Investors considering making an investment in Kensington Capital (NYSE:KCAC) should understand that they are exercising an appetite for risk. Kensington Capital will take QuantumScape public through a reverse IPO. QuantumScape is a 10-year old battery startup out of Silicon Valley which will form a joint venture (JV) with Volkswagen (OTCMKTS:VWAGY). The JV will produce solid-state batteries first for application in Volkswagen vehicles, and later for other manufacturers.
Thus, an investment in KCAC stock is an investment in an unproven technology in solid-state batteries. Further, it is an investment in a JV collaboration which is wrapped up within a shell company in Kensington Capital.
When the deal closes later this year the new equity will trade under the ticker QS on the New York Stock Exchange.
Big Names on Board
Volkswagen is central to this deal, but Kensington Capital has several other big name investors on board with its stock. Portfolio companies Kleiner Perkins and Khosla Ventures have invested. Bill Gates and the Qatar Investment Authority have invested. Also within the auto industry, Shanghai Autos and Continental have invested.
The reason this is important for investors to take note of is because such announcements may bolster individual investors’ risk propensity. I mention this to provide a word of caution. When potential investors read that these big names are on board with KCAC it lends authority to it as an investment. And big name authority is a very effective form of persuasion.
Venture Capital Investment vs. Individual Investment
However, we individual investors are simply different than the massive entities listed above. We are likely to be much more