Good afternoon ladies and gentlemen, and welcome to the TriplePoint Venture Growth’s Third Quarter 2019 Earnings Conference Call. At this time, all lines have been placed in a listen-only mode. After the speakers’ remarks, there will be an opportunity to ask questions and instructions will follow at that time. This conference call is being recorded and a replay of the call will be available as an audio webcast on the TriplePoint Venture Growth website. Company management is pleased to share with you the results of the company for the third quarter 2019. Today, representing the company is Jim Labe, Chief Executive Officer and Chairman of the Board; Sajal Srivastava, President and Chief Investment Officer; and Chris Mathieu, Chief Financial Officer. Before I turn the call over to Mr. Labe, I would like to direct your attention to the customary Safe Harbor disclosure in the company’s press release regarding forward-looking statements and remind you that during this call, management will make certain statements that relate to future events or the company’s future performance or financial condition, which may be considered forward-looking statements under federal securities law. You’re asked to refer to the company’s most recent filings with the Securities and Exchange Commission for important factors that could cause actual results to differ materially from these statements. The company does not undertake any obligation to update any forward-looking statements or projections unless required by law. Investors are cautioned not to place undue reliance on any forward-looking statements made during the call, which reflect management’s opinions only as of today. To obtain copies of our latest SEC filings, please visit the company’s website at www.tpvg.com. Now, I will turn the call over to Mr. Labe.

Thanks operator and good afternoon everybody. We had some mixed results this quarter. We experienced only one very small customer prepayment, it was phenomenal amount. We also had a reduction in our stock prices in our public stock holdings and saw a decrease in value with some of the portfolio watch list companies. So, as a result, we didn’t cover the dividend with our NII and we had a $0.72 reduction in NAV. But we also had many positive events and developments, which benefits us in the continued growth in scaling at TPVG and what is shaping up to be a really strong originations and fundings here. Before I get to those successes, let me address the mixed results. As many of you know, prepayments had been a very important part of the business. In fact, we’ve experienced at least one every quarter for almost the past three years, but we can’t control the size or magnitude of them. We’ve had one large prepayment already here in the fourth quarter for example, which if it did happen in the third quarter, last quarter, it would have led to us achieving NII in excess of the dividend for the quarter and we’re only 40 days into the current quarter right now. We’ve always said to judge our performance on a full-year basis. So, on a year-to-date basis, our dividend is covered. In fact, given the recent fourth quarter prepayment, I just mentioned, the dividend should be more than covered as well. But a more important, I look at the strong growth in our investment portfolio, which is generating more core investment income and approaching the scale, where we may not be dependent on any of these prepayments in order to cover our dividend. I’m pleased with that and I believe we…

Thank you, Jim and good afternoon everyone. During the third quarter, we signed $301 million of term sheets at TriplePoint Capital enclosed $81 million of debt commitments. On a year-to-date basis, we signed $755 million of term sheets and closed $379 million of debt commitments with 21 companies. The first new company’s commitment close in the quarter was Moda Operandi, which is an e-commerce platform for fashion discovery that connects consumers directly with established and emerging designers from around the world. Moda has raised more than $290 million of capital from NEA, Apax, LVMH and other investors. The second new company commitment added was Norex, which is a healthcare services company and telehealth platform covering aspects of adult health. Norex has raised more than $90 million of capital from Kleiner Perkins, Y Combinator, Union Square Ventures, and other investors. As Jim mentioned, we achieved a record level for our investment portfolio this quarter as a result of funding $85 million of debt investments with a 13% weighted-average yield on new fundings to nine companies. We also funded $1 million of equity investments in two companies. Year-to-date, we have funded $247 million of debt investments to 20 companies, an increase of 71% as compared to $145 million to 19 companies over the first nine months of 2018. During Q3, we had only $1 million in portfolio company prepayments, which contributed to our 13% overall weighted-average quarterly portfolio yield. Without prepayments, our portfolio yield was 12.8%. During the quarter, we also received $41 million of scheduled amortization and repayments on short-term loans and revolving loan commitments, which was higher than normal. Scheduled principle amortization is generally between $6 million and $9 million a quarter. On a year-to-day basis, we have $101 million of portfolio company prepays. Core portfolio yield without prepayments was…

