirements. GSV Asset Management does not have experience investing under these constraints. These constraints,
among others, may hinder GSV Asset Management’s ability to take advantage of attractive investment opportunities and to achieve
our investment objective.



We may have difficulty paying our required
distributions if we recognize income before or without receiving cash representing such income.



Although we focus on
achieving capital gains from our investments, in certain cases we may receive current income, such as interest or dividends, on
our investments. Because in certain cases we may recognize such current income before or without receiving cash representing such
income, we may have difficulty satisfying the annual distribution requirement applicable to RICs. Accordingly, we may have to sell
some of our investments at times we would not consider advantageous, raise additional debt or equity capital or reduce new investments
to meet these distribution requirements. If we are not able to obtain cash from other sources, we may fail to qualify for RIC tax
treatment and thus be subject to corporate-level income tax.



Regulations governing our operation
as a business development company affect our ability to, and the way in which we raise additional capital, which may expose us
to risks, including the typical risks associated with leverage.



Although we have not
used leverage and have no present intent to issue preferred stock, we may in the future issue debt securities or preferred stock
and/or borrow money from banks or other financial institutions, which we refer to collectively as “senior securities,”
up to the maximum amount permitted by the 1940 Act. Under the provisions of the 1940 Act, we will be permitted, as a business development
company, to issue senior securities in amounts such that our asset coverage ratio, as defined in the 1940 Act, equals at least
200% of gross assets less all liabilities and indebtedness not represented by senior securities, after each issuance of senior
securities. If the value of our assets declines, we may be unable to satisfy this test. If that happens, we may be required to
sell a portion of our investments and, depending on the nature of our leverage, repay a portion of our indebtedness at a time when
such sales may be disadvantageous. Furthermore, any amounts that we use to service our indebtedness would not be available for
distributions to our common stockholders.



If in the future we
issue debt or preferred stock, all of the costs of offering and servicing such debt or preferred stock, including interest or preferential
dividend payments thereon, will be borne by our common stockholders. The interests of the holders of any debt or preferred stock
we may issue will not necessarily be aligned with the interests of our common stockholders. In particular, the rights of holders
of our debt or preferred stock to receive interest, dividends or principal repayment will be senior to those of our common stockholders.
Also, in the event we issue preferred stock, the holders of such preferred stock will have the ability to elect two members of
our board of directors. In addition, we may grant a lender a security interest in a significant portion or all of our assets, even
if the total amount we may borrow from such lender is less than the amount of such lender’s security interest in our assets.
In no event, however, will any lender to us have any veto power over, or any vote with respect to, any change in our, or approval
of any new, investment objective or investment policies or strategies described in this annual report on Form 10-K.





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We are not generally
able to issue and sell our common stock at a price below net asset value per share. We may, however, sell our common stock, or
warrants, options or rights to acquire our common stock, at a price below the then-current net asset value of our common stock
if our board of directors determines that such sale is in the best interests of GSV Capital and its stockholders, and our stockholders
approve such sale. In any such case, the price at which our securities are to be issued and sold may not be less than a price which,
in the determination of our board of directors, closely approximates the market value of such securities (less any distributing
commission or discount). We are also generally prohibited under the 1940 Act from issuing securities convertible into voting securities
without obtaining the approval of our existing stockholders.



We will be subject to corporate-level
income tax if we are unable to qualify as a regulated investment company, or RIC.



Although we intend
to elect to be treated as a RIC under Subchapter M of the Code beginning in 2011 and to continue to qualify as a RIC in succeeding
taxable years, no assurance can be given that we will be able to qualify for and maintain RIC status. In order to qualify for the
special treatment accorded to RICs, we must meet certain income source, asset diversification and annual distribution requirements.
In order to satisfy the income source requirement, we must derive in each taxable year at least 90% of our gross income from dividends,
interest, payments with respect to certain securities loans, gains from the sale of stock or other securities or foreign currencies,
income from “qualified publicly traded partnerships” or other income derived with respect to our business of investing
in such stock or securities. To qualify as a RIC, we must also meet certain asset diversification requirements at the end of each
quarter of our taxable year. Failure to meet these tests may result in our having to dispose of certain investments quickly in
order to prevent the loss of RIC status. Because most of our investments will be in private companies, any such dispositions could
be made at disadvantageous prices and may result in substantial losses. In order to satisfy the annual distribution requirement
for a RIC, we must distribute at least 90% of our ordinary income and realized net short-term capital gains in excess of realized
net long-term capital losses, if any, to our stockholders on an annual basis.



Although no leverage
is currently contemplated, because we may use additional debt financing in the future, we may be subject to certain asset coverage
ratio requirements under the 1940 Act and financial covenants under loan and credit agreements that could, under certain circumstances,
restrict us from making distributions necessary to satisfy the annual distribution requirement. If we are unable to obtain cash
from other sources, we may fail to qualify for special tax treatment as a RIC and, thus, may be subject to corporate-level income
tax on all our income. If we fail to qualify as a RIC for any reason and become subject to corporate income tax, the resulting
corporate-level federal taxes could substantially reduce our net assets, the amount of income available for distribution and the
amount of our distributions. Such a failure would have a material adverse effect on us and our stockholders.



Even in the event the value of your
investment declines, the base management fee will still be payable.



The base management
fee will be calculated at an annual rate of 2.0% of the value of our gross assets, which we pay monthly in arrears. The base management
fee is payable regardless of whether the value of our gross assets or your investment declines. As a result, we will owe GSV Asset
Management a base management fee regardless of whether we incurred significant realized capital losses and unrealized capital depreciation
(losses) during the period for which the base management fee is paid.



We incur significant costs as a result
of being a publicly traded company.



As a publicly traded
company, we incur legal, accounting and other expenses, including costs associated with the periodic reporting requirements applicable
to a company whose securities are registered under the Securities Exchange Act of 1934, as amended, or the Exchange Act, as well
as additional corporate governance requirements, including requirements under the Sarbanes-Oxley Act of 2002, and other rules implemented
by the Securities and Exchange Commission.



Our board of directors is authorized
to reclassify any unissued shares of stock into one or more classes of preferred stock, which could convey special rights and privileges
to its owners.



Our charter permits
our board of directors to reclassify any authorized but unissued shares of stock into one or more classes of preferred stock. Our
board of directors will generally have broad discretion over the size and timing of any such reclassification, subject to a finding
that the reclassification and issuance of such preferred stock is in the best interests of GSV Capital and our existing common
stockholders. Any issuance of preferred stock would be subject to certain limitations imposed under the 1940 Act, including the
requirement that such preferred stock have equal voting rights with our outstanding common stock. See “Description of Securities
— Preferred Stock.” We are authorized to issue up to 100,000,000 shares of common stock. Based on 5,520,100 shares
issued and outstanding as of December 31, 2011, there were 12,420,100 shares issued and outstanding immediately following the completion
of our follow-on offering, which closed in February 2012. In the event our board of directors opts to reclassify a portion of our
unissued shares of common stock into a class of preferred stock, those preferred shares would have a preference over our common
stock with respect to dividends and liquidation. The cost of any such reclassification would be borne by our existing common stockholders.
In addition, the 1940 Act provides that holders of preferred stock are entitled to vote separately from holders of common stock
to elect two directors. As a result, our preferred stockholders will have the ability to reject a director that would otherwise
be elected by our common stockholders. In addition, while Maryland law generally requires directors to act in the best interests
of all of a corporation’s stockholders, there can be no assurance that a director elected by our preferred stockholders will
not chose to act in a manner that tends to favors our preferred stockholders, particularly where there is a conflict between the
interests of our preferred stockholders and our common stockholders. The class voting rights of any preferred shares we may issue
could make it more difficult for us to take some actions that may, in the future, be proposed by the board of directors and/or
the holders of our common stock, such as a merger, exchange of securities, liquidation, or alteration of the rights of a class
of our securities, if these actions were perceived by the holders of preferred shares as not in their best interests. The issuance
of preferred shares convertible into shares of common stock might also reduce the net income and net asset value per share of our
common stock upon conversion. These effects, among others, could have an adverse effect on your investment in our common stock.





38









Our board of directors may change our
investment objective, operating policies and strategies without prior notice or stockholder approval, the effects of which may
be adverse.



Our board of directors
has the authority to modify or waive our investment objective, current operating policies, investment criteria and strategies without
prior notice and without stockholder approval. We cannot predict the effect any changes to our current operating policies, investment
criteria and strategies would have on our business, net asset value, operating results and value of our stock. However, the effects
might be adverse, which could negatively impact our ability to pay you dividends and cause you to lose all or part of your investment.



Changes in laws or regulations governing
our operations may adversely affect our business.



We and our portfolio
companies are subject to regulation by laws at the local, state and federal levels. These laws and regulations, as well as their
interpretation, may be changed from time to time. Any change in these laws or regulations could have a material adverse effect
on our business and the value of your investment.



Provisions of the Maryland General Corporation
Law and of our charter and bylaws could deter takeover attempts and have an adverse impact on the price of our common stock.



Our charter and bylaws,
as well as certain statutory and regulatory requirements, contain certain provisions that may have the effect of discouraging a
third party from making an acquisition proposal for us. Our bylaws contain a provision exempting any and all acquisitions by any
person of our shares of stock from the Control Share Act under the Maryland General Corporation Law. If our board of directors
does not otherwise approve a business combination, the Control Share Act (if we amend our bylaws to be subject to that Act) may
discourage others from trying to acquire control of us and increase the difficulty of consummating any offer. Additionally, under
our charter, our board of directors is divided into three classes serving staggered terms; our board of directors may, without
stockholder action, authorize the issuance of shares of stock in one or more classes or series, including preferred stock; and
our board of directors may, without stockholder action, amend our charter to increase the number of shares of stock of any class
or series that we have authority to issue. These antitakeover provisions may inhibit a change of control in circumstances that
could give the holders of our common stock the opportunity to realize a premium over the market price for our common stock.





Risks Related to an Investment in Our
Common Stock



Our common stock price may be volatile
and may decrease substantially.



The trading price of
our common stock may fluctuate substantially. The price of the common stock that will prevail in the market may be higher or lower
than the price you pay, depending on many factors, some of which are beyond our control and may not be directly related to our
operating performance. These factors include, but are not limited to, the following:



39









| | · | price and volume fluctuations in the overall
stock market from time to time;
| | - | ----------------------------------------------------------------------------

| | · | investor demand for our shares;
| | - | -------------------------------

| | · | significant volatility in the market price
and trading volume of securities of regulated investment companies, business development companies or other financial services
companies;
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | changes in regulatory policies or tax
guidelines with respect to regulated investment companies or business development companies;
| | - | ----------------------------------------------------------------------------------------------------------------------------------

| | · | failure to qualify as a RIC for a particular
taxable year, or the loss of RIC status;
| | - | -------------------------------------------------------------------------------------

| | · | actual or anticipated changes in our earnings
or fluctuations in our operating results or changes in the expectations of securities analysts;
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------

| | · | general economic conditions and trends;
| | - | ---------------------------------------

| | · | fluctuations in the valuation of our portfolio
investments;
| | - | -----------------------------------------------------------

| | · | operating performance of companies comparable
to us;
| | - | ----------------------------------------------------

| | · | market sentiment against technology-related
companies; or
| | - | ---------------------------------------------------------

| | · | departures of any of the senior investment
professionals or Advisory Board members of GSV Asset Management.
| | - | -----------------------------------------------------------------------------------------------------------



In the past, following
periods of volatility in the market price of a company’s securities, securities class action litigation has often been brought
against that company. Due to the potential volatility of our stock price, we may therefore be the target of securities litigation
in the future. Securities litigation could result in substantial costs and divert management’s attention and resources from
our business.



Our shares have recently traded, and
may in the future trade at premiums that may prove to be unsustainable or at discounts from net asset value.



Shares of business
development companies like us may, during some periods, trade at prices higher than their net asset value per share and, during
other periods, as frequently occurs with closed-end investment companies, trade at prices lower than their net asset value per
share. Our shares have recently traded at a significant premium to our net asset value per share, which premium may be reduced
or eliminated if and when certain of our portfolio companies complete initial public offerings. In addition, the perceived value
of our investment portfolio may be affected by a number of factors including perceived prospects for individual companies we invest
in, market conditions for common stock generally, for initial public offerings and other exit events for venture capital backed
companies, and the mix of companies in our investment portfolio over time. Negative or unforeseen developments affecting the perceived
value of companies in our investment portfolio could result in a decline in the trading price of our common stock relative to our
net asset value per share.



The possibility that
our shares will trade at a discount from net asset value or at premiums that are unsustainable are risks separate and distinct
from the risk that our net asset value per share will decrease. The risk of purchasing shares of a business development company
that might trade at a discount or unsustainable premium is more pronounced for investors who wish to sell their shares in a relatively
short period of time because, for those investors, realization of a gain or loss on their investments is likely to be more dependent
upon changes in premium or discount levels than upon increases or decreases in net asset value per share.



There is a risk that you may not receive
dividends or that our dividends may not grow over time, particularly since we invest primarily in securities that do not produce
current income.



We cannot assure you
that we will achieve investment results or maintain a tax status that will allow or require any specified level of cash distributions
or year-to-year increases in cash distributions. As we intend to focus on making primarily capital gains-based investments in equity
securities, which generally will not be income producing, we do not anticipate that we will pay dividends on a quarterly basis
or become a predictable issuer of dividends, and we expect that our dividends, if any, will be less consistent than other business
development companies that primarily make debt investments.



We have broad discretion over the use
of proceeds from our offerings, to the extent they are successful, and will use proceeds in part to satisfy operating expenses.



We have significant
flexibility in applying the proceeds of our offerings and may use the net proceeds from such offerings in ways with which you may
not agree, or for purposes other than those contemplated at the time of the offering. We cannot assure you that we will be able
to successfully utilize the proceeds within the timeframe contemplated. We will also pay operating expenses, and may pay other
expenses such as due diligence expenses of potential new investments, from net proceeds. Our ability to achieve our investment
objective may be limited to the extent that the net proceeds of an offering, pending full investment, are used to pay operating
expenses. In addition, we can provide you no assurance that any such offerings will be successful, or that by increasing the size
of our available equity capital our aggregate expenses, and correspondingly, our expense ratio, will be lowered.





40









Item 1B.	Unresolved Staff Comments



Not applicable.

Item 2.	Properties



Our corporate headquarters
are located at 2965 Woodside Road, Woodside, California, in the offices of

GSV Capital Service Company. We do not
own or lease any office space directly; however, we will pay a portion of the rent as allocated to us by GSV Capital Service Company.
Our office facilities are suitable and adequate for our business as it is presently conducted.



