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TriplePoint Venture Growth BDC Corp. - Quarter Report: 2019 March (Form 10-Q)

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

FORM 10-Q

 

(Mark One)

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2019

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

COMMISSION FILE NUMBER:  814-01044

 

TriplePoint Venture Growth BDC Corp.

(Exact name of registrant as specified in its charter)

 

 

MARYLAND

 

46-3082016

(State or other jurisdiction of

 

(I.R.S. Employer

incorporation or organization)

 

Identification No.)

 

TriplePoint Venture Growth BDC Corp.

2755 Sand Hill Road, Suite 150, Menlo Park, California 94025

(Address of principal executive office)

(650) 854-2090

(Registrant’s telephone number, including area code)

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes      No  

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes      No  

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer

 

Accelerated filer

 

 

 

 

 

Non-accelerated filer

 

 

 

Smaller reporting company

Emerging growth company

 

 

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes      No  

As of April 30, 2019, the registrant had 24,819,918 shares of common stock, $0.01 par value per share, outstanding.

 

 

1


TriplePoint Venture Growth BDC Corp.

TABLE OF CONTENTS

 

 

 

 

PAGE

PART I. FINANCIAL INFORMATION

 

 

Item 1.

Financial Statements (unaudited)

 

 

 

Condensed Consolidated Statements of Assets and Liabilities as of March 31, 2019 and December 31, 2018

 

3

 

Condensed Consolidated Statements of Operations for the Three Months Ended March 31, 2019 and March 31, 2018

 

4

 

Condensed Consolidated Statements of Changes in Net Assets for the Three Months Ended March 31, 2019 and March 31, 2018

 

5

 

Condensed Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2019 and March 31, 2018

 

6

 

Condensed Consolidated Schedules of Investments as of March 31, 2019 and December 31, 2018

 

7

 

Notes to Condensed Consolidated Financial Statements as of March 31, 2019

 

18

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

34

 

Forward-Looking Statements

 

34

 

Overview

 

35

 

Portfolio Composition, Investment Activity and Asset Quality

 

36

 

Results of Operations

 

41

 

Critical Accounting Policies

 

44

 

Liquidity and Capital Resources

 

45

 

Recent Developments

 

47

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

 

48

Item 4.

Controls and Procedures

 

49

 

 

 

 

 

 

 

 

PART II. OTHER INFORMATION

 

 

Item 1.

Legal Proceedings

 

50

Item 1A.

Risk Factors

 

50

Item 2

Unregistered Sales of Equity Securities and Use of Proceeds

 

50

Item 3.

Defaults Upon Senior Securities

 

50

Item 4.

Mine Safety Disclosures

 

50

Item 5.

Other Information

 

50

Item 6.

Exhibits

 

50

SIGNATURES

 

51

 

 

2


PART I—FINANCIAL INFORMATION

Item 1.  Financial Statements

TRIPLEPOINT VENTURE GROWTH BDC CORP. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF ASSETS AND LIABILITIES

(in thousands, except per share data)

 

 

 

March 31, 2019

 

 

December 31, 2018

 

 

 

(unaudited)

 

 

 

 

 

Assets

 

 

 

 

 

 

 

 

Investments at fair value (amortized cost of $458,176 and $435,084, respectively)

 

$

457,695

 

 

$

433,417

 

Short-term investments at fair value (cost of $49,994 and $19,999, respectively)

 

 

49,994

 

 

 

19,999

 

Cash

 

 

35,973

 

 

 

3,382

 

Restricted cash

 

 

6,014

 

 

 

6,567

 

Deferred credit facility costs

 

 

917

 

 

 

1,179

 

Prepaid expenses and other assets

 

 

3,783

 

 

 

2,510

 

Total assets

 

$

554,376

 

 

$

467,054

 

 

 

 

 

 

 

 

 

 

Liabilities

 

 

 

 

 

 

 

 

Revolving Credit Facility

 

$

80,776

 

 

$

23,000

 

2022 Notes, net

 

 

73,071

 

 

 

72,943

 

Payable for U.S. Treasury Bill assets

 

 

49,994

 

 

 

19,999

 

Base management fee payable

 

 

1,761

 

 

 

1,725

 

Income incentive fee payable

 

 

2,479

 

 

 

2,558

 

Accrued capital gains incentive fee

 

 

 

 

 

 

Payable to directors and officers

 

 

67

 

 

 

64

 

Other accrued expenses and liabilities

 

 

9,029

 

 

 

12,234

 

Total liabilities

 

$

217,177

 

 

$

132,523

 

Commitments and Contingencies (Note 7)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net assets

 

 

 

 

 

 

 

 

Preferred stock, par value $0.01 per share (50,000 shares authorized; no shares issued and outstanding, respectively)

 

$

 

 

$

 

Common stock, par value $0.01 per share (450,000 shares authorized; 24,820 and 24,780 shares issued and outstanding, respectively)

 

 

248

 

 

 

248

 

Paid-in capital in excess of par value

 

 

331,847

 

 

 

331,329

 

Total distributable earnings (loss)

 

 

5,104

 

 

 

2,954

 

Total net assets

 

$

337,199

 

 

$

334,531

 

Total liabilities and net assets

 

$

554,376

 

 

$

467,054

 

 

 

 

 

 

 

 

 

 

Net asset value per share

 

$

13.59

 

 

$

13.50

 

 

See accompanying notes to condensed consolidated financial statements.

 

3


TRIPLEPOINT VENTURE GROWTH BDC CORP. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(unaudited)

(in thousands, except per share data)

 

 

 

For the Three Months Ended March 31,

 

 

 

2019

 

 

2018

 

Investment income

 

 

 

 

 

 

 

 

Interest income from investments

 

$

17,147

 

 

$

12,616

 

Other income

 

 

 

 

 

 

 

 

Expirations or terminations of unfunded commitments

 

 

158

 

 

 

 

Other fees

 

 

186

 

 

 

3

 

Total investment and other income

 

 

17,491

 

 

 

12,619

 

 

 

 

 

 

 

 

 

 

Operating expenses

 

 

 

 

 

 

 

 

Base management fee

 

 

1,761

 

 

 

1,528

 

Income incentive fee

 

 

2,479

 

 

 

1,487

 

Capital gains incentive fee

 

 

 

 

 

 

Interest expense and amortization of fees

 

 

2,203

 

 

 

2,518

 

Administration agreement expenses

 

 

422

 

 

 

407

 

General and administrative expenses

 

 

711

 

 

 

732

 

Total operating expenses

 

 

7,576

 

 

 

6,672

 

 

 

 

 

 

 

 

 

 

Net investment income

 

 

9,915

 

 

 

5,947

 

 

 

 

 

 

 

 

 

 

Net realized and unrealized gains (losses)

 

 

 

 

 

 

 

 

Net realized gains (losses) on investments

 

 

(29

)

 

 

8

 

Net change in unrealized gains (losses) on investments

 

 

1,183

 

 

 

1,988

 

Net realized and unrealized gains (losses)

 

 

1,154

 

 

 

1,996

 

 

 

 

 

 

 

 

 

 

Net increase in net assets resulting from operations

 

$

11,069

 

 

$

7,943

 

 

 

 

 

 

 

 

 

 

Basic and diluted net investment income per share

 

$

0.40

 

 

$

0.34

 

Basic and diluted net increase in net assets per share

 

$

0.45

 

 

$

0.45

 

Basic and diluted weighted average shares of common stock outstanding

 

 

24,782

 

 

 

17,730

 

 

See accompanying notes to condensed consolidated financial statements.

 

4


TRIPLEPOINT VENTURE GROWTH BDC CORP. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETS

(unaudited)

(in thousands)

 

 

 

Common stock

 

 

 

 

 

 

 

 

 

 

 

Shares

 

Par value

 

Paid-in capital in excess of par value

 

Total distributable earnings (loss)

 

Net assets

 

Balance at December 31, 2017

 

17,730

 

$

177

 

$

235,488

 

$

(720

)

$

234,945

 

Net increase in net assets resulting from operations

 

 

 

 

 

 

 

7,943

 

 

7,943

 

Distributions from net investment income

 

 

 

 

 

 

 

(6,383

)

 

(6,383

)

Balance at March 31, 2018

 

17,730

 

$

177

 

$

235,488

 

$

840

 

$

236,505

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at December 31, 2018

 

24,780

 

$

248

 

$

331,329

 

 

2,954

 

$

334,531

 

Net increase in net assets resulting from operations

 

 

 

 

 

 

 

11,069

 

 

11,069

 

Distributions reinvested in common stock

 

40

 

 

 

 

518

 

 

 

 

518

 

Distributions from net investment income

 

 

 

 

 

 

 

(8,919

)

 

(8,919

)

Balance at March 31, 2019

 

24,820

 

$

248

 

$

331,847

 

$

5,104

 

$

337,199

 

 

 

See accompanying notes to condensed consolidated financial statements.

 

5


TRIPLEPOINT VENTURE GROWTH BDC CORP. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited)

(dollars in thousands)

 

 

 

For the Three Months Ended March 31,

 

 

 

2019

 

 

2018

 

Cash Flows from Operating Activities:

 

 

 

 

 

 

 

 

Net increase in net assets resulting from operations

 

$

11,069

 

 

$

7,943

 

Adjustments to reconcile net increase in net assets resulting from operations to net cash provided by (used in) operating activities:

 

 

 

 

 

 

 

 

Fundings and purchases of investments, net

 

 

(89,629

)

 

 

(37,831

)

Purchase of short-term investments, net

 

 

(29,995

)

 

 

(2

)

Principal payments and proceeds from investments

 

 

70,550

 

 

 

13,724

 

Payment-in-kind interest on investments

 

 

(771

)

 

 

(605

)

Net change in unrealized (gains) losses on investments

 

 

(1,183

)

 

 

(1,988

)

Net realized (gains) losses on investments

 

 

29

 

 

 

(8

)

Amortization and accretion of premiums and discounts, net

 

 

(906

)

 

 

(792

)

(Accretion) of end-of-term payments, net of prepayments

 

 

(2,329

)

 

 

(2,158

)

Amortization of debt fees and issuance costs

 

 

390

 

 

 

369

 

Change in operating assets and liabilities:

 

 

 

 

 

 

 

 

Payable for U.S. Treasury Bill assets

 

 

29,995

 

 

 

2

 

Prepaid expenses and other assets

 

 

(1,273

)

 

 

(452

)

Base management fee payable

 

 

36

 

 

 

65

 

Income incentive fee payable

 

 

(79

)

 

 

393

 

Payable to directors and officers

 

 

3

 

 

 

1

 

Other accrued expenses and liabilities

 

 

(3,244

)

 

 

913

 

Net cash used in by operating activities

 

 

(17,337

)

 

 

(20,426

)

Cash Flows from Financing Activities:

 

 

 

 

 

 

 

 

Borrowings under revolving credit facility, net

 

 

57,776

 

 

 

30,000

 

Distributions paid, net

 

 

(8,401

)

 

 

 

Deferred credit facility costs

 

 

 

 

 

(1,260

)

Net cash provided by (used in) financing activities

 

 

49,375

 

 

 

28,740

 

Net change in cash and restricted cash

 

 

32,038

 

 

 

8,314

 

Cash and restricted cash at beginning of period

 

 

9,949

 

 

 

10,006

 

Cash and restricted cash at end of period

 

$

41,987

 

 

$

18,320

 

Supplemental Disclosures of Cash Flow Information:

 

 

 

 

 

 

 

 

Cash paid for interest

 

$

1,693

 

 

$

2,071

 

Distributions reinvested

 

$

518

 

 

$

 

Distribution declared, not paid

 

$

 

 

$

6,383

 

Offering costs yet to be paid

 

$

20

 

 

$

 

 

 

 

 

 

 

 

 

 

 

 

For the Three Months Ended March 31,

 

 

 

2019

 

 

2018

 

Cash

 

$

35,973

 

 

$

7,840

 

Restricted cash

 

 

6,014

 

 

 

10,480

 

Total cash and restricted cash shown in the statement of cash flows

 

$

41,987

 

 

$

18,320

 

 

See accompanying notes to condensed consolidated financial statements. 

 

6


TRIPLEPOINT VENTURE GROWTH BDC CORP. AND SUBSIDIARIES

CONDENSED CONSOLIDATED SCHEDULE OF INVESTMENTS

(unaudited)

(dollars in thousands)

As of March 31, 2019

 

Venture Growth Stage Company

 

Industry

 

Type of Investment

 

Outstanding Principal

 

 

Cost (6)

 

 

Fair Value

 

 

Maturity Date

Debt Investments

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Biofuels / Biomass

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Harvest Power, Inc.

 

Biofuels / Biomass

 

Growth Capital Loan (7.00% interest rate, 9.00% EOT payment)

 

$

13,247

 

 

$

14,866

 

 

$

14,398

 

 

4/30/2020

Total Biofuels / Biomass  - 4.27%*

 

 

 

 

 

 

13,247

 

 

 

14,866

 

 

 

14,398

 

 

 

Building Materials/Construction Machinery

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

View, Inc.

 

Building Materials/Construction Machinery

 

Equipment Loan (Prime + 8.00% interest rate, 14.00% EOT payment)

 

 

10,439

 

 

 

10,817

 

 

 

10,866

 

 

6/30/2021

 

 

Building Materials/Construction Machinery

 

Equipment Loan (Prime + 8.00% interest rate, 14.00% EOT payment)

 

 

4,998

 

 

 

5,173

 

 

 

5,197

 

 

6/30/2021

 

 

Building Materials/Construction Machinery

 

Equipment Loan (Prime + 8.00% interest rate, 14.00% EOT payment)

 

 

6,949

 

 

 

7,154

 

 

 

7,188

 

 

7/31/2021

 

 

Building Materials/Construction Machinery

 

Equipment Loan (Prime + 8.00% interest rate, 14.00% EOT payment)

 

 

1,664

 

 

 

1,695

 

 

 

1,703

 

 

9/30/2021

 

 

Building Materials/Construction Machinery

 

Equipment Loan (Prime + 8.00% interest rate, 14.00% EOT payment)

 

 

2,160

 

 

 

2,181

 

 

 

2,190

 

 

11/30/2021

 

 

Building Materials/Construction Machinery

 

Equipment Loan (Prime + 8.00% interest rate, 14.00% EOT payment)

 

 

1,731

 

 

 

1,746

 

 

 

1,753

 

 

11/30/2021

 

 

Building Materials/Construction Machinery

 

Equipment Loan (Prime + 8.00% interest rate, 14.00% EOT payment)

 

 

2,536

 

 

 

2,546

 

 

 

2,558

 

 

12/31/2021

 

 

Building Materials/Construction Machinery

 

Equipment Loan (Prime + 8.00% interest rate, 14.00% EOT payment)

 

 

2,657

 

 

 

2,667

 

 

 

2,680

 

 

12/31/2021

Total Building Materials/Construction Machinery  - 10.12%*

 

 

 

 

33,134

 

 

 

33,979

 

 

 

34,135

 

 

 

Buildings and Property

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Knotel. Inc.

 

Buildings and Property

 

Growth Capital Loan (Prime + 4.25% interest rate, 9.00% EOT payment)

 

 

9,000

 

 

 

8,886

 

 

 

8,886

 

 

8/31/2022

 

 

Buildings and Property

 

Growth Capital Loan (Prime + 4.25% interest rate, 9.00% EOT payment)

 

 

6,000

 

 

 

5,912

 

 

 

5,912

 

 

9/30/2022

Total Buildings and Property  - 4.39%*

 

 

 

 

 

 

15,000

 

 

 

14,798

 

 

 

14,798

 

 

 

Business Applications Software

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

HI.Q, Inc.

 

Business Applications Software

 

Growth Capital Loan (11.00% interest rate, 2.00% EOT payment)

 

 

13,250

 

 

 

13,022

 

 

 

13,022

 

 

6/30/2023

MapR Technologies, Inc.

 

Business Applications Software

 

Equipment Lease  (8.25% interest rate, 10.00% EOT payment) (1)

 

 

193

 

 

 

328

 

 

 

328

 

 

6/30/2019

 

 

Business Applications Software

 

Equipment Loan (6.50% interest rate,10.00% EOT payment)

 

 

92

 

 

 

174

 

 

 

174

 

 

6/30/2019

 

 

Business Applications Software

 

Equipment Lease  (8.50% interest rate, 10.00% EOT payment) (1)

 

 

55

 

 

 

65

 

 

 

65

 

 

12/31/2019

 

 

Business Applications Software

 

Equipment Loan (6.75% interest rate,10.00% EOT payment)

 

 

81

 

 

 

109

 

 

 

109

 

 

10/31/2019

 

 

Business Applications Software

 

Equipment Lease  (8.75% interest rate, 10.00% EOT payment) (1)

 

 

231

 

 

 

259

 

 

 

259

 

 

4/30/2020

 

 

Business Applications Software

 

Equipment Loan (7.00% interest rate,10.00% EOT payment)

 

 

52

 

 

 

64

 

 

 

64

 

 

1/31/2020

 

 

Business Applications Software

 

Equipment Lease  (9.00% interest rate, 10.00% EOT payment) (1)

 

 

351

 

 

 

380

 

 

 

380

 

 

7/31/2020

 

 

Business Applications Software

 

Equipment Loan (7.00% interest rate,10.00% EOT payment)

 

 

375

 

 

 

431

 

 

 

431

 

 

4/30/2020

 

 

Business Applications Software

 

Equipment Lease  (9.00% interest rate, 10.00% EOT payment) (1)

 

 

331

 

 

 

350

 

 

 

350

 

 

10/31/2020

 

 

Business Applications Software

 

Equipment Loan (7.25% interest rate,10.00% EOT payment)

 

 

185

 

 

 

203

 

 

 

203

 

 

7/31/2020

 

 

Business Applications Software

 

Equipment Lease  (9.25% interest rate, 10.00% EOT payment) (1)

 

 

304

 

 

 

315

 

 

 

315

 

 

1/31/2021

 

 

Business Applications Software

 

Equipment Loan (7.50% interest rate,10.00% EOT payment)

 

 

120

 

 

 

128

 

 

 

128

 

 

10/31/2020

 

 

Business Applications Software

 

Equipment Lease  (9.50% interest rate, 10.00% EOT payment) (1)

 

 

503

 

 

 

516

 

 

 

516

 

 

4/30/2021

 

 

Business Applications Software

 

Equipment Loan (7.75% interest rate,10.00% EOT payment)

 

 

271

 

 

 

280

 

 

 

280

 

 

1/31/2021

 

 

Business Applications Software

 

Equipment Lease  (9.75% interest rate, 10.00% EOT payment) (1)

 

 

668

 

 

 

677

 

 

 

677

 

 

7/31/2021

 

 

Business Applications Software

 

Equipment Loan (10.0% interest rate)

 

 

282

 

 

 

282

 

 

 

282

 

 

 

 

 

 

 

 

 

 

4,094

 

 

 

4,561

 

 

 

4,561

 

 

 

OneSource Virtual, Inc.

 

Business Applications Software

 

Growth Capital Loan (Prime + 2.50% interest rate, 2.25% EOT payment)

 

 

10,000

 

 

 

10,225

 

 

 

10,225

 

 

3/31/2019

Passport Labs, Inc.

 

Business Applications Software

 

Growth Capital Loan (Prime + 4.25% interest rate, 5.25% EOT payment)

 

 

19,000

 

 

 

18,743

 

 

 

18,743

 

 

10/31/2022

Quantcast Corporation

 

Business Applications Software

 

Growth Capital Loan (Prime + 6.25% interest rate, 6.00% EOT payment)

 

 

15,000

 

 

 

15,142

 

 

 

15,142

 

 

3/31/2021

Total Business Applications Software  - 18.30%*

 

 

 

 

61,344

 

 

 

61,693

 

 

 

61,693

 

 

 

Business to Business Marketplace

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjust GmbH (1) (3)

 

Business to Business Marketplace

 

Growth Capital Loan (Prime + 4.75% interest rate, 2.50% PIK interest rate)

 

 

20,086

 

 

 

19,708

 

 

 

19,708

 

 

1/31/2022

 

 

Business to Business Marketplace

 

Growth Capital Loan (Prime + 4.75% interest rate, 2.50% PIK interest rate)

 

 

8,041

 

 

 

7,891

 

 

 

7,891

 

 

1/31/2022

Total Business to Business Marketplace  - 8.18%*

 

 

 

 

28,127

 

 

 

27,599

 

 

 

27,599

 

 

 

Consumer Products and Services

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Clutter, Inc.

 

Consumer Products and Services

 

Growth Capital Loan (Prime + 3.00% interest rate, 4.00% EOT payment)

 

 

6,303

 

 

 

6,200

 

 

 

6,241

 

 

10/31/2020

 

 

Consumer Products and Services

 

Growth Capital Loan (Prime + 4.50% interest rate, 4.00% EOT payment)

 

 

5,000

 

 

 

4,896

 

 

 

4,932

 

 

10/31/2021

 

 

Consumer Products and Services

 

Growth Capital Loan (Prime + 3.00% interest rate, 4.00% EOT payment)

 

 

1,391

 

 

 

1,362

 

 

 

1,372

 

 

12/31/2020

 

 

Consumer Products and Services

 

Growth Capital Loan (Prime + 4.50% interest rate, 4.00% EOT payment)

 

 

1,932

 

 

 

1,881

 

 

 

1,896

 

 

1/31/2022

 

 

 

 

 

 

 

14,626

 

 

 

14,339

 

 

 

14,441

 

 

 

Outdoor Voices, Inc.

 

Consumer Products and Services

 

Growth Capital Loan (Prime + 5.00% interest rate, 9.75% EOT payment)

 

 

4,000

 

 

 

3,877

 

 

 

3,877

 

 

2/28/2022

Total Consumer Products and Services  - 5.43%*

 

 

 

 

18,626

 

 

 

18,216

 

 

 

18,318

 

 

 

Consumer Retail

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

LovePop, Inc.

 

Consumer Retail

 

Growth Capital Loan (Prime + 4.75% interest rate, 6.75% EOT payment)

 

 

10,000

 

 

 

9,845

 

 

 

9,845

 

 

11/30/2021

Total Consumer Retail  - 2.92%*

 

 

 

 

 

 

10,000

 

 

 

9,845

 

 

 

9,845

 

 

 

E-Commerce - Clothing and Accessories

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

FabFitFun, Inc.

 

E-Commerce - Clothing and Accessories

 

Growth Capital Loan (10.50% interest rate, 6.00% EOT payment)

 

 

5,000

 

 

 

5,027

 

 

 

5,050

 

 

2/28/2021

Outfittery GMBH (1) (2) (3)

 

E-Commerce - Clothing and Accessories

 

Growth Capital Loan (12.25% interest rate, 9.00% EOT payment)

 

 

6,925

 

 

 

6,974

 

 

 

6,585

 

 

8/31/2021

 

 

E-Commerce - Clothing and Accessories

 

Growth Capital Loan (12.00% interest rate, 9.00% EOT payment)

 

 

2,360

 

 

 

2,312

 

 

 

2,198

 

 

6/30/2021

 

 

E-Commerce - Clothing and Accessories

 

Growth Capital Loan (12.75% interest rate, 9.00% EOT payment)

 

 

2,294

 

 

 

2,180

 

 

 

2,132

 

 

12/31/2021

 

 

 

 

 

 

 

11,579

 

 

 

11,466

 

 

 

10,915

 

 

 

Stance, Inc.

 

E-Commerce - Clothing and Accessories

 

Growth Capital Loan (Prime + 4.50% interest rate, 5.50% EOT payment)

 

 

2,000

 

 

 

2,012

 

 

 

2,012

 

 

4/30/2020

Untuckit LLC

 

E-Commerce - Clothing and Accessories

 

Growth Capital Loan (Prime + 4.00% interest rate, 4.50% EOT payment)

 

 

1,693

 

 

 

1,761

 

 

 

1,761

 

 

11/30/2019

 

 

E-Commerce - Clothing and Accessories

 

Growth Capital Loan (Prime + 4.00% interest rate, 4.50% EOT payment)

 

 

3,000

 

 

 

3,048

 

 

 

3,048

 

 

3/31/2020

 

 

E-Commerce - Clothing and Accessories

 

Growth Capital Loan (Prime + 4.75% interest rate, 4.50% EOT payment)

 

 

4,500

 

 

 

4,541

 

 

 

4,541

 

 

3/31/2020

 

 

 

 

 

 

 

9,193

 

 

 

9,350

 

 

 

9,350

 

 

 

Total E-Commerce - Clothing and Accessories  - 8.10%*

 

 

 

 

27,772

 

 

 

27,855

 

 

 

27,327

 

 

 

E-Commerce - Personal Goods

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Enjoy Technology, Inc.

 

E-Commerce - Personal Goods

 

Growth Capital Loan (Prime + 5.25% interest rate, 5.50% EOT payment)

 

 

10,000

 

 

 

9,777

 

 

 

9,777

 

 

9/30/2021

Total E-Commerce - Personal Goods  - 2.90%*

 

 

 

 

 

 

10,000

 

 

 

9,777

 

 

 

9,777

 

 

 

Entertainment

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Mind Candy Limited (1) (3) (12)

 

Entertainment

 

Growth Capital Loan (11.00% PIK, 3.00% Cash, 9.50% EOT payment)

 

 

10,730

 

 

 

11,681

 

 

 

6,886

 

 

1/31/2019

Roli, Ltd. (1) (2) (3)

 

Entertainment

 

Growth Capital Loan (11.00% interest rate, 9.50% EOT payment)

 

 

10,732

 

 

 

10,610

 

 

 

10,207

 

 

5/31/2021

 

 

Entertainment

 

Growth Capital Loan (11.00% interest rate, 9.50% EOT payment)

 

 

1,342

 

 

 

1,326

 

 

 

1,280

 

 

5/31/2021

 

 

Entertainment

 

Growth Capital Loan (11.25% interest rate, 9.50% EOT payment)

 

 

1,325

 

 

 

1,299

 

 

 

1,268

 

 

7/31/2021

 

 

Entertainment

 

Revolver (Prime + 3.25% interest rate, 5.00% EOT payment)

 

 

129

 

 

 

129

 

 

 

127

 

 

6/30/2019

 

 

Entertainment

 

Revolver (Prime + 4.25% interest rate, 5.00% EOT payment)

 

 

1,898

 

 

 

1,898

 

 

 

1,870

 

 

6/30/2019

 

 

Entertainment

 

Revolver (Prime + 4.25% interest rate, 5.00% EOT payment)

 

 

4,556

 

 

 

4,556

 

 

 

4,508

 

 

6/30/2019

 

 

 

 

 

 

 

19,982

 

 

 

19,818

 

 

 

19,260

 

 

 

Total Entertainment  - 7.75%*

 

 

 

 

 

$

30,712

 

 

$

31,499

 

 

$

26,146

 

 

 

 

See accompanying notes to condensed consolidated financial statements.

 

7


TRIPLEPOINT VENTURE GROWTH BDC CORP. AND SUBSIDIARIES

CONDENSED CONSOLIDATED SCHEDULE OF INVESTMENTS
(unaudited)

(dollars in thousands)

As of March 31, 2019

 

Venture Growth Stage Company

 

Industry

 

Type of Investment

 

Outstanding Principal

 

 

Cost (6)

 

 

Fair Value

 

 

Maturity Date

Debt Investments (continued)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Financial Institution and Services

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

BlueVine Capital, Inc.