Great, thank you, Sajal. let me take a few minutes to provide some financial highlights for the quarter. Total investment income was $15.7 million for the third quarter of 2019, a decrease of 11% or a $2 million compared to Q3 of 2018. The decrease in investment income was primarily due to lower prepayment income, partially offset by an increase in interest income resulting from a larger average debt investment portfolio. During Q3 2019, we recorded loan prepayments of just $1 million generating fee income of $209,000, compared to Q3 of last year when we recorded loan prepayments of $96 million in generating fee income of $4.5 million. Total operating expenses during the quarter were $8.6 million consisting of interest expense, base management fee, income incentive fee, and administrative and general expenses. Total operating expenses increased approximately 12% or $900,000 over the third quarter of 2018 when the total was $7.7 million. The increase in operating expenses was primarily related to asset growth, which generated an increase in management fees and higher interest expense from a larger average debt balance. Net investment income or NII for the third quarter was $7.1 million or $0.29 per share, compared to $10 million or $0.46 per share in the third quarter of 2018. the change in NII was primarily due to lower prepayment income recorded in the third quarter as compared to 2018. we recorded net realized losses of $1.8 million in the third quarter, primarily from the disposition of one portfolio company. We recorded net unrealized appreciation during the quarter of $14.1 million including mark-to-market adjustments on our warrant and equity portfolio of $4.8 million and mark-to-market adjustments on debt portfolio totaling $8.4 million. We ended the quarter with total investments of $526 million at fair value, up 49% from the prior…

[Operator Instructions] Our first question comes from Casey Alexander with Compass Point. Please go ahead.

Hi, good afternoon. I have a question and this is – it might sound like a loaded question, but this was sort of a pass-through from – that we got from investors. Having an investment in Nortel, it was – its debt and equity. And on the equity side of the investment, Nortel received a large investment from Wafra during the quarter. Then the next week, the largest comparable in the business we work had about an 80% fair value adjustment downward. So, I’m curious, how do you contour the mark that was received on the investment that Nortel received in light of the change in the largest comparable in the group, which was the order of magnitude change. How do you contour that?

Yes. So Casey, I’ll take a first stab at that, but I suppose from the outside, that’s how it sounds or reads. But these are completely different companies in businesses and I think Nortel will take quite an exception to anyone drawing a different conclusion. On one hand, what’s crossing my mind is we got an overblown valuation, 2025 time revenue kind of accompany with all kinds of antics and excesses, a failed IPO and here is Nortel, completely different business model, recently raising a good amount of financing, huge amounts of money across multiple investors just for beginners, but then really the business model completely different. So, Nortel is far more into working with large customers, fortune 500 long-term multiyear contracts. They’re not in that month-to-month rental. They’re into these long-term contracts. They’re not into co-working, they’re not into freelancers or startups. It’s a completely different model.

Yes. And I think more specifically Casey, that valuation multiples that investors used for the round of financing for Nortel were nowhere near the multiples associated with that firm we work. And then also to point out that obviously, the rework registration statement was out in the public domain. So, the world did know about where their financial profile was and where they were versus the valuation out there and we can confirm that Nortel had a much more disciplined valuation compared to rework.

Great. Thank you. I appreciate your answering that question, because I know that was a kind of a difficult one. My next question is just in the broader market, we had a real sort of a reset in, what I call the technology unicorn space. How do you think that I mean, I know it doesn’t impact you per se, because you’re the debt investor, but you do have the equity components, how do you – and your conversations with the VCs think that that may have changed the exit outlook for some of the companies that you guys have lent to and also have equity co-invest with?