Item 3.	Legal Proceedings



We are not currently
subject to any material legal proceedings, nor, to our knowledge, is any material legal proceeding threatened against us. From
time to time, we may be a party to certain legal proceedings in the ordinary course of business, including proceedings relating
to the enforcement of our rights under contracts with our portfolio companies. While the outcome of these legal proceedings cannot
be predicted with certainty, we do not expect that these proceedings will have a material effect upon our financial condition or
results of operations.



Item 4.	Mine Safety Disclosures



Not applicable.





41











PART II



Item 5.	Market
for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities



Our common stock is
traded on the NASDAQ Capital Market under the symbol ‘‘GSVC’’. The following table sets forth, for each
fiscal quarter since our initial public offering on April 28, 2011, the net asset value, or ‘‘NAV,’’ per
share of our common stock, the high and low sales prices for our common stock, and such sales prices as a percentage of NAV per
share.





|                                                           |  |         |       |  | Price Range |   |       | High Sales Price as a Premium (Discount) to |  |   | Low Sales Price as a Premium (Discount) | 
|---------------------------------------------------------- |  | ------- | ----- |  | ----------- | - | ----- | ------------------------------------------- |  | - | --------------------------------------- | 
|                                                           |  | NAV (1) |       |  | High        |   |       | Low                                         |  |   | NAV (2)                                 | 
|Fiscal 2011                                                |  |         |       |  |             |   |       |                                             |  |   |                                         | 
|Fourth Quarter                                             |  | $       | 12.95 |  |             | $ | 17.23 |                                             |  | $ | 12.10                                   | 
|Third Quarter                                              |  |         | 13.26 |  |             |   | 19.97 |                                             |  |   | 12.09                                   | 
|Second Quarter (from April 28, 2011 through June 30, 2011) |  |         | 13.57 |  |             |   | 15.35 |                                             |  |   | 9.75                                    | 





| | (1) | NAV per share is determined as of the last day in the
relevant quarter and therefore may not reflect the NAV per share on the date of the high and low sales prices. The NAV per share
figures shown are based on outstanding shares at the end of each period.
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (2) | Calculated as the respective high or low sales price
divided by NAV per share.
| | --- | ------------------------------------------------------------------------------



Shares of business
development companies may trade at a market price that is less than the value of the net assets attributable to those shares.
The possibility that our shares of common stock will trade at premiums that are unsustainable over the long term or at a discount
from net asset value are separate and distinct from the risk that our net asset value will decrease. Since our initial public
offering on April 28, 2011, our shares of common stock have traded at both a discount and a premium to the net assets attributable
to those shares. As of December 31, 2011, our shares of common stock traded at a premium of approximately 7.7% to our NAV per
share of $12.95.



The timing and amount
of our dividends, if any, will be determined by our board of directors. Any dividends to our stockholders will be declared out
of assets legally available for distribution. We intend to focus on making capital gains-based investments. As a consequence, we
do not anticipate that we will pay dividends on a quarterly basis or become a predictable issuer of dividends, and we expect that
our dividends, if any, will be much less consistent than other business development companies that primarily make debt investments.
However, to the extent there are earnings or realized capital gains to be distributed, we intend to declare and pay a dividend
at least annually.



We intend to elect
to be treated, and intend to qualify annually thereafter, as a RIC under Subchapter M of the Code, beginning with our 2011 taxable
year. To obtain and maintain RIC tax treatment, we must, among other things, distribute at least 90% of our ordinary income and
realized net short-term capital gains in excess of realized net long-term capital losses, if any. In order to avoid certain excise
taxes imposed on RICs, we currently intend to distribute during each calendar year an amount at least equal to the sum of (1) 98%
of our ordinary income for the calendar year, (2) 98.2% of our capital gains in excess of capital losses for the one-year period
ending on October 31 of the calendar year and (3) any ordinary income and net capital gains for preceding years that were not distributed
during such years. In addition, although we currently intend to distribute realized net capital gains (i.e., net long-term
capital gains in excess of net short-term capital losses), if any, at least annually, we may in the future decide to retain such
capital gains for investment. If this happens, you will be treated as if you received an actual distribution of the capital gains
we retain and reinvested the net after-tax proceeds in us. You also may be eligible to claim a tax credit (or, in certain circumstances,
a tax refund) equal to your allocable share of the tax we paid on the capital gains deemed distributed to you. See ‘‘Material
U.S. Federal Income Tax Considerations.’’ We can offer no assurance that we will achieve results that will permit the
payment of any cash distributions and, to the extent that we issue senior securities, we will be prohibited from making distributions
if doing so causes us to fail to maintain the asset coverage ratios stipulated by the 1940 Act or if distributions are limited
by the terms of any of our borrowings.



Our current intention
is to make any distributions out of assets legally available therefrom in additional shares of our common stock under our dividend
reinvestment plan, unless you elect to receive your dividends and/or long-term capital gains distributions in cash. Under the dividend
reinvestment plan, if a stockholder owns shares of common stock registered in its own name, the stockholder will have all cash
distributions (net of any withholding) automatically reinvested in additional shares of common stock unless the stockholder opts
out of our dividend reinvestment plan by delivering a written notice to our dividend paying agent prior to the record date of the
next dividend or distribution. See ‘‘Dividend Reinvestment Plan.’’ Any distributions reinvested under the
plan will nevertheless remain taxable to the U.S. stockholder, although no cash distribution has been made. As a result, if you
do not elect to opt out of the dividend reinvestment plan, you will be required to pay applicable federal, state and local taxes
on any reinvested dividends even though you will not receive a corresponding cash distribution. In addition, reinvested dividends
have the effect of increasing our gross assets, which may correspondingly increase the management fee payable to our investment
adviser. If you hold shares in the name of a broker or financial intermediary, you should contact the broker or financial intermediary
regarding your election to receive distributions in cash.





42









Performance Graph



The following graph
compares the return on our common stock with that of the Standard & Poor’s 500 Stock Index and the NASDAQ Stock Index,
for the period from April 28, 2011 (the date of our initial public offering) to December 31, 2011. The graph assumes that, on April
28, 2011, a person invested $100 in each of our common stock, the Standard & Poor’s 500 Stock Index and the NASDAQ Stock
Index. The graph measures total shareholder return, which takes into account both changes in stock price and dividends. It assumes
that dividends are reinvested in like securities.







Dividend Reinvestment Plan



We have adopted a dividend
reinvestment plan, through which all dividends are paid to stockholders in the form of additional shares of our common stock, unless
a stockholder elects to receive cash as provided below. In this way, a stockholder can maintain an undiluted investment in us and
still allow us to pay out the required distributable income.



No action is required
on the part of a registered stockholder to receive a distribution in shares of our common stock. A registered stockholder may elect
to receive an entire distribution in cash by notifying American Stock Transfer & Trust Company, the plan administrator and
our transfer agent and registrar, in writing so that such notice is received by the plan administrator no later than 10 days prior
to the record date for distributions to stockholders. The plan administrator will set up an account for shares acquired through
the plan for each stockholder who has not elected to receive distributions in cash and hold such shares in non-certificated form.
Upon request by a participant, received in writing not less than 10 days prior to the record date, the plan administrator will,
instead of crediting shares to the participant’s account, issue a certificate registered in the participant’s name
for the number of whole shares of our common stock and a check for any fractional share.



Those stockholders
whose shares are held by a broker or other financial intermediary may receive distributions in cash by notifying their broker or
other financial intermediary of their election.



We use only newly-issued
shares to implement the plan, whether our shares are trading at a premium or at a discount to net asset value. The number of shares
to be issued to a stockholder is determined by dividing the total dollar amount of the distribution payable to such stockholder
by the market price per share of our common stock at the close of regular trading on the NASDAQ Capital Market on the valuation
date for such distribution. Market price per share on that date will be the closing price for such shares on the NASDAQ Capital
Market or, if no sale is reported for such day, at the average of their electronically-reported bid and asked prices. The number
of shares of our common stock to be outstanding after giving effect to payment of the distribution cannot be established until
the value per share at which additional shares will be issued has been determined and elections of our stockholders have been tabulated.





43









There is no charge
to stockholders for receiving their distributions in the form of additional shares of our common stock. The plan administrator’s
fees for handling distributions in stock are paid by us. There are no brokerage charges with respect to shares we have issued directly
as a result of distributions payable in stock. If a participant elects by written or telephonic notice to the plan administrator
to have the plan administrator sell part or all of the shares held by the plan administrator in the participant’s account
and remit the proceeds to the participant, the plan administrator is authorized to deduct a $15 transaction fee plus brokerage
commissions from the proceeds. Stockholders who receive distributions in the form of stock are subject to the same federal, state
and local tax consequences as are stockholders who elect to receive their distributions in cash. A stockholder’s basis for
determining gain or loss upon the sale of stock received in a distribution from us will be equal to the total dollar amount of
the distribution payable to the stockholder. As a result, if you do not elect to opt out of the dividend reinvestment plan, you
will be required to pay applicable federal, state and local taxes on any reinvested dividends even though you will not receive
a corresponding cash distribution. In addition, reinvested dividends have the effect of increasing our gross assets, which may
correspondingly increase the management fee payable to our investment adviser.



The plan may be terminated
by us upon notice in writing mailed to each participant at least 30 days prior to any record date for the payment of any dividend
or distribution by us.



Item 6.	Selected Financial Data



The following selected
financial and other data for the period from January 6, 2011 (date of inception) to December 31, 2011 is derived from our financial
statements. The data should be read in conjunction with our financial statements and notes thereto and “Management’s
Discussion and Analysis of Financial Condition and Results of Operations,” which are included in this Annual Report.





|                                                                           |  |   | Year Ended December 31, 2011(1) |  
|-------------------------------------------------------------------------- |  | - | ------------------------------- | -
|Income Statement Data:                                                     |  |   |                                 |  
|Total operating expenses                                                   |  | $ | 2,196,192                       |  
|Net investment loss                                                        |  |   | (2,033,864                      | )
|Net decrease in net assets resulting from operations                       |  |   | (3,613,664                      | )
|                                                                           |  |   |                                 |  
|Balance Sheet Data:                                                        |  |   |                                 |  
|Total Assets                                                               |  | $ | 91,798,242                      |  
|Total Net Assets                                                           |  |   | 71,503,248                      |  
|                                                                           |  |   |                                 |  
|Per Common Share Data:                                                     |  |   |                                 |  
|Net decrease in net assets resulting from operations per average share (2) |  | $ | (1.07                           | )
|Net asset value per share                                                  |  |   | 12.95                           |  





| | (1) | Includes the period from January 6, 2011 (date of inception)
to December 31, 2011.
| | --- | ----------------------------------------------------------------------------------

| | (2) | Weighted average common shares for the period from January
6, 2011 (date of inception) to December 31, 2011 was calculated starting from the issuance of 100 shares as of February 28, 2011.
Weighted average common shares were 3,377,429 for the period from January 6, 2011 (date of inception) to December 31, 2011.
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------





44









Item 7.	Management’s Discussion
and Analysis of Financial Condition and Results of Operations



Forward-Looking Statements



This annual report
on Form 10-K contains forward-looking statements that involve substantial risks and uncertainties. These forward-looking statements
are not historical facts, but rather are based on current expectations, estimates and projections about GSV Capital, our current
and prospective portfolio investments, our industry, our beliefs, and our assumptions. Words such as ‘‘anticipates,’’
‘‘expects,’’ ‘‘intends,’’ ‘‘plans,’’ ‘‘will,’’
‘‘may,’’ ‘‘continue,’’ ‘‘believes,’’ ‘‘seeks,’’
‘‘estimates,’’ ‘‘would,’’ ‘‘could,’’ ‘‘should,’’
‘‘targets,’’ ‘‘projects,’’ and variations of these words and similar expressions
are intended to identify forward-looking statements.



The forward looking
statements contained in this annual report on Form 10-K involve risks and uncertainties, including statements as to:



| | · | our future operating results;
| | - | -----------------------------

| | · | our business prospects and the prospects
of our portfolio companies;
| | - | --------------------------------------------------------------------

| | · | the impact of investments that we expect
to make;
| | - | -------------------------------------------------

| | · | our contractual arrangements and relationships
with third parties;
| | - | ------------------------------------------------------------------

| | · | the dependence of our future success on
the general economy and its impact on the industries in which we invest;
| | - | ----------------------------------------------------------------------------------------------------------------

| | · | the ability of our portfolio companies
to achieve their objectives;
| | - | -------------------------------------------------------------------

| | · | our expected financings and investments;
| | - | ----------------------------------------

| | · | the adequacy of our cash resources and
working capital; and
| | - | -----------------------------------------------------------

| | · | the timing of cash flows, if any, from
the operations of our portfolio companies.
| | - | ---------------------------------------------------------------------------------



These statements are
not guarantees of future performance and are subject to risks, uncertainties, and other factors, some of which are beyond our control
and difficult to predict and could cause actual results to differ materially from those expressed or forecasted in the forward-looking
statements, including without limitation:



| | · | an economic downturn could impair our
portfolio companies’ ability to continue to operate, which could lead to the loss of some or all of our equity investments
in such portfolio companies,
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | an economic downturn could disproportionately
impact the market sectors in which a significant portion of our portfolio is concentrated, causing us to suffer losses in our portfolio,
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | an inability to access the equity markets
could impair our investment activities,
| | - | ---------------------------------------------------------------------------------

| | · | interest rate volatility could adversely
affect our results, particularly if we opt to use leverage as part of our investment strategy, and
| | - | -------------------------------------------------------------------------------------------------------------------------------------------

| | · | the risks, uncertainties and other factors
we identify in ‘‘Risk Factors’’ and elsewhere in this annual report on Form 10-K and in our filings with
the SEC.
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------



Although we believe
that the assumptions on which these forward-looking statements are based are reasonable, any of those assumptions could prove to
be inaccurate, and as a result, the forward-looking statements based on those assumptions also could be inaccurate. In light of
these and other uncertainties, the inclusion of a projection or forward-looking statement in this annual report on Form 10-K should
not be regarded as a representation by us that our plans and objectives will be achieved. These risks and uncertainties include
those described or identified in ‘‘Risk Factors’’ and elsewhere in this annual report on Form 10-K. You
should not place undue reliance on these forward-looking statements, which apply only as of the date of this annual report on Form
10-K.



The following analysis
of our financial condition and results of operations should be read in conjunction with our financial statements and the related
notes thereto contain elsewhere in this annual report on Form 10-K.



