Good afternoon, ladies and gentlemen, and welcome to the TriplePoint Venture Growth BDC First Quarter 2020 Earnings Conference Call. . This conference call is being recorded, and a replay of the call will be available as an audio webcast on the TriplePoint Venture Growth BDC website. Company management is pleased to share with you the company's results for the first quarter 2020. 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.

Thank you, and good afternoon, everyone. On behalf of TPVG, we hope that our shareholders and their families are healthy and continue to stay that way during this pandemic. As I hope to make clear on today's call, our first priority at TPVG is protecting the health of our employees and supporting our portfolio of companies during this global pandemic. As a global firm, we also continue to work closely with our venture capital partners, the entrepreneurs and investors within the venture ecosystem during these challenging times. The resilience of our portfolio companies and the strength of the venture community is never more evident during these times, and we are grateful for all the support and collaboration within the venture community. At TPVG, our greatest strength is the quality and experience of our management team, which is the most experienced team in the venture lending asset category, bar none. We have decades of experience in venture lending and have been through many economic cycles in the venture lending business over the last 30 years. In this environment, we have a playbook and we have been operating and executing on it. And although this is a very difficult period and we are far from out of the woods, our focus on the venture lending segment of the BDC market brings some mitigating factors that mean the current environment could affect us less than some of the broader segments of the BDC sector. And I'll get into those shortly.

Thank you, Jim. As a result of the COVID pandemic, we are operating in a period of considerable volatility and uncertainty. As we navigate TPVG through these circumstances, we don't know how long these conditions will last. So our thought is to share some short-term guidance on our playbook. And as I review our performance for Q1, I will provide our outlook for the business for the next 1 to 2 quarters based on what we know today and what we can reasonably expect.

Thank you, Sajal, and hello, everyone. While the first quarter was an interesting period, to say the least, TPVG finished the quarter on a strong note. Let me take you through an update on the results for the first quarter. Total investment and other income was $20.8 million for the first quarter of 2020 as compared to $17.5 million for the first quarter of 2019. The weighted average annualized portfolio yield was 12.7% on total debt investments for the first quarter of 2020. The increase in total investment income was driven by a higher average portfolio balance in the quarter. Total operating expenses were $8.6 million for the first quarter of 2020, as compared to $7.6 million for the first quarter of 2019. The total operating expenses for the first quarter consisted of $4.2 million of interest expense, $2.8 million of base management fees and $1.6 million of G&A. The increase in total operating expenses was primarily related to asset growth, which generated an increase in management fees and higher interest expense from a higher average portfolio balance in the quarter. Net investment income, or NII, for the first quarter of 2020 was $12.2 million or $0.41 per share compared to $9.9 million or $0.40 per share in the first quarter of 2019. Net unrealized losses on investments for the first quarter were $17 million or $0.57 per share, resulting primarily from mark-to-market related changes, as well as credit-related adjustments, as all previously discussed on this call by Sajal. The net decrease in net assets from operations for the quarter was $5.1 million or $0.17 per share. Compared to a net increase in net assets from operations of $11.1 million or $0.45 per share in the first quarter of 2019. At quarter end, total assets were $803 million, including $713…

. The first question comes from Finian O'Shea from Wells Fargo.

First, I want to ask a question on some of the new commitments to your existing companies. I know this is normal for the nature of your deal flow, but this quarter saw a few that are nearer-term, OneSource, Grove, Roli, I think that one matured before the quarter end. So can you give us some color on the nature of a shorter-term loan you will do and what that means for the liquidity of those issuers.

Sure. Jim, I'll start, and then maybe you can jump in. So Finian, as you know, when it comes to our unfunded commitment, so our customers have -- or our debt commitment to them are structured as lines of credit. And so they generally have 6 to 12 months to draw on their lines from us. And then we typically give them multiple amortization schedules and maturity dates to match fund the use of proceeds for the strategic purpose. So they're not just drawing on our capital just to have excess capital on their balance sheet. And so in any given quarter, we'll have fundings from new customers that we commit during the quarter and funding on those facilities plus prior quarters unfunded commitments being utilized. And I would say generally, it's on a -- company-specific which options or structures they choose to the extent that may be marketing expense related, they may choose shorter-term options, inventory or asset-based uses the shorter-term options to the extent it's more runway extension, they will tend to use the longer-term options. Jim, I don't know if you have more to add.

