SuRo Capital Corp.

Good day, ladies and gentlemen, and thank you for standing by. Welcome to CERO Capital's third quarter 2021 earnings conference call. During today's presentation, all parties will be in a listen-only mode. Following the presentation, the conference will be open for questions. This call is being recorded today, Wednesday, November 3rd, 2021. I would now turn the conference over to today's speaker, Jackson Stone of Suro Capital. Please go ahead, sir.

Thank you for joining us on today's call. I'm joined today by the Chairman and Chief Executive Officer of Suro Capital, Mark Klein, and Chief Financial Officer, Alison Green. Please note that a slide presentation corresponding to today's prepared remarks by management is available on our website at www.surocap.com under Investor Relations, Events and Presentations. Today's call is being recorded and broadcast live on our website, www.surocap.com. Replay information is included in our press release issued today. This call is the property of Suro Capital, and the unauthorized reproduction of this call in any form is strictly prohibited. I would also like to call your attention to customary disclosures in today's earnings press release regarding forward-looking information. Statements made in today's conference call and webcast may constitute forward-looking statements which relate to future events or future performance or financial condition. These statements are not guarantees of our future performance or future financial condition or results and involve a number of risks, estimates, and uncertainties, including the impact of COVID-19 pandemic and any market volatility that may be detrimental to our business, our portfolio companies, our industries, and the global economy that could cause actual results to differ materially from the plans, intentions, and expectations reflected in or suggested by the forward-looking statements. Actual results may differ materially from those in the forward-looking statements as a result of a number of factors including, but not limited to, those described from time to time in the company's filings of the SEC. Management does not undertake to update such forward-looking statements unless required to do so by law. To obtain copies of Serocapital's latest SEC filings, please visit our website at www.serocap.com or the SEC's website at sec.gov. Now, I would like to turn the call over to Mark Klein.

Thank you, Jackson. Good afternoon and thank you for joining us. We are pleased to share the results of Suro Capital's third quarter 2021. This has been one of the most exciting quarters to date for our firm, including notable exits and exciting investment opportunities in multiple different verticals. This quarter, three additional portfolio companies announced their intentions to become publicly traded through a SPAC merger making a total of five SPAC merger announcements in 2021. In addition to the SPAC mergers, three of our portfolio companies announced intentions to be acquired and two had completed acquisitions as of quarter end. As we make notable exits, we are excited to deploy capital in compelling new high growth opportunities and have added seven new companies to our portfolio in this quarter alone. I'm excited to share more details on these events before handing the call over to Alison Green for a brief financial overview. At the conclusion of our remarks, we will open the call for questions. Let's start with slide three. This quarter, Cerro Capital again reached our highest dividend-adjusted net asset value per share since inception, surpassing the records we set in both Q2 of 2021 in Q1 of 2021. At the end of the quarter, Suro Capital had a net asset value of approximately $426 million, or $14.79 per share, which was near the top of the anticipated range that we posted in our pre-release. The $14.79 per share net asset value is inclusive of a $2.25 per share dividend declared and paid during the quarter. This net asset value per share represents a $0.48 increase from the $14.31 dividend adjusted net asset value at the end of the second quarter. Consistent with our desire to be shareholder friendly and our continued practice of distributing realized gains, On November 2, 2021, Cerro Capital's Board of Directors declared a $2 per share dividend to shareholders and approved an extension of the share repurchase program to October 31, 2022. This dividend will be payable on December 30, 2021 to shareholders of record on November 17, 2021. Our board is again offering shareholders the option to elect to take as much as 100% of their dividend in stock and has capped the aggregate cash dividend to 50% of the total dividend payable. This brings the aggregate dividends declared or paid in 2021 to $7.25 per share. Later in the call, Allison will walk through in detail the election process of this cash and stock dividend. Depending on the portfolio activity for the remainder of the year, the Board will evaluate declaring an additional dividend payable in January of 2022. Please turn to slide four for a review of our top five positions. Cerro Capital's top five positions as of September 30th were Course Hero, Coursera, Forge, Nextdoor, and Blink Health. These positions accounted for approximately 54% of the investment portfolio at fair value. Additionally, as of September 30th, our top 10 positions accounted for approximately 73% of our portfolio. First, I want to highlight our investment in Course Hero, now our largest position. Over the last year, Course Hero has focused on growing their platforms community and pursuing acquisitions that expand their already comprehensive catalog of student study materials. This initiative began in October 2020 with their acquisition of Symbolab, a platform that helps students solve complex mathematical equations, and continued in June 2021 with their acquisition of LitCharts, a platform that helps make learning literature more accessible. Since then, Coursera has grown their offerings by acquiring Quillbot, an AI writing tool that helps people reconstruct