Overview



We are an externally
managed, non-diversified closed-end management investment company that has elected to be treated as a business development company
under the 1940 Act. Our investment objective is to maximize our portfolio’s total return, principally by seeking capital
gains on our equity and equity-related investments. We invest principally in the equity securities of rapidly growing venture capital-backed
emerging companies. We acquire our investments through secondary marketplaces for private companies, negotiations with selling
stockholders and direct investments with prospective portfolio companies. We may also invest on an opportunistic basis in select
publicly-traded equity securities or certain non-U.S. companies that otherwise meet our investment criteria. Our investment activities
are managed by GSV Asset Management, and GSV Capital Service Company provides the administrative services necessary for us to operate.



45









Our investment philosophy
is premised on a disciplined approach of identifying high-growth emerging companies across several key industry themes which may
include, among others, social media, mobility, cloud computing, software-as-a-service, green technology and education technology.
Our investment adviser’s investment decisions are based on a disciplined analysis of available information regarding each
potential portfolio company’s business operations, focusing on the company’s growth potential, the quality of recurring
revenues and cash flow and cost structures, as well as an understanding of key market fundamentals. Many of the companies that
our investment adviser evaluates have financial backing from top tier venture capital funds or other financial or strategic sponsors.



We seek to deploy capital
primarily in the form of non-controlling equity and equity-related investments, including common stock, warrants, preferred stock
and similar forms of senior equity, which may or may not be convertible into a portfolio company’s common equity, and convertible
debt securities with a significant equity component. We anticipate that substantially all of the net proceeds of our follow-on
offering, which closed in February 2012, will be used for the above purposes within six to 12 months, depending on the availability
of investment opportunities that are consistent with our investment objectives and market conditions.



We seek to create a
low-turnover portfolio that we expect will include diversified investments in 20 to 30 companies. As of December 31, 2011, we have
completed investments in 21 companies for aggregate consideration of approximately $64.9 million (exclusive of transaction fees
and costs), or 85.3% of the net proceeds from our initial public offering and subsequent follow-on offering. We expect that the
total number of portfolio companies in which we are invested will increase as our equity capital base grows.



On April 28, 2011,
we priced our initial public offering of 3,335,000 shares of our common stock at the offering price of $15.00 per share. The initial
public offering closed on May 3, 2011, resulting in net proceeds to GSV Capital Corp. of approximately $46.5 million. On September
26, 2011, we priced a follow-on offering of 1,900,000 shares of our common stock at an offering price $14.15 per share. The follow-on
offering included the full exercise of the underwriters’ option to purchase an additional 285,000 shares of our common stock,
resulting in net proceeds to GSV Capital Corp. of approximately $29.6 million. Our shares are currently listed on the NASDAQ Capital
Market under the symbol ‘‘GSVC’’.



Effective May 26,
2011, we changed our name from NeXt Innovation Corp. to GSV Capital Corp.



Investments



All of the investments
in our portfolio at December 31, 2011 were made during the period from May 16, 2011 to December 31, 2011. The fair value of our
investments can be expected to fluctuate in future periods due to changes in our investments and changes in the fair value of the
investments.



We closed on an investment
of $2,250,000 in Kno, Inc., an education software company, on May 16, 2011.



We closed on an investment
of $712,380, plus transaction costs, in Serious Energy, Inc., a green technology company, on June 6, 2011.



We closed on an investment
of $280,000, plus transaction costs, in Gilt Groupe, Inc., an eCommerce platform, on June 17, 2011.



We closed on an investment
of $6,587,500, plus transaction costs, in Facebook, Inc., a social-networking company, on June 23, 2011.



We closed on an investment
of $5,999,996, plus transaction costs, in Chegg, Inc., an online textbook rental company, on June 29, 2011.



We closed on an investment
of $414,827, plus transaction costs, in Bloom Energy Corporation, a green technology company, on June 30, 2011.



We closed on an investment
of $166,500, plus transaction costs, in Bloom Energy Corporation on July 8, 2011.



We closed on an investment
of $200,000, plus transaction costs, in Silver Spring Networks, Inc., a green technology company, on July 11, 2011.



46









We closed on an investment
of $2,250,000, plus transaction costs, in SharesPost, Inc., a secondary marketplace for private equity investments, on July 19,
2011.



We closed on an investment
of $1,968,000, plus transaction costs, in Gilt Groupe, Inc., an eCommerce platform, on July 25, 2011.



We closed on a follow-on
investment of $190,000, plus transaction costs, in Bloom Energy Corporation, on August 9, 2011.



On August 15, 2011,
we acquired a $4 million unsecured promissory note (‘‘Note’’) issued by PJB Fund LLC, a Delaware limited
liability company (‘‘Borrower’’), which note is personally guaranteed by its members on a limited basis.
The Note generally has a one-year maturity (which may be extended for an additional six months thereafter) and is subject to being
repaid, at Borrower’s election, either by transfer of a certain number of shares of common stock of Zynga, Inc., subject
to a cap, transfer of membership interests in Borrower or with a cash amount of equivalent value. The amount payable under the
Note (the ‘‘Repayment Amount’’) will be equal to the face amount, plus the greater of accrued interest
(at a rate of 10%) or a return based on the relative value of Zynga. At values of Zynga ranging from $6 billion to $14.4 billion
(assuming the Note is settled within one year), the Repayment Amount will provide a return of 10% to 20%. At values of Zynga in
excess of $14.4 billion, the Repayment Amount return includes 50% of such incremental share price appreciation. To the extent Zynga
has a value less than $6 billion, the cap applicable to settlement in shares will effectively allow Borrower to settle the Note
for less than the face amount of the loan. To the extent the borrower repays the note in cash, we would have no further direct
or indirect interest in Zynga, Inc.



We closed on a follow-on
investment of $1,000,008, plus transaction costs, in Bloom Energy Corporation, on August 17, 2011.



We closed on a follow-on
investment of $3,251,250, plus transaction costs, in Gilt Group, Inc. on August 22, 2011.



We closed on an investment
of $2,035,200, plus transaction costs, in Groupon, Inc., an online provider of daily coupons for various consumer products, on
August 22, 2011.



We closed on an investment
of $6,932,493, plus transaction costs, in Twitter, Inc., an online short messaging platform, on August 22, 2011.



We closed on a follow-on
investment of $901,430, plus transaction costs, in Silver Spring Networks, Inc., on August 30, 2011.



We closed on investment
of $1,999,997, plus transaction costs, in TrueCar, Inc., an online automotive research destination, on August 30, 2011.



We closed on an investment
of $250,000, plus transaction costs in ZoomSystems, a producer of automated retail vending machines, on August 31, 2011.



We closed on an investment
of $1,000,000, plus transaction costs, in Control 4 Inc., a smart home automation company, on October 4, 2011.



We closed on an investment
of $2,000,000, plus transaction costs in Grockit Inc., an online test preparation company, on October 7, 2011.



We closed on a follow-on
investment of $1,593,000, plus transaction costs, in Twitter, Inc. on October 21, 2011.



We closed on a follow-on
investment of $3,875,000, plus transaction costs, in Facebook, Inc., on November 8, 2011.



We closed on an investment
of $500,000, plus transaction costs in The Echo Systems Corp., a social analytics company, on November 14, 2011.



We closed on an investment
of $3,500,000, plus transaction costs, in ZocDoc Inc., a company that provides online booking for doctor and dentist appointments,
on November 15, 2011.



47









We closed on an investment
of $4,999,998, plus transaction costs, in Dropbox, an online storage service, on November 15, 2011.



We closed on a follow-on
investment of $3,588,000, plus transaction costs, in Twitter, Inc., on November 18, 2011.



We closed on an investment
of $750,000, plus transaction costs, in DreamBox Learning, Inc., an education technology company, on December 6, 2011.



We closed on a follow-on
investment of $205,000, plus transaction costs, in Kno, Inc., on December 15, 2011.



We closed on an investment
of $1,000,000, plus transaction costs in StormWind, an electronic marketing and business services platform, on December 15, 2011.



We closed on an investment
of $500,000, plus transaction costs in rSmart, a higher education learning platform, on December 19, 2011.



The fair value, as
of December 31, 2011, of these investments was $64,078,150. In addition, we held $20,000,044 in one United States Treasury Bill
and $7,000,000 in two money market funds as of December 31, 2011. We also held $385,995 in unrestricted cash on December 31, 2011.



Results of Operations



As January 6,
2011 is our date of inception, there is no comparable period to compare results for the period from January 6, 2011 to
December 31, 2011.



Investment Income



For the period from
January 6, 2011 (date of inception) to December 31, 2011, we had investment income of $162,328, or $0.05 per share, which consisted
of $158,389 of interest income and $3,939 of dividend income.



Operating Expenses



For the period from
January 6, 2011 (date of inception) to December 31, 2011, we had $2,196,192 in total operating expenses consisting primarily of
legal, audit and consulting fees, in addition to organizational expenses, investment management fees and administration fees. The
investment advisory fee for the period from January 6, 2011 (date of inception) to December 31, 2011, was $618,865, representing
the base fee as provided for in our investment advisory agreement. Costs incurred under our administration agreement for the period
from January 6, 2011 (date of inception) to December 31, 2011, were $554,232. Professional fees, consisting of legal, valuation,
audit and consulting fees, were approximately $409,983 for the period from January 6, 2011 (date of inception) to December 31,
2011.



Net Decrease in Net Assets



For the period from
January 6, 2011 (date of inception) to December 31, 2011, we had a net change in unrealized depreciation of $1,579,800, or $0.47
per share. Net investment loss was $2,033,864, or $0.60 per share, for the period from January 6, 2011 (date of inception) to December
31, 2011. Net decrease in net assets resulting from operations was $3,613,664, or $1.07 per share, for the period from January
6, 2011 (date of inception) to December 31, 2011.



The per share figures
noted above are based on a weighted-average of 3,377,429 shares outstanding for the period from January 6, 2011 (date of inception)
to December 31, 2011.



Liquidity and Capital Resources



At December 31, 2011,
we had investments in 21 portfolio companies with costs totaling $65,658,866, two money market funds totaling $7,000,000 and cash
in the amount of $385,995.



On April 28, 2011,
we priced our initial public offering of 3,335,000 shares of our common stock at the offering price of $15.00 per share. The initial
public offering closed on May 3, 2011, resulting in net proceeds to GSV Capital of approximately $46.5 million. Our shares are
currently listed on the NASDAQ Capital Market under the symbol ‘‘GSVC’’.





48









On September 26, 2011,
we priced a secondary offering, selling 2,185,000 shares at a price of $14.15 per share, including an exercise in full by the underwriters
of their option to purchase an additional 285,000 shares of common stock to cover overallotments. The follow-on offering resulted
in net proceeds to the Company of approximately $29.6 million.



Our primary use of
cash is to make investments and to pay our operating expenses. We used substantially all of the proceeds of the offerings to invest
in portfolio companies as of December 31, 2011, except for amounts retained for purposes of funding our ongoing expenses.



Our current policy
is to maintain cash reserves in an amount sufficient to pay our operating expenses, including investment management fees and costs
incurred under the administration agreement, for approximately two years. For a description of the investment advisory and administration
services we receive, see ‘‘Related Party Transactions and Certain Relationships’’. We incurred approximately
$618,865 in investment management fees and $554,232 in costs incurred under the administration agreement for the period from January
6, 2011 (date of inception) to December 31, 2011.



As
of December 31, 2011, the fair value of our portfolio investments was equal to the cost of the investments, net of unrealized depreciation
representing transaction costs and any fair value adjustments. Two of our investments, Groupon and SharesPost, had fair value adjustments.
Groupon conducted an IPO on November 4, 2011. Our shares in Groupon are
presently subject to a lock-up agreement that expires on May 1, 2012. The fair value for Groupon was estimated using the close
price on a public exchange as of the valuation date, adjusted for a discount due to lack of marketability of 28% that was primarily
based on the market price of publicly traded put options with a similar term as the lock-up as of December 31, 2011. Our investment
in SharesPost includes Series B preferred shares and warrants. After our investment in SharesPost in July 2011, SharesPost held
a subsequent financing for Series B preferred shares, which did not include warrants. Accordingly, only our investment in preferred
shares was adjusted due to the subsequent financing. The fair value of our investments can be expected to fluctuate in future periods
due to changes in our investments and changes in the fair value of the investments.



Off-Balance Sheet Arrangements



As of December 31,
2011, we had no off-balance sheet arrangements, including any risk management of commodity pricing or other hedging practices.
However, we may employ hedging and other risk management techniques in the future.



Distribution Policy



The timing and amount
of our dividends, if any, will be determined by our board of directors. Any dividends to our stockholders will be declared out
of assets legally available for distribution. We intend to focus on making capital gains-based investments from which we will derive
primarily capital gains. As a consequence, we do not anticipate that we will pay dividends on a quarterly basis or become a predictable
issuer of dividends, and we expect that our dividends, if any, will be much less consistent than other business development companies
that primarily make debt investments. However, if there are earnings or realized capital gains to be distributed, we intend to
declare and pay a dividend at least annually.



We intend to elect
to be treated, and intend to qualify annually thereafter, as a RIC under Subchapter M of the Code, beginning with our 2011 taxable
year. To obtain and maintain RIC tax treatment, we must, among other things, distribute at least 90% of our ordinary income and
realized net short-term capital gains in excess of realized net long-term capital losses, if any. In order to avoid certain excise
taxes imposed on RICs, we currently intend to distribute during each calendar year an amount at least equal to the sum of (1) 98%
of our ordinary income for the calendar year, (2) 98.2% of our capital gains in excess of capital losses for the one-year period
ending on October 31 of the calendar year and (3) any ordinary income and net capital gains for preceding years that were not distributed
during such years. In addition, although we currently intend to distribute realized net capital gains (i.e., net long-term
capital gains in excess of net short-term capital losses), if any, at least annually, we may in the future decide to retain such
capital gains for investment. If this happens, you will be treated as if you received an actual distribution of the capital gains
we retain and reinvested the net after-tax proceeds in us. You also may be eligible to claim a tax credit (or, in certain circumstances,
a tax refund) equal to your allocable share of the tax we paid on the capital gains deemed distributed to you. See ‘‘Material
U.S. Federal Income Tax Considerations.’’ There is no assurance that we will achieve results that will permit the payment
of any cash distributions and, to the extent that we issue senior securities, we will be prohibited from making distributions if
doing so causes us to fail to maintain the asset coverage ratios stipulated by the 1940 Act or if distributions are limited by
the terms of any of our borrowings.