Yes, I can't really add much to that other than we strive to provide flexibility to companies to meet their financing needs and prior -- so some of these are shorter-term duration, others are longer term, and we work with the companies to optimize our financing strategies. And not at liberty to talk about -- these are privately held companies, but some of the short-term financings are very beneficial and one of the advantages of working with TPVG.

Very well. And just a follow-on, I guess, higher level or higher-portfolio level. Do -- are milestones or any covenants typically set to revenue or profitability numbers, understanding that a lot of your portfolio companies are probably challenged on the revenue side, but able to cut back and preserve cash? So on 1 metric might lag, but overall, profitability is okay. But does that impact anything with your lending parameters or your liquidity parameters?

Yes. Jim, if you don't mind, I'll take the first cut, and then please, have -- jump in. So Fin, I think you hit on a very important point that I'd like to maybe parse through pieces. So I think the first thing is on all of our unfunded commitments, milestone or not, we have various protections in place. So to ensure that companies are generally materially performing to plan or maybe the other way, inversely, that material adverse change generally has not occurred. Obviously, it's a very high bar when you're going to call in something like that. But I also think it's important that unlike, I'd say, maybe bank revolvers, where there is no form of protection for us, there is performance, there is some general requirement in addition to the fact that we have great relationships with these companies, the entrepreneurs, their VCs. We pick up the phone, we talk, regardless of what a legal document may say. But on the other hand, we -- Jim and I have been in the start-up world; me, 20-plus years; Jim, 30-plus years. No company ever meets plan. And so there is also the reality -- although there are some, I take that back, there are definitely companies that meet and beat plan. But I think as venture lenders, we also generally have a higher tolerance for variability in financial performance because, as you know, a lot of valuations or future-round valuations are set to future revenue expectations. But having said that, more specifically, to answer your question, for those companies with milestone-based unfunded commitments, typically, the milestone is set either to a future capital raise, revenue performance or some strategic execution or operating milestone for the company, validating the company to have access to more debt capital. And so those are generally what we look to for our milestones. But again, when we underwrite our loans, we're also looking to the intended use of proceeds where -- and we also have the appropriate legal remedies and protections on the nonmilestone basis. But again, we're very -- as Jim mentioned in his script, reputation relationships are very important. And so we think very kindly and significantly when you have an underperforming company that's looking to draw on capital.

Yes, I don't -- I think Sajal covered that nicely. I don't have too much more to add other than at the time we put the -- first of all, companies rarely are on plan. A good number of them are actually ahead of plan, some behind plan, and things change, not unexpected. But overall, when we put these milestones together, it's the time of the origination of the deal based on the plan that we have presented. And Sajal also hit the nail on the coffin, which is we stay in very close contact with the teams, the investors of these companies. And so we know where they are versus their original plan and the milestones aren't just revenue. Oftentimes, there is multiple ones. So it's revenues. It's equity round, closed. It's performance in terms of cash flow. There's a whole bunch of metrics. It's not just some top line number. And again, it's fluid and there's some resiliency, and we work with these companies.

Your next question comes from Casey Alexander with Compass Point.

One question I have is back in 2014, 2015, when your shares were trading at a significant discount, the company had a fairly active share repurchase program. Why is there no share repurchase program now?

Casey, I'll take this question. And Jim and Chris, please jump in. Listen, I think we're in the middle of the COVID crisis. And I would say right now, liquidity is a position of strength, not for necessarily new investment opportunities, although that's important, but I also think, again, just concern about counterparty risk, lenders and other things. And so we have a pattern of being aligned with our shareholders. And at the appropriate time, I expect to have the conversation with our Board about a buyback program. But we have been a little bit restricted in our ability to communicate given the capital raise is underway and the world knowing about them. And so after we've had the world to season on our results and what we're up to, I think it's the next logical thing to have that conversation.

Well, in that vein, then I'm surprised to see at the end of the quarter that you still own the position in CrowdStrike. And frankly, at today's closing price, that's $20 million of equity and potential liquidity, and you could use that for investments or you could use that for a share repurchase program. And frankly, with the stock at a 58% discount, if you use that to repurchase shares, that would be 2.5 million shares. The equivalent CrowdStrike would have to go to $142 counting dividends to give the equivalent value that you could get by using that in the share repurchase program. So I don't -- I'm curious at what the thought process is of continuing to own CrowdStrike in a period where capital is precious and you need to receive a line from the parent platform.

