Runway Growth Finance Corp.

Ladies and gentlemen, thank you for standing by and welcome to the Runway Growth Finance Third Quarter 2021 Earnings Conference Call. Please be advised that today's conference is being recorded. I would now like to hand the conference over to Alex Routh, Investor Relations.

Thank you, Operator. Good afternoon, everyone, and welcome to the Runway Growth Finance Conference Call for the Third Quarter of 2021. With us on the call today from Runway Growth Finance are David Sprang, Chairman, Chief Executive Officer, Chief Investment Officer and Founder, and Tom Raderman, Chief Financial Officer. Runway Growth Finance third quarter financial results were released just after today's market closed and can be accessed from Runway Growth Finance's investor relations website at investors.runwaygrowth.com. We have arranged for a replay of the call at the Runway Growth Finance webpage or by using the telephone number and passcode provided in today's earnings release. During this call, I want to remind you that we may make forward-looking statements based on current expectations. The statements on this call are not purely historical, are forward-looking statements. These forward-looking statements are not a guarantee of future performance and are subject to uncertainties and other factors that could cause actual results to differ materially from those expressed in the forward-looking statements including and without limitation the uncertainty surrounding the COVID-19 pandemic and other factors we identified from time to time in our filings with the SEC. Although we believe that the assumptions on which these forward-looking statements are based are reasonable, any of these assumptions can prove to be inaccurate, and as a result, the forward-looking statements based on those assumptions can be incorrect. You should not place undue reliance on these forward-looking statements. The forward-looking statements contained on this call are made as of the date hereof, and Runway Growth Finance assumes no obligation to update the forward-looking statements or subsequent events. To obtain copies of SEC-related filings, please visit our website. And with that, I will turn the call over to David. David?

Thank you, Alex, and welcome to the Runway Growth Finance Third Quarter Earnings Conference Call. This is our first public forum since completing our IPO on October 25th. And I'd like to welcome our new shareholders, prospective investors, and future analysts to our inaugural earnings call. Today, I will provide an overview of Runway Growth's unique growth lending platform, some color on our debt investment portfolio, and an outlook for the VC market as a whole. Runway Growth Finance is an established direct origination platform focused on sponsored and non-sponsored senior secured first lean debt investments. We lend to late and growth stage businesses in technology, life sciences, healthcare, information and services, consumer, and other select high growth industries. During the third quarter, we deployed 101.3 million of new funding to six new and existing portfolio companies. In Q3, Runway Growth generated total investment income of 18.6 million and net investment income of 10.7 million, or 32 cents per share. Through our advisor, Runway Growth Capital, we have access to a diversified portfolio of dynamic, late, and growth stage assets. We are pleased that we've continued to diversify our portfolio across industries, geographies, and investor profile and drive prudent portfolio growth in the process. Before describing further our third quarter results and the megatrends propelling our expansion, I'm happy to offer some relevant background on myself and Runway. I started Runway Growth Capital after 25 years as a VC and growth debt lender. During this time, I was actively involved in the formation and development of 50 technology companies, which include 18 IPOs and 14 trade sales. Along the way, I'm honored to have been named to the Forbes Midas list for several years. Turning to runway growth finance, I formed the firm in 2015 based on the megatrend of providing capital and financing solutions that serve founders and companies as a complement or an alternative to equity. Since our inception, we've benefited from this trend and proved that debt is an appropriate component of the capitalization of late and growth stage companies as they look to secure the requisite capital needed to fund long-term strategy while avoiding dilution. Since runway growth inception, we've originated cumulative capital commitments of 1.2 billion across 50 investments while maintaining an industry-leading low loss ratio of just 19 basis points per year on a gross basis and 15 basis points per year on a net basis based on fundings. What's more is that we also benefit from equity upside through warrant coverage in the majority of our deals. These warrants serve as a risk mitigator against potential future losses and can provide a return on our investment at the time of a liquidity event, including an M&A transaction or IPO. Next, I'll provide an overview of our investment process which is credit-driven and focused on principal protection with optionality for equity upside. Our origination success has been made possible for three reasons. First, we bring deep sector knowledge and an ability to quickly understand the bespoke needs of businesses that are burning cash in order to achieve their next growth milestone. Second, we bring a thoughtfulness in terms of developing customized investment solutions that meet the borrower's needs while minimizing dilution. Third, but not least, is our credit discipline that matches company risk with loan risk in a dual-sided pricing matrix that allows us to optimize the terms we offer our portfolio companies and ensure a mutually beneficial partnership. One of the core differentiators of Runway growth from our venture debt peers is that we originate and underwrite both sponsored and non-sponsored transactions. While the non-sponsored deals are harder to source and more widely dispersed around the U.S., they often have more attractive terms and generate higher returns. The foundational element of our differentiated approach is rooted in our efficient and robust origination infrastructure. Our origination team is led by Mark Donnelly, Managing Director and Head of Originations, and Rob Lake, Managing Director and Head of Life Sciences. Mark brings deep experience and relationships with technology sponsors, and Rob adds significant underwriting and investment leadership in life sciences and healthcare information technology. All in, our senior investment team boasts an average of 23 years of experience. Until recently, we built Runway's reputation and current portfolio with a nimble origination team of three. As we enter this next phase in our growth strategy, it is important that we drive prudent investment portfolio expansion. To this end, we recently increased our origination team from three to six. Notably, this team brings world-class networks and relationships that are leading to strong sequential origination momentum. Looking forward, we will be strategic as we make additional investments in the team to support our growth, focusing on both geographic and industry tailwinds as we continue to expand our team. Looking at the venture capital market broadly, the industries we serve continue to grow and benefit from strong equity capital markets in the VC space. According to Crunchbase, total investment in global late stage and technology growth companies surpassed $104 billion in the third quarter. This represents a 69% year-on-year increase, mirroring the accelerated growth that the overall venture capital industry is experiencing. Additionally, we stand to benefit as many late stage companies approach exits. Over the last year, we have had three portfolio companies go public. one through an IPO and two through SPAC combinations. These include Brilliant Earth, a NASDAQ-listed digital-first ethically-sourced jewelry company, Ouster, an NYSE-listed LIDAR solutions company, and Porch, a NASDAQ-listed vertical software company innovating the home services industry. As we mentioned, these are the types of liquidity events that highlight the benefit we experience on the equity side as we exercise our warrant positions. These warrants are a part of nearly every loan we fund. Turning to our outlook, as of November, we maintain a strong pipeline of actionable investment opportunities, totaling 2.1 billion in total commitment value. These deals are in various stages of underwriting, and as a reminder, the deals in our actionable pipeline, should they convert, could take between three and nine months to close. To fund the significant opportunities we see ahead, we plan to thoughtfully deploy leverage to drive portfolio growth and higher ROEs to our shareholders. In October, we received an investment grade rating of BBB plus from Egan Jones. This is an important step when we seek to issue debt. As Tom will explain later in the call, our intention is to optimize our capital structure and prudently lever up to a target of 0.8 to 1.1 times and may seek long-term unsecured financing for this part of our capital needs. We believe issuing debt and establishing a benchmark for our cost of capital is important as we continue to execute our business plan. Conceptually, we believe this approach to using leverage will support our portfolio growth objectives and drive strong returns on equity for our shareholders. We are thrilled to enter the public market at such an exciting inflection point in the VC industry. We begin this next chapter as a public company with a solid five-year track record, decades of VC operational experience and relationships, and a differentiated direct lending platform. With that, I now turn it over to Tom.