SecProbe.io

CORRESP
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filename1.htm

    Wendell M. Faria, Esq.

    Partner

    wendell.faria@dentons.com

    D   +1 202 496 7408

    Dentons US LLP

    1900 K St NW

    Washington, DC 20006

    United States

    dentons.com

Wendell Faria

Partner

January 21, 2025

Kimberly A. Browning, Senior Counsel

United States Securities and Exchange Commission

Division of Investment Management

100 F Street, N.E.

Washington, DC 20549-3010

    Re:
    C1 Fund Inc. (the
    “Company”)

    Registration Statement on Form N-2

    Filed November 12, 2024

    File Nos.: 333-283139, 811-24002

Dear Ms. Browning:

By letter dated December 12, 2024 (the “SEC
Letter”), the staff of the Division of Investment Management of the Securities and Exchange Commission (the “Staff”)
provided comments on the Registration Statement on Form N-2 filed by C1 Fund Inc. (the “Company” or “Fund”)
on November 12, 2024 (the “Registration Statement”). Set forth below are our responses to these comments.

The Company is also filing concurrently via
EDGAR Amendment No. 1 to the Registration Statement (the “Amendment”). The Amendment reflects changes made
in response to the Staff’s comments, as well as certain other changes. For your convenience, we have restated below in bold
italic typeface before each response the particular Staff comment. Page number references in our responses are to the
page numbers in the clean version of the Amendment unless stated otherwise. Capitalized terms used but not defined in this
letter have the meanings ascribed in the Registration Statement.

Registration Statement on Form N-2

General Comments

    1.
    We
    note that the Registration Statement is missing information. We may have additional comments on such portions when you complete them
    in a pre-effective amendment, on disclosures made in response to this letter, on information supplied supplementally, or on exhibits
    filed in any pre-effective amendment.

    Response:
    We
    acknowledge the Staff’s comment.

    2.
    Where
    a comment is made regarding disclosure in one location, it is applicable to all similar disclosure appearing elsewhere in the Registration
    Statement.  Please make conforming changes as necessary.

    Response:
    We
    acknowledge the Staff’s comment, and where applicable, we have made conforming changes in response to the various comments.

    3.
    Please
    tell us if you have presented or will present any “test the waters” materials to potential investors in connection with
    this offering.  If so, we may have further comments.

    Response:
    The
    Company has presented “test the waters” materials to potential institutional investors in connection with this offering
    in reliance on Section 5(d) of the Securities Act and Rule 163B thereunder.

    4.
    Prior
    to seeking effectiveness, please confirm that FINRA has reviewed the proposed underwriting terms and arrangements for the offering,
    including the amount of compensation to be allowed or paid to the underwriters and any other arrangements among the Company, the
    underwriter, and other broker dealers participating in the distribution, and that FINRA has issued a statement expressing no objections
    to the compensation and other arrangements.

    Response:
    The
    Company confirms that FINRA will review the proposed underwriting terms and arrangements for the offering and that FINRA will issue
    a no objections letter prior to the Company seeking effectiveness.

    5.
    On
    page 38 of the Prospectus, the text states, “[you,] the Adviser and certain of its affiliates intend
    to submit an exemptive application to the SEC to permit [you] to co-invest with other funds managed by the Adviser or its affiliates
    . . . . “ (Emphasis added.) Disclosure on page 58, however, states, you “may also submit [such] an exemptive
    application . . . .” (Emphasis added.) Please clarify and harmonize.  As of this letter’s date, we note that
    you have not filed any application for exemptive relief with the Commission.  Please supplementally inform us of this application’s
    status and of any other exemptive applications or no-action requests you have submitted or expect to submit in connection with the
    Registration Statement.

    Response:
    We
    have revised the disclosure on page 46 of the Prospectus to remove the statement in the Registration Statement that “We,
    the Adviser and certain of its affiliates may submit and exemptive application.”  We have not filed, and do not presently
    intend to file, any exemptive applications or no-action requests in connection with the Registration Statement.

Prospectus

    6.
    Some
    sections of the Prospectus are repetitive.  Please review and revise the disclosure where necessary to conform to the Commission’s
    plain English requirements.  See Rule 421(d) under Regulation C under the Securities Act of 1933 Act (“Securities
    Act”).  See also Office of Investor Education and Assistance, U.S.  Securities and Exchange Commission,
    “A Plain English Handbook: How to Create Clear SEC Disclosure Documents” (August 1998) (https://www.sec.gov/reportspubs/investor-
    publications/newsextrahandbookhtm.html).