Yes. No doubt we're -- again, I can't disclose what our trading strategies are on CrowdStrike, but our position is to orderly liquidate after our lockup has occurred. So you -- I would say, no one should be surprised to see us liquidating our position in CrowdStrike over the next couple of quarters. Listen, I think we were -- of all the levers and the crisis and things we were worried about in Q1, I think the liquidity was probably the most important thing and ensuring the viability of the platform, the team, the portfolio, going through the playbook. And so I'd say Q1's playbook, the priority was not a buyback, it was other execution tasks. And here in Q2 and Q3, those are very logical and very thoughtful. And analytically, you are absolutely right, and then those are the conversations we expect to have with our Board about it, Casey. But in Q1, in the heart of COVID, that was not at the highest top of our priority given all the other things that we were managing through in a crisis.

Okay. Can you give us sort of the temper of the activity at the end of the quarter versus the beginning of the quarter? I mean how much of your origination activity -- usually, it's a software model that you guys closed a lot of stuff at the end of the quarter. When did these close? Did these closed early in the quarter? Did things quiet down at the end of the quarter? And how has that transitioned as we've moved into the second quarter?

Yes, Jim, I'm happy to start first, and then please jump in. So I think we had the benefit of -- Casey, we had our Q4 earnings call during the quarter. So during then, again, in that release, you could see that we were -- actually had a very busy first 2 months of Q1...

You will have to forgive me if when you reported Q4 feels like 1 billion years ago.

So albeit -- so as of the time of the Q1 call, which -- Q4 call, which was March 4, we had closed $96 million, and we had funded $41 million of investment. So really it's -- and again, no surprise, right? I mean COVID really hit us here in the U.S. and particularly in the Bay Area second, third week of March. So really, we didn't see until 2 to 3 weeks of March. And so we started off, clearly, January and February, particularly strong, robust. The capital raises, obviously, we're in market on our institutional debt raise. And then when the COVID crisis happened, again, this is something we're very proud of, just the calmness and stability of -- again. So we're at $40 million before the crisis really hit. And then from crisis to end of quarter, we funded less than $40 million of new investments. And then if you look here in the first month of Q2, $16 million of new funding. So very calm, very stable. It goes to the comment we made about the large cash liquidity position, the resiliency and the stability of our portfolio companies and, more importantly, the equity investment activity. And so again, as Jim mentioned during his comment, and Jim, please jump in, just how we manage the pipeline. Jim, I don't know if you want to talk a little bit about managing the originations pipeline and...

Yes. So we've been through, I don't know how many rodeos over time here in venture lending. And the demand now, which is no surprise to us, is very, very strong as companies try to think through this period of uncertainty and revise our plans and think about their cash needs. So the pipeline and the demand is strong. But what we've learned is this is a time where we want to be thoughtful. We want to be conservative. We want to understand the cash needs and structure the deals accordingly. So I think somewhere I mentioned, we went through our existing portfolio, our signed term sheets, the deals in due diligence and did a good, hard look understanding the impact of COVID on the revised plans of these companies, but also there is so much equity out there in the venture capital world with these select venture capital investors. And our companies are raising money, $1.5 billion in the last 3, 4 months just among some TPVG portfolio companies that demand is strong, we want to be careful, there are some new investment opportunities, but we are working with these companies and helping with their financing strategy. I don't think there's any particular drawdown schedule out there.

Okay. Lastly, how many company loans are on nonaccrual compared to last quarter?

Chris, do you want to take that one?

Yes. Yes. Casey, it's the same number. As Sajal mentioned, there's no new loans on nonaccrual. So there's four obligors, same as last quarter's, same names.

Your next question comes from Chris York from JMP Securities.

So I want to talk a little bit about cash at the portfolio company basis. PitchBook supported that the median runway for VC-backed companies is about 10 months. Cash is clearly king today and especially for venture capital investing. So I'm curious if you could provide us any data for your portfolio on the cash runway today.

Yes, I can tackle that. Feel free to add, Sajal. So Chris, a little -- so with these better venture capital funds and our -- portfolio companies that they work with, every company has some kind of impact from COVID. And quite frankly, a few of them are tailwinds. They were not all some headwind issues. And they're all managing their cash and revised plans very conservatively, and we're working lockstep with them. And we haven't had any dramatic change. So to get right into your question, in terms of cash runway, these are things we look at. Again, these are private companies, and they are moving targets because a number of them have just closed rounds. One company closed around last week. We talked about the $1.5 billion close by them in a while, and then there's more cash coming in and some rounds are about to close. So make a long story short, more than half of the TPVG portfolio companies have more than 12 months of cash. We really haven't segmented in it because, again, some of the burn rate are changing from what they were as we speak into some much lower burn rates, but we're feeling pretty good about the portfolio in terms of operating cash runway.