49







Our current intention
is to make any distributions out of assets legally available therefrom in additional shares of our common stock under our dividend
reinvestment plan, unless you elect to receive your dividends and/or long-term capital gains distributions in cash. Under the dividend
reinvestment plan, if a stockholder owns shares of common stock registered in its own name, the stockholder will have all cash
distributions (net of any withholding) automatically reinvested in additional shares of common stock unless the stockholder opts
out of our dividend reinvestment plan by delivering a written notice to our dividend paying agent prior to the record date of the
next dividend or distribution. See ‘‘Dividend Reinvestment Plan.’’ Any distributions reinvested under the
plan will nevertheless remain taxable to the U.S. stockholder, although no cash distribution has been made. If you hold shares
in the name of a broker or financial intermediary, you should contact the broker or financial intermediary regarding your election
to receive distributions in cash.



Borrowings



We had no borrowings
outstanding as of December 31, 2011.



Related Party Transactions



Investment Advisory Agreement



We entered into an
investment advisory agreement with GSV Asset Management (the ‘‘Advisory Agreement’’) in connection with
our initial public offering. Pursuant to the Advisory Agreement, GSV Asset Management will be paid a base annual fee of 2.00% of
gross assets, and an annual incentive fee equal to the lesser of (i) 20% of the GSV Capital’s realized capital gains during
each calendar year, if any, calculated on an investment-by-investment basis, subject to a non-compounded preferred return, or ‘‘hurdle,’’
and a ‘‘catch-up’’ feature, and (ii) 20% of the GSV Capital’s realized capital gains, if any, on
a cumulative basis from inception through the end of each calendar year, computed net of all realized capital losses and unrealized
capital depreciation on a cumulative basis, less the aggregate amount of any previously paid incentive fees. GSV Asset Management
earned $618,865 in base fees and $0 in incentive fees for the period from January 6, 2011 (date of inception) to December 31, 2011.



As of December 31,
2011, we were owed $13,470 from GSV Asset Management for reimbursement of travel-related expenses paid for by us that were the
responsibility of GSV Asset Management.



In addition as of December
31, 2011, we owed GSV Asset Management $78,427 for management fees and reimbursement of other expenses. We owed certain officers
and directors $10,782 in reimbursements for travel-related and other expenses.



Administration Agreement



We entered into an
Administration Agreement with GSV Capital Service Company (the ‘‘Administration Agreement’’) to provide
administrative services, including furnishing us with office facilities, equipment, clerical, bookkeeping services and other administrative
services, in connection with our initial public offering. We reimburse GSV Capital Service Company an allocable portion of overhead
and other expenses in performing its obligations under the Administration Agreement. There were $554,232 in such costs incurred
under the Administration Agreement for the period from January 6, 2011 (date of inception) to December 31, 2011.



We also adopted a Code
of Ethics which applies to, among others, our senior officers, including our Chief Executive Officer and Chief Financial Officer,
as well as all of our officers, directors and employees. Our Code of Ethics requires that all employees and directors avoid any
conflict, or the appearance of a conflict, between an individual’s personal interests and our interests. Pursuant to our
Code of Ethics, each employee and director must disclose any conflicts of interest, or actions or relationships that might give
rise to a conflict, to our Chief Compliance Officer. Our board of directors is charged with approving any waivers under our Code
of Ethics. As required by the NASDAQ corporate governance listing standards, the Audit Committee of our board of directors is also
required to review and approve any transactions with related parties (as such term is defined in Item 404 of Regulation S-K).



Critical Accounting Policies



Basis of Presentation



The financial statements
included herein are expressed in United States dollars and have been prepared in conformity with accounting principles generally
accepted in the United States of America (‘‘GAAP’’).





50









In accordance with
Regulation S-X under the Securities Act of 1933 and Securities Exchange Act of 1934, the Company does not consolidate portfolio
company investments.



Valuation of Investments at Fair
Value



We carry our investments
at fair value, as determined in good faith by our board of directors, in accordance with GAAP. Fair value is the price that one
would receive upon selling an investment or pay to transfer a liability in an orderly transaction between market participants at
the measurement date in the principal or most advantageous market for the investment or liability. GAAP emphasizes that valuation
techniques should maximize the use of observable market inputs and minimize the use of unobservable inputs. Observable inputs are
based on market data obtained from sources independent of the entity and should not be limited to information that is only available
to the entity making the fair value determination, or to a small group of users. Observable market inputs should be readily available
to participants in that market. In addition, observable market inputs should include a level of transparency that is reliable and
verifiable.



GAAP fair value measurement
guidance classifies the inputs used to measure these fair values into the following hierarchy:



Level 1.Financial
assets and liabilities whose values are based on unadjusted quoted prices for identical assets or liabilities in an active market
that we have the ability to access.



Level 2.Financial
assets and liabilities whose values are based on quoted prices in markets that are not active or model inputs that are observable
either directly or indirectly for substantially the full term of the asset or liability. Level 2 inputs include the following:



| | a) | Quoted prices for similar assets or liabilities in active markets;
| | -- | ------------------------------------------------------------------

| | b) | Quoted prices for identical or similar assets or liabilities in non-active markets;
| | -- | -----------------------------------------------------------------------------------

| | c) | Pricing models whose inputs are observable for substantially the full term of the asset or liability;
and
| | -- | ---------------------------------------------------------------------------------------------------------

| | d) | Pricing models whose inputs are derived principally from or corroborated by observable market data
through correlation or other means for substantially the full term of the asset or liability.
| | -- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Level 3.Financial
assets and liabilities whose values are based on prices or valuation techniques that require inputs that are both unobservable
and significant to the overall fair value measurement. These inputs reflect management’s own assumptions about the assumptions
a market participant would use in pricing the asset or liability.



An asset’s categorization
within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement.



Securities that are
publicly traded are generally valued at the close price on the valuation date; however, if they remain subject to lock-up restrictions
they are discounted accordingly. Securities that are not publicly traded or for which there are no readily available market quotations
are valued at fair value as determined in good faith by our board of directors.



In connection with
that determination, portfolio company valuations are prepared using the most currently available data. As appropriate, we obtain
updates on each portfolio company’s financial performance, including information such as economic and industry trends, new
product development, and other operational issues.



In making our good
faith determination of the fair value of investments, we consider valuation methodologies consistent with industry practice, including
but not limited to (i) publicly available information regarding the valuation of the securities based on recent sales in comparable
transactions of private companies, (ii) when management believes there are comparable companies that are publicly traded, a review
of these publicly traded companies and applicable market multiples of their equity securities and, (iii) an income approach that
estimates value based on the expectation of future cash flows that an asset or business will generate.



We engage independent
valuation firms to perform valuations of our investments that are not publicly traded or for which there are no readily available
market quotations. We also engage independent valuation firms to perform valuations of any securities that trade on private secondary
markets, but are not otherwise publicly traded, where there is a lack of appreciable trading or a wide disparity in recently reported
trades. We consider the independent valuations, among other factors, in making our fair value determinations.





51









Recently Issued Accounting Standards



In May 2011, the Financial
Accounting Standards Board (‘‘FASB’’) issued guidance clarifying how to measure and disclose fair value.
This guidance amends the application of the ‘‘highest and best use’’ concept to be used only in the measurement
of fair value of nonfinancial assets, clarifies that the measurement of the fair value of equity-classified financial instruments
should be performed from the perspective of a market participant who holds the instrument as an asset, clarifies that an entity
that manages a group of financial assets and liabilities on the basis of its net risk exposure can measure those financial instruments
on the basis of its net exposure to those risks, and clarifies when premiums and discounts should be taken into account when measuring
fair value. The fair value disclosure requirements also were amended. This accounting standard is effective prospectively for interim
and annual reporting periods beginning after December 15, 2011. At this time management is evaluating the implications of the amendment
and the impact to the financial statements of GSV Capital Corp.



Recent Developments



On January 3, 2011,
the Company sold and settled the $20.0 million United States Treasury Bill for a realized loss of $256.



On February 10, 2012,
the Company priced a secondary offering, selling 6,900,000 of common shares at a price of $15.00 per share, including an exercise
in full by the underwriters of their option to purchase an additional 900,000 shares of common stock to cover overallotments. The
secondary offering resulted in net proceeds to the Company of approximately $96.2 million.



Subsequent
to December 31, 2011, the Company closed on investments of $5.0 million, plus transaction costs as follows:



The
Company closed on an investment of $100,000, plus transaction costs, in AlwaysOn Network, LLC, an internet media company headquartered
in Kelowna, British Columbia, on January 10, 2012.



The
Company closed on an investment of $200,000, plus transaction costs, in Maven Research, Inc., a global knowledge marketplace headquartered
in San Francisco, CA, on February 28, 2012.



The
Company closed on an investment of $500,000, plus transaction costs, in AltEgo, LLC, an avatar technology and games developer headquartered
in Santa Monica, CA, on February 29, 2012.



The Company closed
on an investment of $4,000,000, plus transaction costs, in Chegg, Inc., an online textbook rental company headquartered in Santa
Clara, CA, on March 7, 2012.





The
Company closed on an investment of $150,000, plus transaction costs, in AlwaysOn Network, LLC, an internet media company headquartered
in Kelowna, British Columbia, on March 9, 2012.





On
February 1, 2012, Facebook, Inc. filed a registration statement with the SEC in connection with its proposed initial public offering.
The Company owns 350,000 shares of Class B common stock of Facebook, Inc., which are presently subject to a lock-up agreement that
will expire 181 days after the date of the final prospectus relating to Facebook, Inc.’s initial public offering, if consummated.



The
Company is presently in the final stages of negotiations with a handful of private company investments that it anticipates entering
into within the next 30 to 60 days, subject to applicable closing conditions. These equity investments may be made through the
secondary market and involve making deposits in escrow accounts until certain conditions are met. Moreover, each underlying issuer
has the right to terminate the deal before such conditions are satisfied. Pursuant to the terms of our agreements with each of
these prospective issuers, at such time that these conditions are satisfied, the escrow accounts will close, and our equity investments
will be effectuated. Subsequent to December 31, 2011, the Company made $4.9 million in such escrow deposits of which $0.9 million
are currently outstanding and subject to applicable closing conditions.



Item 7A.	Quantitative
and Qualitative Disclosures about Market Risk



We are subject to financial
market risks, which could include, to the extent we utilize leverage, changes in interest rates. As we invest primarily in equity
rather than debt instruments, we would not expect fluctuations in interest rates to directly impact our return on our portfolio
investments, although any significant change in market interest rates could potentially have an indirect effect on the business,
financial condition and results of operations of the portfolio companies in which we invest.





52









Item 8.	Financial Statements and
Supplementary Data



Index to Financial Statements



|                                                                                                                | Page
|--------------------------------------------------------------------------------------------------------------- | ----
|Report of Independent Registered Public Accounting Firm                                                         | 54  
|                                                                                                                |     
|Statement of Assets and Liabilities as of December 31, 2011                                                     | 55  
|                                                                                                                |     
|Statement of Operations for the period from January 6, 2011 (date of inception) to December 31, 2011            | 56  
|                                                                                                                |     
|Statement of Changes in Net Assets for the period from January 6, 2011 (date of inception) to December 31, 2011 | 57  
|                                                                                                                |     
|Statement of Cash Flows for the period from January 6, 2011 (date of inception) to December 31, 2011            | 58  
|                                                                                                                |     
|Schedule of Investments as of December 31, 2011                                                                 | 59  
|                                                                                                                |     
|Notes to the Financial Statements                                                                               | 62  







53











REPORT OF INDEPENDENT REGISTERED PUBLIC
ACCOUNTING FIRM



To the Board of Directors and Stockholders of

GSV Capital Corp.



We have audited the accompanying statement
of assets and liabilities of GSV Capital Corp. (formerly NeXt Innovation Corp.), including the schedule of investments, as of December
31, 2011 and the related statements of operations, changes in net assets, and cash flows and the financial highlights (see Note
7) for the period from January 6, 2011 (date of inception) to December 31, 2011. These financial statements and financial highlights
are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements
and financial highlights based on our audit.



We conducted our audit in accordance with
standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not
required to have, nor were we engaged to perform an audit of its internal control over financial reporting. Our audit included
consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over
financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement presentation. Our procedures included confirmation of the
investments owned as of December 31, 2011 by correspondence with the custodian and broker. We believe that our audit provides a
reasonable basis for our opinion.



In our opinion, the financial statements
and financial highlights referred to above present fairly, in all material respects, the financial position of GSV Capital Corp.
(formerly NeXt Innovation Corp.) as of December 31, 2011, and the results of its operations, changes in net assets and its cash
flows and financial highlights for the period from January 6, 2011 (date of inception) to December 31, 2011 in conformity with
accounting principles generally accepted in the United States of America.



