TriplePoint Venture Growth BDC Corp.

Good afternoon, ladies and gentlemen. Welcome to the TriplePoint Venture Growth BDC Corp First Quarter 2022 Earnings Conference Call. At this time, all lines have been placed in a listen-only mode. After the speaker's remarks, there will be an opportunity to ask questions and instructions will follow at that time. This conference is being recorded and a replay of the call will be available in an audio webcast on the TriplePoint Venture Growth website. Company management is pleased to share with you the company's results for the first quarter of 2022. Today representing the company is Jim LeBay, Chief Executive Officer and Chairman of the Board, Sujal Srivastava, President and Chief Investment Officer, and Chris Matthew, Chief Financial Officer. Before I turn the call over to Mr. LeBay, I'd like to direct your attention to the customary Safe Harbor disclosure in the company's press release regarding forward-looking statements and remind you that during this call, management will make certain statements that relate to future events or the company's future performance or financial condition, which are considered forward-looking statements under federal securities law. You are asked to refer to the company's most recent filings with the Securities and Exchange Commission for the important factors that could cause actual results to differ materially from these statements. The company does not undertake any obligation to update any forward-looking statements or projections unless required by law. Investors are cautioned not to place undue reliance on any forward-looking statements made during the call which reflect management's opinions only as of today. To obtain copies of our latest SEC filings, please visit the company's website at www.tpvg.com. Now I'd like to turn the conference over to Mr. LeBay. Please go ahead.

Thank you, operator. Good afternoon, everyone, and thank you for joining TPVG's first quarter 2022 earnings call. We're pleased with our strong first quarter results. We over-earned our dividend hit our funding target, increased our portfolio yield, and maintained our credit quality. We are on track to carry out our 2022 plans, drawing on TPVG's differentiated platform, our strong earnings generation capabilities, and our balance sheet strength. This includes our $125 million private debt offering during the quarter and DBRS recently reaffirming our investment grade ratings. The venture capital environment has remained active throughout the recent market choppiness, and the demand for venture lending has remained very strong. This has resulted in our largest pipeline globally, at our sponsor, TriplePoint Capital, of more than $2.75 billion as of quarter's end. In the first quarter, here at TPVG, our signed term sheets at venture growth stage companies was more than $650 million. the second highest since our IPO, topped only by the previous quarter. In fact, the level of signed term sheets in each of the last two quarters has been running at a rate more than triple that of our quarterly average in all the previous quarters. This level of signed term sheets bodes well for our future debt commitments and increased fundings in 2022. During a time when demand remains strong, We continue to maintain our proven and disciplined approach. We work with a select group of leading venture capital investors and with what we believe to be the highest quality venture growth stage deals. This strategy hasn't changed since our IPO more than eight years ago. We believe our time-tested approach has been proven throughout numerous cycles. It positions us well to further deliver strong returns to shareholders, as we capitalize on the exciting opportunities ahead in 2022 and beyond. Regardless of macroeconomic shifts in venture lending, experience makes a difference. Our senior team is the most cycle-tested in the venture lending industry. If there's one point that Sajo and I have learned over what is now more than 23 years of experience working together, a loan covering more than $14 billion in venture lending transactions during that period. It's the venture lending business through markets and cycles. Diving into some of our first quarter highlights, we generated NAI per share of $0.44 and exceeded our regular $0.36 dividend. We achieved a weighted average portfolio yield of 15.5%, First quarter funding fell right into the middle of our target range, and based on our current pipeline, we expect fundings to continue increasing throughout the year in line with the previous ranges we laid out. As of today, in fact, we've already funded more than $49 million subsequent to quarter's end. As we previously reported, We had several loan prepayments during the first quarter, reflecting the ability of our high-quality portfolio companies to complete additional funding rounds and achieve attractive exits. Inspirato and Sonder both completed public