Great. Very helpful. Certainly understand that burn rates are changing very quickly, but just the common 50% of your portfolio over 12 months is helpful. And then, Sajal, you -- I appreciate the comments you provided on portfolio companies that have raised capital in the first quarter and then second quarter. I missed that, so can you just repeat that for me? And then secondly, did your LTV in any of those situations actually improve? Or was there an injection below the round of fund raised where you extended that?

Great question, Chris. So yes, to repeat the statistic in Q1, we had 9 portfolio companies raised over $1.3 billion of capital. I would say that the majority of those companies were pre-COVID, or those terms and those valuations were all pre-COVID. So as you can imagine, they were all up to -- up valuations are flat at the worst. So generally speaking, strong performance and even within the companies that have announced rounds in Q3, despite the impact of COVID, those 3 have all been at up round valuations. In fact, one portfolio company I can comment, Cohesity announced their $250 million of equity round at a $2.5 billion valuation, double their last round valuation, which was -- a prior round was led by SoftBank, and now this round is a devaluation higher than SoftBank. So we're seeing strong activity, as Jim talked to, and we're seeing valuation accretion. And again, it's great companies are doing great things. And -- but it's a balance, it's still early, and we expect to see some impact on valuations and some impact on flat being the new up and down being the new flat.

Very helpful, Sajal, to lead up my next question. You talked a little bit about SoftBank. Obviously, thought Cohesity's fundraise, very positive for your portfolio company there. But on the topic of SoftBank, do you anticipate any issues there with their willingness to support any of your portfolio companies?

Yes. Listen, I can comment on -- isolate one investor. We have historically had, I want to say, almost a dozen mutual portfolio companies with SoftBank. I think TPVG only has one portfolio company with debt outstanding that is backed by SoftBank. I don't know if that's good or bad. It's just the statistic, it is what it is. And so, listen, I think we continue to see them active in the market, supporting portfolio companies. I think Cohesity's a great statistic or a great statistic of ability for SoftBank-backed portfolio companies to raise rounds at valuations higher than SoftBank. So I would say I think they get a bad rap. And they've only been good to us and our portfolio companies, and so we have nothing negative to say about them.

Very good point. Casey touched on my -- part of my question on CrowdStrike, but I did have a leftover. Were you subject to a 12-month lockup at IPO?

No, we were not. No. Standard 6 months.

Okay. So it is -- so your position today could be sold today?

Correct.

Okay. And then last question, maybe for Chris or Jim or Sajal, you certainly can jump in. Chris, your comments about the maintenance of the dividend seem to me to be like there was a deliberation at the Board level. So what degree of confidence do you have in your portfolio providing earnings at this run rate -- at the dividend run rate beyond the second quarter?

Yes. I think that the Board always has the discussion, and it's a prudent thing to do. So I think that we were just kind of elaborating and sharing those conversations that are natural for each quarter that we're talking about at a distribution level. I think just given the robust discussion that always happens, we thought it would be fair to say that we are comfortable where we are with the portfolio, with the additional leverage that we have and the earnings power of the portfolio. So it was really just sharing a little bit behind the curtain what we talked about, nothing else.

Your next question comes from Christopher Nolan from Ladenburg Thalmann.

How often are you evaluating the discount rate when you value your debt investments?

Chris, do you want to take that?

Sure. Yes, so it's part of our valuation process for our quarterly close. So we do that at least quarterly in connection with the fair value process.

Is that for the entire portfolio or just for a portion of the portfolio?

100%, yes. Yes. So the way that we work this is that 100% of the portfolio, we assess the discount rate, compare -- if there's an implicit rate in the transaction, should there be an adjustment, whether it's a credit migration, adjustment or a market rate adjustment? And we do that across the entire portfolio every quarter internally. And then we have an external valuation process where we have 2 evaluation firms that support our efforts and the Board's efforts to come up with a fair value process. And they, too, look at discount rates and the impact of any credit migration for under or overperforming as well as market dynamics.