    Response:
    We
    acknowledge the Staff’s comment, and where applicable, we have revised the disclosure in the Prospectus to be less repetitive and made
    other revisions to better conform to the Commission’s plain English requirements.

    7.
    In
    describing your investment strategies, risks, and/or policies, please do not use overly broad or vague terms in the Prospectus, but
    instead describe these matters clearly and concisely in plain English.  See the Instruction to Item 3.2 and subparagraphs
    2, 3, and 4 of Item 8 in Form N-2.  For example, on the Cover Page, either delete or revise the following terms to
    specify your principal investments: (1) third paragraph, “certain companies,” (2) fourth paragraph, “similar
    forms of senior equity,” and (3) fifth paragraph, “or other synthetic equity agreements” and “other
    special purpose vehicles.”

    Response:
    We
    acknowledge the Staff’s comment and have made revisions throughout the Prospectus to replace overly broad and vague terms with clearer
    and more concise language. In particular, we have revised the applicable paragraph of the Cover Page to state that we may invest
    on an opportunistic basis in equity and equity-linked securities issued by publicly-traded digital asset services and technology
    companies that meet our investment criteria. On the Cover Page, as well as on pages 2 and 52, we have replaced the reference
    to “similar forms of senior equity” with a more descriptive list of the types of equity and equity-linked investments
    in which we will seek to deploy capital.  Additionally, on the Cover Page as well as page 52 we have removed
    the references to “synthetic equity agreements” and “special purpose vehicles” and clarified the surrounding
    disclosures.

    8.
    We
    note several terms for groups with apparent relationships with C1 Advisors LLC (the “Adviser”), for example, “investment
    team of the Adviser,” “Adviser’s investment team,” “the principals of the Adviser,” “Adviser’s
    senior executive team,” “Investment Committee,” and “our investment professionals.” To the extent not
    already done so, please define these groups, including their members and the functions they perform for the Company.  For
    purposes of plain English, please do not use multiple terms as synonyms.

    Response:
    We
    acknowledge the Staff’s comment, and where applicable, we have made conforming changes to harmonize the descriptions of the Adviser’s
    management. Specifically, we note that the Adviser’s advisory duties will be provided by its Investment Committee, which is
    comprised of three members, Dr. Najamul Hasan Kidwai, Michael Lempres and Michael (Xu) Zhao, who were appointed to this committee
    by the Adviser’s sole member, C1 Group LLC.  We have made revisions throughout the Registration Statement to clarify
    that the investment advisory functions will be performed by the members of the Investment Committee.

Cover Page

    9.
    The
    first paragraph states that you have applied to list your common stock on the New York Stock Exchange (NYSE) under the symbol “[CFND].”
    Please update this disclosure accordingly.

    Response:
    We
    have updated the disclosure to state that Company intends to apply to list its common stock on the New York Stock Exchange
    (“NYSE”) and, subject to notice of issuance, expects the common stock be listed under the symbol
    “CFND”.

    10.
    As
    the Cover Page includes a brief description of only some of your principal strategies, please expand it to summarize each such
    strategy (e.g., investments in Special Purpose Vehicles (“SPVs”), private secondary marketplaces, and exchange-traded
    funds (“ETFs”) that hold digital assets).  See Item 1.2 of Form N-2.

    Response:
    We have expanded our discussion of our non-principal
    strategies on the Cover Page section of the Prospectus in response to the Staff’s comment. We have eliminated our discussion
    of non-principal strategies which we do not have a current intention to use, such as investing in SPVs. We note that we do not have
    a strategy to invest in private secondary marketplaces, as the Staff has indicated. Rather, we use these marketplaces as one channel
    (a platform) to engage in transactions in restricted securities with other qualified investors. Each of these marketplaces will be
    registered and regulated as an alternative trading system under Regulation ATS. We have added disclosure to clarify the nature and
    use of these marketplaces in the Prospectus Summary section of the Form N-2.