Yes. I mean I would say that I think the perception has always been that the bar for being a publicly-traded company has historically always been very high. And so it’s a small percentage of companies that we would argue meet that the requirements now or that are even considering it. And so I would say there’s – it hasn’t been a major surprise in terms of how some of the public companies have traded with regards to the IPO outlook or it isn’t making the IPO less attractive or more attractive as many companies know that the bar has been pretty high. I think what we’ve seen is it’s created further volatility in terms of timing of when exit events may happen. And so we’ve seen companies that were maybe planning for those exit events be an M&A or IPO to happen earlier or planning for them to take longer to occur, which candidly creates more demand for debt, which – and potentially equity capital. So, it helps the overall market opportunity for us. But I would also say, our VC investors, they’re focusing on the longer ball, so to speak. And so they’re not necessarily investing today based on how the NASDAQ or New York stock exchange is trading. I do think it does impact existing companies as they look to their timing and exit timing, but less on the new investments and new lending opportunities.

Okay. that’s helpful. And this was just last – just to make sure that, did you say that you had funded already $94 million of debt investments in Q4?

Correct.

Okay, great. I’ll get out of the way now. Let some other folks ask some questions.

Thank you, Casey.

Our next question comes from Finn O’Shea with Wells Fargo. Please go ahead. Finn O’Shea: Hi, everyone. Good afternoon and thanks for having me on and welcome aboard, mr. Mathieu.

Thank you. Finn O’Shea: I want to touch on – I want to touch on the sort of problem names this quarter, understanding that everything’s a private and confidential, but just sort of how the progression of the marks got to where we were. So, the one that stands out to me most is harvest power, because that’s been in your portfolio for quite a long time and not – didn’t stand out on evaluation perspective. It was that 97 last quarter. So, when I heard the word turbocharged M&A, does that mean it was something really idiosyncratic? Or is this just, I mean, I mean, I guess that basically, it would be the question, because I don’t know how else it would decline so quickly on a performance or milestone perspective.

Yes, Finn. I’d say exactly idiosyncratic and as you may recall, harvest, I believe our original loan balance was $20 million. It’s amortized down to $13 million. So, it’s been a current payer and so exactly, idiosyncratic development and causing this accelerated strategic exploration and resulting in our mark. Finn O’Shea: And did that start just recently, because it looks like last quarter you got to change in the interest rate, I guess maybe, I don’t know if it’s the cash interest rate went up to 13%. So, did it kind of – did it maybe, hit some covenant and you’ve got some amendments earlier in the year?

Yes. I mean there had been some modifications during the year, which again, we’re all kind of generally, in part of the company servicing its debt and good developments at the company or developments of the company, a strategic stuff all happened relatively late in the quarter and here in Q4. Finn O’Shea: Okay. Thank you. And then just the other two, I get kind of lumped together. It sounds pretty similar theme, where the exit story or next rounding story, fell through at the end. I guess focused on Roli, because Cambridge was already marked at a pretty distressed level. So maybe, that one won’t surprise us, but both of these were non-accruals as well, how do you – if we look at, again, I guess stick to Roli, a part of its non-accrual. So, we assume there’s a waterfall now – a waterfall assessment going on and meeting this next round in big part is paying you back with something going behind plan. So, I guess really question is it sounds like, was it sounding like your view on the valuation having to really thread the needle there? Did something again, fall apart very last minute here?

Yes. Again, so I’d say usually it’s – with venture back companies when things developments occur, they happen relatively quickly. And so with all these companies generally when there’s been a meaningful reduction in value, it’s been because of a development that happens fairly quickly. And a part of our processes, the manager is when we see delays or we see data points from strategic processes or capital raisings, either data points or delays or public comp multiples. We take all those into effect when we value the loan and even though we’re the most senior and we think there’s enterprise value, you’ve got to apply discount rates. You’ve got to apply probability of various outcomes. And so you can think you’re going to get all your money back, but you also have to take in time value and you have to take in fair value. And so I would say generally speaking, even a company that you expect to get all your bait back or you may show a lower than fair value, because of those discounts that you have to take into account for fair value purposes. Finn O’Shea: Sure, thank you. And then just one more, does – generally, I guess I’ll ask on high level on all three, is there some form of bank line revolver in front of you? And if so was that structured at origination or did further debt come on in front of you down the line, as you worked on these companies saw amendments and so forth?