Great. That's helpful. And then I guess for Sajal, I noticed that the yields on new investments, weighted average yield is 13.74% versus 13.5% last quarter. Are you guys actually seeing stronger pricing power in this market?

Chris, a good question. Let me start, and then please, Jim, I think you should jump in. I would say 2 elements. One is new deals. I'll let Jim talk about the new deals and the current rate for new deals. I'll talk more of -- remember, we do have unfunded commitments. And so they're locked in. We set the prime floors at the prime at the time that we do the deal. So in any given quarter, we have, I call it, the backlog from prior unfunded commitments and the rates and terms set from those prior deals. So that's the insulation, right? The 97% of our book -- of our funded variable rate loans -- our floating loans are -- have prime floors at 4.25% higher, but our unfunded commitments also equally have a high percentage of prime floors set to 4.25% and higher. So I'd say we have that benefit of that lock in, that lag effect of the unfunded commitments from prior deals closed and the higher prime rate floors on those. Jim, do you want to talk about current market rate dynamics?

Yes. I guess I'd just add. So first and foremost, we're, I guess, during this period, emphasizing higher -- highest quality of new transactions out there. And again, there's very strong demand, so we're very carefully going through that. And because of this period of uncertainty, these companies are looking for trusted partners when it comes to financing and debt. And so we are being mindful and opportunistic, and there has been an opportunity, let's say, to tighten up structures and pricing as I don't want to say, capitalize on these times, but just appropriate for the risk and uncertainties at these times. And we're there. And a lot of these companies are looking again for trusted partners that got the reputation, reference and relationships. So there are opportunities, yes.

And I would only add, Chris, just -- our goal here is not to push rates up, it's lower risk. And so we're focusing, as Jim said, on higher-quality investments. If we went downstream, I'm sure we could charge more, but that's not our underwriting methodology or expertise.

Great. And final question, given the liquidity concerns, given that prepayments to date have been $10 million, your fundings have been $16 million. Is it fair to say that you're going to try to keep your prepays and your new fundings relatively in the same general amounts, vicinity or so?

We can't control prepays. So obviously, prepays are a function of the portfolio companies and their activities, be it equity raising or strategic M&A IPO, whatever that may be. And so I think, from our perspective, we're just focused on really good credits and really good companies. And we want our great companies to use our capital when it's strategically beneficial for them. So I would say we're not intentionally controlling or guiding. We want our companies to use it when it's most strategic, understanding that it's not cheap capital and it's not something that they put on their balance sheets for rainy days. It's something that for the cost associated with it, should have a strategic use.

The next question comes from George Bahamondes from Deutsche Bank.

Just wondering if you can give us a sense of what percentage of the portfolio or borrowers have reached out about loan modifications since the onset of COVID-19?

Jim, do you want to take that?

Yes. So it's been very few. The only reason I'm hesitating is we have a very large portfolio cost at TriplePoint platform. And to my knowledge, it's very few and far between a TPVG portfolio companies. Chris might actually or Sajal know it, but I would say it's not a material or major issue or problem right now of companies raising.

And I would just add, the only portfolio modifications that happened during the quarter were on credit watch list companies, and so no new modifications happened on non-lower-rated credit watch list. George, you would think that they should, I guess, to a certain extent. But again, I think it goes to the thoughtfulness and strong liquidity positions of our portfolio companies with regards to how they use debt and manage cash.

Sure. That's helpful. And during your prepared remarks, there was a comment around spillover income. Can you guys just repeat that number? I missed that.

Yes, the spillover's $7.3 million.

$7.3 million?

Correct. That's right. Yes. That was spillover from 2019. And since we covered the distribution for Q1, there's a little bit added, but we make statements as to the balance on an annual basis.

The next question is from Matthew Howlett from Nomura.

First, excellent job on the capital management front with the cap ratio in 1Q before this all started. I guess the question is on the cash balance, you're running at a little over $80 million. The leverage is a little over 1x, at the high end of what you always wanted. What can you tell me in terms of the cadence on putting the cash, maybe drawing down that unsecured line you just got? What can you tell me in terms of what to expect in terms of leverage and net cash?

