TriplePoint Venture Growth BDC Corp.

Good afternoon, ladies and gentlemen. Welcome to the TriplePoint Venture Growth BDC Corp. Third Quarter 2024 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 third quarter of 2024. Today, representing the company is Jim LeBay, Chief Executive Officer and Chairman of the Board, Sujal Srivastava, President and Chief Investment Officer, and Matthew Gagliani, Interim 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 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 welcome to TPVG's third quarter earnings call. During the quarter, we made further progress on the core priorities we have been focused on, as we executed on our playbook of managing both the portfolio and positioning TPVG for the future. I'd like to share some of the highlights for the quarter. We increased our NAV by 3 percent to $9.10 per share. We over-earned our dividend, generating $13.8 million in NII, or net investment income, equaling $0.35 per share. We maintained our strong portfolio yield, achieving a 15.7% weighted average portfolio yield for this quarter, and our core yield increased 1% over the previous quarter. We improved our weighted average credit score, with three upgrades for companies on the watch list and one downgrade from clear to white. We maintained our target leverage range of 1.1 times. We renewed our credit facility to $300 million during the quarter, with an accordion feature to increase it up to $400 million. We enhanced our financial strength and liquidity, ending the quarter with $340 million in total liquidity. We had a reduction in the number of companies on non-accrual status. We had $70 million of additional signed term sheets for venture growth stage companies come into TriplePoint Capital, post the quarter's end. And finally, we reported $8.8 million in net realized and unrealized gains, including continued increases in fair value in our warrant and equity investment positions. Our warrant and equity positions now constitute warrant positions in 95 portfolio companies and equity investment positions in 48. We believe these positions bode well for our ability to improve NAV over the long term. Underscoring this point, we realize an increase in fair value on our Revolut, Warren, and Equity positions, which contributed to the quarterly NAV increase. Moving to credit quality, we're encouraged by the strengthening performance of a number of our portfolio companies, which is reflected in the positive credit migration we experienced during the quarter. as well as the continued success of TPVG's debt portfolio companies that raise capital. For the third quarter, eight debt portfolio companies raised $656 million. And for the nine-month period of 2024, first nine months of this year, 23 debt portfolio companies raised $1.7 billion. That's a 285 percent increase over the first nine months of 2023. In addition, several other companies have raised rounds post this quarter. Going forward, the team will continue to closely manage and monitor the portfolio, while at the same time concentrating on further diversifying the portfolio and investing in today's attractive sectors, which are those in which our select venture capital investors are active. The focus will remain on companies that have recently raised capital, have ample cash runways, have backing from these select venture investors, have prudent management teams, and whose business models have attractive unit economics and high retention rates. We continue to actively seek companies which have tailwinds in spaces such as verticalized software, aerospace and defense, health tech, and AI. These industries offer some exciting investment opportunities driven by a variety of macroeconomic, technological, and geopolitical trends. Portfolio companies such as Cresta Intelligence, Panorama Education, and Loft Orbital are some of the many examples. While investment activity is continuing, it's important to note that the venture capital markets have not yet recovered and the road to recovery remains uneven. We believe in the widely shared view that it will continue to take time for market conditions to improve. Despite PitchBook citing venture deal value being on track to reach more than $175 billion and surpass 2020, they point out that a meaningful market rebound has not yet occurred and the market has just started on its journey on the long road to recovery. Venture capitalists have to balance the need to generate returns for their LP investors while at the same time taking advantage of new investment opportunities and stay patient. The lack of IPOs and M&A exit opportunities for many venture growth stage companies remains a major obstacle. And venture-backed companies are staying private longer as they wait for a better environment. Our select venture investors are opting for quality over quantity, increasing their time on due diligence and carefully structuring deal terms. Likewise, as a venture lender, this is the same prudent approach that we're also employing at TPVG and believe is the right one to follow. Based on many years of experience and throughout numerous venture capital cycles, we don't believe this is a time to open the valves and to grow for the sake of growth or to expand markets. Caution remains a guiding principle in our playbook given this market. In summary, this quarter was one of progress and execution. We're pleased with the progress made this quarter and continue to focus on executing on our plans given the underlying market conditions. We're well positioned from a liquidity standpoint to take advantage of increased activity as the markets improve. While we'll continue to maintain our careful discipline, we're seeing some signs of gradual improvement in the venture capital markets, in TPVG's portfolio, and in new business investment opportunities, and eagerly looking forward to what we expect will be increased investment opportunities in 2025 and the years ahead. With that, I'll turn the call over to Sajal.