/s/ GRANT THORNTON LLP



San Francisco, California

March 13, 2012





54











|GSV CAPITAL CORP.                  
|-----------------------------------
|(formerly NeXt Innovation Corp.)   
|STATEMENT OF ASSETS AND LIABILITIES
|                                   



|                                                                           |  | December 31, 2011 |           
|-------------------------------------------------------------------------- |  | ----------------- | ----------
|ASSETS                                                                     |  |                   |           
|Investments at fair value:                                                 |  |                   |           
|Investments in non-control/non-affiliated securities (cost of $65,658,866) |  | $                 | 64,078,150
|Investments in United States treasury bills (cost of $19,999,128)          |  |                   | 20,000,044
|Investments in money market funds (cost of $7,000,000)                     |  |                   | 7,000,000 
|Total Investments (cost of $92,657,994)                                    |  |                   | 91,078,194
|                                                                           |  |                   |           
|Cash                                                                       |  |                   | 385,995   
|Due from:                                                                  |  |                   |           
|GSV Asset Management                                                       |  |                   | 13,470    
|Portfolio company                                                          |  |                   | 9,249     
|Accrued interest                                                           |  |                   | 158,389   
|Prepaid expenses                                                           |  |                   | 92,750    
|Deferred offering costs                                                    |  |                   | 56,436    
|Dividend receivable                                                        |  |                   | 1,063     
|Other assets                                                               |  |                   | 2,696     
|                                                                           |  |                   |           
|Total Assets                                                               |  |                   | 91,798,242
|                                                                           |  |                   |           
|LIABILITIES                                                                |  |                   |           
|Due to:                                                                    |  |                   |           
|GSV Asset Management                                                       |  |                   | 78,427    
|Other affiliates                                                           |  |                   | 10,782    
|Payable for unsettled securities transaction                               |  |                   | 19,999,128
|Accounts payable                                                           |  |                   | 206,357   
|Accrued expenses                                                           |  |                   | 300       
|                                                                           |  |                   |           
|Total Liabilities                                                          |  |                   | 20,294,994
|                                                                           |  |                   |           
|Commitments and contingencies (Note 6)                                     |  |                   |           
|                                                                           |  |                   |           
|Net Assets                                                                 |  | $                 | 71,503,248
|                                                                           |  |                   |           
|NET ASSETS                                                                 |  |                   |           
|Common Stock, par value $0.01 per share                                    |  |                   |           
|(100,000,000 authorized; 5,520,100 issued and outstanding)                 |  | $                 | 55,201    
|Paid-in capital in excess of par                                           |  |                   | 73,027,847
|Unrealized depreciation on investments                                     |  |                   | (1,579,800
|                                                                           |  |                   |           
|Net Assets                                                                 |  | $                 | 71,503,248
|                                                                           |  |                   |           
|Net Asset Value Per Share                                                  |  | $                 | 12.95     
|                                                                           |  |                   |           
|                                                                           |  |                   |           
|See Notes to the Financial Statements                                      |  |                   |           





55









|GSV CAPITAL CORP.               
|--------------------------------
|(formerly NeXt Innovation Corp.)
|STATEMENT OF OPERATIONS         
|                                



|                                                                          |  | For the period from January 6, 2011 (date of inception) to December 31, 2011 |           
|------------------------------------------------------------------------- |  | ---------------------------------------------------------------------------- | ----------
|INVESTMENT INCOME                                                         |  |                                                                              |           
|Interest income                                                           |  | $                                                                            | 158,389   
|Dividend income                                                           |  |                                                                              | 3,939     
|                                                                          |  |                                                                              |           
|Total Investment Income                                                   |  |                                                                              | 162,328   
|                                                                          |  |                                                                              |           
|OPERATING EXPENSES                                                        |  |                                                                              |           
|Investment management fees                                                |  |                                                                              | 618,865   
|Costs incurred under administration agreement                             |  |                                                                              | 554,232   
|Professional fees                                                         |  |                                                                              | 409,983   
|Organization expenses                                                     |  |                                                                              | 198,831   
|Insurance expense                                                         |  |                                                                              | 142,494   
|Directors’ fees                                                           |  |                                                                              | 127,500   
|Investor relations expense                                                |  |                                                                              | 89,250    
|Other expenses                                                            |  |                                                                              | 55,037    
|                                                                          |  |                                                                              |           
|Total Operating Expenses                                                  |  |                                                                              | 2,196,192 
|                                                                          |  |                                                                              |           
|Net Investment Loss                                                       |  |                                                                              | (2,033,864
|                                                                          |  |                                                                              |           
|Net Change in Unrealized Depreciation on Investments                      |  |                                                                              | (1,579,800
|                                                                          |  |                                                                              |           
|Net Decrease in Net Assets Resulting From Operations                      |  | $                                                                            | (3,613,664
|                                                                          |  |                                                                              |           
|Net Decrease in Net Assets Resulting From Operations Per Average Share(1) |  | $                                                                            | (1.07     
|                                                                          |  |                                                                              |           



| | (1) | Weighted
average common shares for the period from January 6, 2011 (date of inception) to December 31, 2011 was calculated starting from
the ___issuance of 100 shares on February 28, 2011. Weighted average common shares were 3,377,429
for the period.
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



See Notes to the Financial Statements.





56









|GSV CAPITAL CORP.                 
|----------------------------------
|(formerly NeXt Innovation Corp.)  
|STATEMENT OF CHANGES IN NET ASSETS
|                                  



|                                                     |  | For the period from January 6, 2011
(date of inception) to
 December 31, 2011 |           
|---------------------------------------------------- |  | ----------------------------------------------------------------------------- | ----------
|Net Decrease in Net Assets Resulting From Operations |  |                                                                               |           
|Net Investment Loss                                  |  | $                                                                             | (2,033,864
|Net Change in Unrealized Depreciation on Investments |  |                                                                               | (1,579,800
|Net Decrease in Net Assets Resulting From Operations |  |                                                                               | (3,613,664
|                                                     |  |                                                                               |           
|Capital Share Transactions                           |  |                                                                               |           
|Net Proceeds from Common Shares Issued               |  |                                                                               | 76,175,200
|Offering Costs                                       |  |                                                                               | (1,058,288
|Net Capital Share Transactions                       |  |                                                                               | 75,116,912
|                                                     |  |                                                                               |           
|                                                     |  |                                                                               |           
|Net Assets at End of Period                          |  | $                                                                             | 71,503,248
|                                                     |  |                                                                               |           
|Capital Share Activity                               |  |                                                                               |           
|Shares Issued                                        |  |                                                                               | 5,520,100 
|Shares Outstanding at End of Period                  |  |                                                                               | 5,520,100 





See Notes to the Financial Statements.





57









|GSV CAPITAL CORP.               
|--------------------------------
|(formerly NeXt Innovation Corp.)
|STATEMENT OF CASH FLOWS         
|                                



|                                                                   |  | For the period from January 6, 2011 (date of inception) to December 31, 2011 |            
|------------------------------------------------------------------ |  | ---------------------------------------------------------------------------- | -----------
|Cash Flows from Operating Activities                               |  |                                                                              |            
|Net decrease in net assets resulting from operations               |  | $                                                                            | (3,613,664 
|Adjustments to reconcile net decrease in net assets resulting from |  |                                                                              |            
|operations to net cash used in operating activities:               |  |                                                                              |            
|Net change in unrealized depreciation on investments               |  |                                                                              | 1,579,800  
|Purchases of investments in:                                       |  |                                                                              |            
|Non-control/non-affiliated securities                              |  |                                                                              | (65,658,866
|Money market funds                                                 |  |                                                                              | (11,500,000
|Proceeds from sales of investments in:                             |  |                                                                              |            
|Money market funds                                                 |  |                                                                              | 4,500,000  
|Increase in due from GSV Asset Management                          |  |                                                                              | (13,470    
|Increase in due from portfolio company                             |  |                                                                              | (9,249     
|Increase in accrued interest                                       |  |                                                                              | (158,389   
|Increase in prepaid expenses                                       |  |                                                                              | (92,750    
|Increase in dividend receivable                                    |  |                                                                              | (1,063     
|Increase in other assets                                           |  |                                                                              | (2,696     
|Increase in due to GSV Asset Management                            |  |                                                                              | 78,427     
|Increase in due to other affiliates                                |  |                                                                              | 10,782     
|Increase in accounts payable                                       |  |                                                                              | 149,921    
|Increase in accrued expenses                                       |  |                                                                              | 300        
|Net Cash Used in Operating Activities                              |  |                                                                              | (74,730,917
|                                                                   |  |                                                                              |            
|Cash Flows from Financing Activities                               |  |                                                                              |            
|Net proceeds from common shares issued                             |  |                                                                              | 76,175,200 
|Offering costs paid                                                |  |                                                                              | (1,058,288 
|Net Cash Provided by Financing Activities                          |  |                                                                              | 75,116,912 
|                                                                   |  |                                                                              |            
|Total Increase in Cash Balance                                     |  |                                                                              | 385,995    
|Cash Balance at Beginning of Period                                |  |                                                                              | -          
|Cash Balance at End of Period                                      |  | $                                                                            | 385,995    
|                                                                   |  |                                                                              |            
|                                                                   |  |                                                                              |            
|Non-Cash Items                                                     |  |                                                                              |            
|Increase in deferred offering costs                                |  | $                                                                            | (56,436    
|Increase in accounts payable                                       |  | $                                                                            | 56,436     





|See Notes to the Financial Statements. |  |  | 
|-------------------------------------- |  |  | 





58









|GSV Capital Corp.               
|--------------------------------
|(formerly NeXt Innovation Corp.)
|Schedule of Investments         
|December 31, 2011               
|                                





|Portfolio Investments*              | Headquarters / Industry         | Shares / Par Amount |           | Cost |            | Fair  Value |            | % of Net Assets
|----------------------------------- | ------------------------------- | ------------------- | --------- | ---- | ---------- | ----------- | ---------- | ---------------
|                                    |                                 |                     |           |      |            |             |            |                
|Bloom Energy Corporation            | Sunnyvale, CA                   |                     |           |      |            |             |            |                
|Common shares                       | Fuel Cell Energy                |                     | 96,389    | $    | 1,815,818  | $           | 1,771,335  |                
|                                    |                                 |                     |           |      |            |             |            |                
|Chegg, Inc.                         | Santa Clara, CA                 |                     |           |      |            |             |            |                
|Common shares                       | Textbook Rental                 |                     | 774,193   |      | 6,003,694  |             | 5,999,996  |                
|                                    |                                 |                     |           |      |            |             |            |                
|Control 4 Inc.                      | Salt Lake City, UT              |                     |           |      |            |             |            |                
|Common shares                       | Home Automation                 |                     | 666,667   |      | 1,034,827  |             | 1,000,000  |                
|                                    |                                 |                     |           |      |            |             |            |                
|DreamBox Learning, Inc.             | Bellevue, WA                    |                     |           |      |            |             |            |                
|Preferred shares, Series A          | Education Technology            |                     | 3,579,610 |      | 757,955    |             | 750,000    |                
|                                    |                                 |                     |           |      |            |             |            |                
|Dropbox, Inc.                       | San Francisco, CA               |                     |           |      |            |             |            |                
|Preferred shares, Series A          | Online Storage                  |                     | 552,486   |      | 5,015,333  |             | 4,999,998  |                
|                                    |                                 |                     |           |      |            |             |            |                
|Facebook, Inc.                      | Palo Alto, CA                   |                     |           |      |            |             |            |                
|Common shares, Class B              | Social Networking               |                     | 350,000   |      | 10,465,981 |             | 10,462,500 |                
|                                    |                                 |                     |           |      |            |             |            |                
|Gilt Groupe, Inc.                   | New York, NY                    |                     |           |      |            |             |            |                
|Common shares                       | e-Commerce
        Flash Sales  |                     | 203,100   |      | 5,576,979  |             | 5,499,250  |                
|                                    |                                 |                     |           |      |            |             |            |                
|Grockit, Inc.                       | San Francisco, CA               |                     |           |      |            |             |            |                
|Preferred shares, Series B          | Online Test
        Preparation |                     | 2,728,252 |      | 2,005,945  |             | 2,000,000  |                
|                                    |                                 |                     |           |      |            |             |            |                
|Groupon, Inc. (2)                   | Chicago, IL                     |                     |           |      |            |             |            |                
|Common shares                       | Online Deals                    |                     | 80,000    |      | 2,128,585  |             | 1,188,288  |                
|                                    |                                 |                     |           |      |            |             |            |                
|Kno, Inc.                           | Santa Clara, CA                 |                     |           |      |            |             |            |                
|Preferred shares, Series C          | Digital                         |                     | 440,313   |      | 2,262,006  |             | 2,250,000  |                
|Common shares                       | Textbooks                       |                     | 50,000    |      | 214,303    |             | 205,000    |                
|Total                               |                                 |                     |           |      | 2,476,309  |             | 2,455,000  |                
|                                    |                                 |                     |           |      |            |             |            |                
|PJB Fund LLC (1) (3)                | San Francisco, CA               |                     |           |      |            |             |            |                
|Structured note, 10%, due 8/15/2012 | Social Gaming                   | $                   | 4,000,000 |      | 4,029,259  |             | 4,000,000  |                
|                                    |                                 |                     |           |      |            |             |            |                
|Serious Energy, Inc.                | Sunnyvale, CA                   |                     |           |      |            |             |            |                
|Common shares                       | Green Materials                 |                     | 178,095   |      | 739,130    |             | 712,380    |                





|See Notes to the Financial Statements.
|--------------------------------------







59













|GSV Capital Corp.                  
|-----------------------------------
|(formerly NeXt Innovation Corp.)   
|Schedule of Investments (continued)
|December 31, 2011                  







|Portfolio Investments*                                                                    | Headquarters / Industry                    | Shares / Par Amount |           | Cost |            | Fair  Value |            | % of Net Assets
|----------------------------------------------------------------------------------------- | ------------------------------------------ | ------------------- | --------- | ---- | ---------- | ----------- | ---------- | ---------------
|                                                                                          |                                            |                     |           |      |            |             |            |                
|SharesPost, Inc.                                                                          | San Bruno, CA                              |                     |           |      |            |             |            |                
|Preferred shares, Series B                                                                | Online                                     |                     | 1,776,970 | $    | 2,257,984  | $           | 2,256,752  |                
|Common warrants, $0.13 strike price, 
expire 6/15/2018                                    | Marketplace
        (Finance)              |                     | 770,934   |      | 23,128     |             | 17,731     |                
|Total                                                                                     |                                            |                     |           |      | 2,281,112  |             | 2,274,483  |                
|                                                                                          |                                            |                     |           |      |            |             |            |                
|Silver Spring Networks, Inc.                                                              | Redwood City, CA                           |                     |           |      |            |             |            |                
|Common shares                                                                             | Smart Grid                                 |                     | 110,143   |      | 1,153,381  |             | 1,101,430  |                
|                                                                                          |                                            |                     |           |      |            |             |            |                
|StormWind, LLC                                                                            | Scottsdale, AZ                             |                     |           |      |            |             |            |                
|Preferred shares, Series B                                                                | Electronic                                 |                     | 1,711,111 |      | 959,209    |             | 946,335    |                
|Preferred warrants, $0.64 strike price, 
expire 12/1/2012                                 | Marketing and Business Services            |                     | 1,568,518 |      | 53,665     |             | 53,665     |                
|Total                                                                                     |                                            |                     |           |      | 1,012,874  |             | 1,000,000  |                
|                                                                                          |                                            |                     |           |      |            |             |            |                
|The Echo System Corp. (1)                                                                 | New York, NY                               |                     |           |      |            |             |            |                
|Structured note, 6%, due 1/28/2013, and 
warrant, $0.20 strike price, expires 
11/14/2016 | Social Analytics                           |                     | 500,000   |      | 505,823    |             | 500,000    |                
|                                                                                          |                                            |                     |           |      |            |             |            |                
|The rSmart Group, Inc.                                                                    | Scottsdale, AZ                             |                     |           |      |            |             |            |                
|Preferred shares, Series B                                                                | Higher Education
        Learning Platform |                     | 480,769   |      | 513,311    |             | 500,000    |                
|                                                                                          |                                            |                     |           |      |            |             |            |                
|TrueCar, Inc.                                                                             | Santa Monica, CA                           |                     |           |      |            |             |            |                
|Common shares                                                                             | Online
        Marketplace (Cars)          |                     | 377,358   |      | 2,014,551  |             | 1,999,997  |                
|                                                                                          |                                            |                     |           |      |            |             |            |                
|Twitter, Inc.                                                                             | San Francisco, CA                          |                     |           |      |            |             |            |                
|Common shares                                                                             | Social
        Communication               |                     | 735,600   |      | 12,304,345 |             | 12,113,493 |                
|                                                                                          |                                            |                     |           |      |            |             |            |                
|ZocDoc Inc.                                                                               | New York, NY                               |                     |           |      |            |             |            |                
|Preferred shares                                                                          | Online Medical
        Scheduling          |                     | 200,000   |      | 3,563,178  |             | 3,500,000  |                
|                                                                                          |                                            |                     |           |      |            |             |            |                
|ZoomSystems                                                                               | San Francisco, CA                          |                     |           |      |            |             |            |                
|Preferred shares, Series A                                                                | Smart e-tail
        (Retail)              |                     | 1,250,000 | $    | 260,476    | $           | 250,000    |                
|                                                                                          |                                            |                     |           |      |            |             |            |                
|Total Portfolio Investments                                                               |                                            |                     |           |      | 65,658,866 |             | 64,078,150 |                







