Top ETFs Focused on Emerging Start-Ups

Since the aftermath of the Great Recession, technology-driven start-ups have emerged as prime engines of value creation and investment opportunities. Sectors such as smartphones, the sharing economy, cloud computing, and biotechnology have fueled remarkable growth. Giants like Alphabet and Zoom have capitalized on these trends, delivering impressive returns thanks to their high profit margins and rapid expansion potential.

However, many tech start-ups remain inaccessible to most investors because they stay private longer to preserve founder control over equity and strategic vision. When these companies eventually go public, their shares are often pre-allocated or quickly purchased on the initial day of trading, driving prices upward.

For those eager to invest early in the next Google or Uber, certain exchange-traded funds (ETFs) specialize in start-ups. These ETFs offer exposure to young companies while providing benefits such as diversification and liquidity—crucial for managing the volatility typical of start-up stocks.

While start-ups, particularly in tech, can experience significant price swings and inconsistent growth trajectories, ETFs help mitigate some of these risks by spreading investments across multiple firms.

Nevertheless, investing in start-ups suits investors with a high-risk tolerance and a long-term perspective.

Below are three standout ETFs that focus on tech-oriented start-up companies, with data current as of December 16, 2021.

Key Highlights

• Several ETFs offer retail investors a gateway to high-risk, high-reward tech start-ups that are otherwise difficult to access.
• The Renaissance IPO ETF (IPO) targets the largest and most liquid newly listed U.S. IPOs, rebalancing quarterly.
• BlackRock Future Tech ETF (BTEK) invests globally in innovative companies within emerging technology sectors.
• Sutter Rock Capital (SSSS), a publicly traded investment fund (not an ETF), focuses on high-growth, venture capital-backed private companies.

Renaissance IPO ETF (IPO)

• 1-Year Trailing Return: 63.7%
• Expense Ratio: 0.60%
• Dividend Yield: 0.0% (currently suspended)
• Average Daily Volume (3 months): 130,715 shares
• Assets Under Management: $632.65 million
• Launch Date: October 16, 2013
• Provider: Renaissance Capital

The Renaissance IPO ETF grants investors access to a diversified portfolio of newly public companies. While these firms may not all be start-ups in the strictest sense, the same market forces influencing private start-up valuations impact these fresh IPOs, making this ETF a strong proxy for start-up investment appetite.

This ETF tracks the Renaissance IPO Index, which includes the largest and most liquid U.S. IPOs and undergoes quarterly rebalancing. No single company exceeds 10% of the portfolio weight.

Top holdings include:

• Snowflake (SNOW)
• Moderna (MRNA)
• Uber (UBER)
• CrowdStrike Holdings (CRWD)
• Datadog (DDOG)

Sutter Rock Capital/SuRo Capital (SSSS)

• 1-Year Trailing Return: 64.23%
• Expense Ratio: Not applicable
• Dividend Yield: 46.85%
• Average Daily Volume (3 months): 368,100 shares
• Assets Under Management: $425.8 million (as of September 30, 2021)
• Inception Date: April 28, 2011
• Issuer: Not applicable

Previously known as GSV Capital, Sutter Rock Capital is a publicly traded investment fund rather than a traditional ETF. It targets high-growth, venture-backed private companies, offering investors diversified, cost-effective exposure to rapidly expanding young firms.

The portfolio includes approximately 39 companies, with the top five accounting for about 54% of assets. Leading holdings are Course Hero, Coursera, Forge Global, Nextdoor, and Blink Health—each demonstrating strong user or revenue growth and anticipated IPO events.

Reflecting its early-stage focus, Sutter Rock’s stock has experienced volatility since its $15 debut in 2011. It initially attracted investors by holding shares in Facebook and Twitter pre-IPO. After these companies went public, interest waned, pushing the stock down to $4 in 2017. Since then, it has gradually rebounded to around $12 by December 2021.

BlackRock Future Tech ETF (BTEK)

• 1-Year Total Return: 18.95%
• Expense Ratio: 0.88%
• Dividend Yield: Not available
• Average Daily Volume (3 months): 5,611 shares
• Assets Under Management: $17.64 million
• Launch Date: September 29, 2020
• Issuer: BlackRock

The BlackRock Future Tech ETF focuses on cutting-edge companies operating in emerging technology sectors that are poised to influence the global economy. It invests worldwide across all market capitalizations, benchmarking against the MSCI All Country World Index.

Approximately 3% of the portfolio is held in BlackRock cash funds to maintain liquidity. The top five holdings are:

• Marvell Technology (MRVL)
• Tesla (TSLA)
• Lasertic Corp. (6920)
• Lattice Semiconductor Corp. (LSCC)
• On Semiconductor Corp (ON)

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