Runway Growth Finance Corp.

Ladies and gentlemen, thank you for standing by and welcome to the Runway Growth Finance second quarter 2022 earnings conference call. Please be advised that today's conference is being recorded. I would now like to hand the conference over to Mary Friel, Assistant Vice President, Business Development and Investor Relations. Please go ahead.

Thank you, Operator. Good afternoon, everyone, and welcome to the Runway Growth Finance conference call for the second quarter ended June 30th, 2022. With us on the call today from Runway Growth Finance are David Spring, Chairman, Chief Executive Officer, Chief Investment Officer and Founder, and Tom Ratterman, Chief Financial Officer and Chief Operating Officer. Runway Growth Finance's second quarter 2022 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've arranged for a replay of this call at the Runway Growth Finance webpage. During this call, I want to remind you that we may make forward-looking statements based on current expectations. The statements on this call that 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 identify 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 those 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 to 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. With that, I will turn the call over to David.

Thank you, Mary, and thank you all for joining us this evening. Today I will provide an overview of the quarter, some operational highlights, and a brief market outlook for the remainder of the year. Runway growth had an outstanding quarter, delivering record net investment income and origination, even in the face of persistent market volatility. We attribute this success to Runway Growth's disciplined investment process, which underpins our credit-first, weatherproof platform. As the cost differential between debt and equity capital expands, Runway Growth's durable financing model continues to resonate with high-quality, innovative companies. Our portfolio companies recognize we are not simply capital providers. Runway Growth ensures our partners are positioned for success from term sheet to final payment. Our origination team delivered strong portfolio growth in the second quarter, completing nine investments in new and existing portfolio companies. This represents 200 million in new commitments, including 151.7 million in completed deals. We funded all investments in the second quarter with proceeds from our revolving credit facility as part of our ongoing strategy to drive prudent portfolio growth with leverage. Notably, we increased our core leverage ratio from 0.26 to 0.4 times. We delivered total investment income of 25.2 million and net investment income of 14.5 million in the quarter. This is up 35% and 28% respectively from the prior year period. Net assets were 579.4 million at the end of the second quarter, up 21% from 477.7 million in the prior year period. Our record performance is paired with prudent underwriting strategy. We believe we have the lowest risk portfolio among public venture debt BDCs as demonstrated by our concentration in first lien senior secured loans and a weighted average loan to value at origination of 16.1%. Our strong credit quality is a testament to our focus on recession resistant late stage companies. disciplined underwriting, active monitoring, and frequent communication are key components of our approach to prevent losses and keep strong companies in the portfolio. Of course, in order to employ underwriting rigor, we have to generate a steady flow of deal origination. We believe we are building a best-in-class origination team that brings deep sector knowledge and experience to every deal we see. To that end, I'm thrilled to share That subsequent to quarter end, we made four strategic hires. Our new members, Brad Pritchard, Ted Kaven, Jeff Goldrich, and Brandon Morisoli, will increase the depth of our bench. Brad joins us from BlackRock, where he led the firm's venture lending efforts globally and served as president of BlackRock Direct Lending Corp. Brad brings nearly two decades of technology banking and growth lending experience. We are also excited to welcome Ted, Jeff, and Brandon to Runway Growth. Jeff brings nearly 10 years of experience and joins us from CIBC Innovation Banking. Ted joins us from CIFL Bank and brings seven years of experience between CIFL and TriplePoint Venture Growth. Lastly, Brandon joins us after nearly seven years with SWK Holdings, where he built a focus and in-depth expertise in the life sciences sector. These new additions will meaningfully contribute to our origination networks and positively impact future portfolio growth and composition. At Runway, we are constantly evaluating all hiring opportunities. We will continue to make quality investments in our team to support growth while remaining focused on geographic and industry tailwinds. Our origination team is delivering in the fastest growing sectors we know best, including life sciences, technology, and select consumer service and product industries. The nine new investments we made in the second quarter were primarily in technology and life sciences sectors. Notable investment activity during the quarter included loan commitments to companies in enterprise AI, cybersecurity, and innovative medical devices. Turning to the broader market, One of the common questions we field is how contracting valuation multiples may be impacting loan to value ratios in our portfolio. In short, we've seen minimal impact. Let me provide a little more color. For an apples to apples comparison, we calculated loan to value for the basket of loans that were in our portfolio at the end of Q1 and Q2. In comparing this consistent grouping of loans, our dollar weighted loan to value ratio only increased slightly from 20% to 21% sequentially. We believe this points to the discipline we employ at the underwriting stage. It may be more accurate to call this metric loan to our value as we believe in taking a conservative approach to valuation. We are not beholden to a company's last raise or round. We use our own proprietary process to evaluate every deal in our portfolio. Now I'd like to take a moment to discuss our outlook for 2022 before passing it to Tom to review our financial results. We believe the current market environment is set to benefit runway growth. According to PitchBook data, U.S. late-stage venture activity remains at record levels and on pace to exceed 2021 on a deal count basis. The first half of the year accounted for a whopping 3,048 deals for late-stage companies. That said, deal value is lagging in 2021. Today, the market is on pace for $188 billion in deal value for U.S. late-stage companies in 2022. This would represent a 20% decrease from 2021. To summarize, more deals at smaller sizes. It is clear that late-stage companies are deciding to execute smaller deals given the dilution they would experience at compressed valuations. This dynamic is precisely why I founded Runway in 2015. That will be a complement, supplement, or even a replacement for equity capital in today's market. While late-stage companies digest the decline in equity valuation, Runway gross non-dilutive capital is only becoming more attractive. Runway growth is strategically positioned to capitalize on declining VC equity valuations as venture debt continues to evolve to support the needs of entrepreneurs. Debt will remain cheaper than equity even in the rising rate environment, and we believe the cost differential between debt and equity capital will continue to grow in the near future. Runway growth will benefit from these tailwinds. Lastly, We will continue to evaluate avenues to secure the requisite capital to fuel prudent portfolio growth. We are pleased with our strategic deployment of leverage in the quarter, and Tom will go into more detail about the $80 million unsecured bond offering we executed subsequent to the quarter close. While venture equity markets remain challenging, we believe there is no better time to consider venture debt to fuel growth and extend runway. Our record first half of the year is only the beginning, and we look forward to supporting world-class management teams as we create long-term value for our shareholders. I will now turn it over to Tom.