listings during the quarter. We also received prepayments from virtual instruments and CASPER. In this environment, we believe that this level of prepayment activity actually speaks to the strength and stability of our portfolio companies. They're growing, raising capital, and completing successful exits. Pre-payments, while they're not always predictable in terms of their timing, remain ongoing contributors to our income and yields and further testimonials to the strength of our companies. Underpinning our ongoing success and our future prospects is our high credit quality portfolio that I mentioned. This includes a number of companies experiencing tailwinds in this current environment. While in-person activities and return to the office are underway, pandemic-era consumption patterns are here to stay. Many portfolio companies continue to benefit from both the reopening of the economy and the consumer behavioral shifts to online procurement. There's increased demand for next-generation brands that connect and engage with consumers directly online and an expanding range of e-commerce offerings. Service and delivery at convenient rapid delivery times are becoming an even stronger differentiation factor for companies providing vital products. Health and wellness-related companies continue to prove their strong value proposition. Other portfolio companies of ours stand to benefit from the current inflationary environment and the low labor availability, which is driving businesses out there to invest more into the efficiency-enhancing products and the services that many of our portfolio companies offer. Turning back to the venture capital and venture lending environment these days, as I mentioned, the private venture markets have remained highly active even amid this public equity volatility. Last quarter's VC investment levels were still well above pre-COVID averages for any quarter, measured on both the dollar volume as well as the deal count basis. The pace of VC fundraising activity continued uninterrupted. At $70 billion of funds raised last quarter, VC fundraising hit a record, and nontraditional investors and venture deals also reached a new high. With the addition of all this new fundraising, there's now a record amount of dry powder looking to be deployed in the near future. This is estimated to be more than $300 billion by the PitchBook NVCA monitor. This should provide ample support for investment activity and the potential impacts of any corrections in the market. For quality companies, there's no doubt there couldn't be a stronger pool of capital to access. Having stated this, we can't ignore the recent shifts in the impact in the venture markets, most notably private market valuations at these later and growth stage companies, where valuations have been leveling off, and venture capital IPOs, at least last quarter, were almost nonexistent. As we look forward, however, all of these factors serve as positive trends and drivers behind the increased demand for venture lending, and we see that continuing to play out during the remainder of this year. Companies are increasingly evaluating debt financing solutions as a result of these longer timelines for public listings. Following a record year for venture capital activity, Many of the companies that raised equity last year at attractive valuations are now looking to add debt. Other companies are seeking additional runway in the form of debt as they plan out their timetable and future equity rounds. In still other cases, companies are commencing with drawdowns under their existing lines with us as part of augmenting their financing strategy and capitalization plans in this environment. Companies are no longer raising equity rounds every six to 12 months necessarily, or as quickly as last year, and there's a little more moderation. These are all great trends as many are turning towards debt and layering it in as part of their go-forward plans. We believe all this has a positive effect for future business and for our yields. Given the increased demand and increased attention towards debt, we're taking advantage of this opportunistically to increase our rates and expect to increase our yields through the year. To recap all this, we're very pleased with the strong first quarter performance. As we said in our last earnings call, 2022 will be a year of continued execution, growth, and performance. We anticipate the second quarter will be a real busy fundings quarter. We expect to build on that momentum throughout the balance of the year given our backlog and our liquidity. Given our strong pipeline, we're excited about the opportunities ahead. In executing against these opportunities, we have a cycle-tested team and will remain disciplined and continue to apply our tried and true underwriting standards to select the best deals and deliver strong returns to our shareholders. With that, let me turn the call over to you, Sajal.