 

Financial Institution and Services

 

Growth Capital Loan (9.25% interest rate, 3.05% EOT payment)

 

$

5,000

 

 

$

5,072

 

 

$

5,072

 

 

9/30/2019

 

 

Financial Institution and Services

 

Growth Capital Loan (9.25% interest rate, 3.05% EOT payment)

 

 

5,000

 

 

 

5,071

 

 

 

5,071

 

 

9/30/2019

 

 

 

 

 

 

 

10,000

 

 

 

10,143

 

 

 

10,143

 

 

 

Prodigy Finance Limited (1) (3)

 

Financial Institution and Services

 

Growth Capital Loan (Prime + 7.75% interest rate, 10.00% EOT payment)

 

 

18,000

 

 

 

18,346

 

 

 

18,346

 

 

12/31/2020

 

 

Financial Institution and Services

 

Growth Capital Loan (Prime + 7.75% interest rate, 10.00% EOT payment)

 

 

2,200

 

 

 

2,217

 

 

 

2,217

 

 

3/31/2021

 

 

Financial Institution and Services

 

Growth Capital Loan (Prime + 7.75% interest rate, 10.00% EOT payment)

 

 

3,300

 

 

 

3,278

 

 

 

3,278

 

 

7/31/2021

 

 

Financial Institution and Services

 

Growth Capital Loan (Prime + 7.75% interest rate, 10.00% EOT payment)

 

 

2,500

 

 

 

2,480

 

 

 

2,480

 

 

8/31/2021

 

 

Financial Institution and Services

 

Growth Capital Loan (Prime + 7.75% interest rate, 10.00% EOT payment)

 

 

1,500

 

 

 

1,484

 

 

 

1,484

 

 

9/30/2021

 

 

Financial Institution and Services

 

Growth Capital Loan (Prime + 7.75% interest rate, 10.00% EOT payment)

 

 

2,500

 

 

 

2,473

 

 

 

2,473

 

 

9/30/2021

 

 

Financial Institution and Services

 

Growth Capital Loan (Prime + 7.75% interest rate, 10.00% EOT payment)

 

 

6,000

 

 

 

5,895

 

 

 

5,895

 

 

11/30/2021

 

 

Financial Institution and Services

 

Growth Capital Loan (Prime + 7.75% interest rate, 10.00% EOT payment)

 

 

4,000

 

 

 

3,918

 

 

 

3,918

 

 

12/31/2021

 

 

 

 

 

 

 

40,000

 

 

 

40,091

 

 

 

40,091

 

 

 

WorldRemit Limited (1) (3)

 

Financial Institution and Services

 

Growth Capital Loan (Prime + 8.75% interest rate, 10.00% EOT payment)

 

 

5,000

 

 

 

5,434

 

 

 

5,434

 

 

6/30/2019

 

 

Financial Institution and Services

 

Growth Capital Loan (Prime + 8.75% interest rate, 10.00% EOT payment)

 

 

5,000

 

 

 

5,433

 

 

 

5,433

 

 

6/30/2019

 

 

Financial Institution and Services

 

Growth Capital Loan (Prime + 8.75% interest rate, 10.00% EOT payment)

 

 

5,000

 

 

 

5,321

 

 

 

5,321

 

 

11/30/2019

 

 

Financial Institution and Services

 

Growth Capital Loan (Prime + 8.75% interest rate, 10.00% EOT payment)

 

 

10,000

 

 

 

9,993

 

 

 

9,993

 

 

6/30/2021

 

 

 

 

 

 

 

25,000

 

 

 

26,181

 

 

 

26,181

 

 

 

Total Financial Institution and Services  - 22.66%*

 

 

 

 

75,000

 

 

 

76,415

 

 

 

76,415

 

 

 

Human Resources/Recruitment

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Hired, Inc.

 

Human Resources/Recruitment

 

Growth Capital Loan (Prime + 5.00% interest rate, 6.00% EOT payment)

 

 

5,000

 

 

 

4,881

 

 

 

4,881

 

 

9/30/2022

 

 

Human Resources/Recruitment

 

Growth Capital Loan (Prime + 6.50% interest rate, 7.25% EOT payment)

 

 

5,000

 

 

 

4,881

 

 

 

4,881

 

 

3/31/2022

Total Human Resources/Recruitment  - 2.90%*

 

 

 

 

10,000

 

 

 

9,762

 

 

 

9,762

 

 

 

Network Systems Management Software

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Virtual Instruments Corporation

 

Network Systems Management Software

 

Growth Capital Loan (10.00% interest rate)

 

 

5,000

 

 

 

5,000

 

 

 

5,000

 

 

4/4/2020

 

 

Network Systems Management Software

 

Growth Capital Loan (5.00% PIK interest rate)

 

 

24,512

 

 

 

24,512

 

 

 

22,279

 

 

4/4/2021

 

 

Network Systems Management Software

 

Growth Capital Loan (5.00% PIK interest rate)

 

 

4,789

 

 

 

4,789

 

 

 

3,756

 

 

4/4/2021

Total Network Systems Management Software  - 9.20%*

 

 

 

 

34,301

 

 

 

34,301

 

 

 

31,035

 

 

 

Other Financial Services

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Upgrade, Inc.

 

Other Financial Services

 

Growth Capital Loan (9.50% interest rate, 8.50% EOT payment)

 

 

6,000

 

 

 

5,909

 

 

 

5,909

 

 

1/31/2023

 

 

Other Financial Services

 

Growth Capital Loan (11.0% interest rate, 8.50% EOT payment)

 

 

1,522

 

 

 

1,497

 

 

 

1,497

 

 

1/31/2023

 

 

Other Financial Services

 

Growth Capital Loan (8.50% interest rate, 2.75% EOT payment)

 

 

6,391

 

 

 

6,311

 

 

 

6,311

 

 

1/31/2020

 

 

Other Financial Services

 

Growth Capital Loan (9.50% interest rate, 6.25% EOT payment)

 

 

6,087

 

 

 

5,973

 

 

 

5,973

 

 

2/28/2022

Total Other Financial Services  - 5.84%*

 

 

 

 

20,000

 

 

 

19,690

 

 

 

19,690

 

 

 

Real Estate Services

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sonder USA, Inc.

 

Real Estate Services

 

Growth Capital Loan (Prime + 5.75% interest rate, 5.25% EOT payment)

 

 

20,000

 

 

 

19,680

 

 

 

19,680

 

 

6/30/2022

Total Real Estate Services  - 5.84%*

 

 

 

 

 

 

20,000

 

 

 

19,680

 

 

 

19,680

 

 

 

Restaurant / Food Service

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Munchery, Inc. (2) (7) (13)

 

Restaurant / Food Service

 

Growth Capital Loan (Prime + 8.25% PIK interest rate, 8.75% EOT payment)

 

 

2,589

 

 

 

2,729

 

 

 

1,802

 

 

6/30/2019

 

 

Restaurant / Food Service

 

Growth Capital Loan (Prime + 8.25% PIK interest rate)

 

 

300

 

 

 

300

 

 

 

198

 

 

6/30/2019

 

 

Restaurant / Food Service

 

Debtor in Possession Loan (12.50% interest rate per annum)

 

 

183

 

 

 

183

 

 

 

183

 

 

4/25/2019

 

 

Restaurant / Food Service

 

Debtor in Possession Loan (12.50% interest rate per annum)

 

 

28

 

 

 

28

 

 

 

28

 

 

4/25/2019

Total Restaurant / Food Service  - 0.66%*

 

 

 

 

 

 

3,100

 

 

 

3,240

 

 

 

2,211

 

 

 

Security Services

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Forgerock, Inc.

 

Security Services

 

Growth Capital Loan (Prime + 3.75% interest rate, 8.50% EOT payment)

 

 

2,192

 

 

 

2,967

 

 

 

2,967

 

 

9/30/2019

 

 

Security Services

 

Growth Capital Loan (Prime + 3.75% interest rate, 8.50% EOT payment)

 

 

1,965

 

 

 

2,305

 

 

 

2,305

 

 

2/29/2020

 

 

Security Services

 

Growth Capital Loan (Prime + 2.90% interest rate, 8.00% EOT payment)

 

 

10,000

 

 

 

9,790

 

 

 

9,790

 

 

9/30/2022

Total Security Services  - 4.47%*

 

 

 

 

 

 

14,157

 

 

 

15,062

 

 

 

15,062

 

 

 

Wireless Communications Equipment

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cambridge Broadband Network Limited (1) (3) (7)

 

Wireless Communications Equipment

 

Growth Capital Loan (Prime + 11.75% PIK interest rate)

 

 

6,701

 

 

 

6,701

 

 

 

6,093

 

 

12/31/2021

 

 

Wireless Communications Equipment

 

Growth Capital Loan (Prime + 12.00% PIK interest rate)

 

 

375

 

 

 

375

 

 

 

375

 

 

12/31/2019

Total Wireless Communications Equipment  - 1.92%*

 

 

 

 

7,076

 

 

 

7,076

 

 

 

6,468

 

 

 

Total Debt Investments  - 125.85%*

 

 

 

 

 

$

431,596

 

 

$

435,353

 

 

$

424,396

 

 

 

 

See accompanying notes to condensed consolidated financial statements.

 

8


TRIPLEPOINT VENTURE GROWTH BDC CORP. AND SUBSIDIARIES

CONDENSED CONSOLIDATED SCHEDULE OF INVESTMENTS
(unaudited)

(dollars in thousands)

As of March 31, 2019

 

Venture Growth Stage Company

 

Industry

 

Type of Warrant

 

Shares

 

 

Cost (6)

 

 

Fair Value

 

Warrant Investments (8)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Advertising / Marketing

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

InMobi Pte Ltd. (1) (2) (3)

 

Advertising / Marketing

 

Ordinary Shares

 

 

48,500

 

 

$

35

 

 

$

148

 

Total Advertising / Marketing  - 0.04%*

 

 

 

 

 

 

48,500

 

 

 

35

 

 

 

148

 

Building Materials/Construction Machinery

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

View, Inc.

 

Building Materials/Construction Machinery

 

Preferred Stock

 

 

4,545,455

 

 

 

500

 

 

 

864

 

Total Building Materials/Construction Machinery  - 0.26%*

 

 

 

 

 

 

4,545,455

 

 

 

500

 

 

 

864

 

Buildings and Property

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Knotel, Inc.

 

Buildings and Property

 

Preferred Stock

 

 

36,026

 

 

 

159

 

 

 

159

 

Total Buildings and Property  - 0.05%*

 

 

 

 

 

 

36,026

 

 

 

159

 

 

 

159

 

Business Applications Software

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

FinancialForce.com, Inc.

 

Business Applications Software

 

Preferred Stock

 

 

547,440

 

 

 

1,540

 

 

 

2,566

 

HI.Q, Inc.

 

Business Applications Software

 

Preferred Stock

 

 

606,952

 

 

 

196

 

 

 

437

 

Lattice Engines, Inc. (2)

 

Business Applications Software

 

Preferred Stock

 

 

396,652

 

 

 

48

 

 

 

95

 

MapR Technologies, Inc.

 

Business Applications Software

 

Preferred Stock

 

 

253,805

 

 

 

41

 

 

 

48

 

Medallia, Inc. (2)

 

Business Applications Software

 

Preferred Stock

 

 

55,814

 

 

 

11

 

 

 

80

 

OneSource Virtual, Inc.

 

Business Applications Software

 

Preferred Stock

 

 

39,318

 

 

 

90

 

 

 

90

 

Passport Labs, Inc.

 

Business Applications Software

 

Preferred Stock

 

 

17,448

 

 

 

228

 

 

 

228

 

Quantcast Corporation (5)

 

Business Applications Software

 

Cash Exit Fee

 

 

 

 

 

213

 

 

 

188

 

Toast, Inc. (2)

 

Business Applications Software

 

Preferred Stock

 

 

26,325

 

 

 

27

 

 

 

269

 

Total Business Applications Software  - 1.19%*

 

 

 

 

 

 

1,943,754

 

 

 

2,394

 

 

 

4,001

 

Business to Business Marketplace

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Factual, Inc. (2)

 

Business to Business Marketplace

 

Preferred Stock

 

 

23,536

 

 

 

43

 

 

 

43

 

Optoro, Inc. (2)

 

Business to Business Marketplace

 

Preferred Stock

 

 

10,346

 

 

 

40

 

 

 

37

 

RetailNext, Inc.

 

Business to Business Marketplace

 

Preferred Stock

 

 

123,420

 

 

 

80

 

 

 

111

 

Total Business to Business Marketplace  - 0.06%*

 

 

 

 

 

 

157,302

 

 

 

163

 

 

 

191

 

Conferencing Equipment / Services

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fuze, Inc. (fka Thinking Phone Networks, Inc.) (2)

 

Conferencing Equipment / Services

 

Preferred Stock

 

 

323,381

 

 

 

670

 

 

 

203

 

Total Conferencing Equipment / Services  - 0.06%*

 

 

 

 

 

 

323,381

 

 

 

670

 

 

 

203

 

Consumer Products and Services

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Clutter, Inc.

 

Consumer Products and Services

 

Preferred Stock

 

 

77,434

 

 

 

363

 

 

 

530

 

Quip NYC, Inc. (2)

 

Consumer Products and Services

 

Preferred Stock

 

 

33,017

 

 

 

364

 

 

 

364

 

Outdoor Voices, Inc.

 

Consumer Products and Services

 

Common Stock

 

 

255,000

 

 

 

360

 

 

 

360

 

Total Consumer Products and Services  - 0.37%*

 

 

 

 

 

 

365,451

 

 

 

1,087

 

 

 

1,254

 

Consumer Retail

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

LovePop, Inc.

 

Consumer Retail

 

Preferred Stock

 

 

163,463

 

 

 

168

 

 

 

168

 

Total Consumer Retail  - 0.05%*

 

 

 

 

 

 

163,463

 

 

 

168

 

 

 

168

 

Database Software

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Qubole, Inc. (2)

 

Database Software

 

Preferred Stock

 

 

88,422

 

 

 

41

 

 

 

41

 

Total Database Software  - 0.01%*

 

 

 

 

 

 

88,422

 

 

 

41

 

 

 

41

 

E-Commerce - Clothing and Accessories

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

FabFitFun, Inc.

 

E-Commerce - Clothing and Accessories

 

Preferred Stock

 

 

40,786

 

 

 

123

 

 

 

42

 

Outfittery GMBH (1) (2) (3) (5)

 

E-Commerce - Clothing and Accessories

 

Cash Exit Fee

 

 

 

 

 

501

 

 

 

477

 

Rent the Runway, Inc.

 

E-Commerce - Clothing and Accessories

 

Preferred Stock

 

 

88,037

 

 

 

213

 

 

 

428

 

Rent the Runway, Inc.

 

E-Commerce - Clothing and Accessories

 

Common Stock

 

 

149,203

 

 

 

1,081

 

 

 

1,277

 

Stance, Inc.

 

E-Commerce - Clothing and Accessories

 

Preferred Stock

 

 

75,000

 

 

 

41

 

 

 

70

 

Untuckit LLC (5)

 

E-Commerce - Clothing and Accessories

 

Cash Exit Fee

 

 

 

 

 

39

 

 

 

43

 

Total E-Commerce - Clothing and Accessories  - 0.69%*

 

 

 

 

 

 

353,026

 

 

 

1,998

 

 

 

2,337

 

E-Commerce - Personal Goods

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Enjoy Technology, Inc.

 

E-Commerce - Personal Goods

 

Preferred Stock

 

 

336,304

 

 

 

269

 

 

 

269

 

Grove Collaborative, Inc.

 

E-Commerce - Personal Goods

 

Preferred Stock

 

 

202,506

 

 

 

168

 

 

 

768

 

Total E-Commerce - Personal Goods  - 0.31%*

 

 

 

 

 

 

538,810

 

 

 

437

 

 

 

1,037

 

Educational/Training Software

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Varsity Tutors LLC (2) (5)

 

Educational/Training Software

 

Preferred Stock

 

 

240,590

 

 

 

65

 

 

 

185

 

Tangible Play, Inc.

 

Educational/Training Software

 

Preferred Stock

 

 

 

 

 

 

 

 

 

Total Educational/Training Software  - 0.05%*

 

 

 

 

 

 

240,590

 

 

 

65

 

 

 

185

 

Entertainment

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Mind Candy, Inc. (1) (3)

 

Entertainment

 

Preferred Stock

 

 

22,376

 

 

 

751

 

 

 

 

Roli, Ltd. (1) (2) (3)

 

Entertainment

 

Preferred Stock

 

 

102,247

 

 

 

644

 

 

 

626

 

Total Entertainment  - 0.19%*

 

 

 

 

 

 

124,623

 

 

 

1,395

 

 

 

626

 

Financial Institution and Services

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

BlueVine Capital, Inc.

 

Financial Institution and Services

 

Preferred Stock

 

 

271,293

 

 

 

361

 

 

 

757

 

Prodigy Finance Limited (1) (3)

 

Financial Institution and Services

 

Preferred Stock

 

 

40,596

 

 

 

766

 

 

 

766

 

Revolut Ltd. (1) (2) (3)

 

Financial Institution and Services

 

Preferred Stock

 

 

6,253

 

 

 

40

 

 

 

40

 

WorldRemit Limited (1) (3)

 

Financial Institution and Services

 

Preferred Stock

 

 

128,288

 

 

 

382

 

 

 

490

 

WorldRemit Limited (1) (3)

 

Financial Institution and Services

 

Preferred Stock

 

 

46,548

 

 

 

136

 

 

 

142

 

Total Financial Institution and Services  - 0.65%*

 

 

 

 

 

 

492,978

 

 

 

1,685

 

 

 

2,195

 

Food & Drug

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Capsule Corp. (2) (5)

 

Food & Drug

 

Cash Exit Fee

 

 

 

 

 

129

 

 

 

129

 

Total Food & Drug  - 0.04%*

 

 

 

 

 

 

 

 

 

129

 

 

 

129

 

General Media and Content

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

BZ Holdings, Inc. (fka TechMediaNetwork, Inc.) (2)

 

General Media and Content

 

Preferred Stock

 

 

72,234

 

 

 

31

 

 

 

38

 

Thrillist Media Group, Inc. (2)

 

General Media and Content

 

Common Stock

 

 

774,352

 

 

 

624

 

 

 

1,022

 

Total General Media and Content  - 0.31%*

 

 

 

 

 

 

846,586

 

 

 

655

 

 

 

1,060

 

Household & Office Goods

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Casper Sleep Inc.

 

Household & Office Goods

 

Preferred Stock

 

 

19,201

 

 

 

240

 

 

 

240

 

Total Household & Office Goods  - 0.07%*

 

 

 

 

 

 

19,201

 

 

 

240

 

 

 

240

 

Human Resources/Recruitment

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Hired, Inc. (2)

 

Human Resources/Recruitment

 

Preferred Stock

 

 

93,141

 

 

 

156

 

 

 

156

 

Total Human Resources/Recruitment  - 0.05%*

 

 

 

 

 

 

93,141

 

 

 

156

 

 

 

156

 

Medical Software and Information Services

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

AirStrip Technologies, Inc. (2)

 

Medical Software and Information Services

 

Preferred Stock

 

 

31,063

 

 

 

112

 

 

 

74

 

Total Medical Software and Information Services  - 0.02%*

 

 

 

 

 

 

31,063

 

 

 

112

 

 

 

74

 

Other Financial Services

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Upgrade, Inc.

 

Other Financial Services

 

Preferred Stock

 

 

744,225

 

 

 

223

 

 

 

223

 

Total Other Financial Services  - 0.07%*

 

 

 

 

 

 

744,225

 

 

 

223

 

 

 

223

 

See accompanying notes to condensed consolidated financial statements.

 

9


TRIPLEPOINT VENTURE GROWTH BDC CORP. AND SUBSIDIARIES

CONDENSED CONSOLIDATED SCHEDULE OF INVESTMENTS
(unaudited)

(dollars in thousands)

As of March 31, 2019

 

Venture Growth Stage Company

 

Industry

 

Type of Warrant

 

Shares

 

 

Cost (6)

 

 

Fair Value

 

Warrant Investments (8) (continued)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Real Estate Services

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Homelight, Inc. (2)

 

Real Estate Services

 

Preferred Stock

 

 

8,339

 

 

 

27

 

 

 

27

 

Sonder USA, Inc.

 

Real Estate Services

 

Preferred Stock

 

 

136,511

 

 

 

232

 

 

 

232

 

Total Real Estate Services  - 0.08%*

 

 

 

 

 

 

144,850

 

 

 

259

 

 

 

259

 

Security Services

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CrowdStrike, Inc. (2)

 

Security Services

 

Preferred Shares

 

 

99,344

 

 

 

72

 

 

 

1,113

 

Forgerock, Inc.

 

Security Services

 

Preferred Stock

 

 

195,992

 

 

 

155

 

 

 

670

 

Forgerock, Inc.

 

Security Services

 

Preferred Stock

 

 

161,724

 

 

 

340

 

 

 

340

 

Total Security Services  - 0.63%*

 

 

 

 

 

 

457,060

 

 

 

567

 

 

 

2,123

 

Social/Platform Software

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

ClassPass, Inc.

 

Social/Platform Software

 

Preferred Stock

 

 

84,507

 

 

 

281

 

 

 

281

 

Total Social/Platform Software  - 0.08%*

 

 

 

 

 

 

84,507

 

 

 

281

 

 

 

281

 

Travel & Leisure

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Inspirato, LLC (2)

 

Travel & Leisure

 

Preferred Units

 

 

1,994

 

 

 

37

 

 

 

22

 

GoEuro Corp. (1) (2)

 

Travel & Leisure

 

Preferred Units

 

 

2,362

 

 

 

65

 

 

 

64

 

Total Travel & Leisure  - 0.03%*

 

 

 

 

 

 

4,356

 

 

 

102

 

 

 

86

 

Wireless Communications Equipment

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cambridge Broadband Network Limited (1) (3)

 

Wireless Communications Equipment

 

Preferred Shares

 

 

33,000

 

 

 

95

 

 

 

 

Total Wireless Communications Equipment  - 0.00%*

 

 

 

 

 

 

33,000

 

 

 

95

 

 

 

 

Total Warrant Investments  - 5.35%*

 

 

 

 

 

 

 

 

 

$

13,616

 

 

$

18,040

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Venture Growth Stage Company

 

Industry

 

Type of Equity

 

Shares

 

 

Cost (6)

 

 

Fair Value

 

Equity Investments (2) (8)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Business Applications Software

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

MapR Technologies, Inc.

 

Business Applications Software

 

Preferred Stock

 

 

39,018

 

 

 

161

 

 

 

144

 

Convoy, Inc.

 

Business Applications Software

 

Preferred Stock

 

 

35,208

 

 

 

250

 

 

 

250

 

Total Business Applications Software  - 0.12%*

 

 

 

 

 

 

74,226

 

 

 

411

 

 

 

394

 

Communications Software

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pluribus Networks, Inc.

 

Communications Software

 

Preferred Stock

 

 

722,073

 

 

 

2,000

 

 

 

2,000

 

Total Communications Software  - 0.59%*

 

 

 

 

 

 

722,073

 

 

 

2,000

 

 

 

2,000

 

E-Commerce - Clothing and Accessories

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

FabFitFun, Inc.

 

E-Commerce - Clothing and Accessories

 

Preferred Stock

 

 

67,934

 

 

 

500

 

 

 

500

 

Total E-Commerce - Clothing and Accessories  - 0.15%*

 

 

 

 

 

 

67,934

 

 

 

500

 

 

 

500

 

E-Commerce - Personal Goods

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Grove Collaborative, Inc.

 

E-Commerce - Personal Goods

 

Preferred Stock

 

 

134,249

 

 

 

500

 

 

 

830

 

Total E-Commerce - Personal Goods  - 0.25%*

 

 

 

 

 

 

134,249

 

 

 

500

 

 

 

830

 

Educational/Training Software

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Varsity Tutors LLC

 

Educational/Training Software

 

Preferred Stock

 

 

92,470

 

 

 

250

 

 

 

249

 

Total Educational/Training Software  - 0.07%*

 

 

 

 

 

 

92,470

 

 

 

250

 

 

 

249

 

Financial Institution and Services

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GoGreenHost AB (1) (3)

 

Financial Institution and Services

 

Preferred Stock

 

 

1

 

 

 

2,134

 

 

 

1,764

 

Revolut Ltd. (1) (3)

 

Financial Institution and Services

 

Preferred Stock

 

 

25,920

 

 

 

292

 

 

 

664

 

Total Financial Institution and Services  - 0.72%*

 

 

 

 

 

 

25,921

 

 

 

2,426

 

 

 

2,428

 

Household & Office Goods

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Casper Sleep Inc.

 

Household & Office Goods

 

Preferred Stock

 

 

8,000

 

 

 

250

 

 

 

250

 

Casper Sleep Inc.

 

Household & Office Goods

 

Common Stock

 

 

26,669

 

 

 

750

 

 

 

740

 

Total Household & Office Goods  - 0.29%*

 

 

 

 

 

 

34,669

 

 

 

1,000

 

 

 

990

 

Network Systems Management Software

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cohesity Inc.

 

Network Systems Management Software

 

Preferred Stock

 

 

60,342

 

 

 

400

 

 

 

468

 

Total Network Systems Management Software  - 0.14%*

 

 

 

 

 

 

60,342

 

 

 

400

 

 

 

468

 

Security Services

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CrowdStrike, Inc.

 

Security Services

 

Preferred Stock

 

 

87,849

 

 

 

500

 

 

 

1,375

 

CrowdStrike, Inc.

 

Security Services

 

Common Stock

 

 

97,656

 

 

 

500

 

 

 

1,486

 

Total Security Services  - 0.85%*

 

 

 

 

 

 

185,505

 

 

 

1,000

 

 

 

2,861

 

Shopping Facilitators

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Farfetch UK Limited (1) (2) (3) (10)

 

Shopping Facilitators

 

Common Stock

 

 

148,851

 

 

 

170

 

 

 

4,003

 

Total Shopping Facilitators  - 1.19%*

 

 

 

 

 

 

148,851

 

 

 

170

 

 

 

4,003

 

Travel & Leisure

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Inspirato, LLC (1) (4)

 

Travel & Leisure

 

Preferred Units

 

 

1,948

 

 

 

250

 

 

 

257

 

GoEuro Corp. (1)

 

Travel & Leisure

 

Preferred Stock

 

 

2,362

 

 

 

300

 

 

 

279

 

Total Travel & Leisure  - 0.16%*

 

 

 

 

 

 

4,310

 

 

 

550

 

 

 

536

 

Total Equity Investments  - 4.53%*

 

 

 

 

 

 

 

 

 

$

9,207

 

 

$

15,259

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Investments in Portfolio Companies  - 135.73%* (11)

 

 

 

 

 

 

 

 

 

$

458,176

 

 

$

457,695

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Short-Term Investments (2)

 

 

 

 

 

 

 

 

 

Cost (6)

 

 

Fair Value

 

U.S. Treasury Bills

 

$50,000 Face Value, Maturity Date 4/4/2019, Yield to Maturity 2.30%

 

 

 

 

 

$

49,994

 

 

$

49,994

 

Total Short-Term Investments  - 14.83%*

 

 

 

 

 

 

 

 

 

$

49,994

 

 

$

49,994

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Investments  - 150.56%* (9)

 

 

 

 

 

 

 

 

 

$

508,170

 

 

$

507,689

 

 

10


______________

(1)

Investment is a non-qualifying asset under Section 55(a) of the Investment Company Act of 1940, as amended (the “1940 Act”). As of March 31, 2019, non-qualifying assets as a percentage of total assets were 27.1%.

(2)

As of March 31, 2019, these debt investments, warrant and equity investments, and short-term investments were not pledged as collateral as part of the Company’s revolving credit facility.

(3)

Entity is not domiciled in the United States and does not have its principal place of business in the United States.

(4)

Investment is owned by TPVG Investment LLC, a wholly owned taxable subsidiary of the Company.

(5)

Investment is a cash success fee or a cash exit fee payable on the consummation of certain trigger events.

(6)

Gross unrealized gains, gross unrealized losses, and net unrealized losses for federal income tax purposes totaled $12.7 million, $(13.2) million and $(0.5) million respectively. The tax cost of investments is $508.2 million.

(7)

Debt is on non-accrual status at March 31, 2019 and is therefore considered non-income producing.

(8)

Non-income producing investments.

(9)

Except for equity in one public company and the short-term investments in U.S. Treasury Bills, all investments were valued at fair value using Level 3 significant unobservable inputs as determined in good faith by the Company’s board of directors (the “Board”).

(10)

Entity is publicly traded and listed on New York Stock Exchange.

(11)

The Company generally acquires its investments in private transactions exempt from registration under the Securities Act of 1933, as amended (the “Securities Act”). These investments are generally subject to certain limitations on resale, and may be deemed to be “restricted securities” under the Securities Act.

(12)

During the period, Mind Candy Limited’s obligations under its financing arrangements with the Company became past due. The Company and Mind Candy are in the process of renegotiating the terms of the Company’s investment.

(13)

On February 28, 2019, Munchery, Inc. filed for bankruptcy protection under Chapter 11 of the United States Bankruptcy Code.

*

Value as a percentage of net assets.

 

See accompanying notes to condensed consolidated financial statements.