their writing to be more concise, and Cliff Notes, a library of literature study guides. Before the two most acquisitions, TechCrunch estimated Coursera would hit between 2 and 3 million paid subscribers in 2021, up from 1 million subscribers last year. We believe these acquisitions will further bolster paid subscriptions, and support Coursera's goal of becoming the leading comprehensive platform for study materials. As previously discussed, on March 31st, our second largest position, Coursera, executed an initial public offering and began trading on the New York Stock Exchange. Coursera priced at $33 per share, the top of their range. In the third quarter alone, sales of our public shares of Coursera had generated nearly $33 million of net proceeds and approximately $28.5 million in realized gains. To date, monetization of our position in Coursera has generated nearly $112 million in net proceeds and over $96.3 million in realized gains. We have sold substantially all of our Coursera investments. we anticipate selling the de minimis remainder of our Coursera position in the coming days. In addition to Coursero and Coursera, we have also seen strong performance from our overall portfolio. During the third quarter, three portfolio companies announced pending SPAC mergers, one company completed a SPAC merger, two companies announced or completed an IPO, and two companies were acquired. During the third quarter, Forge, Aspiration, and Nextdoor announced plans to merge with SPACs. On September 13th, Forge announced a plan to merge with Motive Capital, a fintech-focused SPAC, at a combined equity value of up to $2 billion. Earlier this year, Forge was valued at $700 million post-money, making this deal their unicorn debut. This pending transaction resulted in a $10.5 million write-up or over a 100% increase in our valuation of Forge compared to last quarter. The Forge-Motive capital SPAC merger is expected to close in the fourth quarter of 2021 or as late as the first quarter of 2022 and result in gross proceeds of $532.5 million for the combined company. Between January 1st of 2018 and June 30th of 2021, Forge has seen a 225% increase in its customer base and a 114% increase in distinctive private companies traded. With nearly 400,000 registered users and 123,000 investors, Forge has driven over $10 billion in volume across 19,000 transactions. We are excited by Forge's success over the years and look forward to the successful conclusion of their business combinations. On August 18th, Aspiration also announced a plan to merge with InterPrivate III Financial Partners, a fintech-focused SPAC at an equity value of $2.3 billion. Aspiration raised a $200 million pipe associated with this transaction. The pending transaction is expected to close in the fourth quarter of 2021 or as late as the first quarter of 2022. Aspiration offers a range of sustainable banking services, credit cards, and investment products and boasts more than 5 million participating members. As of June 2021, the company had a revenue run rate in excess of $100 million and saw a 7x growth since the past year. We are excited by this milestone for Aspiration and believe they have emerged as a leader of ESG-focused fintechs. Finally, on July 6th, Nextdoor announced a plan to merge with Coastal Ventures Acquisition II at an equity value of $4.3 billion. Nextdoor raised a $270 million pipe associated with this transaction. Yesterday, stockholders approved the transaction. The merger is expected to close on November 5th, with the combined entity trading on the New York Stock Exchange under the symbol KIND beginning November 8th. In addition to the SPAC mergers announced this quarter, we saw one portfolio complete their merger and become publicly traded. As previously discussed, on February 11th, Cero Capital portfolio company Rover announced plans to merge with Nebula Caraval Acquisition Corp., a SPAC sponsored by Truen Capital. Stockholders approved the business combination, and the transaction was closed on July 30th. The combined entity now trades on the NASDAQ under the ticker symbol ROVR. The transaction valued the company at an enterprise value of $1.35 billion and provided approximately $240 million in gross proceeds to the company. Our shares of the public common stock of Rover are currently subject to certain lockup provisions. We anticipate they will expire during the first quarter of 2022. We are excited by this transaction and congratulate Rover on the successful close of their SPAC merger. In addition to SPAC mergers, we saw one company announce and another company execute their initial public offering this quarter. On August 20th, New Lake Capital Partners completed an IPO and began trading under the symbol NLCP on the OTCQX. The IPO raised $102 million at a share price of $26 a share. As of September 30th, Serial Capital shares of New Lake are not subject to any lockup restrictions. We will liquidate this position consistent with prior practices as market conditions allow. On October 4th, Rent the Runway announced that it filed for an IPO at a range of $18 to $21 per share. On October 27th, they priced their IPO at $21 per share and began trading on the NASDAQ under the symbol RENT at a price of $23 a share. The IPO was led by Goldman Sachs, Morgan Stanley, and Barclays. and elevated the value of Rent the Runway to $1.5 billion. We expect our shares of Rent the Runway to become freely tradable in early Q2 of 2022 when the lockup expires. In addition to these major milestones, two of our portfolio companies were acquired during the third quarter. On August 30th, 2021, Udemy, a recently minted public learning and online teaching platform, announced that it acquired Corp U for an undisclosed amount. On September 2nd, Kahoot, a publicly traded global education technology company, announced that it acquired Clever. As previously mentioned in our pre-release, in late September, reports from multiple sources alleged significant improprieties by Aussie media. Given these serious allegations, as of September 30th, we