Thank you, Jim, and good afternoon. As we articulated during our last earnings call, in anticipation of a busy year, our playbook for the first quarter was intended to position our business and our team to prepare for and to execute on driving portfolio growth, sustained credit quality, and capital efficiency over the course of the year while generating strong returns for shareholders. Key objectives for the quarter included increasing funding capacity, while diversifying both the type and cost of capital, maintaining our disciplined approach of originating high-quality and high-yielding investments, not just for the quarter, but for the entire year, and, of course, demonstrating the earnings, power, and return potential for our core business. We are pleased to have accomplished each of these objectives. Regarding first-quarter investment portfolio activity, TriplePoint Capital signed $657 million of term sheets with venture growth stage companies and we closed $126 million of debt commitments to 11 companies at TPVG. Signed term sheets and closed commitments were both up from Q1 2021 levels of $192 million and $90 million, respectively. We also received warrants valued at $800,000 in 10 portfolio companies and made $2.4 million of direct equity investments in four companies. During the first quarter, we funded $63 million in debt investments to 10 portfolio companies which was the midpoint of our 50 to 75 million guidance range for Q1, and an increase from 57 million in debt investments to seven companies in Q1 2021. The debt investments we funded during the quarter carried a weighted average annualized portfolio yield of 13.3% at origination, which is also up from 12.6% in Q1 2021. Our core portfolio yield during the quarter was 12.7%, up from 11.9 percent in Q1 2021 and has increased every quarter since then. In addition, as a result of prepayment activity during the first quarter, our weighted average annualized portfolio yield on total debt investments was 15.5 percent. The continued growth of our portfolio and increasing portfolio yield enabled us to generate earnings in excess of our dividend and demonstrate again the return potential of our business both on an NII and ROE basis at scale. As Jim mentioned, we continue to see equity fundraising activity in the venture capital industry as a whole and within our portfolio in particular, which is a testament to its quality. During the quarter, eight portfolio companies raised over $800 million of equity capital as compared to 10 portfolio companies raising over $700 million of capital in total in Q1 2021. We continue to make strong progress on our goal of diversifying the TPVG portfolio while scaling. At the end of Q1, we had 48 funded obligors as compared to 33 funded obligors as of Q1 2021, up 45%. And our debt investments were up 21% on a fair value basis from $574 million to $696 million. Our top 10 obligors represent approximately 40% of our total debt investments as compared to 53% as of one year ago. Our equity and warrant portfolio continue to grow as well, with 128 warrant and equity investments as of Q1 2022, up 36% from 94 warrant and equity investments one year ago, and represents 110 million on a fair value basis, almost double from 60 million as of Q1 2021. Moving on to credit quality, during the quarter, five companies were removed from category one and category two as a result of prepays. I would like to highlight the prepayment from Virtual Instruments, also known as Vertana, which back in December 2015 was rated four on our watch list, and now six years later has paid us off in full. Quite an impressive job by our team and the company as well. In addition, one company with $2.5 million of principal balance was downgraded from Category 2 to Category 3. We see continued progress on the other two of our Category 3 obligors and expect both to be upgraded over the next one to two quarters. Our one Category 4 portfolio company, Luminary Roli, is our only loan on non-accrual, and during the quarter, they launched the second generation of their innovative Seaboard Rise keyword, which has been positively received. During the quarter, two portfolio companies completed their SPAC mergers, Inspirato and Sonder. Casper completed its TAKE private transaction. Fuse was acquired by 8x8. And NomNomNom was acquired by Mars PetCare. Both TransFix and Grove continue to make progress on their previously announced SPAC mergers as well. As noted in today's earnings release, we funded almost 50 million of new loans just one month into the second quarter. We previously guided to a 50 to 100 million range for fundings for Q2 and have line of sight to beat the range for the quarter. For Q3 and Q4, we continue to expect fundings in the range of 100 to 200 million each quarter on a gross basis. We are excited for what's in store over the course of the year, and we continue to be heads down focused on growing the portfolio in a disciplined manner, maintaining a strong credit profile, growing NII and NAV, and working with some of the most exciting venture growth stage companies backed by some of the industry's best venture capital funds. It is during periods of volatility where our platform, our team, and our investment approach flex their muscles in a very thoughtful and disciplined manner to show our leadership position in the market with innovation, consistency, transparency, and scale. With that, I'll now turn the call over to Chris.