 

11


TRIPLEPOINT VENTURE GROWTH BDC CORP. AND SUBSIDIARIES

CONDENSED CONSOLIDATED SCHEDULE OF INVESTMENTS

(dollars in thousands)

As of December 31, 2018

 Venture Growth Stage Company

 

Industry

 

Type of Investment

 

Outstanding Principal

 

 

Cost (6)

 

 

Fair Value

 

 

Maturity Date

Debt Investments

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Biofuels / Biomass

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Harvest Power, Inc.

 

Biofuels / Biomass

 

Growth Capital Loan (7.00% interest rate, 9.00% EOT payment)

 

$

13,246

 

 

$

14,781

 

 

$

14,213

 

 

4/30/2020

Total Biofuels / Biomass  - 4.25%*

 

 

 

 

 

 

13,246

 

 

 

14,781

 

 

 

14,213

 

 

 

Building Materials/Construction Machinery

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

View, Inc.

 

Building Materials/Construction Machinery

 

Equipment Loan (Prime + 8.00% interest rate, 14.00% EOT payment)

 

 

11,419

 

 

 

11,648

 

 

 

11,706

 

 

6/30/2021

 

 

Building Materials/Construction Machinery

 

Equipment Loan (Prime + 8.00% interest rate, 14.00% EOT payment)

 

 

5,467

 

 

 

5,570

 

 

 

5,598

 

 

6/30/2021

 

 

Building Materials/Construction Machinery

 

Equipment Loan (Prime + 8.00% interest rate, 14.00% EOT payment)

 

 

7,575

 

 

 

7,682

 

 

 

7,721

 

 

7/31/2021

 

 

Building Materials/Construction Machinery

 

Equipment Loan (Prime + 8.00% interest rate, 14.00% EOT payment)

 

 

1,802

 

 

 

1,810

 

 

 

1,820

 

 

9/30/2021

 

 

Building Materials/Construction Machinery

 

Equipment Loan (Prime + 8.00% interest rate, 14.00% EOT payment)

 

 

2,326

 

 

 

2,319

 

 

 

2,330

 

 

11/30/2021

 

 

Building Materials/Construction Machinery

 

Equipment Loan (Prime + 8.00% interest rate, 14.00% EOT payment)

 

 

1,865

 

 

 

1,856

 

 

 

1,865

 

 

11/30/2021

 

 

Building Materials/Construction Machinery

 

Equipment Loan (Prime + 8.00% interest rate, 14.00% EOT payment)

 

 

2,724

 

 

 

2,701

 

 

 

2,715

 

 

12/31/2021

 

 

Building Materials/Construction Machinery

 

Equipment Loan (Prime + 8.00% interest rate, 14.00% EOT payment)

 

 

2,854

 

 

 

2,830

 

 

 

2,845

 

 

12/31/2021

Total Building Materials/Construction Machinery  - 10.94%*

 

 

 

 

36,032

 

 

 

36,416

 

 

 

36,600

 

 

 

Business Applications Software

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

FinancialForce.com, Inc.

 

Business Applications Software

 

Growth Capital Loan (Prime + 7.50% interest rate, 4.00% EOT payment)

 

 

15,000

 

 

 

15,043

 

 

 

15,600

 

 

12/31/2020

 

 

Business Applications Software

 

Growth Capital Loan (Prime + 7.50% interest rate, 4.00% EOT payment)

 

 

15,000

 

 

 

14,841

 

 

 

15,600

 

 

6/30/2021

 

 

Business Applications Software

 

Growth Capital Loan (Prime + 7.50% interest rate, 4.00% EOT payment)

 

 

15,000

 

 

 

14,695

 

 

 

15,600

 

 

9/30/2021

 

 

 

 

 

 

 

45,000

 

 

 

44,579

 

 

 

46,800

 

 

 

HI.Q, Inc.

 

Business Applications Software

 

Growth Capital Loan (11.00% interest rate, 2.00% EOT payment)

 

 

13,250

 

 

 

12,993

 

 

 

12,993

 

 

6/30/2023

MapR Technologies, Inc.

 

Business Applications Software

 

Equipment Lease  (8.25% interest rate, 10.00% EOT payment) (1)

 

 

6

 

 

 

18

 

 

 

18

 

 

1/31/2019

 

 

Business Applications Software

 

Equipment Lease  (8.25% interest rate, 10.00% EOT payment) (1)

 

 

382

 

 

 

507

 

 

 

507

 

 

6/30/2019

 

 

Business Applications Software

 

Equipment Loan (6.50% interest rate,10.00% EOT payment)

 

 

183

 

 

 

260

 

 

 

260

 

 

6/30/2019

 

 

Business Applications Software

 

Equipment Lease  (8.50% interest rate, 10.00% EOT payment) (1)

 

 

72

 

 

 

82

 

 

 

82

 

 

12/31/2019

 

 

Business Applications Software

 

Equipment Loan (6.75% interest rate,10.00% EOT payment)

 

 

115

 

 

 

140

 

 

 

140

 

 

10/31/2019

 

 

Business Applications Software

 

Equipment Lease  (8.75% interest rate, 10.00% EOT payment) (1)

 

 

282

 

 

 

305

 

 

 

305

 

 

4/30/2020

 

 

Business Applications Software

 

Equipment Loan (7.00% interest rate,10.00% EOT payment)

 

 

67

 

 

 

77

 

 

 

77

 

 

1/31/2020

 

 

Business Applications Software

 

Equipment Lease  (9.00% interest rate, 10.00% EOT payment) (1)

 

 

412

 

 

 

436

 

 

 

436

 

 

7/31/2020

 

 

Business Applications Software

 

Equipment Loan (7.00% interest rate,10.00% EOT payment)

 

 

458

 

 

 

504

 

 

 

504

 

 

4/30/2020

 

 

Business Applications Software

 

Equipment Lease  (9.00% interest rate, 10.00% EOT payment) (1)

 

 

379

 

 

 

393

 

 

 

393

 

 

10/31/2020

 

 

Business Applications Software

 

Equipment Loan (7.25% interest rate,10.00% EOT payment)

 

 

218

 

 

 

232

 

 

 

232

 

 

7/31/2020

 

 

Business Applications Software

 

Equipment Lease  (9.25% interest rate, 10.00% EOT payment) (1)

 

 

329

 

 

 

336

 

 

 

336

 

 

1/31/2021

 

 

Business Applications Software

 

Equipment Loan (7.50% interest rate,10.00% EOT payment)

 

 

138

 

 

 

143

 

 

 

143

 

 

10/31/2020

 

 

Business Applications Software

 

Equipment Lease  (9.50% interest rate, 10.00% EOT payment) (1)

 

 

503

 

 

 

509

 

 

 

509

 

 

4/30/2021

 

 

Business Applications Software

 

Equipment Loan (7.75% interest rate,10.00% EOT payment)

 

 

305

 

 

 

309

 

 

 

309

 

 

1/31/2021

 

 

Business Applications Software

 

Equipment Lease  (9.75% interest rate, 10.00% EOT payment) (1)

 

 

668

 

 

 

668

 

 

 

668

 

 

7/31/2021

 

 

Business Applications Software

 

Equipment Loan (10.0% interest rate)

 

 

418

 

 

 

418

 

 

 

418

 

 

 

 

 

 

 

 

 

 

4,935

 

 

 

5,337

 

 

 

5,337

 

 

 

OneSource Virtual, Inc.

 

Business Applications Software

 

Growth Capital Loan (Prime + 2.50% interest rate, 2.25% EOT payment)

 

 

10,000

 

 

 

10,125

 

 

 

10,125

 

 

3/31/2019

Passport Labs, Inc.

 

Business Applications Software

 

Growth Capital Loan (Prime + 4.25% interest rate, 5.25% EOT payment)

 

 

19,000

 

 

 

18,674

 

 

 

18,674

 

 

10/31/2022

Quantcast Corporation

 

Business Applications Software

 

Growth Capital Loan (Prime + 6.25% interest rate, 6.00% EOT payment)

 

 

15,000

 

 

 

15,008

 

 

 

15,083

 

 

3/31/2021

Total Business Applications Software  - 32.59%*

 

 

 

 

107,185

 

 

 

106,716

 

 

 

109,012

 

 

 

Consumer Products and Services

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Clutter, Inc.

 

Consumer Products and Services

 

Growth Capital Loan (Prime + 3.00% interest rate, 4.00% EOT payment)

 

 

6,303

 

 

 

6,151

 

 

 

6,151

 

 

10/31/2020

 

 

Consumer Products and Services

 

Growth Capital Loan (Prime + 4.50% interest rate, 4.00% EOT payment)

 

 

5,000

 

 

 

4,863

 

 

 

4,863

 

 

10/31/2021

 

 

Consumer Products and Services

 

Growth Capital Loan (Prime + 3.00% interest rate, 4.00% EOT payment)

 

 

1,391

 

 

 

1,352

 

 

 

1,352

 

 

12/31/2020

Total Consumer Products and Services  - 3.70%*

 

 

 

 

12,694

 

 

 

12,366

 

 

 

12,366

 

 

 

Consumer Retail

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

LovePop, Inc.

 

Consumer Retail

 

Growth Capital Loan (Prime + 4.75% interest rate, 6.75% EOT payment)

 

 

10,000

 

 

 

9,771

 

 

 

9,771

 

 

11/30/2021

Total Consumer Retail  - 2.92%*

 

 

 

 

 

 

10,000

 

 

 

9,771

 

 

 

9,771

 

 

 

Database Software

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

SimpliVity Corporation

 

Database Software

 

Equipment Lease (7.00% interest rate, 10.00% EOT payment) (1)

 

 

71

 

 

 

182

 

 

 

182

 

 

2/28/2019

 

 

Database Software

 

Equipment Lease (7.00% interest rate, 10.00% EOT payment) (1)

 

 

6

 

 

 

13

 

 

 

13

 

 

3/31/2019

Total Database Software  - 0.06%*

 

 

 

 

 

 

77

 

 

 

195

 

 

 

195

 

 

 

E-Commerce - Clothing and Accessorie

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

FabFitFun, Inc.

 

E-Commerce - Clothing and Accessories

 

Growth Capital Loan (10.50% interest rate, 6.00% EOT payment)

 

 

5,000

 

 

 

4,982

 

 

 

5,010

 

 

2/28/2021

Outfittery GMBH (1) (2) (3)

 

E-Commerce - Clothing and Accessories

 

Growth Capital Loan (12.25% interest rate, 9.00% EOT payment)

 

 

7,127

 

 

 

7,093

 

 

 

6,833

 

 

8/31/2021

 

 

E-Commerce - Clothing and Accessories

 

Growth Capital Loan (12.00% interest rate, 9.00% EOT payment)

 

 

2,360

 

 

 

2,280

 

 

 

2,212

 

 

6/30/2021

 

 

E-Commerce - Clothing and Accessories

 

Growth Capital Loan (12.75% interest rate, 9.00% EOT payment)

 

 

2,294

 

 

 

2,151

 

 

 

2,147

 

 

12/31/2021

 

 

 

 

 

 

 

11,781

 

 

 

11,524

 

 

 

11,192

 

 

 

Stance, Inc.

 

E-Commerce - Clothing and Accessories

 

Growth Capital Loan (Prime + 4.50% interest rate, 5.50% EOT payment)

 

 

2,000

 

 

 

1,991

 

 

 

1,991

 

 

4/30/2020

Untuckit LLC

 

E-Commerce - Clothing and Accessories

 

Growth Capital Loan (Prime + 4.00% interest rate, 4.50% EOT payment)

 

 

2,301

 

 

 

2,340

 

 

 

2,340

 

 

11/30/2019

 

 

E-Commerce - Clothing and Accessories

 

Growth Capital Loan (Prime + 4.00% interest rate, 4.50% EOT payment)

 

 

3,000

 

 

 

3,015

 

 

 

3,015

 

 

3/31/2020

 

 

E-Commerce - Clothing and Accessories

 

Growth Capital Loan (Prime + 4.75% interest rate, 4.50% EOT payment)

 

 

4,500

 

 

 

4,478

 

 

 

4,478

 

 

3/31/2020

 

 

 

 

 

 

 

9,801

 

 

 

9,833

 

 

 

9,833

 

 

 

Total E-Commerce - Clothing and Accessories  - 8.38%*

 

 

 

 

28,582

 

 

 

28,330

 

 

 

28,026

 

 

 

E-Commerce - Personal Goods

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Enjoy Technology, Inc.

 

E-Commerce - Personal Goods

 

Growth Capital Loan (Prime + 5.25% interest rate, 5.50% EOT payment)

 

 

10,000

 

 

 

9,692

 

 

 

9,692

 

 

9/30/2021

Grove Collaborative, Inc.

 

E-Commerce - Personal Goods

 

Growth Capital Loan (Prime + 1.00% interest rate, 0.25% EOT payment)

 

 

5,000

 

 

 

4,941

 

 

 

4,941

 

 

3/31/2019

Total E-Commerce - Personal Goods  - 4.37%*

 

 

 

 

15,000

 

 

 

14,633

 

 

 

14,633

 

 

 

Educational/Training Software

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Tangible Play, Inc.

 

Educational/Training Software

 

Growth Capital Loan (Prime + 5.00% interest rate, 5.75% EOT payment)

 

 

1,500

 

 

 

1,479

 

 

 

1,586

 

 

8/31/2021

Total Educational/Training Software  - 0.47%*

 

 

 

 

1,500

 

 

 

1,479

 

 

 

1,586

 

 

 

Entertainment

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Mind Candy Limited (1) (3)

 

Entertainment

 

Growth Capital Loan (11.00% PIK, 3.00% Cash, 9.50% EOT payment)

 

 

10,441

 

 

 

11,387

 

 

 

6,789

 

 

1/31/2019

Roli, Ltd. (1) (2) (3)

 

Entertainment

 

Growth Capital Loan (11.00% interest rate, 9.50% EOT payment)

 

 

10,732

 

 

 

10,462

 

 

 

9,867

 

 

5/31/2021

 

 

Entertainment

 

Growth Capital Loan (11.00% interest rate, 9.50% EOT payment)

 

 

1,342

 

 

 

1,308

 

 

 

1,233

 

 

5/31/2021

 

 

Entertainment

 

Growth Capital Loan (11.25% interest rate, 9.50% EOT payment)

 

 

1,325

 

 

 

1,281

 

 

 

1,222

 

 

7/31/2021

 

 

Entertainment

 

Revolver (Prime + 3.25% interest rate, 5.00% EOT payment)

 

 

129

 

 

 

129

 

 

 

124

 

 

6/30/2019

 

 

Entertainment

 

Revolver (Prime + 4.25% interest rate, 5.00% EOT payment)

 

 

1,898

 

 

 

1,898

 

 

 

1,827

 

 

6/30/2019

 

 

Entertainment

 

Revolver (Prime + 4.25% interest rate, 5.00% EOT payment)

 

 

4,556

 

 

 

4,556

 

 

 

4,403

 

 

6/30/2019

 

 

 

 

 

 

 

19,982

 

 

 

19,634

 

 

 

18,676

 

 

 

Total Entertainment  - 7.61%*

 

 

 

 

 

$

30,423

 

 

$

31,021

 

 

$

25,465

 

 

 

See accompanying notes to condensed consolidated financial statements.

 

12


TRIPLEPOINT VENTURE GROWTH BDC CORP. AND SUBSIDIARIES

CONDENSED CONSOLIDATED SCHEDULE OF INVESTMENTS
(dollars in thousands)

As of December 31, 2018

 

Venture Growth Stage Company

 

Industry

 

Type of Investment

 

Outstanding Principal

 

 

Cost (6)

 

 

Fair Value

 

 

Maturity Date

Debt Investments (continued)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Financial Institution and Services

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

BlueVine Capital, Inc.

 

Financial Institution and Services

 

Growth Capital Loan (9.25% interest rate, 3.05% EOT payment)

 

$

5,000

 

 

$

5,034

 

 

$

5,034

 

 

9/30/2019

 

 

Financial Institution and Services

 

Growth Capital Loan (9.25% interest rate, 3.05% EOT payment)

 

 

5,000

 

 

 

5,033

 

 

 

5,033

 

 

9/30/2019

 

 

 

 

 

 

 

10,000

 

 

 

10,067

 

 

 

10,067

 

 

 

Prodigy Finance Limited (1) (3)

 

Financial Institution and Services

 

Growth Capital Loan (Prime + 7.75% interest rate, 10.00% EOT payment)

 

 

18,000

 

 

 

18,174

 

 

 

18,174

 

 

12/31/2020

 

 

Financial Institution and Services

 

Growth Capital Loan (Prime + 7.75% interest rate, 10.00% EOT payment)

 

 

2,200

 

 

 

2,197

 

 

 

2,197

 

 

3/31/2021

 

 

Financial Institution and Services

 

Growth Capital Loan (Prime + 7.75% interest rate, 10.00% EOT payment)

 

 

3,300

 

 

 

3,249

 

 

 

3,249

 

 

7/31/2021

 

 

Financial Institution and Services

 

Growth Capital Loan (Prime + 7.75% interest rate, 10.00% EOT payment)

 

 

2,500

 

 

 

2,458

 

 

 

2,458

 

 

8/31/2021

 

 

Financial Institution and Services

 

Growth Capital Loan (Prime + 7.75% interest rate, 10.00% EOT payment)

 

 

1,500

 

 

 

1,471

 

 

 

1,471

 

 

9/30/2021

 

 

Financial Institution and Services

 

Growth Capital Loan (Prime + 7.75% interest rate, 10.00% EOT payment)

 

 

2,500

 

 

 

2,452

 

 

 

2,452

 

 

9/30/2021

 

 

Financial Institution and Services

 

Growth Capital Loan (Prime + 7.75% interest rate, 10.00% EOT payment)

 

 

6,000

 

 

 

5,845

 

 

 

5,845

 

 

11/30/2021

 

 

Financial Institution and Services

 

Growth Capital Loan (Prime + 7.75% interest rate, 10.00% EOT payment)

 

 

4,000

 

 

 

3,884

 

 

 

3,884

 

 

12/31/2021

 

 

 

 

 

 

 

40,000

 

 

 

39,730

 

 

 

39,730

 

 

 

WorldRemit Limited (1) (3)

 

Financial Institution and Services

 

Growth Capital Loan (Prime + 8.75% interest rate, 10.00% EOT payment)

 

 

5,000

 

 

 

5,371

 

 

 

5,371

 

 

6/30/2019

 

 

Financial Institution and Services

 

Growth Capital Loan (Prime + 8.75% interest rate, 10.00% EOT payment)

 

 

5,000

 

 

 

5,369

 

 

 

5,369

 

 

6/30/2019

 

 

Financial Institution and Services

 

Growth Capital Loan (Prime + 8.75% interest rate, 10.00% EOT payment)

 

 

5,000

 

 

 

5,260

 

 

 

5,260

 

 

11/30/2019

 

 

Financial Institution and Services

 

Growth Capital Loan (Prime + 8.75% interest rate, 10.00% EOT payment)

 

 

10,000

 

 

 

9,905

 

 

 

9,905

 

 

6/30/2021

 

 

 

 

 

 

 

25,000

 

 

 

25,905

 

 

 

25,905

 

 

 

Total Financial Institution and Services  - 22.63%*

 

 

 

 

75,000

 

 

 

75,702

 

 

 

75,702

 

 

 

Network Systems Management Software

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Virtual Instruments Corporation

 

Network Systems Management Software

 

Growth Capital Loan (10.00% interest rate)

 

 

5,000

 

 

 

5,000

 

 

 

5,000

 

 

4/4/2020

 

 

Network Systems Management Software

 

Growth Capital Loan (5.00% PIK interest rate)

 

 

24,215

 

 

 

24,215

 

 

 

21,762

 

 

4/4/2021

 

 

Network Systems Management Software

 

Growth Capital Loan (5.00% PIK interest rate)

 

 

4,732

 

 

 

4,732

 

 

 

3,605

 

 

4/4/2021

Total Network Systems Management Software  - 9.08%*

 

 

 

 

33,947

 

 

 

33,947

 

 

 

30,367

 

 

 

Real Estate Services

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sonder USA, Inc.

 

Real Estate Services

 

Growth Capital Loan (Prime + 5.75% interest rate, 5.25% EOT payment)

 

 

20,000

 

 

 

19,569

 

 

 

19,569

 

 

6/30/2022

Total Real Estate Services  - 5.85%*

 

 

 

 

 

 

20,000

 

 

 

19,569

 

 

 

19,569

 

 

 

Restaurant / Food Service

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Munchery, Inc. (2) (7)

 

Restaurant / Food Service

 

Growth Capital Loan (Prime + 8.25% PIK interest rate, 8.75% EOT payment)

 

 

2,589

 

 

 

2,729

 

 

 

1,802

 

 

6/30/2019

 

 

Restaurant / Food Service

 

Growth Capital Loan (Prime + 8.25% PIK interest rate)

 

 

300

 

 

 

300

 

 

 

198

 

 

6/30/2019

Total Restaurant / Food Service  - 0.60%*

 

 

 

 

2,889

 

 

 

3,029

 

 

 

2,000

 

 

 

Security Services

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Forgerock, Inc.

 

Security Services

 

Growth Capital Loan (Prime + 3.75% interest rate, 8.50% EOT payment)

 

 

3,252

 

 

 

3,978

 

 

 

3,978

 

 

9/30/2019

 

 

Security Services

 

Growth Capital Loan (Prime + 3.75% interest rate, 8.50% EOT payment)

 

 

2,473

 

 

 

2,780

 

 

 

2,780

 

 

2/29/2020

Total Security Services  - 2.02%*

 

 

 

 

 

 

5,725

 

 

 

6,758

 

 

 

6,758

 

 

 

Wireless Communications Equipment

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cambridge Broadband Network Limited (1) (3) (7)

 

Wireless Communications Equipment

 

Growth Capital Loan (Prime + 11.75% PIK interest rate)

 

 

6,701

 

 

 

6,701

 

 

 

6,093

 

 

12/31/2021

Eero, Inc.

 

Wireless Communications Equipment

 

Growth Capital Loan (Prime + 8.25% interest rate)

 

 

7,991

 

 

 

7,963

 

 

 

7,991

 

 

11/30/2019

 

 

Wireless Communications Equipment

 

Growth Capital Loan (Prime + 8.25% interest rate)

 

 

5,000

 

 

 

4,879

 

 

 

5,000

 

 

3/31/2021

 

 

 

 

 

 

 

12,991

 

 

 

12,842

 

 

 

12,991

 

 

 

Total Wireless Communications Equipment  - 5.70%*

 

 

 

 

19,692

 

 

 

19,543

 

 

 

19,084

 

 

 

Total Debt Investments  - 121.17%*

 

 

 

 

 

$

411,992

 

 

$

414,256

 

 

$

405,347

 

 

 

 

See accompanying notes to condensed consolidated financial statements.

 

13


TRIPLEPOINT VENTURE GROWTH BDC CORP. AND SUBSIDIARIES

CONDENSED CONSOLIDATED SCHEDULE OF INVESTMENTS
(dollars in thousands)

As of December 31, 2018

 

Venture Growth Stage Company

 

Industry

 

Type of Warrant

 

Shares

 

 

Cost (6)

 

 

Fair Value

 

Warrant Investments (8)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Advertising / Marketing

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

InMobi Pte Ltd. (1) (2) (3)

 

Advertising / Marketing

 

Ordinary Shares

 

 

48,500

 

 

$

35

 

 

$

104

 

Total Advertising / Marketing  - 0.03%*

 

 

 

 

 

 

48,500

 

 

 

35

 

 

 

104

 

Building Materials/Construction Machinery

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

View, Inc.

 

Building Materials/Construction Machinery

 

Preferred Stock

 

 

4,545,455

 

 

 

500

 

 

 

864

 

Total Building Materials/Construction Machinery  - 0.26%*

 

 

 

 

 

 

4,545,455

 

 

 

500

 

 

 

864

 

Business Applications Software

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

FinancialForce.com, Inc.

 

Business Applications Software

 

Preferred Stock

 

 

547,440

 

 

 

1,540

 

 

 

2,566

 

HI.Q, Inc.

 

Business Applications Software

 

Preferred Stock

 

 

606,952

 

 

 

196

 

 

 

196

 

Lattice Engines, Inc. (2)

 

Business Applications Software

 

Preferred Stock

 

 

396,652

 

 

 

48

 

 

 

95

 

MapR Technologies, Inc.

 

Business Applications Software

 

Preferred Stock

 

 

253,805

 

 

 

41

 

 

 

129

 

Medallia, Inc. (2)

 

Business Applications Software

 

Preferred Stock

 

 

55,814

 

 

 

11

 

 

 

80

 

OneSource Virtual, Inc.

 

Business Applications Software

 

Preferred Stock

 

 

39,318

 

 

 

90

 

 

 

90

 

Passport Labs, Inc.

 

Business Applications Software

 

Preferred Stock

 

 

17,448

 

 

 

228

 

 

 

228

 

Quantcast Corporation (5)

 

Business Applications Software

 

Cash Exit Fee

 

 

 

 

 

213

 

 

 

219

 

Toast, Inc. (2)

 

Business Applications Software

 

Preferred Stock

 

 

26,325

 

 

 

27

 

 

 

136

 

Total Business Applications Software  - 1.12%*

 

 

 

 

 

 

1,943,754

 

 

 

2,394

 

 

 

3,739

 

Business to Business Marketplace

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Factual, Inc. (2)

 

Business to Business Marketplace

 

Preferred Stock

 

 

23,536

 

 

 

43

 

 

 

43

 

Optoro, Inc. (2)

 

Business to Business Marketplace

 

Preferred Stock

 

 

10,346

 

 

 

40

 

 

 

37

 

RetailNext, Inc.

 

Business to Business Marketplace

 

Preferred Stock

 

 

123,420

 

 

 

80

 

 

 

80

 

Total Business to Business Marketplace  - 0.05%*

 

 

 

 

 

 

157,302

 

 

 

163

 

 

 

160

 

Conferencing Equipment / Services

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fuze, Inc. (fka Thinking Phone Networks, Inc.) (2)

 

Conferencing Equipment / Services

 

Preferred Stock

 

 

323,381

 

 

 

670

 

 

 

203

 

Total Conferencing Equipment / Services  - 0.06%*

 

 

 

 

 

 

323,381

 

 

 

670

 

 

 

203

 

Consumer Products and Services

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Clutter, Inc.

 

Consumer Products and Services

 

Preferred Stock

 

 

71,064

 

 

 

333

 

 

 

333

 

Quip NYC, Inc. (2)

 

Consumer Products and Services

 

Preferred Stock

 

 

33,017

 

 

 

364

 

 

 

364

 

Total Consumer Products and Services  - 0.21%*

 

 

 

 

 

 

104,081

 

 

 

697

 

 

 

697

 

Consumer Retail

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

LovePop, Inc.

 

Consumer Retail

 

Preferred Stock

 

 

163,463

 

 

 

168

 

 

 

168

 

Total Consumer Retail  - 0.05%*

 

 

 

 

 

 

163,463

 

 

 

168

 

 

 

168

 

Database Software

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Qubole, Inc. (2)

 

Database Software

 

Preferred Stock

 

 

88,422

 

 

 

41

 

 

 

41

 

Total Database Software  - 0.01%*

 

 

 

 

 

 

88,422

 

 

 

41

 

 

 

41

 

E-Commerce - Clothing and Accessories

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

FabFitFun, Inc.

 

E-Commerce - Clothing and Accessories

 

Preferred Stock

 

 

40,786

 

 

 

123

 

 

 

42

 

Outfittery GMBH (1) (2) (3) (5)

 

E-Commerce - Clothing and Accessories

 

Cash Exit Fee

 

 

 

 

 

501

 

 

 

486

 

Rent the Runway, Inc.

 

E-Commerce - Clothing and Accessories

 

Preferred Stock

 

 

88,037

 

 

 

213

 

 

 

512

 

Rent the Runway, Inc.

 

E-Commerce - Clothing and Accessories

 

Common Stock

 

 

149,203

 

 

 

1,081

 

 

 

1,280

 

Stance, Inc.

 

E-Commerce - Clothing and Accessories

 

Preferred Stock

 

 

75,000

 

 

 

41

 

 

 

70

 

Untuckit LLC (5)

 

E-Commerce - Clothing and Accessories

 

Cash Exit Fee

 

 

 

 

 

39

 

 

 

43

 

Total E-Commerce - Clothing and Accessories  - 0.73%*

 

 

 

 

 

 

353,026

 

 

 

1,998

 

 

 

2,433

 

E-Commerce - Personal Goods

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Enjoy Technology, Inc.