Yes. Maybe I'll start, Matt. And then, Chris, please jump in. Listen, obviously, particularly the last two weeks of March were some very chaotic and crazy periods. And so for us, we felt having as much reasonable liquidity on hand was a position of strength. As we ended the quarter, as you know, fundings tend to be strong at the end of the quarter, and then right -- if there's some spillover that first week, and so we wanted to be in a strong liquidity position given just all the factors in the market and things going on, which ended up, Matt, as you pointed out, our gross leverage ratio was 1x. But obviously, our net leverage ratio is lower. I think as we see more stability and calmness in the market, which we're seeing, we expect our net leverage position or our excess cash position were translated to -- is -- will be lower as we just maintain less cash on hand and pay down our credit facilities, and then, again, use the cash on hand to fund new debt and investments. And so I do think -- one of our goals pre-COVID was we wanted to just stabilize and operate at a higher leverage so that there was less variability. And given that we hit our target leverage ratio in Q4 without the world seeing it and then we came with the equity raise, we wanted, again, to just have the benefit of running at a higher leverage, a higher portfolio rate, and again, smooth out some of the lumpiness that we had in between our equity capital raises. Chris, you want to add?

Yes, I would just add that on a kind of direct response to your question on leverage, on a net basis, if we took that cash and applied it to our debt, we'd be at more like 0.8x lever. So more at kind of the low end of the range that we spoke about, but for the focus on liquidity as we went into quarter end.

Right. And then remind me again, is there a floor on the bank credit facility that's -- in terms of LIBOR for that?

No. There's none.

So that's going to come down, that -- we can presume that?

That's right. That makes sense, yes. It will bounce around a little bit, but generally down with the market.

Got it. Okay. And then -- got that. Okay. Then just remind me again, I mean, you guys have been through the cycles, like you said. Remind me again sort of on '08, '09, I think of that sort of recession how well a lot of venture growth defaults held up relative to the broader middle market space. Could you sort of remind me, again, if you think sort of that does play out, we get a recessionary environment where that would be the case? And then maybe if I could ask a little bit more on that playbook. What are you seeing in the back half of the year that gets you excited? Is it sort of deals? Is it sort of pent-up demand? Will there be opportunities in new social distancing companies? Better terms? If I could just sort of ask a little bit more on that front.

Yes. Well, maybe I'll start, and then Jim, please jump in. So Matt, I think it's hard to compare what were -- the scenario we're in now or the market conditions now. I'd say that the benefit to us in the venture world in '08 and '09, as odd as it may sound, is the financial crisis really didn't impact the VC ecosystem as much, right? I mean our start-up companies were generally relatively insulated from the impact of the financial crisis from a liquidity perspective, from a revenue, from being able to work, being able to sell product less impacted. I would say the COVID pandemic is unprecedented in terms of it's touching every aspect of our lives, our economy and the world as a whole. So I guess maybe rest assured that in the '08, '09 time period financial crisis, venture -- I mean, we -- as Jim said, we structured some of our highest returning transactions across the platform during that period of time because we focused on our best sponsors, our best relationships and used our balance sheet and our partnership as a means of deepening the barriers to entry by solidifying our relationships with our VC partners, and that also helps credit performance, right? When you have multiple portfolio company relationships with the VC fund, you're an entrenched, reliable, dependable partner. So I'd say credit performed particularly well in '08, '09, returns on our equity kickers were also particularly strong. I just think we're in this unprecedented COVID environment right now, where everything is generally impacted. And so it's too soon to tell. Obviously, Q1 only had two weeks of real COVID impact. We don't want to be overly confident. We're lenders, so we should always be paranoid at -- all the time. So I don't want to say -- and Jim said this as well, we're far from out of the woods. We're here on the defensive and paranoid and staying on top of our portfolio. But to you get to your other point, we are definitely seeing some pent-up demand, some pockets of excitement. And Jim, if you want to talk about -- is -- our outlook for areas for origination and excitement as we end or over the next couple of quarters.

Yes. So again, hopefully, not at the expense of being duplicative, but there's definitely an adjustment underway. And there are massive amounts of fresh venture capital among our select venture funds and some of the better opportunities in having made the rounds with some of these venture capitalists historically have grown out of some of the more challenging times. So just post-2008, 2009, I don't want to rattle all the company names, but some of the better or highest returns or some of the best companies in the VC world have historically after -- I don't want to say out of the ashes, but out of some of the, again, more challenging times, have been created. Those have all been opportunities, and it's easy for us to go back in the TriplePoint playbook, and I can pick on Facebook and some others that we did some very large ones post-2008. But the VCs, there's opportunities here. We're already starting to see them. And we could spend an afternoon on some of the sectors and industries, but there's a lot of things developing investments in, I guess, I'd call it, the new office of the future in the environment of the future, in the new work environment. And there's an awful lot of exciting things in technologies in terms of investments for the post-COVID era. So there are -- and again, the strong demand.