|See Notes to the Financial Statements.
|--------------------------------------







60

















|GSV Capital Corp.                  
|-----------------------------------
|(formerly NeXt Innovation Corp.)   
|Schedule of Investments (continued)
|December 31, 2011                  







|Non-Portfolio
    Investments                  | Headquarters
    / Industry | Shares
    / Par Amount |            | Cost |            | Fair 
    Value |            | %
    of 
    Net Assets
|---------------------------------------------- | --------------------------- | ----------------------- | ---------- | ---- | ---------- | --------------- | ---------- | ------------------------
|                                               |                             |                         |            |      |            |                 |            |                         
|United States Treasury (1)                     |                             |                         |            |      |            |                 |            |                         
|United States Treasury Bill, 0%, due 1/26/2012 |                             | $                       | 20,000,000 | $    | 19,999,128 | $               | 20,000,044 |                         
|                                               |                             |                         |            |      |            |                 |            |                         
|Money Market Funds (1)                         |                             |                         |            |      |            |                 |            |                         
|Fidelity Institutional Money Market Funds      |                             |                         |            |      |            |                 |            |                         
|Money Market Portfolio                         |                             |                         | 3,500,000  |      | 3,500,000  |                 | 3,500,000  |                         
|Prime Money Market Portfolio                   |                             |                         | 3,500,000  |      | 3,500,000  |                 | 3,500,000  |                         
|Total Money Market Funds                       |                             |                         |            |      | 7,000,000  |                 | 7,000,000  |                         
|                                               |                             |                         |            |      |            |                 |            |                         
|Total Investments                              |                             |                         |            | $    | 92,657,994 | $               | 91,078,194 |                         







| | * | All portfolio investments are non-control/non-affiliated and non-income producing, unless
                                                                              identified. Equity investments are subject to lock-up restrictions upon their initial public offering.
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (1) | Investment is income producing.
| | --- | -------------------------------



| | (2) | On November 8, 2011, Groupon, Inc. priced its initial
public offering, selling 35,000,000 shares at a price of $20.00 per share. GSV Capital Corp.’s shares in Groupon are
subject to a lock-up agreement that expires on May 1, 2012.
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (3) | Represents a $4 million unsecured promissory note with an interest rate of 10% and maturity date
                                                                                                             of August 15, 2012 that was issued by PJB Fund LLC that may be repaid, at PJB Fund LLC’s election, either by transfer
                                                                                                             of a certain number of shares of common stock of Zynga, Inc. or with a cash amount of equivalent value. The amount payable
                                                                                                             under the note will be equal to the face amount, plus the greater of accrued interest (at a rate of 10%) or a return
                                                                                                             based on the relative value of Zynga, Inc. To the extent the borrower repays the note in cash, GSV Capital Corp. would have
                                                                                                             no further direct or indirect interest in Zynga, Inc. On December 15, 2011, Zynga, Inc. priced its initial public
                                                                                                             offering, selling 100,000,000 shares at a price of $10.00 per share.
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------







|See Notes to the Financial Statements.
|--------------------------------------







61











GSV CAPITAL CORP.

(formerly NeXt Innovation
Corp.)

NOTES TO THE FINANCIAL STATEMENTS

December 31, 2011





NOTE 1 — NATURE OF OPERATIONS
AND SIGNIFICANT ACCOUNTING POLICIES



Nature of Operations



GSV Capital Corp. (formerly
NeXt Innovation Corp., the “Company”, “we”, “our” or “GSV Capital”) was formed
in September 2010 as a Maryland corporation structured as an externally managed, non-diversified closed-end management investment
company. The Company has elected to be treated as a business development company under the Investment Company Act of 1940, as amended
(the “1940 Act”). The Company is managed by GSV Asset Management, LLC (formerly NeXt Asset Management, “GSV Asset
Management”).



The Company’s
date of inception is January 6, 2011, which is the date it commenced its development stage activities. On February 28, 2011, the
Company, which had not yet begun investment operations, issued 100 shares which were owned by an officer of the Company who is
also a principal of GSV Asset Management. On April 28, 2011, the Company priced its initial public offering, selling 3,335,000
shares at a price of $15.00 per share. The initial public offering closed on May 3, 2011, resulting in net proceeds to the Company
of approximately $46.5 million. The Company’s shares are currently listed on the NASDAQ Capital Market under the symbol “GSVC”.
The Company began its investment operations during the second quarter.



The Company’s
investment objective is to maximize our portfolio’s total return, principally by seeking capital gains on our equity investments.
The Company invests principally in the equity securities of venture capital-backed and rapidly growing emerging companies. The
Company may also invest on an opportunistic basis in select publicly-traded equity securities of rapidly growing companies that
otherwise meet its investment criteria.



On March 28, 2011,
the board of directors (the “Board”) of the Company approved Articles of Amendment and Restatement, reflecting a change
in the Company’s name from NeXt BDC Capital Corp. to NeXt Innovation Corp., which Articles of Amendment and Restatement became
effective upon filing with the State Department of Assessment and Taxation of the State of Maryland on March 29, 2011. Then, on
May 26, 2011, the board of directors of the Company approved Articles of Amendment, reflecting a change in the Company’s
name from NeXt Innovation Corp. to GSV Capital Corp., which Articles of Amendment became effective upon filing with the State Department
of Assessment and Taxation of the State of Maryland on May 26, 2011.



On September 26, 2011,
the Company priced a secondary offering, selling 2,185,000 of common shares at a price of $14.15 per share, including an exercise
in full by the underwriters of their option to purchase an additional 285,000 shares of common stock to cover overallotments. The
secondary offering resulted in net proceeds to the Company of approximately $29.6 million.



Summary of Significant Accounting
Policies



Basis of Presentation



The accompanying financial
statements have been prepared on the accrual basis of accounting in conformity with accounting principles generally accepted in
the United States of America (“GAAP”).



In accordance with
Regulation S-X under the Securities Act of 1933 and Securities Exchange Act of 1934, the Company does not consolidate portfolio
company investments.



Use of Estimates



The preparation of
financial statements requires the Company to make a number of significant estimates. These include estimates of fair value of certain
assets and liabilities and other estimates that affect the reported amounts of certain assets and liabilities as of the date of
the financial statements and the reported amounts of certain revenues and expenses during the reported period. It is likely that
changes in these estimates will occur in the near term. Our estimates are inherently subjective in nature and actual results could
differ from our estimates and the differences could be material.





62









Investments



The Company applies
fair value accounting in accordance with GAAP. The Company generally values its assets on a quarterly basis, or more frequently
if required under the 1940 Act. Securities for which market quotations are readily available on an exchange are valued at the closing
price of such security on the valuation date; however, if they remain subject to lock-up restrictions they are discounted accordingly.
The Company may also obtain quotes with respect to certain of its investments from pricing services or brokers or dealers in order
to value assets. When doing so, the Company determines whether the quote obtained is sufficient according to GAAP to determine
the fair value of the security. If determined adequate, the Company uses the quote obtained.



Securities for which
reliable market quotations are not readily available or for which the pricing source does not provide a valuation or methodology
or provides a valuation or methodology that, in the judgment of GSV Asset Management, the Board or the Valuation Committee of the
Board (the “Valuation Committee”), does not represent fair value, shall each be valued as follows:



| | 1. | The quarterly valuation process begins with each portfolio company or investment being initially
valued by the investment professionals responsible for the portfolio investment;
| | -- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 2. | Preliminary valuation conclusions are then documented and discussed with GSV Asset Management senior
management;
| | -- | ----------------------------------------------------------------------------------------------------------------

| | 3. | An independent third-party valuation firm is engaged by, or on behalf of, the Valuation Committee
to conduct independent appraisals and review management’s preliminary valuations and make their own independent assessment,
for all material investments;
| | -- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 4. | The Valuation Committee discusses valuations and recommends the fair value of each investment in
the portfolio in good faith based on the input of GSV Asset Management and the independent third-party valuation firm; and
| | -- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 5. | The Board then discusses the valuations and determines in good faith the fair value of each investment
in the portfolio based upon input of GSV Asset Management, estimates from the independent valuation firm and the recommendations
of the Valuation Committee.
| | -- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



In making our good
faith determination of the fair value of investments, we consider valuation methodologies consistent with industry practice. Valuation
methods, among other measures and as applicable, may include comparisons to prices from secondary market transactions and recent
venture capital financings, analysis of financial ratios and valuation metrics of the portfolio companies that issued such private
equity securities to peer companies that are public, analysis of the portfolio companies’ most recent financial statements
and forecasts, and the markets in which the portfolio company does business, and other relevant factors.



When an external event
such as a purchase transaction, public offering or subsequent equity sale occurs, the Company will consider the pricing indicated
by the external event to corroborate the private equity valuation. Due to the inherent uncertainty of determining the fair value
of investments that do not have a readily available market value, the fair value of the investments may differ significantly from
the values that would have been used had a readily available market value existed for such investments, and the differences could
be material.



Fair value is defined
as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants
at the measurement date. GAAP establishes a framework for measuring fair value that includes a hierarchy used to classify the inputs
used in measuring fair value. The hierarchy prioritizes the inputs to valuation techniques used to measure fair value into three
levels. The level in the fair value hierarchy within which the fair value measurement falls is determined based on the lowest level
input that is significant to the fair value measurement. The levels of the fair value hierarchy are as follows:



Level 1. Financial
assets and liabilities whose values are based on unadjusted quoted prices for identical assets or liabilities in an active market
that the Company has the ability to access (examples include active exchange-traded equity securities, exchange-traded derivatives,
and most U.S. Government and agency securities).



Level 2. Financial
assets and liabilities whose values are based on quoted prices in markets that are not active or model inputs that are observable
either directly or indirectly for substantially the full term of the asset or liability. Level 2 inputs include the following:





63









| | a) | Quoted prices for similar assets or liabilities in active markets;
| | -- | ------------------------------------------------------------------

| | b) | Quoted prices for identical or similar assets or liabilities in non-active markets (examples include
corporate and municipal bonds, which trade infrequently);
| | -- | --------------------------------------------------------------------------------------------------------------------------------------------------------------

| | c) | Pricing models whose inputs are observable for substantially the full term of the asset or liability
(examples include most over-the-counter derivatives, including foreign exchange forward contracts); and
| | -- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | d) | Pricing models whose inputs are derived principally from or corroborated by observable market data
through correlation or other means for substantially the full term of the asset or liability.
| | -- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Level 3. Financial
assets and liabilities whose values are based on prices or valuation techniques that require inputs that are both unobservable
and significant to the overall fair value measurement. These inputs reflect management’s own assumptions about the assumptions
a market participant would use in pricing the asset or liability (examples include certain of our private equity investments).



When the inputs used
to measure fair value fall within different levels of the hierarchy, the level within which the fair value measurement is categorized
is based on the lowest level input that is significant to the fair value measurement in its entirety. For example, a Level 3 fair
value measurement may include inputs that are observable (Levels 1 and 2) and unobservable (Level 3). Therefore gains and losses
for such assets and liabilities categorized within the Level 3 table set forth in Note 3 may include changes in fair value that
are attributable to both observable inputs (Levels 1 and 2) and unobservable inputs (Level 3).



A review of fair value
hierarchy classifications is conducted on a quarterly basis. Changes in the observability of valuation inputs may result in a reclassification
for certain financial assets or liabilities. Reclassifications impacting Level 3 of the fair value hierarchy are reported as transfers
in/out of the Level 3 category as of the beginning of the quarter in which the reclassifications occur.



Securities Transactions



Securities transactions
are accounted for on the date the transaction for the purchase or sale of the securities is entered into by the Company (i.e.,
trade date). Securities transactions outside conventional channels, such as private transactions, are recorded as of the date the
Company obtains the right to demand the securities purchased or to collect the proceeds from a sale, and incurs an obligation to
pay for securities purchased or to deliver securities sold, respectively.



Portfolio Company Investment Classification



We are a non-diversified
company within the meaning of the 1940 Act. We classify our investments by level of control. As defined in the 1940 Act, control
investments are those where there is the power to exercise a controlling influence over the management or policies of a company.
Control is generally deemed to exist when a company or individual directly or indirectly owns beneficially more than 25% of the
voting securities of an investee company. Affiliated investments and affiliated companies are defined by a lesser degree of influence
and are deemed to exist when a company or individual directly or indirectly owns, controls or holds the power to vote 5% or more
of the outstanding voting securities of another person. At December 31, 2011, no investments were deemed to be control or affiliated
investments.



Cash



The Company places
its cash with U.S. Bank, N.A. and First Republic Bank, N.A., and at times, cash held in these accounts may exceed the Federal Deposit
Insurance Corporation insured limit. The Company also invests a portion of its cash in money market funds, within limitations of
the 1940 Act.



Revenue Recognition



The Company’s
revenue recognition policies are as follows:



Sales: Gains
or losses on the sale of investments are determined using the specific identification method.



Interest: Interest
income, adjusted for amortization of premium and accretion of discount, is recorded on an accrual basis.





64









Dividends: Dividend income is recognized
on the ex-dividend date.