Thank you, Jim, and good afternoon. During the third quarter, TriplePoint Capital signed 94 million of term sheets with venture growth stage companies, down from 188 million in Q2. This reflects our continued selectivity given market conditions, as well as an element of seasonality, as signed term sheets so far in Q4 are already at 70 million. With regards to new investment allocation to TPVG during the quarter, Trouble Point Capital allocated $41 million in new commitments to four companies to TPVG, including two new portfolio companies, compared to $52 million in new commitments and two new portfolio companies in Q2. Commitments to new portfolio companies during Q3 included Panorama Education, an education software platform backed by General Atlantic, Emerson Collective, Chan Zuckerberg Initiative, and other investors, as well as Oculus, a fintech infrastructure company backed by Oak, Bullpen Capital, Mubadala Capital, and other investors. During the quarter, we also had follow-on investments in one recent portfolio company, as well as refinancing of another existing portfolio company in conjunction with an upsize. During the quarter, TPBG funded $33 million in debt investments to four portfolio companies, which is slightly down from $38.7 million in debt investments to five portfolio companies in Q2, as fundings were primarily related to transactions closed during the quarter. Year-to-date, we have funded 85.2 million to 10 portfolio companies. The debt investments funded this quarter carried a weighted average annualized portfolio yield of 13.4% at origination, down from 15.5% in Q2, given the combination of lower base rates, lower yields associated with asset-based financings, as well as more robust enterprises we're lending to. Our quarterly gross funding target continues to be in the 25 to 50 million range for Q4 and as we head into 2025. As a reminder, new fundings don't materially contribute to income in the quarter in which they fund, given they typically occur at the end of the quarter. During Q3, we had 36 million of loan prepayments, down from 51 million in Q2, representing 117.8 million of prepayments year-to-date. Prepayment-related income this quarter contributed to an overall weighted average portfolio yield of 15.7%, in line with last quarter's portfolio yield. Excluding prepayments, poor portfolio yield was 14.9%, up from 13.9% in Q2, primarily due to the reduction of non-accruals. We expect at least one prepay here in Q4 and believe that prepayment activity in 2025 will depend on improving market conditions, continued equity fundraising activity, as well as other factors related to seasoning of our vintages. We do expect the pace of contractual principal amortization and repayments to increase in 2025, given contractual amortization requirements. and we therefore continue to focus on ensuring that we sufficiently grow the portfolio over time in addition to replacing prepaid and repaid loans. With regards to fundraising activity, eight portfolio companies with debt outstanding as of quarter's end raised $656 million during the quarter, compared to nine portfolio companies with debt outstanding raising $443 million in Q2. We are pleased to see not only the level of activity and round sizes increase, but also the expanding number of sub-industries of technology, including consumer, attracting capital despite market conditions, all of which reflects the quality of these portfolio companies. We expect to continue to see capital-raising activity within our portfolio. We believe this fundraising activity should bode well for the outlook for our obligors, their credit quality, as well as for the value of our war and equity investments in these companies. As of September 30th, we held warrants in 95 companies and equity investments in 48 companies with a total fair value of $116 million. Our warrant and equity portfolio experienced a $9.4 million net unrealized gain in fair value, or $0.23 per share for the quarter, primarily driven by an increase in the fair value of Revolut as a result of its announced secondary transaction of shares at a $45 billion valuation. Revolut is now reportedly Europe's most valuable private tech company, and our total warrant and equity holdings in Revolut are currently valued at $37 million, so substantial appreciation on our investment since our initial loan commitment to them in 2018. Europe continues to be an important market for the TriplePoint Capital platform, as we've been active in that market and have served as a key financing source in that ecosystem since 2008. In other portfolio activity during the quarter, Good Eggs was acquired by Grub Market, a privately held company with substantial scale revenues in EBITDA per public sources. We received equity in Grub Market for consideration for our loans, and Good Eggs was removed from Category 4 on our credit watch list. As Jim mentioned, credit improved within the portfolio during the quarter with three upgrades and one downgrade. Flink, with a principal balance of $27 million, was upgraded from Category 4 to Category 3 as a result of closing around and positive performance. One portfolio company with a principal balance of $6 million was upgraded from Category 3 to Category 2. Another portfolio company with a principal balance of $20 million was upgraded from Category 2 to Category 1, and one company with a principal balance of $10 million was downgraded from Category 1 to Category 2. During the quarter, we amended our $27.5 million outstanding loan with Moda Apparanda, rated Category 3 on our watch list, and placed the loans back on approval in conjunction with the company raising new finances. We remain focused on executing our plan for positioning TPVG for the future. In light of our industry-leading sponsor, TriplePoint Capital, its commitment to TPVG's success as well as alignment with TPBG shareholders, we announced earlier today that starting with Q1 2025 and through the end of 2025, if payment of the quarterly incentive fee prevents the company from covering the quarterly distribution from NII, the advisor will waive that portion of its quarterly income incentive fee for that quarter necessary to cover the distribution up to the full amount of the quarterly income incentive fee. Although we continue to feel encouraged by the potential for improving market conditions, our pipeline, and our ability to increase the pace of new commitments and investment fundings over the course of 2025, we believe that this waiver provides a cushion in the near term, if necessary, despite our considerable spillover, while we execute on our longer-term plan to increase TBVG scale, durability, portfolio diversification, and income-generating assets. With that, I'll now turn the call over to Matt.