 

E-Commerce - Personal Goods

 

Preferred Stock

 

 

336,304

 

 

 

269

 

 

 

269

 

Grove Collaborative, Inc.

 

E-Commerce - Personal Goods

 

Preferred Stock

 

 

105,655

 

 

 

88

 

 

 

401

 

Total E-Commerce - Personal Goods  - 0.20%*

 

 

 

 

 

 

441,959

 

 

 

357

 

 

 

670

 

Educational/Training Software

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Varsity Tutors LLC (2) (5)

 

Educational/Training Software

 

Preferred Stock

 

 

240,590

 

 

 

65

 

 

 

185

 

Tangible Play, Inc.

 

Educational/Training Software

 

Preferred Stock

 

 

61,840

 

 

 

79

 

 

 

79

 

Total Educational/Training Software  - 0.08%*

 

 

 

 

 

 

302,430

 

 

 

144

 

 

 

264

 

Entertainment

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Mind Candy, Inc. (1) (3)

 

Entertainment

 

Preferred Stock

 

 

22,376

 

 

 

751

 

 

 

 

Roli, Ltd. (1) (2) (3)

 

Entertainment

 

Preferred Stock

 

 

102,247

 

 

 

644

 

 

 

612

 

Total Entertainment  - 0.18%*

 

 

 

 

 

 

124,623

 

 

 

1,395

 

 

 

612

 

Financial Institution and Services

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

BlueVine Capital, Inc.

 

Financial Institution and Services

 

Preferred Stock

 

 

271,293

 

 

 

361

 

 

 

757

 

Prodigy Finance Limited (1) (3)

 

Financial Institution and Services

 

Preferred Stock

 

 

40,596

 

 

 

766

 

 

 

766

 

Revolut Ltd. (1) (2) (3)

 

Financial Institution and Services

 

Preferred Stock

 

 

6,253

 

 

 

40

 

 

 

40

 

WorldRemit Limited (1) (3)

 

Financial Institution and Services

 

Preferred Stock

 

 

128,288

 

 

 

382

 

 

 

490

 

WorldRemit Limited (1) (3)

 

Financial Institution and Services

 

Preferred Stock

 

 

46,548

 

 

 

136

 

 

 

142

 

Total Financial Institution and Services  - 0.66%*

 

 

 

 

 

 

492,978

 

 

 

1,685

 

 

 

2,195

 

Food & Drug

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Capsule Corp. (2) (5)

 

Food & Drug

 

Cash Exit Fee

 

 

 

 

 

129

 

 

 

129

 

Total Food & Drug  - 0.04%*

 

 

 

 

 

 

 

 

 

129

 

 

 

129

 

General Media and Content

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

BZ Holdings, Inc. (fka TechMediaNetwork, Inc.) (2)

 

General Media and Content

 

Preferred Stock

 

 

72,234

 

 

 

31

 

 

 

38

 

Thrillist Media Group, Inc. (2)

 

General Media and Content

 

Common Stock

 

 

774,352

 

 

 

624

 

 

 

1,022

 

Total General Media and Content  - 0.32%*

 

 

 

 

 

 

846,586

 

 

 

655

 

 

 

1,060

 

Human Resources/Recruitment

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Hired, Inc. (2)

 

Human Resources/Recruitment

 

Preferred Stock

 

 

32,599

 

 

 

55

 

 

 

55

 

Total Human Resources/Recruitment  - 0.02%*

 

 

 

 

 

 

32,599

 

 

 

55

 

 

 

55

 

Medical Software and Information Services

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

AirStrip Technologies, Inc. (2)

 

Medical Software and Information Services

 

Preferred Stock

 

 

31,063

 

 

 

112

 

 

 

74

 

Total Medical Software and Information Services  - 0.02%*

 

 

 

 

 

 

31,063

 

 

 

112

 

 

 

74

 

Real Estate Services

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Homelight, Inc. (2)

 

Real Estate Services

 

Preferred Stock

 

 

8,339

 

 

 

27

 

 

 

27

 

Sonder USA, Inc.

 

Real Estate Services

 

Preferred Stock

 

 

136,511

 

 

 

232

 

 

 

232

 

Total Real Estate Services  - 0.08%*

 

 

 

 

 

 

144,850

 

 

 

259

 

 

 

259

 

 

See accompanying notes to condensed consolidated financial statements.

 

14


TRIPLEPOINT VENTURE GROWTH BDC CORP. AND SUBSIDIARIES

CONDENSED CONSOLIDATED SCHEDULE OF INVESTMENTS

(dollars in thousands)

As of December 31, 2018

 

Venture Growth Stage Company

 

Industry

 

Type of Warrant

 

Shares

 

 

Cost (6)

 

 

Fair Value

 

Warrant Investments (8) (continued)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Restaurant / Food Service

 

n

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Munchery, Inc.

 

Restaurant / Food Service

 

Preferred Stock

 

 

21,537

 

 

 

45

 

 

 

 

Total Restaurant / Food Service  - 0.00%*

 

 

 

 

 

 

21,537

 

 

 

45

 

 

 

 

Security Services

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CrowdStrike, Inc. (2)

 

Security Services

 

Preferred Shares

 

 

99,344

 

 

 

72

 

 

 

1,035

 

Forgerock, Inc.

 

Security Services

 

Preferred Stock

 

 

195,992

 

 

 

155

 

 

 

459

 

Total Security Services  - 0.45%*

 

 

 

 

 

 

295,336

 

 

 

227

 

 

 

1,494

 

Shopping Facilitators

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Farfetch UK Limited (1) (2) (3) (10)

 

Shopping Facilitators

 

Preferred Stock

 

 

189,995

 

 

 

170

 

 

 

1,996

 

Total Shopping Facilitators  - 0.60%*

 

 

 

 

 

 

189,995

 

 

 

170

 

 

 

1,996

 

Travel & Leisure

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Inspirato, LLC (2)

 

Travel & Leisure

 

Preferred Units

 

 

1,994

 

 

 

37

 

 

 

26

 

GoEuro Corp. (1) (2)

 

Travel & Leisure

 

Preferred Units

 

 

2,362

 

 

 

65

 

 

 

64

 

Total Travel & Leisure  - 0.03%*

 

 

 

 

 

 

4,356

 

 

 

102

 

 

 

90

 

Wireless Communications Equipment

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cambridge Broadband Network Limited (1) (3)

 

Wireless Communications Equipment

 

Preferred Shares

 

 

33,000

 

 

 

95

 

 

 

 

Eero, Inc.

 

Wireless Communications Equipment

 

Preferred Stock

 

 

94,806

 

 

 

114

 

 

 

-

 

Eero, Inc.

 

Wireless Communications Equipment

 

Cash Exit Fee (5)

 

 

 

 

 

77

 

 

 

207

 

 

 

 

 

 

 

 

94,806

 

 

 

191

 

 

 

207

 

Total Wireless Communications Equipment  - 0.06%*

 

 

 

 

 

 

127,806

 

 

 

286

 

 

 

207

 

Total Warrant Investments  - 5.24%*

 

 

 

 

 

 

 

 

 

$

12,287

 

 

$

17,514

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Venture Growth Stage Company

 

Industry

 

Type of Equity

 

Shares

 

 

Cost (6)

 

 

Fair Value

 

Equity Investments (2) (8)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Business Applications Software

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

MapR Technologies, Inc.

 

Business Applications Software

 

Preferred Stock

 

 

39,018

 

 

 

161

 

 

 

161

 

Convoy, Inc.

 

Business Applications Software

 

Preferred Stock

 

 

35,208

 

 

 

250

 

 

 

250

 

Total Business Applications Software  - 0.12%*

 

 

 

 

 

 

74,226

 

 

 

411

 

 

 

411

 

Communications Software

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pluribus Networks, Inc.

 

Communications Software

 

Preferred Stock

 

 

722,073

 

 

 

2,000

 

 

 

2,000

 

Total Communications Software  - 0.60%*

 

 

 

 

 

 

722,073

 

 

 

2,000

 

 

 

2,000

 

E-Commerce - Personal Goods

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Grove Collaborative, Inc.

 

E-Commerce - Personal Goods

 

Preferred Stock

 

 

134,249

 

 

 

500

 

 

 

830

 

Total E-Commerce - Personal Goods  - 0.25%*

 

 

 

 

 

 

134,249

 

 

 

500

 

 

 

830

 

Educational/Training Software

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Varsity Tutors LLC

 

Educational/Training Software

 

Preferred Stock

 

 

92,470

 

 

 

250

 

 

 

249

 

Total Educational/Training Software  - 0.07%*

 

 

 

 

 

 

92,470

 

 

 

250

 

 

 

249

 

Financial Institution and Services

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GoGreenHost AB (1) (3)

 

Financial Institution and Services

 

Preferred Stock

 

 

1

 

 

 

2,138

 

 

 

1,730

 

Revolut Ltd. (1) (3)

 

Financial Institution and Services

 

Preferred Stock

 

 

25,920

 

 

 

292

 

 

 

664

 

Total Financial Institution and Services  - 0.72%*

 

 

 

 

 

 

25,921

 

 

 

2,430

 

 

 

2,394

 

Household & Office Goods

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Casper Sleep Inc.

 

Household & Office Goods

 

Preferred Stock

 

 

8,000

 

 

 

250

 

 

 

251

 

Casper Sleep Inc.

 

Household & Office Goods

 

Common Stock

 

 

26,669

 

 

 

750

 

 

 

741

 

Total Household & Office Goods  - 0.30%*

 

 

 

 

 

 

34,669

 

 

 

1,000

 

 

 

992

 

Network Systems Management Software

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cohesity Inc.

 

Network Systems Management Software

 

Preferred Stock

 

 

60,342

 

 

 

400

 

 

 

468

 

Total Network Systems Management Software  - 0.14%*

 

 

 

 

 

 

60,342

 

 

 

400

 

 

 

468

 

Security Services

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CrowdStrike, Inc.

 

Security Services

 

Preferred Stock

 

 

87,849

 

 

 

500

 

 

 

1,297

 

CrowdStrike, Inc.

 

Security Services

 

Common Stock

 

 

97,656

 

 

 

500

 

 

 

1,378

 

Total Security Services  - 0.80%*

 

 

 

 

 

 

185,505

 

 

 

1,000

 

 

 

2,675

 

Travel & Leisure

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Inspirato, LLC (1) (4)

 

Travel & Leisure

 

Preferred Units

 

 

1,948

 

 

 

250

 

 

 

258

 

GoEuro Corp. (1)

 

Travel & Leisure

 

Preferred Stock

 

 

2,362

 

 

 

300

 

 

 

279

 

Total Travel & Leisure  - 0.16%*

 

 

 

 

 

 

4,310

 

 

 

550

 

 

 

537

 

Total Equity Investments  - 3.16%*

 

 

 

 

 

 

 

 

 

$

8,541

 

 

$

10,556

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Investments in Portfolio Companies  - 129.56%* (11)

 

 

 

 

 

 

 

 

 

$

435,084

 

 

$

433,417

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Short-Term Investments (2)

 

 

 

 

 

 

 

 

 

Cost (6)

 

 

Fair Value

 

U.S. Treasury Bills

 

$20,000 Face Value, Maturity Date 1/3/2019, Yield to Maturity 2.15%

 

 

 

 

 

$

19,999

 

 

$

19,999

 

Total Short-Term Investments  - 5.98%*

 

 

 

 

 

 

 

 

 

$

19,999

 

 

$

19,999

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Investments  - 135.54%* (9)

 

 

 

 

 

 

 

 

 

$

455,083

 

 

$

453,416

 

 


 

15


______________

(1)

Investment is a non-qualifying asset under Section 55(a) of the 1940 Act. As of December 31, 2018, non-qualifying assets as a percentage of total assets were 25.6%.

(2)

As of December 31, 2018, these debt investments, warrant and equity investments, and short-term investments were not pledged as collateral as part of the Company’s revolving credit facility.

(3)

Entity is not domiciled in the United States and does not have its principal place of business in the United States.

(4)

Investment is owned by TPVG Investment LLC, a wholly owned taxable subsidiary of the Company.

(5)

Investment is a cash success fee or a cash exit fee payable on the consummation of certain trigger events.

(6)

Gross unrealized gains, gross unrealized losses, and net unrealized losses for federal income tax purposes totaled $12.1 million, $(13.8) million and $(1.7) million respectively. The tax cost of investments is $455.1 million.

(7)

Debt is on non-accrual status at December 31, 2018 and is therefore considered non-income producing.

(8)

Non-income producing investments.

(9)

Except for warrants in one public company and the short-term investments in U.S. Treasury Bills, all investments were valued at fair value using Level 3 significant unobservable inputs as determined in good faith by the Board.

(10)

Entity is publicly traded and listed on New York Stock Exchange.

(11)

The Company generally acquires its investments in private transactions exempt from registration under the Securities Act. These investments are generally subject to certain limitations on resale, and may be deemed to be “restricted securities” under the Securities Act.

*

Value as a percentage of net assets.

 

See accompanying notes to condensed consolidated financial statements.

 

 

16


TRIPLEPOINT VENTURE GROWTH BDC CORP. AND SUBSIDIARIES

CONDENSED CONSOLIDATED SCHEDULES OF INVESTMENTS

(unaudited)

As of March 31, 2019 and as of December 31, 2018

NOTES TO CONDENSED CONSOLIDATED SCHEDULES OF INVESTMENTS

Notes applicable to the investments presented in the foregoing tables:

No investment represents a 5% or greater interest in any outstanding class of voting security of the portfolio company.

Notes applicable to the debt investments presented in the foregoing tables:

Interest rate is the annual interest rate on the debt investment and does not include any original issue discount, end-of-term (“EOT”) payment, or any additional fees related to the investments, such as deferred interest, commitment fees or prepayment fees.

For each debt investment tied to the Prime Rate, “Prime”, the current rate is 5.50% as of March 31, 2019.

The EOT payments are contractual and fixed interest payments due in cash at the maturity date of the loan, including upon prepayment, and are a fixed percentage of the original principal balance of the loan unless otherwise noted. The EOT payment is amortized and recognized as non-cash income over the loan or lease prior to its payment.

Some of the terms noted in the foregoing tables are subject to change based on certain events such as prepayments.

Notes applicable to the equipment leases presented in the foregoing tables:

At the end of the term of certain equipment leases, the lessee has the option to purchase the underlying assets at fair market value in certain cases subject to a cap, return the equipment or continue to finance the assets. The fair market values of the financed assets have been estimated as a percentage of original cost for purposes of the EOT payment value.

Notes applicable to the warrant investments presented in the foregoing tables:

Warrant investments are associated with funded debt instruments as well as certain commitments to provide future funding.

See accompanying notes to condensed consolidated financial statements.

 

17


TRIPLEPOINT VENTURE GROWTH BDC CORP. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2019
(unaudited)

 

Note 1. Organization

TriplePoint Venture Growth BDC Corp. (the “Company”), a Maryland corporation, was formed on June 28, 2013 and priced its initial public offering and commenced investment operations on March 5, 2014. The Company is structured as an externally-managed non-diversified, closed-end investment company that has elected to be treated as a business development company (“BDC”) under the Investment Company Act of 1940, as amended (the “1940 Act”). The Company has elected to be treated, and intends to qualify annually, as a regulated investment company (“RIC”) under Subchapter M of the Internal Revenue Code of 1986, as amended (the “Code”).

The Company was formed to expand the venture growth stage business segment of TriplePoint Capital LLC’s (“TPC”) investment platform. TPC is widely recognized as a leading global financing provider devoted to serving venture capital-backed companies with creative, flexible and customized debt financing, equity capital and complementary services throughout their lifespan. The Company’s investment objective is to maximize total return to stockholders primarily in the form of current income and, to a lesser extent, capital appreciation by primarily lending to venture growth stage companies focused in technology, life sciences and other high growth industries backed by TPC’s select group of leading venture capital investors. The Company is externally managed by TriplePoint Advisers LLC (the “Adviser”), which is registered as an investment adviser under the 1940 Act and is a wholly owned subsidiary of TPC. The Adviser is responsible for sourcing, reviewing and structuring investment opportunities, underwriting and performing due diligence on investments and monitoring the investment portfolio on an ongoing basis. The Adviser was organized in August 2013 and, pursuant to an investment advisory agreement entered into between the Company and the Adviser, the Company pays the Adviser a base management fee and an incentive fee for its services. The Company has also entered into an administration agreement with TriplePoint Administrator LLC (the “Administrator”), a wholly owned subsidiary of the Adviser, and pays fees and expenses for services provided.

The Company has two wholly owned subsidiaries: TPVG Variable Funding Company LLC (the “Financing Subsidiary”), a bankruptcy remote special purpose entity established for utilizing the Company’s revolving credit facility, and TPVG Investment LLC, an entity established for holding certain of the Company’s investments in order to benefit from the tax treatment of these investments and create a tax structure that is more advantageous with respect to the Company’s RIC tax treatment. These subsidiaries are consolidated in the financial statements of the Company.

Note 2. Significant Accounting Policies

Basis of Presentation and Principles of Consolidation

The accompanying interim condensed consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and pursuant to the requirements for reporting on Form 10-Q and Articles 6 and 10 of Regulation S-X. Accordingly, certain disclosures required by GAAP for the annual reporting of consolidated financial statements are omitted.

The condensed consolidated financial statements include the accounts of the Company and its consolidated subsidiaries. All adjustments and reclassifications that are necessary for the fair representation of financial results as of and for the periods presented have been included and all intercompany account balances and transactions have been eliminated.

Certain items in the prior period’s condensed consolidated financial statements have been reclassified to conform to the current period’s presentation. These reclassifications did not impact any prior amounts of reported total assets, total liabilities, net assets or results of operations.

These unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes contained in the Company’s Annual Report on Form 10-K filed with the U.S. Securities and Exchange Commission (“SEC”) on March 6, 2019.  

Note 3. Related Party Agreements and Transactions

Investment Advisory Agreement

In accordance with the Board approved investment advisory agreement (the “Advisory Agreement”), subject to the overall supervision of the Board and in accordance with the 1940 Act, the Adviser manages the day-to-day operations and provides investment advisory services to the Company. Under the terms of the Advisory Agreement, the Adviser:

 

18


 

determines the composition of the Company’s portfolio, the nature and timing of changes to the Company’s portfolio and the manner of implementing such changes;

 

identifies, evaluates and negotiates the structure of investments;

 

executes, closes, services and monitors investments;

 

determines the securities and other assets purchased, retained or sold;

 

performs due diligence on prospective investments; and

 

provides the Company with such other investment advisory, research and related services as the Company may, from time to time, reasonably require for the investment of its funds.

As consideration for the investment advisory and management services provided, and pursuant to the Advisory Agreement, the Company has agreed to pay the Adviser a fee consisting of two components—a base management fee and an incentive fee. The cost of both the base management fee and incentive fee is ultimately borne by the Company’s stockholders.

The base management fee is calculated at an annual rate of 1.75% of the Company’s average adjusted gross assets, including assets purchased with borrowed funds. For services rendered under the Advisory Agreement, the base management fee is payable quarterly in arrears. The base management fee is calculated based on the average value of the Company’s gross assets at the end of its two most recently completed calendar quarters. Such amount is appropriately adjusted (based on the actual number of days elapsed relative to the total number of days in such calendar quarter) for any share issuance or repurchases during a calendar quarter. Base management fees for any partial month or quarter are appropriately pro-rated.

The incentive fee, which provides the Adviser with a share of the income it generates for the Company, consists of two components— net investment income and net capital gains—which are largely independent of each other, and may result in one or both components payable in a given period.

Under the investment income component, the Company pays the Adviser 20.0% of the amount by which the Company’s pre-incentive fee net investment income for the quarter exceeds a hurdle rate of 2.0% (8.0% annualized) of the Company’s net assets at the end of the immediately preceding calendar quarter, subject to a “catch-up” provision pursuant to which the Adviser receives all of such income in excess of 2.0% but less than 2.5%, subject to a total return requirement. The effect of the “catch-up” provision is that, subject to the total return provision discussed below, if pre-incentive fee net investment income exceeds 2.5% in any calendar quarter, the Adviser receives 20.0% of the Company’s pre-incentive fee net investment income as if the 2.0% hurdle rate did not apply. The foregoing incentive fee is subject to a total return requirement, which provides that no incentive fee in respect of the Company’s pre-incentive fee net investment income is payable except to the extent that 20.0% of the cumulative net increase in net assets resulting from operations since the effective date of the Company’s election to be regulated as a BDC exceeds the cumulative incentive fees accrued and/or paid since the effective date of the Company’s election to be regulated as a BDC. In other words, any investment income incentive fee that is payable in a calendar quarter is limited to the lesser of (i) 20.0% of the amount by which the Company’s pre-incentive fee net investment income for such calendar quarter exceeds the 2.0% hurdle, subject to the “catch-up” provision and (ii) (x) 20.0% of the cumulative net increase in net assets resulting from operations since the effective date of the Company’s election to be regulated as a BDC minus (y) the cumulative incentive fees accrued and/or paid since the effective date of the Company’s election to be regulated as a BDC. For the foregoing purpose, the “cumulative net increase in net assets resulting from operations” is the sum of the Company’s pre-incentive fee net investment income, realized gains and losses and unrealized appreciation and depreciation since the effective date of the Company’s election to be regulated as a BDC. The Company elected to be regulated as a BDC under the 1940 Act on March 5, 2014.

Pre-incentive fee net investment income does not include any realized capital gains, realized capital losses or unrealized capital gains or losses. Because of the structure of the incentive fee, it is possible that the Company may pay an incentive fee in a quarter where it incurs a loss, subject to the total return requirement described in the preceding paragraph. For example, if the Company receives pre-incentive fee net investment income in excess of the quarterly minimum hurdle rate, the Company may pay the applicable incentive fee even if it has incurred a loss in that quarter due to realized and unrealized losses, subject to the total return requirement. The Company’s net investment income used to calculate this component of the incentive fee is also included in the amount of the Company’s assets used to calculate the 1.75% base management fee. These calculations are appropriately pro-rated for any period of less than three months and adjusted for any share issuance or repurchase during the current quarter.

Under the capital gains component of the incentive fee, the Company pays the Adviser at the end of each calendar year 20.0% of the Company’s aggregate cumulative realized capital gains from inception through the end of that year, computed net of aggregate cumulative realized capital losses and aggregate cumulative unrealized losses through the end of such year, less the aggregate amount of any previously paid capital gains incentive fees. For the foregoing purpose, the Company’s “aggregate cumulative realized capital gains” does not include any unrealized gains. It should be noted that the Company accrues an incentive fee for accounting purposes taking into account any unrealized gains in accordance with GAAP. The capital gains component of the incentive fee is not subject to any minimum return to stockholders. If such amount is negative, then no capital gains incentive fee is payable for such year. Additionally, if the Advisory Agreement is terminated as of a date that is not a calendar year end, the termination date will be treated as though it were a calendar year end for purposes of calculating and paying the capital gains incentive fee.

 

19


The base management fee accrued and payable, income incentive fee accrued and payable, and capital gains incentive fee accrued are included in the Company’s condensed consolidated financial statements and summarized in the table below. The Adviser has agreed to exclude U.S. Treasury Bills acquired at the end of each applicable quarter in the calculation of gross assets for purposes of determining its base management fee. The Company had cumulative realized and unrealized losses during the three months ended March 31, 2019 and March 31, 2018, and, as a result, no capital gains incentive fees were recorded for the three months ended March 31, 2019 and March 31, 2018.

 

Management and Incentive Fees

 

For the Three Months Ended March 31,

 

(in thousands)

 

2019

 

 

2018

 

Base management fee

 

$

1,761

 

 

$

1,528

 

Income incentive fee

 

$

2,479

 

 

$

1,487

 

Capital gains incentive fee

 

$

 

 

$

 

 

The table above presents the base management and incentive fees accrued during the period which are paid in the quarter after they are earned. During the three months ended March 31, 2019 and March 31, 2018, approximately $1.7 million and $1.5 million, respectively, of base management fees earned in prior periods were paid, and approximately $2.6 million and $1.1 million, respectively, of income incentive fees earned in prior periods were paid.

Administration Agreement

The Board approved administration agreement (the “Administration Agreement”) provides that the Administrator is responsible for furnishing the Company with office facilities and equipment and providing the Company with clerical, bookkeeping, recordkeeping services and other administrative services at such facilities. Under the Administration Agreement, the Administrator performs, or oversees, or arranges for, the performance of the Company’s required administrative services, which includes being responsible for the financial and other records which the Company is required to maintain and preparing reports to the Company’s stockholders and reports and other materials filed with the SEC and any other regulatory authority. In addition, the Administrator assists the Company in determining and publishing net asset value (“NAV”), overseeing the preparation and filing of the Company’s tax returns and printing and disseminating reports and other materials to the Company’s stockholders, and generally oversees the payment of the Company’s expenses and the performance of administrative and professional services rendered to the Company by others. Under the Administration Agreement, the Administrator also provides managerial assistance on the Company’s behalf to those companies that have accepted the Company’s offer to provide such assistance.

Payments under the Administration Agreement are equal to the Company’s allocable portion (subject to the review of the Board) of the Administrator’s overhead resulting from its obligations under the Administration Agreement, including rent and the allocable portion of the cost of the chief compliance officer and chief financial officer and their respective staffs. In addition, if requested to provide significant managerial assistance to the Company’s portfolio companies, the Administrator is paid an additional amount based on the services provided, which shall not exceed the amount the Company receives from such companies for providing this assistance. 

For the three months ended March 31, 2019 and 2018, expenses paid or payable by the Company to the Administrator under the Administration Agreement were approximately $0.4 million, respectively, of which approximately $23 thousand and $64 thousand, respectively, were paid or payable to third party service providers.

Note 4. Investments

The Company measures the fair value of its investments in accordance with Accounting Standards Codification Topic 820, Fair Value Measurements and Disclosure, or “ASC Topic 820”, issued by the Financial Accounting Standards Board, or “FASB”. ASC Topic 820 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.

The Valuation Committee of the Board is responsible for assisting the Board in valuing investments that are not publicly traded or for which current market values are not readily available. Investments for which market quotations are readily available are valued using market quotations, which are generally obtained from independent pricing services, broker-dealers or market makers. With respect to portfolio investments for which market quotations are not readily available, the Board, with the assistance of the Adviser and its senior investment team and independent valuation agents, is responsible for determining, in good faith, the fair value in accordance with the valuation policy approved by the Board. If more than one valuation method is used to measure fair value, the results are evaluated and weighted, as appropriate, considering the reasonableness of the range indicated by those results. The Adviser considers a range of fair values based upon the valuation techniques utilized and selects a value within that range that most accurately represents fair value based on current market conditions as well as other factors the Adviser’s senior investment team considers relevant. The Board determines fair value of its investments on at least a quarterly basis or at such other times when the Board feels it would be appropriate to do so given the circumstances. A determination of fair value involves subjective judgments and estimates and depends on the facts and circumstances present at each valuation date. Due to the inherent uncertainty of determining fair value of portfolio investments that do not have a readily available market value, fair value of investments may differ significantly from the values that would have been used had a readily available market value existed for such investments, and the differences could be material.

 

20


ASC Topic 820 specifies a hierarchy of valuation techniques based on whether the inputs to those valuation techniques are observable or unobservable. ASC Topic 820 also provides guidance regarding a fair value hierarchy, which prioritizes information used to measure fair value and the effect of fair value measurements on earnings and provides for enhanced disclosures determined by the level of information used in the valuation. In accordance with ASC Topic 820, these inputs are summarized in the three levels listed below.

Level 1—Valuations are based on quoted prices in active markets for identical assets or liabilities that are accessible at the measurement date.

Level 2—Valuations are based on quoted prices in markets that are not active or for which all significant inputs are observable, either directly or indirectly and model-based valuation techniques for which all significant inputs are observable.

Level 3—Valuations are based on inputs that are unobservable and significant to the overall fair value measurement. Level 3 assets and liabilities include financial instruments whose value is determined using pricing models incorporating significant unobservable inputs, such as discounted cash flow models and other similar valuations techniques. The valuation of Level 3 assets and liabilities generally requires significant management judgment due to the inability to observe inputs to valuation.