Investment
Transaction Costs and Escrow Deposits



Commissions
and other costs associated with an investment transaction, including legal expenses, are included in the cost basis of purchases
and deducted from the proceeds of sales. The Company makes certain acquisitions on the secondary market which involves making deposits
to escrow accounts until certain conditions are met including the underlying private company’s right of first refusal. If
the underlying private company does not exercise its right to first refusal and all other conditions are met, then the funds in
the escrow account are delivered to the seller and the account is closed. These transactions are reflected on the Statement of
Assets and Liabilities as Escrow deposits. At December 31, 2011, the Company had $0 in Escrow deposits.



Payable
for Unsettled Securities Transaction



Payable
for unsettled securities transaction relates to the purchase of the United States Treasury Bill that was unsettled at December
31, 2011, and settled subsequent to year-end.



Unrealized
Appreciation or Depreciation on Investments



Unrealized
appreciation or depreciation is calculated as the difference between the fair value of the investment and the cost basis of such
investment.



U.S. Federal and State Income Taxes



The Company intends
to elect to be treated as a regulated investment company (“RIC”) under subchapter M of the Internal Revenue Code of
1986, as amended, and to operate in a manner so as to qualify for the tax treatment applicable to RICs. In order to qualify as
a RIC, among other things, the Company is required to timely distribute to its stockholders at least 90% of investment company
taxable income, as defined by the Code, for each year. So long as the Company maintains its status as a RIC, it generally will
not pay corporate-level U.S. federal and state income taxes on any ordinary income or capital gains that it distributes at least
annually to its stockholders as dividends. Rather, any tax liability related to income earned by the Company represents obligations
of the Company’s investors and will not be reflected in the financial statements of the Company.



The Company evaluates
tax positions taken or expected to be taken in the course of preparing its financial statements to determine whether the tax positions
are “more-likely-than-not” of being sustained by the applicable tax authority. The Company recognizes the tax benefits
of uncertain tax positions only where the position has met the “more-likely-than-not” threshold. The Company classifies
penalties and interest associated with income taxes, if any, as income tax expense. Conclusions regarding tax positions are subject
to review and may be adjusted at a later date based on factors including, but not limited to, ongoing analyses of tax laws, regulations
and interpretations thereof. The Company did not have any unrecognized tax benefits as of the period presented herein. The Company
identified its major tax jurisdictions as U.S. Federal and California, and is not aware of any tax positions for which it is reasonably
possible that the total amount of unrecognized tax benefits will change materially in the next 12 months.



Organization and Offering costs



Organization costs
include costs relating to the formation and incorporation of the business. These costs were expensed as incurred. For the period
from January 6, 2011 (date of inception) to December 31, 2011, the Company has incurred and expensed organization costs of $198,831.
Offering costs include legal fees and other costs pertaining to the initial public offering. These costs have been offset against
capital proceeds from the public offerings. For the period from January 6, 2011 (date of inception) to December 31, 2011, these
costs amount to $1,058,288.



Per Share Information



Basic and diluted earnings
(loss) per common share is calculated using the weighted average number of shares outstanding for the period presented. Basic and
diluted earnings (loss) per share are the same since there are no potentially dilutive securities outstanding.





65









Capital Accounts



Certain capital accounts
including undistributed net investment income, accumulated net realized gain or loss, net unrealized appreciation or depreciation,
and paid in capital in excess of par, are adjusted, at least annually, for permanent differences between book and tax. In addition,
the character of income and gains to be distributed is determined in accordance with income tax regulations that may differ from
GAAP. GAAP requires that certain components of net assets relating to permanent difference be reclassified between financial and
tax reporting. These reclassifications have no effect on the net assets or net asset value per share and are intended to enable
the Company’s stockholders to determine the amount of accumulated and undistributed earnings they potentially could receive
in the future and on which they could be taxed. For the period from January 6, 2011 (date of inception) to December 31, 2011, the
net investment loss of $2,033,864 in the Statement of Operations was determined to be a permanent difference and reduced paid-in
capital in excess of par in the Statement of Assets and Liabilities.



Recently Issued Accounting Standards



In May 2011, the Financial
Accounting Standards Board (“FASB”) issued guidance clarifying how to measure and disclose fair value. This guidance
amends the application of the “highest and best use” concept to be used only in the measurement of fair value of nonfinancial
assets, clarifies that the measurement of the fair value of equity-classified financial instruments should be performed from the
perspective of a market participant who holds the instrument as an asset, clarifies that an entity that manages a group of financial
assets and liabilities on the basis of its net risk exposure can measure those financial instruments on the basis of its net exposure
to those risks, and clarifies when premiums and discounts should be taken into account when measuring fair value. The fair value
disclosure requirements also were amended. The amended guidance is to be applied prospectively. For public entities, the guidance
is effective during interim and annual periods beginning after December 15, 2011. Early application by public entities is not permitted.
At this time management is evaluating the implications of the guidance and the impact to the financial statements of GSV Capital
Corp.



NOTE 2 — RELATED PARTY ARRANGEMENTS



Investment Advisory Agreement



The Company entered
into an investment advisory agreement with GSV Asset Management (the “Advisory Agreement”) in connection with its initial
public offering. Pursuant to the Advisory Agreement, GSV Asset Management will be paid a base annual fee of 2% of gross assets,
and an annual incentive fee equal to the lesser of (i) 20% of the Company’s realized capital gains during each calendar year,
if any, calculated on an investment-by-investment basis, subject to a non-compounded preferred return, or “hurdle,”
and a “catch-up” feature, and (ii) 20% of the Company’s realized capital gains, if any, on a cumulative basis
from inception through the end of each calendar year, computed net of all realized capital losses and unrealized capital depreciation
on a cumulative basis, less the aggregate amount of any previously paid incentive fees. For the period from the close of the initial
public offering through and including December 31, 2011, the fee was payable monthly in arrears, and was calculated based on the
initial value of the Company’s assets upon the closing of the public offering. GSV Asset Management earned $618,865 in base
fees and $0 in incentive fees for the period from January 6, 2011 (date of inception) to December 31, 2011.



As of December 31,
2011, the Company was due $13,470 from GSV Asset Management for reimbursement of travel-related expenses paid for by the Company
that were the responsibility of GSV Asset Management, and is included in the Statement of Assets and Liabilities.



As of December 31,
2011, the Company owed certain officers and directors $10,782 for reimbursements of travel-related and other expenses. The Company
owed GSV Asset Management $78,427 for management fees and reimbursements of travel-related and other expenses. These are included
in the Statement of Assets and Liabilities.



Administration Agreement



The Company entered
into an administration agreement with GSV Capital Service Company (the “Administration Agreement”) to provide administrative
services, including furnishing the Company with office facilities, equipment, clerical, bookkeeping, record keeping services and
other administrative services, in connection with its initial public offering and ongoing operations. The Company reimburses GSV
Capital Service Company an allocable portion of overhead and other expenses in performing its obligations under the Administration
Agreement. There was $554,232 in such costs incurred under the Administration Agreement for the
period from January 6, 2011 (date of inception) to December 31, 2011.





66









License Agreement



The Company entered
into a license agreement with GSV Asset Management pursuant to which GSV Asset Management has agreed to grant the Company a non-exclusive,
royalty-free license to use the name ‘‘GSV.’’ Under this agreement, the Company has the right to use the
GSV name for so long as the Advisory Agreement with GSV Asset Management is in effect. Other than with respect to this limited
license, The Company has no legal right to the ‘‘GSV’’ name.



NOTE 3 — PORTFOLIO INVESTMENTS
AND FAIR VALUE



At December 31, 2011,
the Company had 24 investments in 21 portfolio companies. The total cost and fair value of the 24 positions were $65,658,866 and
$64,078,150, respectively. The composition of our investments as of December 31, 2011 is as follows:



|                            |  | Cost |            |  | Fair Value |  
|--------------------------- |  | ---- | ---------- |  | ---------- | -
|Common Stock                |  | $    | 43,451,594 |  |            | $
|Preferred Stock             |  |      | 17,595,397 |  |            |  
|Structured Note             |  |      | 4,535,082  |  |            |  
|Warrants                    |  |      | 76,793     |  |            |  
|Total Portfolio Investments |  |      | 65,658,866 |  |            |  
|                            |  |      |            |  |            |  
|Non-Portfolio Investments   |  |      | 26,999,128 |  |            |  
|Total Investments           |  | $    | 92,657,994 |  |            | $



The fair values of our
investments disaggregated into the three levels of the fair value hierarchy based upon the lowest level of
significant input used in the valuation as of December 31, 2011 are as follows:



|                   |  |   | Quoted Prices in Active Markets for Identical Securities (Level 1) |  |  |   | Significant Other Observable Inputs (Level 2) |  |  |   | Significant Unobservable Inputs (Level 3) |  |  |   | Total      | 
|------------------ |  | - | ------------------------------------------------------------------ |  |  | - | --------------------------------------------- |  |  | - | ----------------------------------------- |  |  | - | ---------- | 
|Common Stock       |  | $ | -                                                                  |  |  | $ | 1,188,288                                     |  |  | $ | 40,865,381                                |  |  | $ | 42,053,669 | 
|U.S. Treasury Bill |  |   | 20,000,044                                                         |  |  |   | -                                             |  |  |   | -                                         |  |  |   | 20,000,044 | 
|Preferred Stock    |  |   | -                                                                  |  |  |   | -                                             |  |  |   | 17,453,085                                |  |  |   | 17,453,085 | 
|Money Market Funds |  |   | 7,000,000                                                          |  |  |   | -                                             |  |  |   | -                                         |  |  |   | 7,000,000  | 
|Structured Note    |  |   | -                                                                  |  |  |   | -                                             |  |  |   | 4,500,000                                 |  |  |   | 4,500,000  | 
|Warrants           |  |   | -                                                                  |  |  |   | -                                             |  |  |   | 71,396                                    |  |  |   | 71,396     | 
|Total Investments  |  | $ | 27,000,044                                                         |  |  | $ | 1,188,288                                     |  |  | $ | 62,889,862                                |  |  | $ | 91,078,194 | 



The aggregate values of Level 3 portfolio
investments changed during the period from January 6, 2011 (date of inception) to December 31, 2011 as follows:



|                                                                                            |  | Common Stock |            |   | Preferred Stock |   |            | Structured Note |  |   | Warrants  |   |  | Total |       
|------------------------------------------------------------------------------------------- |  | ------------ | ---------- | - | --------------- | - | ---------- | --------------- |  | - | --------- | - |  | ----- | ------
|Fair value as of January 6, 2011                                                            |  | $            | -          |   |                 | $ | -          |                 |  | $ | -         |   |  | $     | -     
|Purchases of investments                                                                    |  |              | 43,451,594 |   |                 |   | 17,595,397 |                 |  |   | 4,535,082 |   |  |       | 76,793
|Change in unrealized depreciation included in
    earnings                                  |  |              | (1,397,925 | ) |                 |   | (142,312   | )               |  |   | (35,082   | ) |  |       | (5,397
|Transfer to Level 2                                                                         |  |              | (1,188,288 | ) |                 |   | -          |                 |  |   | -         |   |  |       | -     
|Fair value as of December 31, 2011                                                          |  | $            | 40,865,381 |   |                 | $ | 17,453,085 |                 |  | $ | 4,500,000 |   |  | $     | 71,396
|Change in unrealized depreciation on Level 3 investments
still held as of December 31, 2011 |  | $            | (457,628   | ) |                 | $ | (142,312   | )               |  | $ | (35,082   | ) |  | $     | (5,397





During the
period from January 6, 2011 (date of inception) to December 31, 2011, there was one transfer from Level 3 to Level 2 related
to our investment in Groupon. Due to its public offering in November 2011, observable inputs became available for our
valuation as of December 31, 2011. Our shares in Groupon are presently subject to a lock-up agreement that expires on May 1,
2012. The fair value for Groupon was estimated using the close price on a public exchange as of the valuation date, adjusted
for a discount due to lack of marketability of 28% that was primarily based on the market price of publicly traded put
options with a similar term as the lock-up as of December 31, 2011. Change in unrealized depreciation for the period for
Level 3 investments still held as of December 31, 2011, is $640,419.





67









NOTE 4 — EQUITY OFFERINGS AND RELATED EXPENSES



We issued 5,520,100
shares of our common stock during the period from January 6, 2011 (date of inception) to December 31, 2011. The proceeds raised,
the related underwriting fees, the offering expenses and the prices at which these shares were issued are as follows:



|Issuances of Common Stock |  | Number of
Shares |           |  | Gross Proceeds Raised |   |            | Underwriting
Fees |  |   | Offering
Expenses |  |  | Offering
Price |        
|------------------------- |  | ---------------- | --------- |  | --------------------- | - | ---------- | ----------------- |  | - | ----------------- |  |  | -------------- | -------
|February 28, 2011         |  |                  | 100       |  |                       | $ | 1,500      |                   |  | $ | -                 |  |  | $              | -      
|April 28, 2011            |  |                  | 3,335,000 |  |                       |   | 50,025,000 |                   |  |   | 3,501,750         |  |  |                | 527,166
|September 27, 2011        |  |                  | 1,900,000 |  |                       |   | 26,885,000 |                   |  |   | 1,102,000         |  |  |                | -      
|September 27, 2011        |  |                  | 285,000   |  |                       |   | 4,032,750  |                   |  |   | 165,300           |  |  |                | 531,122



|(1) | Includes $3,585 of offering expenses that were accrued as of September 30, 2011.                             
|--- | -------------------------------------------------------------------------------------------------------------
|(2) | Amount was reduced by $18,878 after actual expenses for the offering were determined as of December 31, 2011.



NOTE 5 — NET DECREASE IN NET ASSETS PER COMMON
SHARE



The following information
sets forth the computation of net decrease in net assets resulting from operations per common share for the period from January
6, 2011 (date of inception) to December 31, 2011.



|                                                     |  | For the period from January 6, 2011 (date of inception) to December 31, 2011 |           
|---------------------------------------------------- |  | ---------------------------------------------------------------------------- | ----------
|Net decrease in net assets resulting from operations |  | $                                                                            | (3,613,664
|Weighted average common shares(1)                    |  |                                                                              | 3,377,429 
|Basic and diluted earnings
per common share          |  | $                                                                            | (1.07     



| | (1) | Weighted average common shares for the period from January
6, 2011 (date of inception) to December 31, 2011 was calculated starting from the issuance of 100 shares on February 28, 2011.
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



NOTE 6 — LEGAL CONTINGENCIES



The Company is currently
not subject to any material legal proceedings, nor, to our knowledge, is any material legal proceeding threatened against us. From
time to time, we may be a party to certain legal proceedings in the ordinary course of business, including proceedings relating
to the enforcement of our rights under contracts with our portfolio companies. While the outcome of these legal proceedings cannot
be predicted with certainty, we do not expect that these proceedings will have a material effect upon our business, financial condition
or results of operations.