Your next question comes from Ryan Lynch from KBW.

I wanted to touch back on some of the discussion regarding liquidity and unfunded commitments. So if I look at your unfunded commitments that are nonmilestone-related, that's about $168 million, when you compare that to your current liquidity as of March 31 of $130 million, I wanted to get your guys' thoughts on if in the near term, if you had all of your unfunded commitments from your borrowers that are not milestone related, if they came to you and wanted to all borrow that capital in the next month or so, how would you fund that?

Great question, Ryan, and so exact, that's, I don't know, a segue to our backstop facility. So the playbook is obviously cash on hand plus we have the warehouse facility, plus the accordion, plus we have CrowdStrike and then we have the backstop from the adviser. And that's why we put the facility in place. We don't see a scenario of that happening. And I'll explain why we wouldn't expect to see all $160 million or $170 million of -- if funding requests come in. But that's the thought process and the logic by having that backstop facility, as if in that scenario, we're more than well positioned to cover it. Why do I think that's not going to -- well, and let me also add, too, the portfolio amortization, right? So we did have a prepay of $10 million that just came in, in the beginning of the month. We obviously got April 1 collections, May 1 collections, so that's another $20 million to $30 million right there. So I would say, well positioned without the backstop. The backstop just gives us even more buffer. But I think the more deeper point is the other statistic that I mentioned during my call, 9 portfolio companies raising $1.3 billion in Q1; 10 companies, I believe, raising $1.1 billion in Q4. If you look at our unfunded commitments -- I'll pick on Cohesity, for example. Cohesity announced the $250 million equity raise about 3 weeks ago. We have a $30 million unfunded commitment to Cohesity. We would love for Cohesity to draw on that $30 million unfunded commitment. We wish they would. Very few lenders have the opportunity to lend $30 million at double-digit interest rates to companies sitting on $250 million of cash. I could go through the list. Capsule is another company on that list that announced a large equity round earlier this year that has an unfunded commitment from us. And so, I guess, as we parse through the unfunded, the good or the bad is it's a fine balance of those companies that have significant liquidity, and that's why we don't think that scenario. But because we're best-in-class, because we're proactive, we're ahead of the curve, that's why we have the cash flows, the prepays, the accordion and the backstop from our adviser.

Okay. And I think you mentioned the -- in the prepared remarks, Sajal, that the $108 million for the rest of the year of cash flows, you talked about 2 months. But it's a total of $108 million, just the remainder of the year as well.

Yes. No, I'm just saying as of where we are today, we've already received $10 million from the prepay and then two months' worth of cash collections against that $100 million.

Yes. Okay. That makes sense. The other question that I had, when I was looking at your 10-Q, when I look at gross unrealized changes in your portfolio valuation, your debt investments look like they had about a $44 million unrealized loss across the board this quarter, which was a pretty big uptick from the $26 million last quarter, which would make sense given the COVID-related pandemic and wider spreads, et cetera, et cetera. But when I look at your equity investments, you guys had a $15.7 million unrealized gain in your equity book at the end of this quarter, which was actually a bigger gain than the $14.7 million last quarter. So it actually looked like you guys wrote your equity book up in total. So I'm just wondering, how is that possible given the broad-based decline in equity indices in the first quarter as well as, obviously, the current pandemic environment we're in today?

Yes. Maybe I'll start and then, Chris, if you want to jump in. So obviously, CrowdStrike and Medallia are two publicly traded portfolio companies with our equity kickers that were converted to warrants, converted to equity, represents a meaningful amount, as I mentioned in our prepared remarks, of the gains that we had about $700,000 related to just those two companies trading up during the quarter. And then -- so that's -- and so the meaningful amount of the cumulative unrealized gain, Ryan, as I mentioned in my prepared remarks, I think it was 14.3%. Chris, you can correct me. It's from those two companies, just those two companies. So again, as you look to the rest of the warrant portfolio, I guess, the great opportunity is where we've really undervalued the warrant book because the majority of the unrealized gains have come from those two names despite this fact that we have some real winners and promising companies in the private equity and warrant portfolio. For example, Revolut closed around at a $5 billion valuation. Toast closed around at a $4 billion valuation. And you'll see only slight accretion in value of the equity kickers. And in fact, one of the Revolut warrants went down in value for the quarter. So I would say -- so again, that addresses the first half. And then the second point is, again, our valuation policy is looking if those ramps have generally happened within the most recent quarters. If a willing buyer paid those rates and those valuations, we look to those. And then after a period of time, we then look to market rates on top of that. And so it's no surprise in Q1, you would see less impact on the equity warrant book, and in subsequent quarters, potentially seeing more impact to the rest of the book as those rounds get older and we rely more on market rates versus those last rounds of financing, unless those companies raise new rounds, and then we'll look to those valuations to set our evaluations.