In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, an investment’s level within the fair value hierarchy is based on the lowest level of observable input that is significant to the fair value measurement. The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment, and it considers factors specific to the investment.

Under ASC 820, fair value measurement assumes that the transaction to sell an asset occurs in the principal market for the asset or, in the absence of a principal market, the most advantageous market for the asset, which may be a hypothetical market, excluding transaction costs. The principal market for any asset is the market with the greatest volume and level of activity for such asset in which the reporting entity would or could sell or transfer the asset. In determining the principal market for an asset or liability, it is assumed that the reporting entity has access to such market as of the measurement date. Market participants are defined as buyers and sellers in the principal or most advantageous market that are independent, knowledgeable and willing and able to transact.

With respect to investments for which market quotations are not readily available, the Board undertakes a multi-step valuation process each quarter, as described below:

 

The quarterly valuation process begins with each portfolio company or investment being initially valued by the Adviser’s professionals that are responsible for the portfolio investment;

 

Preliminary valuation conclusions are then documented and discussed with the Adviser’s senior investment team and approved by the Adviser’s executive management team;

 

At least once annually, the valuation for each portfolio investment is reviewed by an independent valuation firm. However, the Board does not have de minimis investments of less than 1.0% of the Company’s gross assets (up to an aggregate of 10% of the Company’s gross assets) independently reviewed, given the expenses involved in connection therewith;

 

The Valuation Committee of the Board then reviews these preliminary valuations and makes fair value recommendations to the Board; and

 

The Board then discusses valuations and determines the fair value of each investment in the Company’s portfolio in good faith, based on the input of the Adviser, the respective independent valuation firms and the Valuation Committee.

Debt Investments

The debt investments identified on the condensed consolidated schedules of investments are loans and equipment leases made to venture growth stage companies focused in technology, life sciences and other high growth industries which are backed by a select group of leading venture capital investors. These investments are considered Level 3 assets under ASC Topic 820 as there is no known or accessible market or market indices for these types of debt instruments and thus the Adviser’s senior management team must estimate the fair value of these investment securities based on models utilizing unobservable inputs.

To estimate the fair value of debt investments, the Company compares the cost basis of each debt investment, including any OID, to the resulting fair value determined using a discounted cash flow model, unless another model is more appropriate based on the circumstances at the measurement date. The discounted cash flow approach entails analyzing the interest rate spreads for recently completed financing transactions which are similar in nature to these debt investments, in order to determine a comparable range of effective market interest rates. The range of interest rate spreads utilized is based on borrowers with similar credit profiles. All remaining expected cash flows of the investment are discounted using this range of interest rates to determine a range of fair values for the debt investment.

The valuation process includes, among other things, evaluating the underlying investment performance of the portfolio company’s current financial condition and ability to raise additional capital, as well as macro-economic events that may impact valuations. These

 

21


events include, but are not limited to, current market yields and interest rate spreads of similar securities as of the measurement date. Changes in these unobservable inputs could result in significantly different fair value measurements.

Under certain circumstances, an alternative technique may be used to value certain debt investments that better reflect the fair value of the investment, such as the price paid or realized in a recently completed transaction or a binding offer received in an arm’s length transaction, or the use of multiple probability weighted cash flow models when the expected future cash flows contain elements of variability or estimates of proceeds that would be received in a liquidation scenario.

Warrant Investments

Warrant fair values are primarily determined using a Black Scholes option pricing model. Privately held warrants and equity-related securities are valued based on an analysis of various factors, including, but not limited to, those listed below. Increases or decreases in any of the unobservable inputs described below could result in a material change in fair value:

 

Underlying enterprise value of the issuer based on available information, including any information regarding the most recent financing round of borrower. Valuation techniques to determine enterprise value include market multiple approaches, income approaches or the use of recent rounds of financing and the portfolio company’s capital structure. Valuation techniques are also utilized to allocate the enterprise fair value of a portfolio company to the specific class of common or preferred stock exercisable in the warrant. Such techniques take into account the rights and preferences of the portfolio company’s securities, expected exit scenarios, and volatility associated with such outcomes to allocate the fair value to the specific class of stock held in the portfolio. Such techniques include option pricing models, including back solve techniques, probability weighted expected return models and other techniques determined to be appropriate.

 

Volatility, or the amount of uncertainty or risk about the size of the changes in the warrant investment price, is based on comparable publicly traded companies within indices similar in nature to the underlying company issuing the warrant.

 

The risk-free interest rates are derived from the U.S. Treasury yield curve. The risk-free interest rates are calculated based on a weighted average of the risk-free interest rates that correspond closest to the expected remaining life of the warrant investment.

 

Other adjustments, including a marketability discount on private company warrant investments, are estimated based on the Adviser’s judgment about the general industry environment.

 

Historical portfolio experience on cancellations and exercises of warrant investments are utilized as the basis for determining the estimated life of the warrant investment in each financial reporting period. Warrant investments may be exercised in the event of acquisitions, mergers or initial public offerings, and cancelled due to events such as bankruptcies, restructuring activities or additional financings. These events cause the expected remaining life assumption to be shorter than the contractual term of the warrant investment.

Under certain circumstances alternative techniques may be used to value certain warrants that more accurately reflect the warrants’ fair values, such as an expected settlement of a warrant in the near term, a model that incorporates a put feature associated with the warrant, or the price paid or realized in a recently completed transaction or binding offer received in an arm’s-length transaction. The fair value may be determined based on the expected proceeds to be received from such settlement or based on the net present value of the expected proceeds from the put option.

These valuation methodologies involve a significant degree of judgment. There is no single standard for determining the estimated fair value of investments that do not have an active observable market. Valuations of privately held investments are inherently uncertain, as they are based on estimates, and their values may fluctuate over time. The determination of fair value may differ materially from the values that would have been used if an active market for these investments existed. In some cases, the fair value of such investments is best expressed as a range of values derived utilizing different methodologies from which a single estimate may then be determined.

Equity Investments

The fair value of an equity investment in a privately held company is initially the amount invested. The Company adjusts the fair value of equity investments in private companies upon the completion of a new third party round of equity financing subsequent to its investment. The Company may adjust the fair value of an equity investment absent a new equity financing event based upon positive or negative changes in a portfolio company’s financial or operational performance. The Company may also reference comparable transactions and/or secondary market transactions of comparable companies to estimate fair value. These valuation methodologies involve a significant degree of judgment.

The fair value of an equity investment in a publicly traded company is based upon the closing public share price on the date of measurement. These assets are recorded at fair value on a recurring basis. There is no single standard for determining the estimated fair value of investments which do not have an active public market. Valuations of privately held investments are inherently uncertain, as they are based on estimates, and their values may fluctuate over time. The determination of fair value may differ materially from the values that would have been used if an active market for these investments existed. In some cases, the fair value of such investments is best expressed as a range of values derived utilizing different methodologies from which a single estimate may then be determined.

 

22


Investment Valuation

Investments measured at fair value on a recurring basis are categorized in the tables below based upon the lowest level of significant input to the valuations as of March 31, 2019 and as of December 31, 2018. The Company transfers investments in and out of Level 1, 2 and 3 as of the beginning balance sheet date, based on changes in the use of observable and unobservable inputs utilized to perform the valuation for the period.

 

Investment Type

 

As of March 31, 2019

 

(in thousands)

 

Level 1

 

 

Level 2

 

 

Level 3

 

 

Total

 

Debt investments

 

$

 

 

$

 

 

$

424,396

 

 

$

424,396

 

Warrant investments

 

 

 

 

 

 

 

 

18,040

 

 

 

18,040

 

Equity investments

 

 

4,003

 

 

 

 

 

 

11,256

 

 

 

15,259

 

Short-term investments

 

 

49,994

 

 

 

 

 

 

 

 

 

49,994

 

Total investments

 

$

53,997

 

 

$

 

 

$

453,692

 

 

$

507,689

 

 

Investment Type

 

As of December 31, 2018

 

(in thousands)

 

Level 1

 

 

Level 2

 

 

Level 3

 

 

Total

 

Debt investments

 

$

 

 

$

 

 

$

405,347

 

 

$

405,347

 

Warrant investments

 

 

 

 

 

1,996

 

 

 

15,518

 

 

 

17,514

 

Equity investments

 

 

 

 

 

 

 

 

10,556

 

 

 

10,556

 

Short-term investments

 

 

19,999

 

 

 

 

 

 

 

 

 

19,999

 

Total investments

 

$

19,999

 

 

$

1,996

 

 

$

431,421

 

 

$

453,416

 

 The following tables present information about Level 3 investments measured at fair value for the three months ended March 31, 2019 and March 31, 2018. Both observable and unobservable inputs were used to determine the fair value of positions that the Company has classified within the Level 3 category. As a result, the net unrealized gains and losses for assets within the Level 3 category may include changes in fair value that were attributable to both observable (e.g., changes in market interest rates) and unobservable (e.g., changes in unobservable long-dated volatilities) inputs. 

Level 3

 

For the Three Months Ended March 31, 2019

 

Investment Activity (in thousands)

 

Debt Investments

 

 

Warrant Investments

 

 

Equity Investments

 

 

Total Investments

 

Fair value as of January 1, 2019

 

$

405,347

 

 

$

15,518

 

 

$

10,556

 

 

$

431,421

 

Funding and purchases of investments, at cost

 

 

87,641

 

 

 

1,322

 

 

 

666

 

 

 

89,629

 

Principal payments and sale proceeds received from investments

 

 

(70,550

)

 

 

 

 

 

 

 

 

(70,550

)

Amortization and accretion of premiums and discounts, net and end-of-term payments

 

 

3,235

 

 

 

 

 

 

 

 

 

3,235

 

Realized gains (losses) on investments

 

 

 

 

 

7

 

 

 

 

 

 

7

 

Net change in unrealized gains (losses) included in earnings

 

 

(2,048

)

 

 

1,193

 

 

 

4,037

 

 

 

3,182

 

Payment-in-kind coupon

 

 

771

 

 

 

 

 

 

 

 

 

771

 

Gross transfers out of Level 3 (1)

 

 

 

 

 

 

 

 

(4,003

)

 

 

(4,003

)

Totals

 

$

424,396

 

 

$

18,040

 

 

$

11,256

 

 

$

453,692

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net change in unrealized gains (losses) on Level 3 investments held as of March 31, 2019

 

$

(2,334

)

 

$

1,023

 

 

$

4,037

 

 

$

2,726

 

_______________

(1)

Transfers out of Level 3 are measured as of the date of the transfer. During the three months ended March 31, 2019, these transfers relate to an equity investment in a publicly traded company.

Level 3

 

For the Three Months Ended March 31, 2018

 

Investment Activity (dollars in thousands)

 

Debt Investments

 

 

Warrant Investments

 

 

Equity Investments

 

 

Total Investments

 

Fair value as of January 1, 2018

 

$

352,052

 

 

$

11,062

 

 

$

7,969

 

 

$

371,083

 

Fundings of investments, at cost

 

 

36,966

 

 

 

615

 

 

 

250

 

 

 

37,831

 

Principal payments and sale proceeds received from investments

 

 

(14,224

)

 

 

 

 

 

 

 

 

(14,224

)

Amortization and accretion of premiums and discounts, net and end-of-term payments

 

 

2,950

 

 

 

 

 

 

 

 

 

2,950

 

Realized gains (losses) on investments

 

 

 

 

 

 

 

 

 

 

 

 

Net change in unrealized gains (losses) included in earnings

 

 

1,957

 

 

 

(539

)

 

 

38

 

 

 

1,456

 

Payment-in-kind coupon

 

 

605

 

 

 

 

 

 

 

 

 

605

 

Totals

 

$

380,306

 

 

$

11,138

 

 

$

8,257

 

 

$

399,701

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net change in unrealized gains (losses) on Level 3 investments held as of March 31, 2018

 

$

2,287

 

 

$

(539

)

 

$

38

 

 

$

1,786

 

 

 


 

23


Realized gains and losses are included as a component of net realized gains (losses) in the condensed consolidated statements of operations.

During the three months ended March 31, 2019, the Company recognized net realized losses on investments of approximately $(29) thousand, as a result of changes in foreign currency between the time of investment and liquidation. During the three months ended March 31, 2018, the Company recognized net realized gains on investments of $8 thousand, as a result of changes in foreign currency between the time of investment and liquidation.

Unrealized gains and losses are included in net change in unrealized gains (losses) on investments in the condensed consolidated statements of operations. 

Net change in unrealized appreciation during the three months ended March 31, 2019 was approximately $1.2 million, which primarily consisted of $3.6 million of net unrealized appreciation on the investment portfolio related to mark to market activity, offset by the reversal and recognition of previously recorded net unrealized appreciation of $2.4 million into income or realized gains due to the disposition of four portfolio companies. Net change in unrealized gains during the three months ended March 31, 2018 was approximately $2.0 million, which consisted of net unrealized appreciation of $2.0 million and $0.5 million related to debt investments and equity investments, respectively, offset by net unrealized depreciation of $0.5 million from warrant investments.

For the three months ended March 31, 2019, the Company recognized approximately $0.3 million, in other income consisting of approximately $0.1 million, from the termination or expiration of unfunded commitments and approximately $0.2 million from amortization of certain fees paid by portfolio companies and other income. For the three months ended March 31, 2018, the Company recognized approximately $3 thousand in other income, from the recognition of certain fees paid by portfolio companies and other income.

The following tables provide a summary of quantitative information about the Level 3 fair value measurements of investments as of March 31, 2019 and December 31, 2018. In addition to the techniques and inputs noted in the tables below, the Company may also use other valuation techniques and methodologies when determining fair value measurements.

Level 3 Investments

 

As of March 31, 2019

 

(dollars in thousands)

 

Fair Value

 

 

Valuation Technique

 

Unobservable Inputs

 

Range

 

 

Weighted Average

 

Debt investments

 

$

408,831

 

 

Discounted Cash Flows

 

Discount Rate

 

9.77% - 90.14%

 

 

16.57%

 

 

 

 

15,565

 

 

Probability-Weighted Expected Return Method

 

Probability Weighting of Alternative Outcomes

 

33.33% -75.00%

 

 

 

 

 

Warrant investments

 

 

15,850

 

 

Black Scholes Option Pricing Model

 

Revenue Multiples

 

0.90x - 9.50x

 

 

3.99x

 

 

 

 

 

 

 

 

 

Volatility

 

37.50% - 80.00%

 

 

58.63%

 

 

 

 

 

 

 

 

 

Term

 

1.00– 4.50 Years

 

 

2.69 Years

 

 

 

 

 

 

 

 

 

Discount for Lack of

Marketability

 

0.00% - 25.00%

 

 

18.92%

 

 

 

 

 

 

 

 

 

Risk Free Rate

 

2.20% - 2.50%

 

 

2.27%

 

 

 

 

1,353

 

 

Option-Pricing Method and Probability-Weighted Expected Return Method

 

Weighted Average Cost

of Capital

 

26.40% - 27.50%

 

 

26.73%

 

 

 

 

 

 

 

 

 

Term

 

1.50 - 4.50 Years

 

 

2.40 Years

 

 

 

 

837

 

 

Discounted Expected Return

 

Discount Rate

 

18.00% - 22.50%

 

 

19.40%

 

 

 

 

 

 

 

 

 

Term

 

2.80 - 4.00 Years

 

 

3.40 Years

 

 

 

 

 

 

 

 

 

Expected Recovery Rate

 

50.00% - 80.00%

 

 

71.40%

 

Equity investments

 

 

5,641

 

 

Black Scholes Option Pricing Model

 

Revenue Multiples

 

1.00x - 9.50x

 

 

6.67x

 

 

 

 

 

 

 

 

 

Volatility

 

37.50% - 80.00%

 

 

55.50%

 

 

 

 

 

 

 

 

 

Term

 

1.50 - 4.50 Years

 

 

2.42 Years

 

 

 

 

 

 

 

 

 

Discount for Lack of

Marketability

 

0.00% - 4.20%

 

 

4.20%

 

 

 

 

 

 

 

 

 

Risk Free Rate

 

2.20% - 2.30%

 

 

2.26%

 

 

 

 

3,851

 

 

Option-Pricing Method and Probability-Weighted Expected Return Method

 

Weighted Average Cost

of Capital

 

23.10% - 32.50%

 

 

26.43%

 

 

 

 

 

 

 

 

 

Term

 

1.50 - 4.50 Years

 

 

2.73 Years

 

 

 

 

1,764

 

 

Discounted Expected Recovery

 

Expected Recovery Rate

 

73.00%

 

 

73.00%

 

Total investments

 

$

453,692

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

24


Level 3 Investments

 

As of December 31, 2018

 

(dollars in thousands)

 

Fair Value

 

 

Valuation Technique

 

Unobservable Inputs

 

Range

 

 

Weighted Average

 

Debt investments

 

$

390,465

 

 

Discounted Cash Flows

 

Discount Rate

 

9.80% - 43.66%

 

 

16.07%

 

 

 

$

14,882

 

 

Probability-Weighted Expected Return Method

 

Probability Weighting of Alternative Outcomes

 

33.33% -75.00%

 

 

 

 

 

Warrant investments

 

 

13,399

 

 

Black Scholes Option Pricing Model

 

Revenue Multiples

 

0.90x - 10.00x

 

 

4.01x

 

 

 

 

 

 

 

 

 

Volatility

 

40.00% - 75.00%

 

 

57.81%

 

 

 

 

 

 

 

 

 

Term

 

1.00– 4.00 Years

 

 

2.67 Years

 

 

 

 

 

 

 

 

 

Discount for Lack of Marketability

 

0.00% - 22.70%

 

 

16.36%

 

 

 

 

 

 

 

 

 

Risk Free Rate

 

2.40% - 3.00%

 

 

2.52%

 

 

 

 

1,035

 

 

Option-Pricing Method and Probability-Weighted Expected Return Method

 

Weighted Average Cost of Capital

 

26.40%

 

 

26.40%

 

 

 

 

 

 

 

 

 

Term

 

1.50 Years

 

 

1.50 Years

 

 

 

 

1,084

 

 

Discounted Expected Return

 

Discount Rate

 

18.00% - 25.00%

 

 

19.21%

 

 

 

 

 

 

 

 

 

Term

 

0.50 - 4.00 Years

 

 

2.68 Years

 

 

 

 

 

 

 

 

 

Expected Recovery Rate

 

50.00% - 80.00%

 

 

72.23%

 

Equity investments

 

 

5,159

 

 

Black Scholes Option Pricing Model

 

Revenue Multiples

 

1.00x - 9.00x

 

 

6.15x

 

 

 

 

 

 

 

 

 

Volatility

 

44.00% - 80.00%

 

 

56.00%

 

 

 

 

 

 

 

 

 

Term

 

1.50 - 4.50 Years

 

 

2.40 Years

 

 

 

 

 

 

 

 

 

Discount for Lack of Marketability

 

0.00% - 6.10%

 

 

6.10%

 

 

 

 

 

 

 

 

 

Risk Free Rate

 

2.47% - 2.60%

 

 

2.52%

 

 

 

 

3,667

 

 

Option-Pricing Method and Probability-Weighted Expected Return Method

 

Weighted Average Cost of Capital

 

21.40% - 32.50%

 

 

25.59%

 

 

 

 

 

 

 

 

 

Term

 

1.50 - 4.50 Years

 

 

2.78 Years

 

 

 

 

1,730

 

 

Discounted Expected Recovery

 

Expected Recovery Rate

 

71.00%

 

 

71.00%

 

Total investments

 

$

431,421

 

 

 

 

 

 

 

 

 

 

 

 

 

As of March 31, 2019 the fair values for all but three of the Company’s debt investments were estimated using discounted cash flow models based on anticipated cash flows and a discount rate deemed most appropriate for each investment given the facts and circumstances specific to each portfolio company and market yields as of the reporting date. The fair value for three debt investments as of March 31, 2019 were estimated using a Probability-Weighted Expected Return Method. As of March 31, 2019, fair values for all but six warrant investment positions were estimated using an Option-Pricing Method that values individual equity classes based on their economic rights and preferences using the Black Scholes Option-Pricing Model. Two warrant investments were valued using a combination of the Option-Pricing Method and the Probability-Weighted Expected Return Method. Four investments contain fee conditions which may result in cash proceeds to the Company upon a qualifying liquidity event. These investments were valued using a discounted expected return method. As of March 31, 2019, all but four equity investments were valued using the market approach or the last equity financing round. The fair market value for two investments as of March 31, 2019 were derived based on a combination of the Option-Pricing Method and the Probability-Weighted Expected Return Method. The fair values for two investments as of March 31, 2019 were based on time discounted expected recovery.

As of December 31, 2018, the fair values for all but four of the Company’s debt investments were estimated using discounted cash flow models based on anticipated cash flows and a discount rate deemed most appropriate for each investment given the facts and circumstances specific to each portfolio company and market yields as of the reporting date. The fair values of the four debt investments as of December 31, 2018 were estimated using the Probability-Weighted Expected Return Method. As of December 31, 2018, fair values for all but one warrant investment positions were estimated using an Option-Pricing Method that values individual equity classes based on their economic rights and preferences using the Black Scholes Option-Pricing Model. One warrant investment position was valued using a combination of the Option-Pricing Method and the Probability-Weighted Expected Return Method. Certain investments within the portfolio contain fee conditions which may result in cash proceeds to the Company upon a qualifying liquidity event. These fees were valued using a discounted expected return method. As of December 31, 2018, all but five equity investments were valued using the market approach or the last equity financing round. The fair market values for four investments as of December 31, 2018 were derived based on a combination of the Option-Pricing Method and the Probability-Weighted Expected Return Method. The fair market value for one investment as of December 31, 2018 was based on time discounted expected recovery.

As of March 31, 2019 and December 31, 2018, approximately $406.6 million and $385.9 million of the Company’s assets were pledged for borrowings under its revolving credit facility, respectively.

Note 5. Credit Risk

Debt investments may be affected by business, financial market or legal uncertainties. Prices of investments may be volatile, and a variety of factors that are inherently difficult to predict, such as domestic, economic and political developments, may significantly affect the value of these investments. In addition, the value of these investments may fluctuate as the general level of interest rates fluctuate.

 

25


In many instances, the portfolio company’s ability to repay the debt investments is dependent on additional funding by its venture capital investors, a future sale or an initial public offering. The value of these investments may be detrimentally affected to the extent a borrower defaults on its obligations, there is insufficient collateral and/or there are extensive legal and other costs incurred in collecting on a defaulted loan.

Note 6. Borrowings

Revolving Credit Facility

In February 2014, the Company, along with its Financing Subsidiary as borrower, entered into a credit agreement with Deutsche Bank AG, acting as administrative agent and a lender, and KeyBank National Association, TIAA Bank, and AloStar Bank of Commerce, as other lenders, which provided the Company with a $150.0 million commitment, subject to borrowing base requirements (as amended and restated from time to time, the “Revolving Credit Facility”). In August 2014, the Company amended the Revolving Credit Facility to increase the total commitments available thereunder to $200.0 million in aggregate. In January 2018, the Company amended and renewed the Revolving Credit Facility, which, among other things, increased the total commitment by $10.0 million to $210.0 million and replaced AloStar Bank of Commerce with MUFG Union Bank, N.A as a lender.

Effective as of January 2018, borrowings under the Revolving Credit Facility bear interest at the sum of (i) a floating rate based on certain indices, including LIBOR and commercial paper rates, plus (ii) a margin of 2.80% if facility utilization is greater than or equal to 75%, 2.90% if utilization is greater than or equal to 50%, 3.00% if utilization is less than 50% and 4.5% during the amortization period. Borrowings under the Revolving Credit Facility are secured only by the assets of the Financing Subsidiary. The Company agreed to pay Deutsche Bank AG a syndication fee and to pay to Deutsche Bank AG a fee to act as administrative agent under the Revolving Credit Facility as well as to pay each lender (i) a commitment fee based on each lender’s commitment and (ii) a fee of approximately 0.50% per annum for any unused borrowings under the Revolving Credit Facility on a monthly basis. The Revolving Credit Facility contains affirmative and restrictive covenants including, but not limited to, an advance rate limitation of approximately 55% of the applicable balance of net assets held by the Financing Subsidiary, maintenance of minimum net worth, a ratio of total assets to total indebtedness of not less than the greater of 3:2 and the amount so required under the 1940 Act, a key man clause relating to the Company’s Chief Executive Officer, Mr. James P. Labe, and the Company’s President and Chief Investment Officer, Mr. Sajal K. Srivastava, and eligibility requirements, including but not limited to geographic and industry concentration limitations and certain loan grade classifications. Furthermore, events of default under the Revolving Credit Facility include, among other things, (i) a payment default; (ii) a change of control; (iii) bankruptcy; (iv) a covenant default; and, (v) the Company’s failure to maintain compliance with RIC provisions at all times. The revolving period of the Revolving Credit Facility ends on February 21, 2020 and the maturity date of the Revolving Credit Facility is August 21, 2021. As of March 31, 2019 and December 31, 2018, the Company was in compliance with all covenants under the Revolving Credit Facility.

At March 31, 2019 and December 31, 2018, the Company had outstanding borrowings under the Revolving Credit Facility of $80.8 million and $23.0 million, respectively, which is included in the Company’s consolidated statements of assets and liabilities. The book value of the Revolving Credit Facility approximates fair value due to the relatively short maturity, cash repayments and market interest rates of the instrument. The fair value of the Revolving Credit Facility would be categorized as Level 3 of the fair value hierarchy if determined as of the reporting date.

Interest expense on these borrowings includes the interest cost charged on borrowings, the unused fee on the Revolving Credit Facility, paying and administrative agent fees, and the amortization of deferred Revolving Credit Facility fees and expenses. These expenses are summarized in the table below.

Interest Expense and Amortization of Fees

 

For the Three Months Ended March 31,

 

(in thousands)

 

2019

 

 

2018

 

Revolving Credit Facility

 

 

 

 

 

 

 

 

Interest cost charged on borrowings

 

$

488

 

 

$

857

 

Unused fee

 

 

219

 

 

 

187

 

Amortization of costs and other fees

 

 

289

 

 

 

268

 

Revolving Credit Facility Total

 

$

996

 

 

$

1,312

 

2022 Notes

 

 

 

 

 

 

 

 

Interest cost

 

$

1,075

 

 

$

1,075

 

Amortization of costs and other fees

 

 

132

 

 

 

131

 

2022 Notes Total

 

$

1,207

 

 

$

1,206

 

Total interest expense and amortization of fees

 

$

2,203

 

 

$

2,518

 

During the three months ended March 31, 2019 and March 31, 2018, the Company had average outstanding borrowings under the Revolving Credit Facility of $35.5 million and $75.1 million, respectively, at a weighted average interest of 5.49% and 4.61%, respectively.

 

 

26


2022 Notes

On July 14, 2017, the Company completed a public offering of $65.0 million in aggregate principal amount of its 5.75% notes due 2022 (the “2022 Notes”) and received net proceeds of approximately $62.8 million after the payment of fees and offering costs. On July 24, 2017, as a result of the underwriters’ full exercise of their option to purchase additional 2022 Notes, the Company issued an additional $9.75 million in aggregate principal amount of the 2022 Notes and received net proceeds of approximately $9.5 million after the payment of fees and offering costs. The interest on the 2022 Notes is payable quarterly on January 15, April 15, July 15 and October 15, beginning October 15, 2017. The 2022 Notes are listed on the NYSE under the symbol “TPVY”. The 2022 Notes were issued in integral principal amount multiples (“units”) of $25. The Company used a portion of the net proceeds from the offering of the 2022 Notes to redeem all of the outstanding 6.75% Notes due 2020.

At March 31, 2019, the 2022 Notes had a market price of $25.58 per unit, resulting in an aggregate fair value of approximately $76.5 million. The 2022 Notes are recorded at amortized cost in the condensed consolidated statements of assets and liabilities. Amortized cost includes approximately $1.7 million of deferred issuance cost at March 31, 2019, which is amortized and expensed over the five year term of the 2022 Notes based on an effective yield method.

The following tables provide additional information about the fair value hierarchy of the Company’s liabilities at March 31, 2019 and December 31, 2018.