Yes. I would say generally speaking one of the companies does not have any other debt and then two of the companies have ABL type financing. Finn O’Shea: Okay. That’s all for me. Thanks for taking my question.

The next question comes from Christopher Nolan with Ladenburg Thalmann. Please go ahead.

Hey, guys. Given lower interest rates, given that the IPO market is really slowed down and this is an interesting opportunity for TriplePoint to scale up, is that how you’re looking at it? And if so, what does that mean for capital and expenses going forward?

I’ll let Chris answer about the interest rate impacts, but in terms of the current environment, I think so to you alluded to this, but absolutely is an opportunity and an IPO is getting stretched out. Things like that are great from an investment perspective, from an originations perspective has to be done intelligently, but it’s also ideal as additional supplemental financing to their IPO strategy.

Yes. I think more specifically, Chris, we are seeing increased demand across both our private capital and our public entities across all stages of development. But I wouldn’t say it’s necessarily related to the public markets. I think it’s a – as Jim said earlier, it’s a function of VC fund raising and VC investment activity that’s what’s causing strong demand for our debt. The fact that the time to exit is a longer journey and a capital intensive journey further creates the demand for debt. So yes, across the board, we’re seeing it. Obviously, TPVG is externally managed. So, as we look to impact of growth for TPVG, it’s more fixed then. And so we’ll see the benefits of growth and scale, but fundamentally, we are absolutely seeing demand across all of our strategies and look to take advantage of it.

But does that mean that we should be seeing operating expenses start to increase relative to revenues? What does that mean for capital ratios? Can be your leverage ratio has gone up this quarter?

Yes. So, I think generally speaking operating expenses are leveraged a little bit in the G&A area. Management fees are based on gross assets, so that kind of moves with the growth of the company. I think as Sajal mentioned, we have the investment grade rating with DBRS. So, I think we can drive down our interest expense overtime. So, as we scale and get to a higher leverage level that will be with what we hope will be less expensive debt. So, I think that will be the real contributor to ROE over time.

Great, okay. Thanks for taking my questions.

The next question comes from Ryan Lynch with KBW. Please go ahead.

Hey, good afternoon. First question, you mentioned a strong – a large prepayment and prepayment fee coming in the fourth quarter. You said if that fee would have come in the third quarter, would have been large enough debt to cover the dividend. I believe then that that’s implying at least a $0.07 per share prepayment fee coming in the fourth quarter. Is that correct? And would you like to quantify the amount?

Yes. I think broadly speaking; you’re in the right ballpark. I think we’re not talking about the exact dollar amounts and letting those be in the…

I think we said it was over $2 million actually, we said was the gain.

Yes. So, a kind of ballpark over to $2 million. But kind of not penny count at this point, but north of $2 million and yes, it would have fully covered the $0.07 shortfall in Q3.

Okay. And then when I look at your slide, which shows the core yields, you guys – yields decreased about 12.8% from 13.7%, obviously prime was down about 50 basis points in the quarter. Can you just speak to what were the other puts and takes of why core yields came down pretty meaningfully in the quarter?

Yes, a great question, Ryan. So, less – as I mentioned, in my prepared remarks, less from prime, because a third of our rate, our loans are fixed rate and then two thirds are floaters and of the floaters, we have a high percentage that are at 4.75% higher actually north of 5%. So, what impacted us the most as quarters, we actually had a numb with the $40 million plus of repayments that happened. We had some of our obligors through some of their either short-term loans or revolving loan structures. And so given the lower risk profile associated with those companies, lower yielding. And so we saw them draw and pay off during the quarter, and so that’s lower risk transactions, lower yield associated with them. And so that’s why the core yield came down during the quarter, but the new assets funded 13% and the new loans funded here in Q4 of that $100 million have an even higher yield profile than what we funded in Q3.

This concludes our question-and-answer session. I would like to turn the conference back over to Jim Labe for any closing remarks.

Thank you. We’d like to thank everyone for participating in our quarterly call today, and for your continuing support. We look forward to talking with you or seeing you soon.

That concludes today’s call. You may now disconnect.