      With
                                            respect to the foregoing, please note that the Company has a non-principal investment strategy
                                            to invest in Private Funds. For this purpose, the Company distinguishes Private Funds from
                                            SPVs. In accordance with its commonly understood meaning, we use the term “SPV”
                                            to refer to an entity that was formed for the specific purpose of investing in a particular
                                            portfolio company but which relies on (1) the exclusion from the definition of “investment
                                            company” contained in Sections 3(c)(1) or Section 3(c)(7), and (2) the
                                            non-public offering exemption contained in Rule 506 of Regulation D under the Securities
                                            Act of 1933, as amended (the “Securities Act”) in connection with the offer and
                                            sale of interests to investors. An SPV is not engaged in the business of investing, reinvesting,
                                            owning, holding or trading securities issued by two or more portfolio companies.

    By contrast, we use the term “Private
    Fund” to refer to an investment fund that is engaged in the business of investing, reinvesting, owning, holding or trading
    securities issued by two or more portfolio companies and which relies on (1) the exclusion from the definition of “investment
    company” contained in Section 3(c)(1) or Section 3(c)(7) of the Investment Company, and (2) the non-public
    offering exemption contained in Rule 506 of Regulation D under the Securities Act in connection with the offer and sale of its
    securities to investors. In this regard, we use the term “Private Fund” to describe a fund that, although having attributes
    of an SPV, is in essence and operates as a private investment vehicle.

    11.
    The
    third paragraph refers to “rapidly growing emerging digital asset services and technology companies,” while other disclosures
    refer to these companies as “privately held companies,” “private companies,” “private emerging companies,”
    and “rapidly growing and privately held companies.” Also, we note that you state on page 9 that you will invest
    “primarily in rapidly growing private companies.” (Emphasis added.) Please harmonize.

    Response:
    We
    have harmonized the disclosure to use the one term “rapidly growing emerging digital asset services and technology companies”
    to describe the types of companies in which the Fund will invest.

    12.
    The Cover
    Page and Prospectus: (1) use the terms “equity-related investments” and “equity-linked securities;”
    (2) refer only to “equity-linked securities” in your 80% policy; and (3) provide a definition of “equity-linked
    securities.” The Prospectus also uses the term “equity-related securities.” (Emphasis added.)
    If you are using any of these terms as synonyms, please use only one term for purposes of plain English as the current text is dense
    and confusing.  If not, add definitions for “equity-related instruments” and “equity-related securities.”
    Confirm that terms describing your investment strategies harmonize throughout the registration statement, including your description
    of the components of your 80% basket (e.g., types of securities, sectors and/or industries).

    Response:
    We have added
    a definition of “equity” and “equity-linked” securities on the Cover Page and have harmonized the disclosure
    in the Registration Statement to assure consistent use of these terms.

    13.
    Please
    add the following sentence to the first bulleted risk point, “[t]he risk of loss due to this discount may be greater for initial
    investors expecting to sell their common shares in a relatively short period after the completion of this initial public offering.”

    Response:
    We have added
    this sentence to the first bulleted risk point.

    14.
    In the
    fifth bulleted risk point, which currently discusses leverage, please summarize the Company’s current intention with respect
    to using leverage.

    Response:
    The Company
    will not use leverage in its capital structure and, accordingly, we removed the fifth bulleted risk point regarding leverage.

    15.
    As the following risk factors, which
    are disclosed in the Prospectus, make the offering speculative and/or one of high risk, please consider adding them to the Cover
    Page:

    ·      “Our
    stock price may be volatile and could decline significantly and rapidly.”

    ·      “We
    will have no limitation on the portion of our portfolio that may be invested in illiquid securities, and we anticipate that all or
    a substantial portion of our portfolio may be invested in such illiquid securities at all times. . . [and we may invest without]
    limitation in investments in which no secondary market is readily available or which are otherwise illiquid.”

    ·      “We
    intend to invest primarily in rapidly growing private companies, which involve significant risks.”

    ·      “An
    active, liquid, and orderly market for our common stock may not develop or be sustained. You may be unable to sell your shares of
    common stock at or above the price at which you purchased them.” Also, revise “at or above the price” to “at,
    above, or below the price.”

    See Item 1.1.j of Form N-2.

    Response:
    We acknowledge
    the Staff’s comment and have made this addition.

Cover Page – Pricing Table (page ii)

    16.
    Pleased
    revise the table’s layout to conform to the formatting of Item 1.1.g of N-2.

    Response:
    We acknowledge
    the Staff’s comment, and respectfully advise the Staff that we believe that the Pricing Table conforms to the requirements
    of Item 1.1.g of Form N-2.  Item 1.1.g provides that the Registrant di