 

Liability

 

As of March 31, 2019

 

(in thousands)

 

Level 1

 

 

Level 2

 

 

Level 3

 

 

Total

 

Revolving Credit Facility

 

$

 

 

$

 

 

$

80,776

 

 

$

80,776

 

2022 Notes, net *

 

 

 

 

 

74,802

 

 

 

 

 

 

74,802

 

Total

 

$

 

 

$

74,802

 

 

$

80,776

 

 

$

155,578

 

_______________

*

Net of approximately $1.7 million of deferred issuance cost

 

Liability

 

As of December 31, 2018

 

(in thousands)

 

Level 1

 

 

Level 2

 

 

Level 3

 

 

Total

 

Revolving Credit Facility

 

$

 

 

$

 

 

$

23,000

 

 

$

23,000

 

2022 Notes, net *

 

 

 

 

 

72,860

 

 

 

 

 

 

72,860

 

Total

 

$

 

 

$

72,860

 

 

$

23,000

 

 

$

95,860

 

_______________

*

Net of approximately $1.8 million of deferred issuance cost.

Other Payables

On March 29, 2019, the Company purchased $50.0 million, in face value of U.S. Treasury Bills for settlement on April 2, 2019. On December 31, 2018, the Company purchased $20.0 million of U.S. Treasury Bills for settlement on January 4, 2019. The associated payable was included in the Company’s condensed consolidated statements of assets and liabilities as of March 31, 2019 and December 31, 2018.

Note 7. Commitments and Contingencies

Commitments

As of March 31, 2019 and December 31, 2018, the Company’s unfunded commitments totaled approximately $379.7 million to twenty-four portfolio companies and approximately $294.3 million to twenty portfolio companies, respectively, of which $102.0 million and $87.5 million, respectively, was dependent upon the portfolio companies reaching certain milestones before the debt commitment becomes available to them. As of March 31, 2019, of the approximately $379.7 million of unfunded commitments, approximately $218.7 million will expire in 2019, $131.0 million will expire during 2020, and $30.0 million will expire during 2021, if not drawn prior to expiration.

The Company’s credit agreements contain customary lending provisions that allow it relief from funding obligations for previously made commitments in instances where the underlying company experiences materially adverse events that affect the financial condition or business outlook for the company. Since these commitments may expire without being drawn upon, unfunded commitments do not necessarily represent future cash requirements or future earning assets for the Company. The Company generally expects 50% - 75% of its gross unfunded commitments to eventually be drawn before the expiration of their corresponding availability periods.

 

27


The tables below provide the Company’s unfunded commitments by portfolio company as of March 31, 2019 and December 31, 2018.

 

 

As of March 31, 2019

 

Unfunded Commitments for Growth Capital Loans (unless otherwise noted)

(in thousands)

 

Principal Balance

 

 

Fair Value of Unfunded Commitment Liability

 

Adjust GMBH

 

$

7,000

 

 

$

139

 

BlueVine Capital, Inc.

 

 

20,000

 

 

 

 

Cambridge Broadband Network Limited

 

 

375

 

 

 

 

Capsule Corporation

 

 

10,000

 

 

 

179

 

Casper Sleep, Inc.

 

 

30,000

 

 

 

615

 

ClassPass, Inc.

 

 

30,000

 

 

 

581

 

Clutter, Inc.

 

 

15,374

 

 

 

156

 

FabFitFun, Inc.

 

 

10,000

 

 

 

75

 

Factual, Inc.

 

 

10,000

 

 

 

143

 

Fiverr International, Ltd.

 

 

30,000

 

 

 

158

 

Forgerock, Inc.

 

 

20,000

 

 

 

426

 

GoEuro Corp.

 

 

30,000

 

 

 

365

 

Grove Collaborative, Inc.

 

 

20,000

 

 

 

199

 

Homelight, Inc.

 

 

10,000

 

 

 

43

 

Knotel, Inc.

 

 

15,000

 

 

 

229

 

OneSource Virtual

 

 

10,000

 

 

 

 

Outdoor Voices, Inc.

 

 

11,000

 

 

 

294

 

Passport Labs, Inc.

 

 

6,000

 

 

 

61

 

Prodigy Finance Limited

 

 

2,000

 

 

 

20

 

Qubole, Inc.

 

 

15,000

 

 

 

78

 

Quip NYC, Inc.

 

 

25,000

 

 

 

514

 

Sonder USA, Inc.

 

 

5,000

 

 

 

109

 

Stance, Inc.

 

 

13,000

 

 

 

144

 

Toast, Inc.

 

 

35,000

 

 

 

115

 

Total

 

$

379,749

 

 

$

4,643

 

 

 

 

As of December 31, 2018

 

Unfunded Commitments for Growth Capital Loans (unless otherwise noted)*

(in thousands)

 

Principal Balance

 

 

Fair Value of Unfunded Commitment Liability

 

BlueVine Capital, Inc.

 

$

20,000

 

 

$

 

Capsule Corporation

 

 

10,000

 

 

 

179

 

Clutter, Inc.

 

 

2,306

 

 

 

176

 

FabFitFun, Inc.

 

 

10,000

 

 

 

75

 

Factual, Inc.

 

 

10,000

 

 

 

143

 

Fiverr International, Ltd.

 

 

30,000

 

 

 

158

 

GoEuro Corp.

 

 

30,000

 

 

 

365

 

Grove Collaborative, Inc.

 

 

10,000

 

 

 

81

 

Hired, Inc.

 

 

10,000

 

 

 

155

 

Homelight, Inc.

 

 

10,000

 

 

 

43

 

OneSource Virtual

 

 

10,000

 

 

 

 

Passport Labs, Inc.

 

 

6,000

 

 

 

61

 

Prodigy Finance Limited

 

 

2,000

 

 

 

20

 

Qubole, Inc.

 

 

15,000

 

 

 

78

 

Quip NYC, Inc.

 

 

25,000

 

 

 

514

 

Sonder USA, Inc.

 

 

5,000

 

 

 

46

 

Stance, Inc.

 

 

13,000

 

 

 

144

 

Tangible Play, Inc.

 

 

6,000

 

 

 

90

 

Toast, Inc.

 

 

60,000

 

 

 

115

 

WorldRemit Limited

 

 

10,000

 

 

 

67

 

Total

 

$

294,306

 

 

$

2,510

 

 

 

__________________

*Does not include $25.0 million backlog of potential future commitments. Refer to the “Backlog of Potential Future Commitments” below. 

 

28


The tables above also provide the fair value of the Company’s unfunded commitment liability totaling approximately $4.6 million and $2.5 million as of March 31, 2019 and December 31, 2018, respectively. The fair value at the inception of the delay draw credit agreements is equal to the fees and warrants received to enter into these agreements, taking into account the remaining terms of the agreements and the counterparties’ credit profile. The unfunded commitment liability reflects the fair value of these future funding commitments and is included in “Other accrued expenses and liabilities” in the Company’s condensed consolidated statements of assets and liabilities.

These liabilities are considered Level 3 liabilities under ASC Topic 820 as there is no known or accessible market or market indices for these types of financial instruments. Both observable and unobservable inputs were used to determine the fair value of positions that the Company has classified within the Level 3 category. The below table provides additional details regarding the Company’s unfunded commitments activity during the three months ended March 31, 2019 and March 31, 2018.

 

 

 

For the Three Months Ended March 31,

 

Commitments Activity (in thousands)

 

2019

 

 

2018

 

Activity during the period:

 

 

 

 

 

 

 

 

New commitments

 

$

190,960

 

 

$

115,000

*

Fundings

 

 

(89,517

)

 

 

(37,862

)

Expirations / Terminations

 

 

(41,000

)

 

 

 

 

 

 

 

 

 

 

 

 

Unfunded commitments at beginning of period **

 

$

294,306

 

 

$

100,097

 

Unfunded commitments at end of period

 

$

379,749

 

 

$

124,435

 

Backlog of potential future commitments

 

$

 

 

$

88,176

 

______________

* Includes backlog of potential future commitments. Refer to the “Backlog of Potential Future Commitments” below. 

**Does not include backlog of potential future commitments. Refer to the “Backlog of Potential Future Commitments” below.

The following table provides additional information on the Company’s unfunded commitments regarding milestones, expirations, and types of loans.

 

Unfunded Commitments

(in thousands)

 

As of March 31, 2019

 

 

As of December 31, 2018*

 

Dependent on milestones

 

$

102,000

 

 

$

87,500

 

Expiring during:

 

 

 

 

 

 

 

 

2019

 

 

218,749

 

 

 

183,306

 

2020

 

 

131,000

 

 

 

111,000

 

2021

 

 

30,000

 

 

 

 

 

 

 

 

 

 

 

 

 

Growth capital loans

 

 

379,749

 

 

 

294,306

 

Equipment leases and loans

 

 

 

 

 

 

______________

*Does not include backlog of potential future commitments. Refer to the “Backlog of Potential Future Commitments” below. 

 

Backlog of Potential Future Commitments

 

The Company entered into commitments with certain portfolio companies that permit an increase in the commitment amount in the future in the event that certain conditions to make such increases are met.  If such conditions to increase are met, these amounts may become unfunded commitments, if not drawn prior to expiration. As of March 31, 2019 and December 31, 2018, this backlog of potential future commitments totaled $0.0 million and $25.0 million, respectively.

 

29


Note 8. Financial Highlights

The financial highlights presented below are for the three months ended March 31, 2019 and March 31, 2018.

Financial Highlights

 

For the Three Months Ended March 31, or as of March 31,

 

(in thousands, except per share data)

 

2019

 

 

2018

 

Per Share Data (1)

 

 

 

 

 

 

 

 

Net asset value at beginning of period

 

$

13.50

 

 

$

13.25

 

Changes in net asset value due to:

 

 

 

 

 

 

 

 

Net investment income

 

 

0.40

 

 

 

0.34

 

Net realized gains (losses) on investments

 

 

 

 

 

 

Net change in unrealized gains (losses) on investments

 

 

0.05

 

 

 

0.11

 

Net increase (decrease) from capital share transactions (1)

 

 

 

 

 

 

Distributions from net investment income

 

 

(0.36

)

 

 

(0.36

)

Net asset value at end of period

 

$

13.59

 

 

$

13.34

 

 

 

 

 

 

 

 

 

 

Net investment income per share

 

$

0.40

 

 

$

0.34

 

Net increase in net assets resulting from operations per share

 

$

0.45

 

 

$

0.45

 

Weighted average shares of common stock outstanding for period

 

 

24,782

 

 

 

17,730

 

Shares of common stock outstanding at end of period

 

 

24,820

 

 

 

17,730

 

 

 

 

 

 

 

 

 

 

Ratios / Supplemental Data

 

 

 

 

 

 

 

 

Net asset value at beginning of period

 

$

334,531

 

 

$

234,945

 

Net asset value at end of period

 

$

337,199

 

 

$

236,505

 

Average net asset value

 

$

337,414

 

 

$

236,511

 

Stock price at end of period

 

$

13.76

 

 

$

11.95

 

 

 

 

 

 

 

 

 

 

Total return based on net asset value per share (2)

 

 

3.4

%

 

 

0.7

%

Total return based on stock price (3)

 

 

29.8

%

 

 

(5.8

%)

 

 

 

 

 

 

 

 

 

Net investment income to average net asset value (4)

 

 

11.9

%

 

 

10.2

%

Net increase (decrease) in net assets to average net asset value (4)

 

 

13.3

%

 

 

13.6

%

Ratio of expenses to average net asset value (4)

 

 

9.1

%

 

 

11.4

%

Operating expenses excluding incentive fees to average net asset value

 

 

6.1

%

 

 

8.9

%

Income incentive fees to average net asset value

 

 

3.0

%

 

 

2.5

%

Capital gains incentive fees to average net asset value

 

 

0.0

%

 

 

0.0

%

__________________

(1)

All per share activity is calculated based on the weighted average shares outstanding for the relevant period, except net increase (decrease) in net assets from capital share transactions, which is based on the common shares outstanding as of the relevant balance sheet date.

(2)

Total return based on NAV is the change in ending NAV per share plus distributions per share paid during the period assuming participation in the Company’s dividend reinvestment plan divided by the beginning NAV per share.

(3)

Total return based on stock price is the change in the ending stock price of the Company’s common stock plus distributions paid during the period assuming participation in the Company’s dividend reinvestment plan divided by the beginning stock price of the Company’s common stock. The total return is for the period shown and is not annualized.

(4)

Percentage is presented on an annualized basis.

 

The weighted average portfolio yield on debt investments presented below is for the three months ended March 31, 2019 and March 31, 2018.

Ratios

 

For the Three Months Ended March 31, or as of March 31,

 

(Percentages, on an annualized basis) (1)

 

2019

 

 

2018

 

Weighted average portfolio yield on debt investments

 

 

16.5

%

 

 

14.0

%

Coupon income

 

 

10.7

%

 

 

10.5

%

Accretion of discount

 

 

0.9

%

 

 

0.9

%

Accretion of end-of-term payments

 

 

2.2

%

 

 

2.2

%

Impact of prepayments during the period

 

 

2.7

%

 

 

0.4

%

_______________

(1)    

Weighted average portfolio yields on debt investments for periods shown are the annualized rates of interest income recognized during the period divided by the average amortized cost of debt investments in the portfolio at the beginning of each month in the period.

 

30


Note 9. Net Increase in Net Assets per Share

The following information sets forth the computation of basic and diluted earnings per share for the three months ended March 31, 2019 and March 31, 2018.

Basic and Diluted Share Information

 

For the Three Months Ended March 31,

 

(in thousands, except per share data)

 

2019

 

 

2018

 

Net investment income

 

$

9,915

 

 

$

5,947

 

Net increase in net assets resulting from operations

 

$

11,069

 

 

$

7,943

 

Basic and diluted weighted average shares of common stock outstanding

 

 

24,782

 

 

 

17,730

 

Basic and diluted net investment income per share of common stock

 

$

0.40

 

 

$

0.34

 

Basic and diluted net increase in net assets resulting from operations per share of common stock

 

$

0.45

 

 

$

0.45

 

Note 10. Equity

Since inception through March 31, 2019, the Company has issued 25,087,545 shares of common stock through an initial public offering, a concurrent private placement offering in 2014, a follow-on offering in 2015, a private placement offering in 2017 and a follow-on offering and concurrent private placement offering in 2018. The Company received net proceeds from these offerings of approximately $354.7 million, net of the portion of the underwriting sales load and offering costs paid by the Company.

The Company has adopted a dividend reinvestment plan for its stockholders, which is an “opt out” dividend reinvestment plan. Under this plan, if the Company declares a cash distribution to stockholders, the amount of such distribution is automatically reinvested in additional shares of common stock unless a stockholder specifically “opts out” of the dividend reinvestment plan. If a stockholder opts out, that stockholder receives cash distributions.

Information on the proceeds raised along with any related underwriting sales load and associated offering expenses, and the price at which common stock was issued by the Company, during the three months ended March 31, 2019 and year ended December 31, 2018 is provided in the following table.

Issuance of Common Stock for the Three Months Ended March 31, 2019 (in thousands, except per share data)

 

Date

 

Number of Shares of Common Stock Issued

 

 

Gross Proceeds Raised

 

 

Underwriting Sales Load

 

 

Offering Expenses

 

 

Gross Offering Price

First quarter 2019 distribution reinvestment

 

3/29/2019

 

 

40

 

 

$

518

 

 

$

 

 

$

 

 

$13.07 per share

Total issuance

 

 

 

 

40

 

 

$

518

 

 

$

 

 

$

 

 

 

 

Issuance of Common Stock for the Year Ended December 31, 2018 (in thousands, except per share data)

 

Date

 

Number of Shares of Common Stock Issued

 

 

Gross Proceeds Raised

 

 

Underwriting Sales Load

 

 

Offering Expenses

 

 

Gross Offering Price

First quarter 2018 distribution reinvestment

 

4/6/2018

 

 

22

 

 

$

249

 

 

$

 

 

$

 

 

$11.35 per share

Second quarter 2018 distribution reinvestment

 

6/15/2018

 

 

19

 

 

 

234

 

 

 

 

 

 

 

 

$12.08 per share

Public offering of common stock (1)

 

8/9/2018

 

 

6,000

 

 

 

82,200

 

 

 

 

 

 

260

 

 

$13.70 per share

Private placement (1)

 

8/9/2018

 

 

400

 

 

 

5,480

 

 

 

 

 

 

 

 

$13.70 per share

Exercise of over-allotment option

 

8/31/2018

 

 

525

 

 

 

7,191

 

 

 

 

 

 

 

 

$13.70 per share

Third quarter 2018 distribution reinvestment

 

9/14/2018

 

 

31

 

 

 

379

 

 

 

 

 

 

 

 

$12.39 per share

Fourth quarter 2018 distribution reinvestment

 

12/14/2018

 

 

39

 

 

 

448

 

 

 

 

 

 

 

 

$11.35 per share

Special 2018 distribution reinvestment

 

12/28/2018

 

 

14

 

 

 

145

 

 

 

 

 

 

 

 

$10.55 per share

Total issuance

 

 

 

 

7,050

 

 

$

96,326

 

 

$

 

 

$

260

 

 

 

_______________

(1)    

In connection with the offering, the Company’s investment adviser agreed to bear all of the sales load and to pay to the underwriters an additional supplemental payment of approximately $0.04 per share.

The Company had 24,819,918 and 24,780,223 shares of common stock outstanding as of March 31, 2019 and December 31, 2018, respectively.

Note 11. Distributions

The Company has elected to be treated, and intends to comply with the requirements to continue to qualify annually, as a RIC under the Code, beginning with the Company’s taxable year ended December 31, 2014. In order to maintain its ability to be subject to tax as a RIC, among other things, the Company is required to distribute at least 90% of its net ordinary income and net realized short-term capital gains in excess of its net realized long-term capital losses, if any, to its stockholders. Additionally, to avoid a nondeductible 4% U.S. federal excise tax on certain of the Company’s undistributed income, the Company must distribute during each calendar year an amount at least equal to the sum of: (a) 98% of the Company’s ordinary income (not taking into account any capital gains or losses) for such calendar year; (b) 98.2% of the amount by which the Company’s capital gains exceed the Company’s capital losses (adjusted for certain ordinary losses) for a one-year period ending on October 31 of the calendar year (unless an election is made by the Company to use its taxable year); and (c) certain undistributed amounts from previous years on which the Company paid no U.S. federal income tax.

 

31


For the tax years ended December 31, 2014, 2015, 2017 and 2018, the Company was subject to a 4% U.S. federal excise tax and the Company may be subject to this tax in future years. In such cases, the Company is liable for the tax only on the amount by which the Company does not meet the foregoing distribution requirement. The character of income and gains that the Company distributes is determined in accordance with income tax regulations that may differ from GAAP. Book and tax basis differences relating to stockholder dividends and distributions and other permanent book and tax differences are reclassified to paid-in capital. The Company incurred a non-deductible U.S. federal excise tax of approximately $155,000 for the year ended December 31, 2018.

The following table summarizes cash distributions per share that have been authorized by the board of directors since the Company’s initial public offering. From March 5, 2014 (commencement of operations) to December 31, 2015, these distributions represent ordinary income as earnings exceeded distributions. Approximately $1.20 per share of the distributions during the year ended December 31, 2016 represent a return of capital.

Period Ended

 

Date Announced

 

Record Date

 

Payment Date

 

Per Share Amount

March 31, 2014

 

April 3, 2014

 

April 15, 2014

 

April 30, 2014

 

$

0.09

 

(1)

June 30, 2014

 

May 13, 2014

 

May 30, 2014

 

June 17, 2014

 

$

0.30

 

 

September 30, 2014

 

August 11, 2014

 

August 29, 2014

 

September 16, 2014

 

$

0.32

 

 

December 31, 2014

 

October 27, 2014

 

November 28, 2014

 

December 16, 2014

 

$

0.36

 

 

December 31, 2014

 

December 3, 2014

 

December 22, 2014

 

December 31, 2014

 

$

0.15

 

(2)

March 31, 2015

 

March 16, 2015

 

March 26, 2015

 

April 16, 2015

 

$

0.36

 

 

June 30, 2015

 

May 6, 2015

 

May 29, 2015

 

June 16, 2015

 

$

0.36

 

 

September 30, 2015

 

August 11, 2015

 

August 31, 2015

 

September 16, 2015

 

$

0.36

 

 

December 31, 2015

 

November 10, 2015

 

November 30, 2015

 

December 16, 2015

 

$

0.36

 

 

March 31, 2016

 

March 14, 2016

 

March 31, 2016

 

April 15, 2016

 

$

0.36

 

 

June 30, 2016

 

May 9, 2016

 

May 31, 2016

 

June 16, 2016

 

$

0.36

 

 

September 30, 2016

 

August 8, 2016

 

August 31, 2016

 

September 16, 2016

 

$

0.36

 

 

December 31, 2016

 

November 7, 2016

 

November 30, 2016

 

December 16, 2016

 

$

0.36

 

 

March 31, 2017

 

March 13, 2017

 

March 31, 2017

 

April 17, 2017

 

$

0.36

 

 

June 30, 2017

 

May 9, 2017

 

May 31, 2017

 

June 16, 2017

 

$

0.36

 

 

September 30, 2017

 

August 8, 2017

 

August 31, 2017

 

September 15, 2017

 

$

0.36

 

 

December 31, 2017

 

November 6, 2017

 

November 17, 2017

 

December 1, 2017

 

$

0.36

 

 

March 31, 2018

 

March 12, 2018

 

March 23, 2018

 

April 6, 2018

 

$

0.36

 

 

June 30, 2018

 

May 2, 2018

 

May 31, 2018

 

June 15, 2018

 

$

0.36

 

 

September 30, 2018

 

August 1, 2018

 

August 31, 2018

 

September 14, 2018

 

$

0.36

 

 

December 31, 2018

 

October 31, 2018

 

November 30, 2018

 

December 14, 2018

 

$

0.36

 

 

December 31, 2018

 

December 6, 2018

 

December 20, 2018

 

December 28, 2018

 

$

0.10

 

(2)

March 31, 2019

 

March 1, 2019

 

March 20, 2019

 

March 29, 2019

 

$

0.36

 

 

Total cash distributions

 

 

 

 

 

 

 

$

7.44

 

 

 _______________

(1)

The amount of this initial distribution reflected a quarterly dividend rate of $0.30 per share, prorated for the 27 days for the period from the pricing of the Company’s initial public offering on March 5, 2014 through March 31, 2014.

(2)

Represents a special distribution.

It is the Company’s intention to distribute all or substantially all of its taxable income earned over the course of the year; thus, no provision for income tax has been recorded in the Company’s condensed consolidated statements of operations during the three months ended March 31, 2019. However, the Company may choose not to distribute all of its taxable income for a number of reasons, including retaining excess taxable income for investment purposes and/or defer the payment of distributions associated with the excess taxable income for future calendar years. For the three months ended March 31, 2019, total distributions of $0.36 per share were declared and paid and represented a distribution of ordinary income as the Company’s earnings and profits for 2018 exceeded its distributions. As of December 31, 2018, the Company estimated it had undistributed 2018 taxable earnings of approximately $4.6 million. This “spillover” income will be paid as part of the 2019 dividends. Since March 5, 2014 (commencement of operations) to March 31, 2019, total distributions of $7.44 per share have been declared and paid.

Note 12. Subsequent Events

Distributions

On May 1, 2019, the Company announced that the Board declared a $0.36 per share regular quarterly dividend, payable on June 14, 2019, to stockholders of record on May 31, 2019.


 

32


Recent Portfolio Activity

From April 1, 2019 through April 30, 2019, the Company funded $39.8 million in new investments and closed $17.1 million of additional debt commitments. TPC’s direct originations platform entered into $95.0 million of additional non-binding signed term sheets with venture growth stage companies, subject to due diligence, definitive documentation and investment committee approval, as well as compliance with TPC’s allocation policy.


 

33


Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Forward-Looking Statements

The information contained in this section should be read in conjunction with our condensed consolidated financial statements and related notes and schedules thereto appearing elsewhere in this Quarterly Report on Form 10-Q. Except as otherwise specified, references to “the Company”, “we”, “us”, and “our” refer to TriplePoint Venture Growth BDC Corp. and its subsidiaries.

This Quarterly Report on Form 10-Q contains forward-looking statements that involve substantial risks and uncertainties. These forward-looking statements are not historical facts, but rather are based on current expectations, estimates and projections about us, our current and prospective portfolio investments, our industry, our beliefs, and our assumptions. Words such as “anticipates,” “expects,” “intends,” “plans,” “will,” “may,” “continue,” “believes,” “seeks,” “estimates,” “would,” “could,” “should,” “targets,” “projects,” and variations of these words and similar expressions are intended to identify forward-looking statements. The forward-looking statements contained in this Quarterly Report on Form 10-Q include statements as to:

 

our future operating results;

 

our business prospects and the prospects of our portfolio companies;

 

our relationships with third parties, including venture capital investors;

 

the impact and timing of our unfunded commitments;

 

the expected market for venture capital investments;

 

the performance of our existing portfolio and other investments we may make in the future;

 

the impact of investments that we expect to make;

 

actual and potential conflicts of interest with TriplePoint Capital LLC (“TPC”) and TriplePoint Advisers LLC’s (“Adviser”) and its senior investment team and Investment Committee;

 

our contractual arrangements and relationships with third parties;

 

the dependence of our future success on the general economy and its impact on the industries in which we invest;

 

the ability of our portfolio companies to achieve their objectives;

 

our expected financings, use of leverage and investments;

 

the ability of our Adviser to attract, retain and have access to highly talented professionals, including our Adviser’s senior management team;

 

our ability to qualify and maintain our qualification as a RIC and as a BDC;

 

the adequacy of our cash resources and working capital; and

 

the timing of cash flows, if any, from the operations of our portfolio companies.

These statements are not guarantees of future performance and are subject to risks, uncertainties, and other factors, some of which are beyond our control and difficult to predict and could cause actual results to differ materially from those expressed or forecasted in the forward-looking statements, including without limitation:

 

an economic downturn could impair our portfolio companies’ ability to continue to operate, which could lead to the loss of some or all of our investments in such portfolio companies;  

 

a contraction of available credit and/or an inability to access the equity markets could impair our lending and investment activities;

 

interest rate volatility could adversely affect our results, particularly given that we use leverage as part of our investment strategy;

 

currency fluctuations could adversely affect the results of our investments in foreign companies, particularly to the extent that we receive payments denominated in foreign currency rather than U.S. dollars; and

 

the risks, uncertainties and other factors we identify in “Risk Factors” in our Annual Report on Form 10-K under Part I, Item 1A.

 

34


Although we believe that the assumptions on which these forward-looking statements are based are reasonable, any of those assumptions could prove to be inaccurate, and as a result, the forward-looking statements based on those assumptions also could be inaccurate. Important assumptions include our ability to originate new loans and investments, borrowing costs and levels of profitability and the availability of additional capital. In light of these and other uncertainties, the inclusion of a projection or forward-looking statement in this Quarterly Report on Form 10-Q should not be regarded as a representation by us that our plans and objectives will be achieved. These risks and uncertainties include those described in “Risk Factors” in our Annual Report on Form 10-K under Part I, Item 1A. You should not place undue reliance on these forward-looking statements, which apply only as of the date of this Quarterly Report on Form 10-Q.

Overview

We are an externally managed, closed-end, non-diversified management investment company that has elected to be regulated as a BDC under the 1940 Act. We have elected to be treated, and intend to qualify annually, as a RIC under Subchapter M of the Code for U.S. federal income tax purposes beginning with our taxable year ending December 31, 2014.

Our shares are currently listed on the New York Stock Exchange (the “NYSE”) under the symbol “TPVG”. Our 5.75% Notes due 2022 (the “2022 Notes”) are currently listed on the NYSE under the symbol “TPVY”.

Our investment objective is to maximize our total return to stockholders primarily in the form of current income and, to a lesser extent, capital appreciation by primarily lending with warrant investments to venture growth stage companies focused in technology, life sciences and other high growth industries that are backed by TPC’s select group of leading venture capital investors.

We serve as the primary financing source for the venture growth stage business segment of TriplePoint Capital’s global investment platform. TPC is widely recognized as a leading global financing provider devoted to serving venture capital-backed companies with creative, flexible and customized debt financing, equity capital and complementary services throughout their lifespan. TPC is located on Sand Hill Road in Silicon Valley and has a primary focus in technology, life sciences and other high growth industries.