NOTE 7 — FINANCIAL HIGHLIGHTS

|                                                                       |  | For the period from January 6, 2011
(date of 
inception) to
 December 31, 2011 |           
|---------------------------------------------------------------------- |  | ------------------------------------------------------------------------------ | ----------
|                                                                       |  |                                                                                |           
|Per Share Data (1):                                                    |  |                                                                                |           
|Net asset value at beginning of period                                 |  | $                                                                              | -         
|Issuance of common shares (2)                                          |  |                                                                                | 14.67     
|Underwriters’ discount                                                 |  |                                                                                | (0.86     
|Offering costs                                                         |  |                                                                                | (0.19     
|Net investment loss                                                    |  |                                                                                | (0.37     
|Change in unrealized depreciation                                      |  |                                                                                | (0.30     
|Net asset value at end of period                                       |  | $                                                                              | 12.95     
|                                                                       |  |                                                                                |           
|Per share market value at end of period                                |  | $                                                                              | 13.95     
|Total return based on market value(3)                                  |  |                                                                                | (7.00     
|Total return based on net asset value(3)                               |  |                                                                                | (13.67    
|Shares outstanding at end of period                                    |  |                                                                                | 5,520,100 
|Ratio / Supplemental Data:                                             |  |                                                                                |           
|Net assets at end of period                                            |  | $                                                                              | 71,503,248
|Average net assets (4)                                                 |  |                                                                                | 44,532,523
|Annualized ratio of gross operating expenses to average net assets (4) |  |                                                                                | 5.01      
|Annualized ratio of net operating expenses to average net assets (4)   |  |                                                                                | 5.01      
|Annualized ratio of net investment loss to average net assets (4)      |  |                                                                                | (4.64     





68









| | (1) | Financial highlights are based on shares outstanding
as of December 31, 2011.
| | --- | -----------------------------------------------------------------------------

| | (2) | Issuance of common shares is based on the weighted average
offering price for the shares issued during the period.
| | --- | ------------------------------------------------------------------------------------------------------------------

| | (3) | Total return based on market value is based on the change
in market price per share assuming an investment at the initial public offering price of $15.00 per share. Total return based
on net asset value is based upon the change in net asset value per share between the opening and ending net asset values per share
and the issuance of common shares in the period. The total returns are not annualized.
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (4) | Financial Highlights for periods of less than one year
are annualized and the ratios of operating expenses to average net assets and net investment loss to average net assets are
adjusted accordingly.  Non-recurring expenses were not annualized.  For the period from January 6, 2011 (date
of inception) to December 31, 2011, the Company incurred $198,831 of Organizational Expenses, which were deemed to be non-recurring.
Average net assets for the period from January 6, 2011 (date of inception) to December 31, 2011, were calculated starting from
the issuance of 100 shares on February 28, 2011.
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



NOTE 8 — INCOME TAX



The Company will elect
to be treated for federal income tax purposes as a RIC. As a RIC, the Company generally will not pay corporate-level federal income
taxes on any net ordinary income or capital gains that the Company distributes to its stockholders as dividends. In addition to
meeting other requirements, the Company must generally distribute at least 90% of its investment company taxable income to qualify
for pass-through tax treatment and maintain its RIC status. As part of maintaining RIC status, undistributed taxable income (subject
to a 4% excise tax) pertaining to a given fiscal year may be distributed up to 12 months subsequent to the end of that fiscal year,
provided such dividends are declared prior to the filing of the federal income tax return for the prior year.



NOTE 9 — SUBSEQUENT EVENTS



On January 3, 2011,
the Company sold and settled the $20.0 million United States Treasury Bill for a realized loss of $256.



On February 10, 2012,
the Company priced a secondary offering, selling 6,900,000 of common shares at a price of $15.00 per share, including an exercise
in full by the underwriters of their option to purchase an additional 900,000 shares of common stock to cover overallotments. The
secondary offering resulted in net proceeds to the Company of approximately $96.2 million.



Subsequent
to December 31, 2011, the Company closed on investments of $5.0 million, plus transaction costs as follows:



The
Company closed on an investment of $100,000, plus transaction costs, in AlwaysOn Network, LLC, an internet media company headquartered
in Kelowna, British Columbia, on January 10, 2012.



The
Company closed on an investment of $200,000, plus transaction costs, in Maven Research, Inc., a global knowledge marketplace headquartered
in San Francisco, CA, on February 28, 2012.



The
Company closed on an investment of $500,000, plus transaction costs, in AltEgo, LLC, an avatar technology and games developer headquartered
in Santa Monica, CA, on February 29, 2012.



The Company closed
on an investment of $4,000,000, plus transaction costs, in Chegg, Inc., an online textbook rental company headquartered in Santa
Clara, CA, on March 7, 2012.





The
Company closed on an investment of $150,000, plus transaction costs, in AlwaysOn Network, LLC, an internet media company headquartered
in Kelowna, British Columbia, on March 9, 2012.





On
February 1, 2012, Facebook, Inc. filed a registration statement with the SEC in connection with its proposed initial public offering.
The Company owns 350,000 shares of Class B common stock of Facebook, Inc., which are presently subject to a lock-up agreement that
will expire 181 days after the date of the final prospectus relating to Facebook, Inc.’s initial public offering, if consummated.



69









The
Company is presently in the final stages of negotiations with a handful of private company investments that it anticipates entering
into within the next 30 to 60 days, subject to applicable closing conditions. These equity investments may be made through the
secondary market and involve making deposits in escrow accounts until certain conditions are met. Moreover, each underlying issuer
has the right to terminate the deal before such conditions are satisfied. Pursuant to the terms of our agreements with each of
these prospective issuers, at such time that these conditions are satisfied, the escrow accounts will close, and our equity investments
will be effectuated. Subsequent to December 31, 2011, the Company made $4.9 million in such escrow deposits of which $0.9 million
are currently outstanding and subject to applicable closing conditions.



NOTE 10 — SELECTED QUARTERLY FINANCIAL DATA
(UNAUDITED)



The following tables
set forth certain quarterly financial information for each of the last four quarters ended December 31, 2011. This information
was derived from our unaudited financial statements. Results for any quarter are not necessarily indicative of results for the
full year or for any further quarter.



|                   |  | Total Investment Income |         |  | Net Investment Loss  |   |      | Net Unrealized
        Depreciation |  | Net Decrease in Net
        Assets from Operations
|------------------ |  | ----------------------- | ------- |  | -------------------- | - | ---- | ----------------------------------- |  | --------------------------------------------------
|Quarter Ended      |  | Total                   |         |  | Per
        Share(1) |   |      | Total                               |  |                                                   
|March 31, 2011     |  | $                       | -       |  |                      | $ | -    |                                     |  | $                                                 
|June 30, 2011      |  |                         | -       |  |                      |   | -    |                                     |  |                                                   
|September 30, 2011 |  |                         | 53,408  |  |                      |   | 0.02 |                                     |  |                                                   
|December 31, 2011  |  |                         | 108,920 |  |                      |   | 0.02 |                                     |  |                                                   



|(1) | Per share amounts are calculated using weighted average shares outstanding during the period.
|--- | ---------------------------------------------------------------------------------------------





70











Item 9.	Changes in and Disagreements
with Accountants on Accounting and Financial Disclosure





Not applicable.





Item 9A.	Controls and Procedures



(a)   Evaluation of Disclosure Controls and
Procedures



As
of December 31, 2011, we, including our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of the
design and operation of our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act
of 1934). Based on that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls
and procedures were effective and provided reasonable assurance that
information required to be disclosed in our periodic SEC filings is recorded, processed, summarized and reported within the time
periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management,
including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required
disclosure. However, in evaluating the disclosure controls and procedures, management recognized that any controls and procedures,
no matter how well designed and operated can provide only reasonable assurance of achieving the desired control objectives, and
management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of such possible controls
and procedures.



(b) Management’s Report on
Internal Control Over Financial Reporting



This annual report does not include a report
of management’s assessment regarding internal control over financial reporting or an attestation report of the company’s
registered public accounting firm due to a transition period established by rules of the Securities and Exchange Commission for
newly public companies.



(c) Attestation Report of the Independent
Registered Public Accounting Firm



Not applicable.



(d) Changes in Internal Controls
Over Financial Reporting



There have been no changes
in our internal control over financial reporting (as defined in Rule 13a-15(f) under the Securities Exchange Act of 1934) that
occurred during the period from January 6, 2011 (date of inception) to December 31, 2011 that have materially affected, or are
reasonably likely to materially affect, our internal control over financial reporting.



Item 9B.	Other Information



On March 5, 2012, Luben Pampoulov resigned from his position
as an officer of the Company.  In light of Mr. Pampoulov's focus on providing the Company with investment advisory services
through GSV Asset Management, both he and our Board of Directors believe his position as a Managing Director of GSV Asset Management
more accurately reflects his contributions to the Company.







71









PART III



Item 10.	Directors, Executive Officers
and Corporate Governance



The information required
by Item 10 is hereby incorporated by reference from the Company’s definitive Proxy Statement relating to the Company’s
2012 Annual Meeting of Stockholders, to be filed with the Securities and Exchange Commission within 120 days following the end
of the Company’s fiscal year.



Item 11.	Executive Compensation



The information required
by Item 11 is hereby incorporated by reference from the Company’s definitive Proxy Statement relating to the Company’s
2012 Annual Meeting of Stockholders, to be filed with the Securities and Exchange Commission within 120 days following the end
of the Company’s fiscal year.



Item 12.	Security
Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters



The information required
by Item 12 is hereby incorporated by reference from the Company’s definitive Proxy Statement relating to the Company’s
2012 Annual Meeting of Stockholders, to be filed with the Securities and Exchange Commission within 120 days following the end
of the Company’s fiscal year.



Item 13.	Certain Relationships and
Related Transactions, and Director Independence



The information required
by Item 13 is hereby incorporated by reference from the Company’s definitive Proxy Statement relating to the Company’s
2012 Annual Meeting of Stockholders, to be filed with the Securities and Exchange Commission within 120 days following the end
of the Company’s fiscal year.



Item 14.	Principal Accountant Fees
and Services



The information required
by Item 14 is hereby incorporated by reference from the Company’s definitive Proxy Statement relating to the Company’s
2012 Annual Meeting of Stockholders, to be filed with the Securities and Exchange Commission within 120 days following the end
of the Company’s fiscal year.





72









PART IV



Item 15. 	Exhibits and Financial Statement Schedules



| | a. | Documents Filed as Part of this Report
| | -- | --------------------------------------



The following financial statements are set
forth in Item 8:

|                                                                                                                | Page
|--------------------------------------------------------------------------------------------------------------- | ----
|Report of Independent Registered Public Accounting Firm                                                         | 54  
|                                                                                                                |     
|Statement of Assets and Liabilities as of December 31, 2011                                                     | 55  
|                                                                                                                |     
|Statement of Operations for the period from January 6, 2011 (date of inception) to December 31, 2011            | 56  
|                                                                                                                |     
|Statement of Changes in Net Assets for the period from January 6, 2011 (date of inception) to December 31, 2011 | 57  
|                                                                                                                |     
|Statement of Cash Flows for the period from January 6, 2011 (date of inception) to December 31, 2011            | 58  
|                                                                                                                |     
|Schedule of Investments as of December 31, 2011                                                                 | 59  
|                                                                                                                |     
|Notes to the Financial Statements                                                                               | 62  



| | b. | Exhibits
| | -- | --------



The following exhibits are filed as part
of this report or hereby incorporated by reference to exhibits previously filed with the SEC:





|3.1  | Articles of Amendment and Restatement*                                                                                               
|---- | -------------------------------------------------------------------------------------------------------------------------------------
|     |                                                                                                                                      
|3.2  | Articles of Amendment**                                                                                                              
|     |                                                                                                                                      
|3.3  | Bylaws*                                                                                                                              
|     |                                                                                                                                      
|4.1  | Form of Common Stock Certificate*                                                                                                    
|     |                                                                                                                                      
|10.1 | Form of Dividend Reinvestment Plan*                                                                                                  
|     |                                                                                                                                      
|10.2 | Investment Advisory Agreement by and between Registrant and GSV Asset Management, LLC (f/k/a NeXt Asset Management, LLC) *           
|     |                                                                                                                                      
|10.3 | Administration Agreement by and between Registrant and GSV Capital Service Company, LLC (f/k/a NeXt Innovation Service Company, LLC)*
|     |                                                                                                                                      
|10.4 | Form of Indemnification Agreement by and between Registrant and each of its directors*                                               
|     |                                                                                                                                      
|10.5 | Form of Custody Agreement by and between Registrant and U.S. Bank National Association*                                              
|     |                                                                                                                                      
|10.6 | Form of Trademark License Agreement by and between Registrant and GSV Asset Management, LLC**                                        
|     |                                                                                                                                      
|31.1 | Certification of Chief Executive Officer pursuant to Rule 13a-14 of the Securities Exchange Act of 1934, as amended                  
|31.2 | Certification of Chief Financial Officer pursuant to Rule 13a-14 of the Securities Exchange Act of 1934, as amended.                 
|     |                                                                                                                                      
|32.1 | Certification of Chief Executive Officer pursuant to Section 906 of The Sarbanes-Oxley Act of 2002.                                  
|     |                                                                                                                                      
|32.2 | Certification of Chief Financial Officer pursuant to Section 906 of The Sarbanes-Oxley Act of 2002.                                  





___________

* Previously filed in connection with Pre-Effective Amendment
No. 2 to the Registrant’s Registration Statement on Form N-2 (File No. 333-171578) filed on March 30, 2011.

** Previously filed in connection with Current Report on Form
8-K (File No. 814-00852) filed on June 1, 2011.





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SIGNATURES



Pursuant to the requirements of Section 13
or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.







|                     |                                                                           
|-------------------- | --------------------------------------------------------------------------
|                     | GSV CAPITAL CORP.                                                         
|Date: March 13, 2012 |                                                                           
|                     | By: /s/Michael T. Moe                                                     
|                     | Michael T. Moe                                                            
|                     | Chief Executive Officer, President 
and Chairman of the Board of Directors
|                     | (Principal Executive Officer)                                             
|                     |                                                                           
|                     |                                                                           
|Date: March 13, 2012 | By: /s/Stephen D. Bard                                                    
|                     | Stephen D. Bard                                                           
|                     | Chief Financial Officer, Treasurer 
and Secretary                         
|                     | (Principal Financial and Accounting Officer)                              







74