Okay. Understood. And then can you talk about -- did any of your borrowers received Paycheck Protection Program loans this quarter? And if they did, could you just give us a sense of approximately how many did?

Jim, do you want to handle that?

Yes, I can jump in on that. Because these are privately held companies, these are not things that I think would be appropriate to share. But I'd say a number of them have applied for the PPP program and some are considering it, some have been approved, others actually have passed on it and a few have actually returned the funds. So there's a mixture there. And I don't think it will be appropriate to share specific numbers, percentages, but a number of them have applied -- I'm sorry, a number of them are in those various stages with the PPP program.

I think a good point, Jim, is that our companies qualify. So I think there was some concern particularly for PE-backed companies. We've seen or the data points have shown that venture-backed companies do qualify, have qualified. And as Jim said, I think each company and its Board is making a decision independently of whether or not they want to pursue or accept a return, but we do definitely have portfolio companies in TPVG that have taken it.

You now have a follow-up question from Casey Alexander from Compass Point.

Yes. And I would note in relation to the other question you got, that CrowdStrike's up another $5 million in this quarter. So hoping you sell it tomorrow and not the first day of the quarter. Can you break down the -- out of the $17 million of unrealized losses, can you break down -- break it down between how much was -- what percentage was spread-related marks versus credit-related marks? And what was the benchmark that you used to create the spread-related marks?

Let me start with the approach, and then, Chris, if you could parse through the various categories, if we have it available. If not, Casey, we can follow up with you. So as I said in my prepared remarks, we looked at -- or at least our approach was making an adjustment for the market aspect, the risk and volatility. So all the portfolio companies generally received -- all the debt investments received an adjustment related to that. And then those companies and those specific sectors that I mentioned, primarily e-commerce, consumer, travel, real estate, lending, those got an additional adjustment to the extent that those businesses were negatively impacted to the -- by COVID, to the extent that we had companies outperforming or performing better than planned because of COVID, they did not get the industry sector adjustment associated with that. And then with regards to companies on the watch list, the lower quality assets, so to speak, we applied higher market rate discounts or higher industry sector discounts for those to reflect the fact that these were companies that were on the watch list, and so they should get a credit adjustment, an additional adjustment for credit. And then on top of that, we have revisited any of those companies where there were recovery-based assumptions and the valuation. In this environment, you have to take into account recoveries may be lower, it may take longer, things of that nature. So we then applied an additional discount to those companies due to recovery-based assumptions. What I had shared in my remarks was -- I didn't break it down between what was market, what was sector, what was all the other buckets. I did say at least the categories 1, 2 and 3, the higher-quality rated assets of that $17.6 million, $11.7 million represented adjustments to those top 3 buckets, and then the bottom two buckets represented about $5.9 million of the total $17.6 million.

Yes. Okay. All right.

And Casey, just to provide kind of guidance to lead you to the 10-Q in the investment footnote, there's a table of inputs. And we show where the allocation of discount rate, kind of the unobservable inputs, the range of discount rates of about 6.5%, all the way up to 26%, depending on which debt investment we are talking about with the weighted average a little over 15%. So it's a mixed bag is what we're really describing, depending on the facts and circumstances of industry sector and overall market rate.

Great. Secondly, on the unfunded commitments, and I hate to come back to this, but is there not also an adverse event clause gate that somebody has to go through that if their business is substantially damaged, they can't just run to you and take down one of the unfunded commitments.

Yes. Agreed. Yes, absolutely. And I believe I mentioned that during month. Yes, yes, absolutely, Casey.

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

Thank you, operator, and I want to thank everyone for their patience as we do a remotely operated conference call here. And again, on behalf of TPVG, we hope that our shareholders, all the analysts and others on the phone and their families stay healthy. And thank you very much for your time today. I'm sure we'll be talking to you all soon. Thank you all. Goodbye.

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