We commenced investment activities on March 5, 2014. In order to expedite the ramp-up of our investment activities and further our ability to meet our investment objectives, on March 5, 2014, we acquired our initial portfolio. On March 11, 2014, we completed our initial public offering and received $141.6 million of net proceeds in connection with the initial public offering and concurrent private placement, net of the portion of the underwriting sales load and offering costs we paid. In 2015, we completed a follow-on public offering of our common stock raising approximately $95.9 million after offering costs. In October 2017, we sold in a private placement transaction 1,594,007 shares of our common stock to certain investment funds managed by the Alternative Investments & Manager Selection Group of Goldman Sachs Asset Management, L.P. and 73,855 shares of our common stock to certain of our executive officers, for total gross proceeds of approximately $22.6 million. In August 2018, we completed a public offering and a concurrent private placement offering of an aggregate 6,925,000 shares of our common stock, raising approximately $94.6 million after offering costs.

Borrowings

In February 2014, we entered into a credit agreement with Deutsche Bank AG acting as administrative agent and a lender, and KeyBank National Association, Everbank Commercial Lender Finance, Inc., and AloStar Bank of Commerce, as other lenders, which provided us with a $150.0 million commitment, subject to borrowing base requirements (as amended and restated from time to time, the “Credit Facility”). In August 2014, we amended the Credit Facility to increase the total commitments to $200.0 million in aggregate.

In January 2018 we amended and renewed the Credit Facility, MUFG Union Bank, N.A., replaced AloStar Bank of Commerce as a lender, under the amended Credit Facility. The amendment and renewal, among other things, increased the total commitment to $210.0 million in aggregate, extended the revolving period from February 21, 2018 to February 21, 2020, and extended the maturity date from February 21, 2019 to August 21, 2021. In addition, the amended Credit Facility includes a reduction in the undrawn rate from 0.75% to 0.50% and a change in the applicable margin during the revolving period to 2.80% if facility utilization is greater than or equal to 75%, 2.90% if utilization is greater than or equal to 50%, and 3.00% if utilization is less than 50%. Borrowings under the Credit Facility are subject to various covenants and the leverage restrictions contained in the 1940 Act.

On July 14, 2017, we completed a public offering of $65.0 million in aggregate principal amount of our newly issued 2022 Notes and received net proceeds of approximately $62.8 million, after the payment of fees and offering costs. On July 24, 2017, as a result of the underwriters’ full exercise of their option to purchase additional 2022 Notes, we issued an additional $9.75 million in aggregate principal amount of the 2022 Notes and received net proceeds of approximately $9.5 million, after the payment of fees and offering costs. The interest on the 2022 Notes is payable quarterly on January 15, April 15, July 15 and October 15, beginning October 15, 2017.


 

35


Asset Coverage Requirements

On June 21, 2018, our stockholders voted at a special meeting of stockholders to approve a proposal to authorize us to be subject to a reduced asset coverage ratio of at least 150% under the 1940 Act. As a result of the stockholder approval at the special meeting, effective June 22, 2018, our applicable minimum asset coverage ratio under the 1940 Act has been decreased to 150% from 200%. Thus, we are permitted, under specified conditions, to issue multiple classes of debt and one class of stock senior to our common stock if our asset coverage, as defined in the 1940 Act, is at least equal to 150% immediately after each such issuance. As of March 31, 2019, the Company’s asset coverage for borrowed amounts was 317%.

Portfolio Composition, Investment Activity and Asset Quality

Portfolio Composition

We originate and invest primarily in venture growth stage companies. Companies at the venture growth stage have distinct characteristics differentiating them from venture capital-backed companies at other stages in their development lifecycle. We invest primarily in (i) growth capital loans that have a secured collateral position and that are generally used by venture growth stage companies to finance their continued expansion and growth, (ii) equipment financings, which may be structured as loans or leases, that have a secured collateral position on specified mission-critical equipment, (iii) on a select basis, revolving loans that have a secured collateral position and that are typically used by venture growth stage companies to advance against inventory, components, accounts receivable, contractual or future billings, bookings, revenues, sales or cash payments and collections including proceeds from a sale, financing or the equivalent and (iv) direct equity investments in venture growth stage companies. In connection with our growth capital loans, equipment financings and revolving loans, we generally receive warrant investments that allow us to participate in any equity appreciation of our borrowers and enhance our overall investment returns.

As of March 31, 2019, we held 152 investments in 60 companies. Our investments included 86 debt investments, 50 warrant investments, and 16 direct equity and related investments. As of March 31, 2019, the total cost and fair value of these investments were approximately $458.2 million and approximately $457.7 million, respectively. As of March 31, 2019, the 86 debt investments with an aggregate fair value of approximately $424.4 million had a weighted average loan to enterprise value ratio at the time of underwriting of approximately 9.6%. Enterprise value of a portfolio company is estimated based on information available, including any information regarding the most recent rounds of equity funding, at the time of origination.

As of December 31, 2018, we had 144 investments in 57 companies. Our investments included 82 debt investments, 48 warrant investments, and 14 direct equity and related investments. As of December 31, 2018, the total cost and fair value of these investments were approximately $435.1 million and approximately $433.4 million, respectively. As of December 31, 2018, one of our portfolio companies was publicly traded. As of December 31, 2018, the 82 debt investments had an aggregate fair value of approximately $405.3 million and a weighted average loan to enterprise value ratio at the time of underwriting of approximately 8.9%. Enterprise value of a portfolio company is estimated based on information available, including any information regarding the most recent rounds of equity funding, at the time of origination.

The following tables provide information on the cost and fair value of our investments in companies along with the number of companies in our portfolio as of March 31, 2019 and December 31, 2018.

 

 

 

As of March 31, 2019

 

 

Investments by Type

(dollars in thousands)

 

Cost

 

 

Fair Value

 

 

Net Unrealized Gains (losses)

 

 

Number of

Investments

 

 

Number of

Companies

 

 

Debt investments

 

$

435,353

 

 

$

424,396

 

 

$

(10,957

)

 

 

86

 

 

 

29

 

 

Warrant investments

 

 

13,616

 

 

 

18,040

 

 

 

4,424

 

 

 

50

 

 

 

50

 

 

Equity investments

 

 

9,207

 

 

 

15,259

 

 

 

6,052

 

 

 

16

 

 

 

14

 

 

Total Investments in Portfolio Companies

 

$

458,176

 

 

$

457,695

 

 

$

(481

)

 

 

152

 

 

 

60

 

*

 

 

 

As of December 31, 2018

 

 

Investments by Type

(dollars in thousands)

 

Cost

 

 

Fair Value

 

 

Net Unrealized Gains (losses)

 

 

Number of

Investments

 

 

Number of

Companies

 

 

Debt investments

 

$

414,256

 

 

$

405,347

 

 

$

(8,909

)

 

 

82

 

 

29

 

 

Warrant investments

 

 

12,287

 

 

 

17,514

 

 

 

5,227

 

 

 

48

 

 

48

 

 

Equity investments

 

 

8,541

 

 

 

10,556

 

 

 

2,015

 

 

 

14

 

 

12

 

 

Total Investments in Portfolio Companies

 

$

435,084

 

 

$

433,417

 

 

$

(1,667

)

 

 

144

 

 

 

57

 

*

_______________

*

Represents non-duplicative number of companies.

 

36


The following tables present the fair value of the portfolio of investments, by industry and the percentage of the total investment portfolio, as of March 31, 2019 and December 31, 2018.

 

 

As of March 31, 2019

 

 

Investments in Portfolio Companies by Industry

(dollars in thousands)‍

 

At Fair Value

 

 

Percentage of Total Investments

 

 

Financial Institution and Services

 

$

81,038

 

 

 

17.8

 

%

Business Applications Software

 

 

66,088

 

 

 

14.4

 

 

Building Materials/Construction Machinery

 

 

34,999

 

 

 

7.6

 

 

Network Systems Management Software

 

 

31,503

 

 

 

6.9

 

 

E-Commerce - Clothing and Accessories

 

 

30,164

 

 

 

6.6

 

 

Business to Business Marketplace

 

 

27,790

 

 

 

6.1

 

 

Entertainment

 

 

26,809

 

 

 

5.9

 

 

Real Estate Services

 

 

19,939

 

 

 

4.4

 

 

Other Financial Services

 

 

19,913

 

 

 

4.4

 

 

Security Services

 

 

20,046

 

 

 

4.4

 

 

Consumer Products and Services

 

 

19,572

 

 

 

4.3

 

 

Buildings and Property

 

 

14,957

 

 

 

3.3

 

 

Biofuels / Biomass

 

 

14,398

 

 

 

3.1

 

 

E-Commerce - Personal Goods

 

 

11,644

 

 

 

2.5

 

 

Consumer Retail

 

 

10,013

 

 

 

2.2

 

 

Human Resources/Recruitment

 

 

9,918

 

 

 

2.2

 

 

Wireless Communications Equipment

 

 

6,468

 

 

 

1.4

 

 

Shopping Facilitators

 

 

4,003

 

 

 

0.9

 

 

Restaurant / Food Service

 

 

2,211

 

 

 

0.5

 

 

Communications Software

 

 

2,000

 

 

 

0.4

 

 

General Media and Content

 

 

1,060

 

 

 

0.2

 

 

Household & Office Goods

 

 

1,230

 

 

 

0.3

 

 

Travel & Leisure

 

 

622

 

 

 

0.1

 

 

Educational/Training Software

 

 

434

 

 

 

0.1

 

 

Conferencing Equipment / Services

 

 

203

 

 

*

 

 

Food & Drug

 

 

129

 

 

*

 

 

Advertising / Marketing

 

 

148

 

 

*

 

 

Social/Platform Software

 

 

281

 

 

*

 

 

Medical Software and Information Services

 

 

74

 

 

*

 

 

Database Software

 

 

41

 

 

*

 

 

Total portfolio company investments

 

$

457,695

 

 

 

100.0

 

%

  ______________

*

Amount represents less than 0.05% of the total portfolio investments.

 

37


 

 

As of December 31, 2018

 

 

Investments in Portfolio Companies by Industry

(dollars in thousands)‍

 

At Fair Value

 

 

Percentage of Total Investments

 

 

Business Applications Software

 

$

113,162

 

 

 

26.1

 

%

Financial Institution and Services

 

 

80,291

 

 

 

18.5

 

 

Building Materials/Construction Machinery

 

 

37,464

 

 

 

8.6

 

 

Network Systems Management Software

 

 

30,835

 

 

 

7.1

 

 

E-Commerce - Clothing and Accessories

 

 

30,459

 

 

 

7.0

 

 

Entertainment

 

 

26,077

 

 

 

6.0

 

 

Real Estate Services

 

 

19,828

 

 

 

4.6

 

 

Wireless Communications Equipment

 

 

19,291

 

 

 

4.5

 

 

E-Commerce - Personal Goods

 

 

16,133

 

 

 

3.7

 

 

Biofuels / Biomass

 

 

14,213

 

 

 

3.3

 

 

General Media and Content

 

 

13,063

 

 

 

3.0

 

 

Consumer Retail

 

 

10,927

 

 

 

2.5

 

 

Consumer Products and Services

 

 

9,939

 

 

 

2.3

 

 

Educational/Training Software

 

 

2,099

 

 

 

0.5

 

 

Shopping Facilitators

 

 

2,000

 

 

 

0.5

 

 

Restaurant / Food Service

 

 

2,000

 

 

 

0.5

 

 

Database Software

 

 

1,996

 

 

 

0.5

 

 

Communications Software

 

 

1,060

 

 

 

0.2

 

 

Household & Office Goods

 

 

992

 

 

 

0.2

 

 

Travel & Leisure

 

 

627

 

 

 

0.1

 

 

Security Services

 

 

236

 

 

 

0.1

 

 

Conferencing Equipment / Services

 

 

203

 

 

 

0.1

 

 

Business to Business Marketplace

 

 

160

 

 

 

0.1

 

 

Food & Drug

 

 

129

 

 

*

 

 

Advertising / Marketing

 

 

104

 

 

*

 

 

Medical Software and Information Services

 

 

74

 

 

*

 

 

Human Resources/Recruitment

 

 

55

 

 

*

 

 

Total portfolio company investments

 

$

433,417

 

 

 

100.0

 

%

______________

*

Amount represents less than 0.05% of total portfolio investments.

The following tables present the financing product type of our debt investments as of March 31, 2019 and December 31, 2018.

 

 

 

As of March 31, 2019

 

 

Debt Investments By Financing Product

(dollars in thousands)

 

Fair Value

 

 

Percentage of Total Debt Investments

 

 

Growth capital loans

 

$

378,984

 

 

 

89.3

 

%

Equipment loans

 

 

35,524

 

 

 

8.4

 

 

Revolver loans

 

 

6,505

 

 

 

1.5

 

 

Equipment leases

 

 

3,383

 

 

 

0.8

 

 

Total debt investments

 

$

424,396

 

 

 

100.0

 

%

 

 

 

As of December 31, 2018

 

 

Debt Investments By Financing Product

(dollars in thousands)

 

Fair Value

 

 

Percentage of Total Debt Investments

 

 

Growth capital loans

 

$

356,861

 

 

 

88.0

 

%

Equipment leases

 

 

38,265

 

 

 

9.4

 

 

Equipment loans

 

 

6,354

 

 

 

1.6

 

 

Convertible notes

 

 

3,867

 

 

 

1.0

 

 

Total debt investments

 

$

405,347

 

 

 

100.0

 

%

 

Growth capital loans in which the borrower held a term loan facility, with or without an accompanying revolving loan, in priority to our senior lien represent approximately 19.9% and 14.0% of the debt investments at fair value as of March 31, 2019 and December 31, 2018, respectively.

 

38


Investment Activity

During the three months ended March 31, 2019, we entered into commitments with five new portfolio companies and four existing portfolio company totaling $191.0 million, funded thirteen debt investments for approximately $89.5 million in principal value, acquired warrant investments representing approximately $1.8 million of value and made an equity investment of $0.5 million.

During the three months ended March 31, 2018, we entered into commitments with two new portfolio companies and two existing portfolio companies totaling $115.0 million, funded eight debt investments for approximately $37.9 million in principal value, acquired warrant investments representing approximately $0.6 million of value and made an equity investment of $0.3 million.

During the three months ended March 31, 2019, we received $57.6 million of debt prepayments from three portfolio companies and one portfolio company repaid at maturity its outstanding growth capital loan of approximately $5.0 million.

During the three months ended March 31, 2018, we received $3.3 million of debt prepayment from one portfolio company and one portfolio company repaid at maturity its outstanding growth capital loan of approximately $5.0 million.

Total portfolio investment activity for the three months ended March 31, 2019 and March 31, 2018 was as follows:

 

 

For the Three Months Ended March 31,

 

(in thousands)

 

2019

 

 

2018

 

Beginning portfolio at fair value

 

$

433,417

 

 

$

372,103

 

New debt investments, net (1)

 

 

87,639

 

 

 

36,968

 

Scheduled principal payments from debt investments

 

 

(12,960

)

 

 

(5,876

)

Early principal payments, repayments and recoveries

 

 

(57,553

)

 

 

(8,348

)

Accretion of debt investment fees

 

 

3,235

 

 

 

2,948

 

Payment-in-kind coupon

 

 

771

 

 

 

605

 

New warrant investments

 

 

1,814

 

 

 

615

 

New equity investments

 

 

500

 

 

 

250

 

Proceeds and dispositions of investments

 

 

(322

)

 

 

(3

)

Net realized gains (losses)

 

 

(29

)

 

 

8

 

Net unrealized gains (losses) on investments

 

 

1,183

 

 

 

1,988

 

Ending portfolio at fair value

 

$

457,695

 

 

$

401,258

 

_____________

(1)

Debt balance is net of fees and discounts applied to the loan at origination.

As of March 31, 2019, our unfunded commitments to twenty-four companies totaled approximately $379.7 million. During the three months ended March 31, 2019, $41.0 million in unfunded commitments expired or were terminated.

As of December 31, 2018, our unfunded commitments to twenty companies totaled approximately $294.3 million. During the year ended December 31, 2018, $61.0 million in unfunded commitments expired or were terminated.

The following table provides additional information on our unfunded commitments regarding milestones, expirations, and types of loans.

 

Unfunded Commitments

(in thousands)

 

As of March 31, 2019

 

 

As of December 31, 2018*

 

Dependent on milestones

 

$

102,000

 

 

$

87,500

 

Expiring during:

 

 

 

 

 

 

 

 

2019

 

 

218,749

 

 

 

183,306

 

2020

 

 

131,000

 

 

 

111,000

 

2021

 

 

30,000

 

 

 

 

 

 

 

 

 

 

 

 

 

Growth capital loans

 

 

379,749

 

 

 

294,306

 

Equipment leases and loans

 

 

 

 

 

 

_______________

* Does not include backlog of potential future commitments.

Our credit agreements with our portfolio companies contain customary lending provisions that allow us relief from funding obligations for previously made commitments in instances where the underlying company experiences materially adverse events that affect the financial condition or business outlook for the company. Since these commitments may expire without being drawn upon, unfunded commitments do not necessarily represent future cash requirements or future earning assets for the Company. We generally expect 50% - 75% of our gross unfunded commitments to eventually be drawn before the expiration of their corresponding availability periods.

 

39


The fair value at the inception of the delay draw credit agreements with our portfolio companies is equal to the fees and/or warrant investments received to enter into these agreements, taking into account the remaining terms of the agreements and the counterparties’ credit profile. The unfunded commitment liability reflects the fair value of these future funding commitments. As of March 31, 2019 and December 31, 2018, the fair value for these unfunded commitments totaled approximately $4.6 million and $2.5 million, respectively, and was included in “other accrued expenses and liabilities” in our condensed consolidated statements of assets and liabilities.

Our level of investment activity can vary substantially from period to period as our Adviser chooses to slow or accelerate new business originations depending on market conditions, rate of investment of TPC’s select group of leading venture capital investors, our Adviser’s knowledge, expertise and experience, our funding capacity (including availability under the Credit Facility and our ability or inability to raise equity or debt capital), and other market dynamics.

The following table shows the debt commitments, fundings of debt investments (principal balance) and equity investments and non-binding term sheet activity for the three months ended March 31, 2019.

Commitments and Fundings

 

For the Three Months Ended March 31,

 

(in thousands)

 

2019

 

 

2018

 

Debt Commitments

 

 

 

 

 

 

 

 

New portfolio companies

 

$

130,000

 

 

$

75,000

 

Existing portfolio companies

 

 

60,960

 

 

 

40,000

 

Total *

 

$

190,960

 

 

$

115,000

 

 

 

 

 

 

 

 

 

 

Funded Debt Investments

 

$

89,517

 

 

$

37,862

 

 

 

 

 

 

 

 

 

 

Equity Investments

 

$

500

 

 

$

250

 

 

 

 

 

 

 

 

 

 

Non-Binding Term Sheets

 

$

250,023

 

 

$

146,000

 

_______________

* Includes backlog of potential future commitments.

We may enter into commitments with certain portfolio companies that permit an increase in the commitment amount in the future in the event that conditions to such increases are met (“backlog of potential future commitments”).  If such conditions to increase are met, these amounts may become unfunded commitments if not drawn prior to expiration. As of March 31, 2019 and December 31, 2018, this backlog of potential future commitments totaled $0.0 million and $25.0 million, respectively.

Payables

On March 29, 2019, we acquired $50.0 million in face value of U.S. Treasury Bills for settlement on April 2, 2019.  On December 31, 2018, we acquired $20.0 million in face value of U.S. Treasury Bills which were sold on January 3, 2019. The Company purchased and sold U.S. Treasury Bills in order to efficiently meet certain RIC diversification tests. 

Asset Quality

Consistent with TPC’s existing policies, our Adviser maintains a credit watch list which places borrowers into five risk categories based on our Adviser’s senior investment team’s judgment, where 1 is the highest rating and all new loans are generally assigned a rating of 2. 

 Category

 

Category Definition

 

Action Item

 

 

 

 

 

Clear (1)

 

Performing above expectations and/or strong financial or enterprise profile, value or coverage.

 

Review quarterly.

White (2)

 

Performing at expectations and/or reasonably close to it. Reasonable financial or enterprise profile, value or coverage. Generally, all new loans are initially graded White.

 

Contact portfolio company periodically in no event less than quarterly.

Yellow (3)

 

Performing generally below expectations and/or some proactive concern. Adequate financial or enterprise profile, value or coverage.

 

Contact portfolio company monthly or more frequently as determined by our Adviser’s Investment Committee; contact venture capital investors.

Orange (4)

 

Needs close attention due to performance materially below expectations, weak financial and/or enterprise profile, concern regarding additional capital or exit equivalent.

 

Contact portfolio company weekly or more frequently as determined by our Adviser’s Investment Committee; contact venture capital investors regularly; our Adviser forms a workout group to minimize risk of loss.

Red (5)

 

Serious concern/trouble due to pending or actual default or equivalent. May experience partial and/or full loss.

 

Maximize value from assets.

 

40


As of March 31, 2019 and December 31, 2018, the weighted average investment ranking of our debt investment portfolio was 1.95 and 1.87, respectively. During the three months ended March 31, 2019, portfolio company credit category changes, excluding fundings and repayments, consisted of the following: one portfolio company with a principal balance of $14.6 million was upgraded from White (2) to Clear (1); and two portfolio companies with a combined principal balance of $29.2 million were downgraded from Clear (1) to White (2).

The following tables show the credit rankings for the portfolio companies that had outstanding obligations to us as of March 31, 2019 and December 31, 2018.

 

 

As of March 31, 2019

 

Credit Category

(dollars in thousands)

 

Fair Value

 

 

Percentage of Total Debt Investments

 

 

Number of Portfolio Companies

 

Clear (1)

 

$

81,225

 

 

 

19.1

 

%

 

4

 

White (2)

 

 

293,911

 

 

 

69.3

 

 

 

20

 

Yellow (3)

 

 

40,163

 

 

 

9.5

 

 

 

3

 

Orange (4)

 

 

6,886

 

 

 

1.6

 

 

 

1

 

Red (5)

 

 

2,211

 

 

 

0.5

 

 

 

1

 

 

 

$

424,396

 

 

 

100.0

 

%

 

29

 

 

 

 

As of December 31, 2018

 

Credit Category

(dollars in thousands)

 

Fair Value

 

 

Percentage of Total Debt Investments

 

 

Number of Portfolio Companies

 

Clear (1)

 

$

112,032

 

 

 

27.6

 

%

 

7

 

White (2)

 

 

245,544

 

 

 

60.6

 

 

 

17

 

Yellow (3)

 

 

38,982

 

 

 

9.6

 

 

 

3

 

Orange (4)

 

 

6,789

 

 

 

1.7

 

 

 

1

 

Red (5)

 

 

2,000

 

 

 

1

 

 

 

1

 

 

 

$

405,347

 

 

 

100.0

 

%

 

29

 

Results of Operations

Comparison of operating results for the three months ended March 31, 2019 and March 31, 2018.

An important measure of our financial performance is net increase (decrease) in net assets resulting from operations, which includes net investment income (loss), net realized gains (losses) and net unrealized gains (losses). Net investment income (loss) is the difference between our income from interest, dividends, fees and other investment income and our operating expenses including interest on borrowed funds. Net realized gains (losses) on investments is the difference between the proceeds received from dispositions of portfolio investments and their amortized cost. Net unrealized gains (losses) on investments is the net change in the fair value of our investment portfolio.

For the three months ended March 31, 2019, our net increase in net assets resulting from operations was approximately $11.1 million, which was comprised of approximately $9.9 million of net investment income and approximately $1.2 million of net realized and unrealized gains. On a per share basis for the three months ended March 31, 2019, net investment income was $0.40 per share and the net increase in net assets from operations was $0.45 per share.

For the three months ended March 31, 2018, our net increase in net assets resulting from operations was approximately $7.9 million, which was comprised of approximately $5.9 million of net investment income and approximately $2.0 million of net realized and unrealized gains. On a per share basis for the three months ended March 31, 2018, net investment income was $0.34 per share and the net increase in net assets from operations was $0.45 per share.

Investment Income

Total investment income for the three months ended March 31, 2019 was approximately $17.5 million as compared to approximately $12.6 million for the three months ended March 31, 2018.

The increase in investment and other income for the three months period ended March 31, 2019 compared to the comparable period of 2018 was $4.9 million and primarily due to an increase in prepayments and other income as well as an increase in interest income due to a higher average portfolio balance between periods.

For the three months ended March 31, 2019, we recognized approximately $0.3 million in other income consisting of approximately $0.1 million due to the termination or expiration of unfunded commitments and approximately $0.2 million from the realization of certain fees paid by portfolio companies and other income. For the three months ended March 31, 2018, we recognized approximately $3 thousand in other income primarily from the realization of certain fees paid by portfolio companies and other income.

 

 

41


Operating Expenses

Total operating expenses consist of base management fee, income incentive fee, capital gains incentive fee, interest expense and amortization of fees, administration agreement expenses, and general and administrative expenses and is summarized in the statement of operations. In determining the base management fee, our Adviser has agreed to exclude the U.S. Treasury Bill assets acquired at the end of the applicable quarters in 2019 and 2018 in the calculation of the gross assets. We anticipate operating expenses will increase over time as our portfolio continues to grow. However, we anticipate operating expenses, as a percentage of totals assets and net assets, will decrease over time as our portfolio and capital base expand. We expect base management and income incentive fees will increase as we grow our asset base and our earnings. Capital gains incentive fee will depend on realized and unrealized gains and losses. Interest expense will increase as we utilize more of the Credit Facility, and we expect expenses per the administration agreement and general and administrative expenses will increase to meet the additional requirements associated with servicing a larger portfolio.

Total operating expenses for the three months ended March 31, 2019 was approximately $7.6 million as compared to approximately $6.7 million for the three months ended March 31, 2018.

Base management fee totaled approximately $1.8 million and $1.5 million for the three months ended March 31, 2019 and 2018, respectively. Base management fee for the three months ended March 31, 2019, as compared to March 31, 2018, increased due to higher average assets between the periods.

Income incentive fee totaled approximately $2.5 million and $1.5 million for the three months ended March 31, 2019 and 2018, respectively. The increase in income based fees for the three months ended March 31, 2019 from the comparable period in 2018 was primarily due to higher income on our investment portfolio driven by the recognition of greater fees from prepayment activity between periods.

There was no capital gains incentive fee expense calculated for the three months ended March 31, 2019 or 2018.

Interest and fees on our borrowings totaled approximately $2.2 million and $2.5 million for the three months ended March 31, 2019 and 2018, respectively. Interest and fee expense for the three months ended March 31, 2019, as compared to March 31, 2018, decreased primarily due to a lower weighted average outstanding principal balance on borrowings.

Administration agreement and general and administrative expenses totaled approximately $1.1 million for the three months ended March 31, 2019 and 2018, respectively. Administration agreement and general and administrative expenses for the three months ended March 31, 2019, as compared to March 31, 2018, remained flat due to lower professional services costs offset by higher administrative expenses.

Net Realized Gains and Losses and Net Unrealized Gains and Losses

Realized gains and losses are included as a component of net realized gains (losses) in the condensed consolidated statements of operations.

During the three months ended March 31, 2019, we recognized net realized losses on investments of approximately $(29) thousand, as a result of changes in foreign currency between the time of investment and liquidation. During the three months ended March 31, 2018, we recognized net realized gains on investments of $8 thousand, as a result of changes in foreign currency between the time of investment and liquidation.

Unrealized gains and losses are included in net change in unrealized gains (losses) on investments in the condensed consolidated statements of operations.

Net change in unrealized appreciation during the three months ended March 31, 2019 was approximately $1.2 million, which primarily consisted of $3.6 million of net unrealized appreciation on the investment portfolio related to mark to market activity, offset by the reversal and recognition of previously recorded net unrealized appreciation of $2.4 million into income or realized gains due to the disposition of four portfolio companies. Net change in unrealized gains during the three months ended March 31, 2018 was approximately $2.0 million, which consisted of net unrealized appreciation of $2.0 million and $0.5 million related to debt investments and equity investments, respectively, offset by net unrealized depreciation of $0.5 million from warrant investments.

Net change in realized and unrealized gains or losses in subsequent periods may be volatile as it depends on changes in the market, changes in the underlying performance of our portfolio companies and their respective industries, and other market factors.


 

42


The table below presents our statement of operations for the three months ended March 31, 2019 and March 31, 2018.

