Runway Growth Finance Corp.

ladies and gentlemen thank you for standing by and welcome to the runway growth finance third quarter 2022 earnings conference call please be advised that today's conference is being recorded i would like to hand the conference over to mary frio assistant vice president business development and investor relations please go ahead thank you operator good evening everyone and welcome to runway growth finance conference call

for the third quarter ended September 30th, 2022. Joining 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 third quarter 2022 financial results were released just after today's market close. and can be accessed from Runway Growth Finance's investor relations website at investors.runwaygrowth.com. We have arranged for a playback of the call at Runway Growth Finance's 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, changing economic conditions, 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 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 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. With that, I will turn the call over to David.

Thank you, Mary. And thank you all for joining us this evening to discuss our third quarter results. I'd like to start by providing an overview of the quarter, operational highlights, and a brief market update. Runway growth generated record third quarter originations and net investment income results. fueled by disciplined execution against our strategic initiatives. Our success underscores our credit-driven investment process, which provides the downside protection of debt with the potential for upside of equity. Runway Growth's weatherproof platform has been built to navigate all operating environments. This call marks a little over a year since Runway Growth went public. As we prepared for life as a public company, we believed we had significant opportunity for portfolio growth, ROE expansion, and to build what we believe to be the most stable portfolio among our venture lending peers. We knew that we would do this by deploying leverage to accelerate prudent portfolio growth while partnering with the highest quality late stage companies in the venture market. Over the last year, Runway growth has delivered gross fundings of 585 million, resulting in 55% net portfolio growth. Expanded ROE 130 basis points to 10.1%. Nearly quadrupled our leverage ratio to 0.6 times. Strengthened our balance sheet with diversified capital sources. Recorded zero realized credit losses. and increased our dividend per share for four consecutive quarters from $0.25 to $0.36 per share. This has been a historic year for our company, and we believe there is ample room to run for the balance of 2022 and into 2023. Runway growth represents a compelling opportunity for investors that are looking for stable returns generated from partnering with some of the highest quality growth companies in the market. Now let's dive deeper into the third quarter. We are pleased with our ability to originate and structure high quality senior secured debt investments and deliver significant portfolio growth. As we predicted at the start of the year, the cost differential between debt and equity capital continues to increase. And that remains a tailwind for our platform. Our investment team has built the strongest pipeline we've seen. which demonstrates the growing demand for our financing solutions amidst the current market environment. Many of the companies in our pipeline are seeking non-dilutive capital to take the next step in their development without giving up significant equity. Companies that are seeking rescue financing are quickly weeded out. We're lending to companies that can raise equity but choose not to in order to preserve ownership positions and expand their businesses. We delivered our strongest third quarter of portfolio growth historically, completing nine investments in new and existing portfolio companies. This represents 216 million in new commitments, including 161 million in funded loans. In addition, we closed two transactions totaling 64 million in funding subsequent to quarter end. We increased our core leverage ratio from 0.4 to 0.6 times in the third quarter. Additionally, we strengthened our liquidity position by upsizing our key bank credit facility on which Tom will provide additional details momentarily. We delivered total investment income of $27 million and net investment income of $15 million in the quarter. This is up 47% and 35% respectively from the prior year period. Net assets were $574 million at the end of the third quarter. of 14% from $504 million in the prior year period. These results, and particularly the growth, demonstrate the demand for our creative financing solutions. We are pleased with the consistent strength of our credit quality. This is a direct result of our disciplined underwriting and monitoring processes. Our work with portfolio companies continues throughout the life of our loans. We believe runway growth monitoring process ensures that we are accurately marking these investments and mitigating risk while achieving consistent stable yield. We view our risk mitigation process as a competitive edge and a key method to preserving credit quality. We can see that through our loan to value comps. For an apples to apples comparison, we calculated the loan to value for loans that were in the portfolio at the end of Q2 and Q3. In comparing this consistent grouping of loans, our dollar weighted loan to value ratio held consistent at 21% to 22% in the third quarter. As we said, it may be more accurate to call this metric loan to our value. This is because whenever we conduct due diligence, our credit team takes an extremely conservative approach to valuation. We're not solely basing a portfolio company's enterprise value on the last round of fundraising. Runway growth has always used proprietary processes to insulate our underwriting rigor from profit evaluations. Looking ahead, we believe the rising interest rate environment and industry tailwinds will contribute to runway growth momentum. According to Pittsburgh data, US late stage venture activity slowed during Q3, which was further constricted by a lack of startup liquidity. Year to date late stage company deals were down from 2021, but still well above 2020 levels. The median deal value, however, continued to decline. In other words, late stage companies are continuing to raise equity capital, but it's smaller increments than in previous two years. We believe late stage companies are deciding to execute smaller deals because they're scaling back growth, focusing on profitability, and being offered more onerous terms at lower valuations. In the third quarter, US venture capital deal value was 195 billion year to date, surpassing the total value for full year 2020, which was 169 billion. Similarly, venture debt deal value exceeded 22 billion and continues to grow as late stage companies embrace debt as a means to reach additional milestones and avoid dilutive equity financing. This trend points to venture debt's untapped potential and bodes well for runway gross non-dilutive capital, which we believe is only becoming more attractive. We are positioned to take advantage of declining VC equity valuation as venture debt is increasingly being utilized to support the needs of entrepreneurs. More companies are looking at debt as an alternative or complement to new equity, positioning Runway for future growth. Given the momentum we have in the market, we look forward to closing out our first full calendar year as a public company. I will now turn it over to Tom.