valued our investment in Aussie Media at zero. The many successful portfolio company transactions completed in the third quarter and anticipated to be completed in the near future have provided significant cash flows to fund high growth, well-scrutinized, and promising new investments. During the third quarter, we judiciously added seven new portfolio companies. On August 9th, we invested $10 million in Orchard Technologies Series D Preferred Shares. Orchard is a vertically integrated property technology company competing in the trade-in and cash offers market. Orchard's move-first product allows homeowners the ability to buy their home before selling their old home, while still unlocking the equity they have built up in their existing home. In the current real estate climate, it is more important than ever to have as few contingencies attached with offers as possible, and Orchard is a market leader in removing these barriers for homebuyers. Orchard plans to expand to four new markets in 2022, as well as launch new services to offer millions more buyers a better way to purchase their dream home. Over the past year, Orchard has doubled their footprint, launched Orchard Insurance, and introduced Concierge, a service that repairs and updates homes on the behalf of homeowners before sale at no upfront cost. In September, Orchard announced that it raised $100 million at a valuation of over a billion dollars in a round led by Accomplice with participation with existing investors as well. We have evaluated several business models in the property technology sector and believe Orchard's model solves many of the pain points for consumers with a more capital efficient and less risky model than iBuyers and other similar companies in the space. As such, we believe Orchard is uniquely poised to grow and achieve success in both bull and bear housing markets compared to many of its peers in the prop tech sector. Turn to slide eight. During the third quarter, we also made a $10 million investment in the common shares of Varo Money, Inc. Varo is a nationally chartered bank developing a branchless, digitally native financial platform to improve the mobile banking experience. Varo offers various services, including financial insights and analysis of spending, real-time budgeting, and forecasts of cash flow, direct deposits, online bill payment, and other financial applications. Barrow's target market is the 180 million Americans Barrow views as underserved and overcharged by traditional financial institutions. Barrow believes traditional banks are unable to profitably serve this massive segment of consumers who have modest or no savings. Due to their legacy cost structure, Barrow believes traditional banks must charge fees to avoid losing money on these particular clients. meaning customers with the least money pay the most in fees relative to their assets or their income. Borrower has no monthly account minimum balance, no debit card replacement fees, no foreign transaction fees, no ACB bank transfer fees, and no ATM fees on borrowers. In addition, unlike other neobanks who use a sponsor bank model by partnering with smaller banks to help offer banking services, as a nationally chartered bank, Varo operates a lower cost structure than other neobanks and can pass along these savings to consumers. In September, Varo announced that it raised $510 million in the Series E equity round at a $2.5 billion valuation. This is according to TechCrunch. Soro invested $10 million in the Series E round, which was led by Lone Pine Capital with participation from investors Warburg Pincus, TPG Thrive Fund, Gallatin Point Capital, and others, including New Investors, Declaration Partners, and BlackRock. Please turn to slide nine. As previously discussed, Serocapital Sports is a $10 million wholly owned subsidiary of Serocapital, created to take advantage of the significant tail in the sport. Since inception, In March 21, Cerro Capital has been creating a robust pipeline of B2B and B2C players across several key verticals, including affiliates, compliance technology, fan engagement, and differentiated operators. In addition to our initial investment in Betterview, since June 30th, we've made two additional investments in Cerro Capital Sports. The first is pickups. which allows publishers to embed prop-like predictions within their content. Users create profiles allowing them to track the accuracy of their picks and earn prizes from sportsbooks and other affiliates. The gamification of content represents a new era of fan engagement where the experience is now centered around the fan versus the previous iteration of fan engagement centered around shares, likes, and comments on social media. During the third quarter, We invested in pickup series C2 preferred shares as part of the round led by KP Partners and Drive by DraftKings. The second investment, Complyable, provides a compliant software solution that makes managing, maintaining, and completing gaming licenses across multiple states and jurisdictions easy. Complyable's software platform and tools provide customers with both significant time and cost savings allowing operators to focus on entering new markets and establishing a presence in the growing sports betting landscape. As the complexity of licensing with the real gaming market continues, we believe compliable will be an essential part of how operators, vendors, and regulators maintain compliance with a constantly changing and varied regulatory environment. In October, we invested in compliable Series C board preferred shares, as part of their seed extension led by Better Capital. Looking ahead, we believe our portfolio is as well positioned as ever to drive long-term value through both exits and ongoing strategic investment in compelling industries and opportunities not readily available to public investors. We believe our healthy cash balance puts us in a strong position to deploy against this high volume of attractive opportunities. Thank you. for your attention, and with that, I'll hand it over to Ellen.