Net Increase in Net Assets

 

For the Three Months Ended March 31,

 

(in thousands, except per share amounts)

 

2019

 

 

2018

 

Investment and Other Income

 

 

 

 

 

 

 

 

Interest income from investments

 

$

17,147

 

 

$

12,616

 

Other income

 

 

 

 

 

 

 

 

Expirations / terminations of unfunded commitments

 

 

158

 

 

 

 

Other fees

 

 

186

 

 

 

3

 

Total Investment and Other Income

 

 

17,491

 

 

 

12,619

 

 

 

 

 

 

 

 

 

 

Operating Expenses

 

 

 

 

 

 

 

 

Base management fee

 

 

1,761

 

 

 

1,528

 

Income incentive fee

 

 

2,479

 

 

 

1,487

 

Capital gains incentive fee

 

 

 

 

 

 

Interest expense and amortization of fees

 

 

2,203

 

 

 

2,518

 

Administration agreement expenses

 

 

422

 

 

 

407

 

General and administrative expenses

 

 

711

 

 

 

732

 

Total Operating Expenses

 

 

7,576

 

 

 

6,672

 

 

 

 

 

 

 

 

 

 

Net investment income

 

 

9,915

 

 

 

5,947

 

 

 

 

 

 

 

 

 

 

Net realized and unrealized gains (losses)

 

 

 

 

 

 

 

 

Net realized gains (losses) on investments

 

 

(29

)

 

 

8

 

Net change in unrealized gains (losses) on investments

 

 

1,183

 

 

 

1,988

 

Net realized and unrealized gains (losses)

 

 

1,154

 

 

 

1,996

 

 

 

 

 

 

 

 

 

 

Net Increase in Net Assets Resulting from Operations

 

$

11,069

 

 

$

7,943

 

 

 

 

 

 

 

 

 

 

Net investment income per share

 

$

0.40

 

 

$

0.34

 

Net increase in net assets per share

 

$

0.45

 

 

$

0.45

 

Weighted average shares of common stock outstanding

 

 

24,782

 

 

 

17,730

 

We believe an important measure of the investment income that we will be required to distribute each year is core net investment income, to the extent it is divergent from GAAP net investment income. Core net investment income, unlike GAAP net investment income, excludes accrued, but as yet unearned, capital gains incentive fees on net unrealized gains. Specifically, the capital gains component of the incentive fee is paid at the end of each calendar year and is 20.0% of our aggregate cumulative realized capital gains from commencement of operations through the end of the year, computed net of our aggregate cumulative realized capital losses and our aggregate cumulative unrealized losses through the end of such year. For the foregoing purpose, our “aggregate cumulative realized capital gains” does not include any unrealized gains. The capital gains component of the incentive fee is not subject to any minimum return to stockholders. No capital gains incentive fee was earned or was payable during the three months ended March 31, 2019 and March 31, 2018, respectively. Therefore, GAAP net investment income and core net investment income were the same during the respective periods.

Portfolio Yield and Total Return

Investment income includes interest income on our debt investments utilizing the effective yield method including cash interest income as well as the amortization of any purchase premium, accretion of purchase discount, original issue discount, facilities fees, and the amortization and payment of the end-of-term (“EOT”) payments. For the three months ended March 31, 2019 and March 31, 2018, interest income totaled approximately $17.1 million and $12.6 million, respectively, representing a weighted average annualized portfolio yield on debt investments for the period held of approximately 16.5% and 14.0%, respectively.

We calculate weighted average annualized portfolio yields for periods shown as the annualized rates of the interest income recognized during the period divided by the average amortized cost of debt investments in the portfolio at the beginning of each month in the period. The weighted average yields reported for these periods are annualized and reflect the weighted average yields to maturities. Should the portfolio companies choose to repay their loans earlier, our weighted average yields will increase for those debt investments affected but may reduce our weighted average yields on the remaining portfolio in future quarters.

The yield on our portfolio, excluding the impact of prepayments, was approximately 13.8% and 13.6%, respectively, for the three months ended March 31, 2019 and March 31, 2018.


 

43


The following table provides the weighted average annualized portfolio yield on our portfolio comprising of cash interest income, accretion of the net purchase discount, facilities fees and the value of warrants received, accretion of EOT payments and the accelerated receipt of EOT payments on prepayments.  

Returns on Net Asset Value and Total Assets

 

For the Three Months Ended March 31,

 

Portfolio Yield (1)

 

2019

 

 

2018

 

Weighted average annualized portfolio yield on debt investments

 

 

16.5

%

 

 

14.0

%

Coupon income

 

 

10.7

%

 

 

10.5

%

Accretion of discount

 

 

0.9

%

 

 

0.9

%

Accretion of end-of-term payments

 

 

2.2

%

 

 

2.2

%

Impact of prepayments during the period

 

 

2.7

%

 

 

0.4

%

______________

 

(1)

The yields for periods shown are the annualized rates of interest income or the components of interest income recognized during the period divided by the average amortized cost of debt investments in the portfolio at the beginning of each month in the period.

Our weighted average annualized portfolio yield on debt investments may be higher than an investor’s yield on an investment in shares of our common stock. Our weighted average annualized portfolio yield on debt investments does not reflect operating expenses that may be incurred by us. In addition, our weighted average annualized portfolio yield on debt investments and total return figures disclosed above do not consider the effect of any sales commissions or charges that may be incurred in connection with the sale of shares of our common stock. Our weighted average annualized portfolio yield on debt investments and total return based on NAV do not represent actual investment returns to stockholders. Our weighted average annualized portfolio yield on debt investments and total return figures are subject to change and, in the future, may be greater or less than the rates set forth above. Total return based on NAV is the change in ending NAV per share plus distributions per share paid during the period assuming participation in the Company’s dividend reinvestment plan divided by the beginning NAV per share. Total return based on stock price is the change in the ending stock price of the Company’s common stock plus distributions paid during the period assuming participation in the Company’s dividend reinvestment plan divided by the beginning stock price of the Company’s common stock. The total return is for the period shown and is not annualized.

For the three months ended March 31, 2019 and March 31, 2018, our total return per period based on the change in NAV plus distributions reinvested as of the distribution date per share was 3.4% and 0.7%, respectively, and our total return per period based on the change in stock price plus distributions reinvested as of the distribution date was 29.8% and (5.8)%, respectively.

The table below summarizes our return on average total assets and return on average NAV for the three months ended March 31, 2019 and March 31, 2018.

Returns on Net Asset Value and Total Assets

 

For the Three Months Ended March 31,

 

(dollars in thousands)

 

2019

 

 

2018

 

Net investment income

 

$

9,915

 

 

$

5,947

 

Net increase (decrease) in net assets

 

 

11,069

 

 

 

7,943

 

 

 

 

 

 

 

 

 

 

Average net asset value (1)

 

 

337,414

 

 

 

236,511

 

Average total assets (1)

 

 

468,792

 

 

 

401,007

 

 

 

 

 

 

 

 

 

 

Net investment income to average net asset value (2)

 

 

11.9

%

 

 

10.2

%

Net increase (decrease) in net assets to average net asset value (2)

 

 

13.3

%

 

 

13.6

%

 

 

 

 

 

 

 

 

 

Net investment income to average total assets (2)

 

 

8.6

%

 

 

6.0

%

Net increase (decrease) in net assets to average total assets (2)

 

 

9.6

%

 

 

8.0

%

______________

 

(1)

The average NAVs and the average total assets are computed based on daily balances. Total assets are gross assets before deducting total liabilities.

 

(2)

Percentage is presented on an annualized basis.

Critical Accounting Policies

The preparation of our financial statements in accordance with GAAP requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses. Changes in the economic environment, financial markets and any other parameters used in determining such estimates could cause actual results to differ. Valuation of investments, income recognition, realized / unrealized gains or losses and U.S. federal income taxes are considered to be our critical accounting policies and estimates. These have been disclosed under “Critical Accounting Polices” in our Annual Report on Form 10-K filed with the SEC on March 6, 2019 and under “Significant Accounting Policies” in the notes to consolidated financial statements included therein. Changes to the policies are disclosed in the notes to the condensed consolidated financial statements in this Quarterly Report on Form 10-Q.


 

44


Liquidity and Capital Resources

During the three months ended March 31, 2019, cash used in operating activities, consisting primarily of purchases, sales and repayments of investments and the items described in “Results of Operations,” was approximately $17.3 million and cash provided by financing activities was approximately $49.4 million due to borrowings under the Credit Facility of $57.8 million offset by approximately $8.4 million in distributions paid. As of March 31, 2019, cash, including restricted cash, was approximately $42.0 million.

During the three months ended March 31, 2018, cash used in operating activities, consisting primarily of purchases, sales and repayments of investments and the items described in “Results of Operations,” was approximately $20.4 million and cash provided by financing activities was approximately $28.7 million due to borrowings under the Credit Facility for $30.0 million, partially offset by approximately $1.3 million of Credit Facility costs payments, which are deferred and expensed over the term of the Credit Facility. As of March 31, 2018, cash, including restricted cash, was approximately $18.3 million.

Capital Resources

In February 2014, we entered into our Credit Facility which provided us with a $150.0 million commitment, subject to borrowing base requirements. In August 2014, we amended our Credit Facility to increase the total commitments available thereunder to $200.0 million in aggregate. In January 2016, we amended and renewed our Credit Facility which included a reduction in the applicable margin from 3.50% to 3.00%. In January 2018, we amended and renewed our Credit Facility to increase the total commitments available to $210.0 million which includes a reduction in the undrawn rate from 0.75% to 0.50% and a change in the applicable margin during the revolving period to 2.80% if facility utilization is greater than or equal to 75%, 2.90% if utilization is greater than or equal to 50%, and 3.00% if utilization is less than 50%.

As of March 31, 2019 and December 31, 2018, we had outstanding borrowings of $80.8 million and $23.0 million, respectively, under our Credit Facility, which is included in the condensed consolidated statements of assets and liabilities. We had $129.2 million and $187.0 million of remaining capacity on our Credit Facility as of March 31, 2019 and December 31, 2018, respectively.

On July 14, 2017, we completed a public offering of $65.0 million in aggregate principal amount of our newly issued 2022 Notes and received net proceeds of approximately $62.8 million after the payment of fees and offering costs. On July 24, 2017, as a result of the underwriters’ full exercise of their option to purchase additional 2022 Notes, we issued an additional $9.75 million in aggregate principal amount of the 2022 Notes and received net proceeds of approximately $9.5 million after the payment of fees and offering costs. The interest on the 2022 Notes is payable quarterly on January 15, April 15, July 15 and October 15, beginning October 15, 2017.

As a BDC, we generally have an ongoing need to raise additional capital for investment purposes. As a result, we expect, from time to time, to access the debt and equity markets when we believe it is necessary and appropriate to do so. In this regard, we continue to explore various options for obtaining additional debt or equity capital for investments. This may include expanding or extending the Credit Facility, or the issuance of additional shares of our common stock or debt securities. If we are unable to obtain leverage or raise equity capital on terms that are acceptable to us, our ability to grow our portfolio could be substantially impacted.

Contractual Obligations

The tables below provide a summary of when payments are due under our Credit Facility and the 2022 Notes as of March 31, 2019.

Payments Due By Period

 

As of March 31, 2019

 

(in thousands)

 

Total

 

 

Less than 1 year

 

 

1-3 years

 

 

3-5 years

 

 

More than 5 years

 

Credit Facility

 

$

80,776

 

 

$

 

 

$

80,776

 

 

$

 

 

$

 

2022 Notes

 

 

74,750

 

 

 

 

 

 

 

 

 

74,750

 

 

 

 

Total

 

$

155,526

 

 

$

 

 

$

80,776

 

 

$

74,750

 

 

$

 

Off-Balance Sheet Arrangements

Commitments

We are a party to financial instruments with off-balance sheet risk in the normal course of business to meet the financial needs of our portfolio companies. As of March 31, 2019 and December 31, 2018, our off-balance sheet arrangements consisted of approximately, $379.7 million and $294.3 million, respectively, of unfunded commitments, of which $102.0 million and $87.5 million, respectively, was dependent upon the portfolio companies reaching certain milestones before the debt commitment becomes available to them. Our credit agreements with our portfolio companies contain customary lending provisions that allow us relief from funding obligations for previously made commitments in instances where the underlying portfolio company experiences materially adverse events that affect the financial condition or business outlook for the portfolio company.


 

45


The table below provides our unfunded commitments by portfolio company as of March 31, 2019 and December 31, 2018.

Unfunded Commitments for Growth Capital Loans

(unless otherwise noted)

(in thousands)

 

As of March 31, 2019

 

 

As of December 31, 2018*

 

Adjust GMBH

 

 

7,000

 

 

 

 

BlueVine Capital, Inc.

 

 

20,000

 

 

 

20,000

 

Cambridge Broadband Network Limited

 

 

375

 

 

 

 

Capsule Corporation

 

 

10,000

 

 

 

10,000

 

Casper Sleep, Inc.

 

 

30,000

 

 

 

 

ClassPass, Inc.

 

 

30,000

 

 

 

 

Clutter, Inc.

 

 

15,374

 

 

 

2,306

 

FabFitFun, Inc.

 

 

10,000

 

 

 

10,000

 

Factual, Inc.

 

 

10,000

 

 

 

10,000

 

Fiverr International, Ltd.

 

 

30,000

 

 

 

30,000

 

Forgerock, Inc.

 

 

20,000

 

 

 

 

GoEuro Corp.

 

 

30,000

 

 

 

30,000

 

Grove Collaborative, Inc.

 

 

20,000

 

 

 

10,000

 

Hired, Inc.

 

 

 

 

 

10,000

 

Homelight, Inc.

 

 

10,000

 

 

 

10,000

 

Knotel, Inc.

 

 

15,000

 

 

 

 

OneSource Virtual

 

 

10,000

 

 

 

10,000

 

Outdoor Voices, Inc.

 

 

11,000

 

 

 

 

Passport Labs, Inc.

 

 

6,000

 

 

 

6,000

 

Prodigy Finance Limited

 

 

2,000

 

 

 

2,000

 

Qubole, Inc.

 

 

15,000

 

 

 

15,000

 

Quip NYC, Inc.

 

 

25,000

 

 

 

25,000

 

Sonder USA, Inc.

 

 

5,000

 

 

 

5,000

 

Stance, Inc.

 

 

13,000

 

 

 

13,000

 

Tangible Play, Inc.

 

 

 

 

 

6,000

 

Toast, Inc.

 

 

35,000

 

 

 

60,000

 

WorldRemit Limited

 

 

 

 

 

10,000

 

Total

 

$

379,749

 

 

$

294,306

 

_______________

*    Does not include backlog of potential future commitments. Refer to “Investment Activity” above. 

Distributions

We have elected to be treated, and intend to qualify annually, as a RIC under the Code, beginning with our taxable year ended December 31, 2014. To obtain and maintain RIC tax treatment, we must distribute at least 90% of our net ordinary income and net realized short-term capital gains in excess of our net realized long-term capital losses, if any, to our stockholders. In order to avoid a non-deductible 4% U.S. federal excise tax on certain of our undistributed income, we would need to distribute during each calendar year an amount at least equal to the sum of: (a) 98% of our ordinary income (not taking into account any capital gains or losses) for such calendar year; (b) 98.2% of the amount by which our capital gains exceed our capital losses (adjusted for certain ordinary losses) for a one-year period ending on October 31 of the calendar year (unless an election is made by us to use our taxable year); and (c) certain undistributed amounts from previous years on which we paid no U.S. federal income tax. For the tax years ended December 31, 2017 and 2018, we were subject to a 4% U.S. federal excise tax and we may be subject to this tax in future years. In such cases, we will be liable for the tax only on the amount by which we do not meet the foregoing distribution requirement.

To the extent our taxable earnings fall below the total amount of our distributions for the year, a portion of those distributions may be deemed a return of capital to our stockholders. Our Adviser monitors available taxable earnings, including net investment income and realized capital gains, to determine if a return of capital may occur for the year. The tax character of distributions will be determined at the end of the taxable year. Stockholders should read any written disclosure accompanying a dividend payment carefully and should not assume that the source of any distribution is our taxable ordinary income or capital gains. The specific tax characteristics of our distributions will be reported to stockholders after the end of the taxable year.

The following table summarizes our cash distributions per share that have been authorized by our board of directors since our initial public offering. From March 5, 2014 (commencement of operations) to December 31, 2015, these distributions represent ordinary income as our earnings exceed distributions. Approximately $1.20 per share of the distributions during the year ended December 31, 2016 represent a return of capital.

 

46


Period Ended

 

Date Announced

 

Record Date

 

Payment Date

 

Per Share Amount

March 31, 2014

 

April 3, 2014

 

April 15, 2014

 

April 30, 2014

 

$

0.09

 

(1)

June 30, 2014

 

May 13, 2014

 

May 30, 2014

 

June 17, 2014

 

$

0.30

 

 

September 30, 2014

 

August 11, 2014

 

August 29, 2014

 

September 16, 2014

 

$

0.32

 

 

December 31, 2014

 

October 27, 2014

 

November 28, 2014

 

December 16, 2014

 

$

0.36

 

 

December 31, 2014

 

December 3, 2014

 

December 22, 2014

 

December 31, 2014

 

$

0.15

 

(2)

March 31, 2015

 

March 16, 2015

 

March 26, 2015

 

April 16, 2015

 

$

0.36

 

 

June 30, 2015

 

May 6, 2015

 

May 29, 2015

 

June 16, 2015

 

$

0.36

 

 

September 30, 2015

 

August 11, 2015

 

August 31, 2015

 

September 16, 2015

 

$

0.36

 

 

December 31, 2015

 

November 10, 2015

 

November 30, 2015

 

December 16, 2015

 

$

0.36

 

 

March 31, 2016

 

March 14, 2016

 

March 31, 2016

 

April 15, 2016

 

$

0.36

 

 

June 30, 2016

 

May 9, 2016

 

May 31, 2016

 

June 16, 2016

 

$

0.36

 

 

September 30, 2016

 

August 8, 2016

 

August 31, 2016

 

September 16, 2016

 

$

0.36

 

 

December 31, 2016

 

November 7, 2016

 

November 30, 2016

 

December 16, 2016

 

$

0.36

 

 

March 31, 2017

 

March 13, 2017

 

March 31, 2017

 

April 17, 2017

 

$

0.36

 

 

June 30, 2017

 

May 9, 2017

 

May 31, 2017

 

June 16, 2017

 

$

0.36

 

 

September 30, 2017

 

August 8, 2017

 

August 31, 2017

 

September 15, 2017

 

$

0.36

 

 

December 31, 2017

 

November 6, 2017

 

November 17, 2017

 

December 1, 2017

 

$

0.36

 

 

March 31, 2018

 

March 12, 2018

 

March 23, 2018

 

April 6, 2018

 

$

0.36

 

 

June 30, 2018

 

May 2, 2018

 

May 31, 2018

 

June 15, 2018

 

$

0.36

 

 

September 30, 2018

 

August 1, 2018

 

August 31, 2018

 

September 14, 2018

 

$

0.36

 

 

December 31, 2018

 

October 31, 2018

 

November 30, 2018

 

December 14, 2018

 

$

0.36

 

 

December 31, 2018

 

December 6, 2018

 

December 20, 2018

 

December 28, 2018

 

$

0.10

 

(2)

March 31, 2019

 

March 1, 2019

 

March 20, 2019

 

March 29, 2019

 

$

0.36

 

 

Total cash distributions

 

 

 

 

 

 

 

$

7.44

 

 

_______________

(1)

The amount of this initial distribution reflected a quarterly dividend rate of $0.30 per share, prorated for the 27 days for the period from the pricing of the Company’s initial public offering on March 5, 2014 through March 31, 2014.

(2)

Represents a special distribution.

For the three months ended March 31, 2019 and for the year ended December 31, 2018, distributions paid were comprised of interest-sourced distributions (qualified interest income) in amounts equal to 100.0% of total distributions paid, respectively.

Recent Developments

Dividends

On May 1, 2019, our Board declared a $0.36 per share regular quarterly dividend, payable on June 15, 2019 to stockholders of record on May 31, 2019.

Recent Portfolio Activity

From April 1, 2019 through May 1, 2019, we closed $17.1 million of additional debt commitments and funded $39.8 million in new investments. TPC’s direct originations platform entered into $95.0 million of additional non-binding signed term sheets with venture growth stage companies, subject to due diligence, definitive documentation and investment committee approval, as well as compliance with TPC’s allocation policy.


 

47


Item 3. Quantitative and Qualitative Disclosures about Market Risk

We are subject to financial market risks, including changes in interest rates.

Interest Rate Risk

Interest rate sensitivity refers to the change in our earnings and in the relative values of our portfolio that may result from changes in the level of interest rates. Because we fund a portion of our investments with borrowings, our net investment income is affected by the difference between the rate at which we invest and the rate at which we borrow. As a result, there can be no assurance that a change in market interest rates will not have a material adverse effect on our net investment income.

Changes in interest rates may affect both our cost of funding and our interest income from portfolio investments. Our risk management systems and procedures are designed to identify and analyze our risk, to set appropriate policies and limits and to continually monitor these risks. Our investment income will be affected by changes in various interest rates, including LIBOR and prime rates, to the extent that any debt investments include floating interest rates. Debt investments are made with either floating rates that are subject to contractual minimum interest rates for the term of the investment or fixed interest rates.

As of March 31, 2019, a majority of the debt investments (approximately 68.5% and approximately $295.8 million in principal balance) in our debt investment portfolio bore interest at floating rates, all of which have interest rate floors and some of them have interest rate caps for a limited period. Almost all of our unfunded commitments float with changes in the prime rate from the date we enter into the commitment to the date of the actual draw. In addition, our interest expense will be affected by changes in the published LIBOR rate in connection with our Credit Facility, however, our 2022 Notes bears interest at a fixed rate. As of March 31, 2019, our floating rate borrowings totaled $80.8 million, which comprised only 52.5% of our outstanding debt, so an increase in interest rates would generally benefit us as we would expect to generate additional interest income in excess of the additional interest expense. This is illustrated in the following table which shows the annual impact on net income of base rate changes in interest rates (considering interest rate floors for variable rate instruments) assuming no changes in our investment and borrowing structure from the March 31, 2019 condensed consolidated statement of assets and liabilities. 

Change in Interest Rates

(in thousands)

 

Increase (decrease) in interest income

 

 

(Increase) decrease in interest expense

 

 

Net increase (decrease) in net investment income

 

Up 300 basis points

 

$

8,997

 

 

$

(2,457

)

 

$

6,540

 

Up 200 basis points

 

$

5,998

 

 

$

(1,638

)

 

$

4,360

 

Up 100 basis points

 

$

2,999

 

 

$

(819

)

 

$

2,180

 

Up 50 basis points

 

$

1,499

 

 

$

(409

)

 

$

1,090

 

Down 25 basis points

 

$

(750

)

 

$

205

 

 

$

(545

)

This analysis is indicative of the potential impact on our investment income as of March 31, 2019, assuming an immediate and sustained change in interest rates as noted. It should be noted that we anticipate growth in our portfolio funded in part with additional borrowings and such additional borrowings, all else being equal, will increase our investment income sensitivity to interest rates, and such changes could be material. In addition, this analysis does not adjust for potential changes in our portfolio or our borrowing facilities nor does it take into account any changes in the credit performance of our loans that might occur should interest rates change.

Since it is our intention to hold loans to maturity, the fluctuating relative value of these loans that may occur due to changes in interest rate may have an impact on unrealized gains and losses during quarterly reporting periods. Based on our assessment of the interest rate risk, as of March 31, 2019, we had no hedging transactions in place as we deemed the risk acceptable and we did not believe it was necessary to mitigate this risk at that time.

While hedging activities may mitigate our exposure to adverse fluctuations in interest rates, certain hedging transactions that we may enter into in the future, such as interest rate swap agreements, may also limit our ability to participate in the benefits of lower interest rates with respect to our portfolio investments. In addition, there can be no assurance that we will be able to effectively hedge our interest rate risk.

Substantially all of our assets and liabilities are financial in nature. As a result, changes in interest rates and other factors drive our performance more directly than does inflation. Changes in interest rates do not necessarily correlate with inflation rates or changes in inflation rates.

 

48


Item 4. Controls and Procedures

(a)

        Evaluation of Disclosure Controls and Procedures 

 

As of March 31, 2019 (the end of the period covered by this report), we, including our Chief Executive Officer and Interim Chief Financial Officer, evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule 13a-15(e) of the Securities Exchange Act of 1934, as amended). Based on that evaluation, our management, including the Chief Executive Officer and Interim Chief Financial Officer, concluded that our disclosure controls and procedures were effective and provided reasonable assurance that information required to be disclosed in our periodic SEC filings is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Interim Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. However, in evaluating the disclosure controls and procedures, management recognized that any controls and procedures, no matter how well designed and operated can provide only reasonable assurance of achieving the desired control objectives, and management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of such possible controls and procedures.

 

(b)Changes in Internal Controls Over Financial Reporting

 

Management has not identified any change in the Company’s internal control over financial reporting that occurred during the quarter ended March 31, 2019 that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

 

 

49


PART II—OTHER INFORMATION

Item 1. Legal Proceedings

We, our wholly-owned subsidiaries, our Adviser and our Administrator are not currently subject to any material legal proceedings, nor, to our knowledge, is any material legal proceeding threatened against us, our wholly-owned subsidiaries, our Adviser or our Administrator. From time to time, we, our wholly-owned subsidiaries, our Adviser or our Administrator may be a party to certain legal proceedings in the ordinary course of business, including proceedings relating to the enforcement of our rights under contracts with our portfolio companies. While the outcome of these legal proceedings cannot be predicted with certainty, we do not expect that these proceedings will have a material effect upon our financial condition or results of operations.

Item 1A. Risk Factors

There have been no material changes during the three months ended March 31, 2019 to the risk factors discussed in Item 1A. Risk Factors in our Annual Report on Form 10-K for the year ended December 31, 2018.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

Dividend Reinvestment Plan

During the three months ended March 31, 2019, we issued 39,695 shares of common stock under our dividend reinvestment plan. These issuances were not subject to the registration requirements under the Securities Act of 1933, as amended. The cash paid for shares of common stock issued under our dividend reinvestment plan during the three months ended March 31, 2019 was approximately $0.5 million.

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

None.

Item 6. Exhibits

The following exhibits are filed as part of this report or hereby incorporated by reference to exhibits previously filed with the SEC:

 

Exhibit

Number

 

Description of Document

 

 

 

3.1

 

Articles of Amendment and Restatement (1)

3.2

 

Amended and Restated Bylaws (2)

 

 

 

4.1

 

Specimen Stock Certificate (3)

 

 

 

31.1

 

Certification of Chief Executive Officer pursuant to Rule 13a-14 of the Securities Exchange Act of 1934, as amended (*)

 

 

 

31.2

 

Certification of Chief Financial Officer pursuant to Rule 13a-14 of the Securities Exchange Act of 1934, as amended (*)

 

 

 

32.1

 

Certification of Chief Executive Officer pursuant to section 906 of the Sarbanes-Oxley Act of 2002 (*)

 

 

 

32.2

 

Certification of Chief Financial Officer pursuant to section 906 of the Sarbanes-Oxley Act of 2002 (*)

 

 

 

(1)

Incorporated by reference to Exhibit (a) to the Registrant’s Pre-Effective Amendment No. 1 to TriplePoint Venture Growth BDC Corp.’s registration statement on Form N-2 (File No. 333-191871) filed on January 22, 2014.

(2)

Incorporated by reference to Exhibit (b) to the Registrant’s Pre-Effective Amendment No. 1 to TriplePoint Venture Growth BDC Corp.’s registration statement on Form N-2 (File No. 333-191871) filed on January 22, 2014.

(3)

Incorporated by reference to Exhibit (d) to the Registrant’s Pre-Effective Amendment No. 1 to TriplePoint Venture Growth BDC Corp.’s registration statement on Form N-2 (File No. 333-191871) filed on January 22, 2014.

(*)

Filed herewith.

 

50


SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

 

TRIPLEPOINT VENTURE GROWTH BDC CORP.

 

 

 

Date: May 1, 2019

By:

/s/ James P. Labe

 

 

James P. Labe, Chief Executive Officer and Chairman of the Board of Directors

(Principal Executive Officer)

 

 

 

Date: May 1, 2019

By:

/s/ Christopher Gastelu

 

 

Christopher Gastelu, Interim Chief Financial Officer

(Principal Financial and Accounting Officer)

 

 

 

51