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

Good afternoon, everyone, and thank you for joining TPVG's fourth quarter earnings call. During 2022, we achieved several key objectives while continuing to take our selective approach given market volatility. We grew the portfolio to record levels, generated both record investment income and record NII and over-earned our distribution. Other accomplishments included further diversifying the portfolio, maintaining our target leverage ratio and growing our core portfolio yield, which has now expanded over the past seven consecutive quarters. During the year, we also raised accretive equity capital and increased overall leverage as well as extended our credit lines to strengthen our balance sheet. Turning to some fourth quarter highlights. The earnings power of the business remains strong. We generated net investment income of $0.58 per share and exceeded our $0.37 quarterly distribution. We're pleased to announce that our Board of Directors has approved an 8% increase in the distribution to $0.40 per share. This represents the second consecutive increase in our quarterly distribution. Our distribution has now increased by 11% over the past two quarters. Since going public almost nine years ago, we have declared $13.45 per share in distributions, including four special distributions with the most recent special distribution declared in December 2022. Over this time, we've also exceeded our distributions on a cumulative basis and maintain sizable spillover income. Turning to the venture market. Tightening monetary policy and the downturn in public company multiples and valuations have continued to impact venture capital investment activity. Quarter-over-quarter activity in 2022 dropped off steadily. According to PitchBook, in Q4, an estimated 936 deals closed for a total of $1.35 billion, the lowest quarterly deal value since the second quarter of 2018. For many companies, prior year plans of growth at all costs, have shifted to revise plans of conserving cash at all…

Thank you, Jim, and good afternoon. During 2022, we made progress in growing our portfolio, increasing our portfolio yield and increasing our portfolio and funding diversification, all critical elements for the long term that we believe position us well to create sustainable shareholder value. As we progress through 2023, we will continue to pursue these goals throughout the course of the year, while continuing to be focused and disciplined. So with that background, I will review our performance in Q4 and full year 2022, as well as highlight key expectations for 2023. Regarding investment portfolio activity during Q4, TriplePoint Capital signed $221 million of term sheets with venture growth stage companies, and we closed $105 million of debt commitments to 12 companies at TPVG. Signed term sheets and closed commitments during Q4, reflected our continued discipline as we seek to select only the highest quality opportunities. Of the 12 companies we committed debt capital to during the quarter, half were new portfolio companies and the other half were existing portfolio companies. We also received warrants valued at $1.1 million in 16 portfolio companies and made $400,000 of direct equity investments in two companies. For the full year, TriplePoint Capital signed a record $2 billion of term sheets with venture growth stage companies, and we closed $594 million of debt commitments with 48 companies at TPVG, of which 34 were new obligors and 14 were existing obligors. We also acquired warrant investments, representing $6 million of value and made $6 million of direct equity investments. Given current market conditions, as we look to 2023 as a whole, we expect to see our originations activity increase over the course of the year and in particular, in the second half of the year. During the fourth quarter, we funded $95 million in debt…

Great. Thank you, Sajal, and hello, everybody. During the fourth quarter, we experienced continued growth in core interest income from our loan portfolio and once again saw stable utilization rates on debt commitments. We increased the overall leverage ratio on the portfolio to target levels. We deployed capital using our attractive sources of leverage, which included fixed rate long-term investment-grade notes and our revolving credit facility, while continuing to diversify the portfolio. The total investment portfolio increased 10% year-over-year. Total investment income increased 33% -- 37% year-over-year. NII increased 55% year-over-year. Of note, both total investment income and NII reached record levels for both the quarter and for the year. Quarterly dividends increased by 8% to $0.40 per share from last quarter and 11% from the dividend rate of a year ago. And we entered 2023 with a record portfolio size, a diversified capital structure and ample liquidity at the ready. Let me drill down a bit and share an update on the financial results for the fourth quarter and for the full year of 2022. For the fourth quarter, total investment income was $34.9 million, with a portfolio yield of 15.3% on total debt investments as compared to $25.9 million and 14.9% for the prior year period. Total investment income reflects a higher average debt investment balance, as well as an increased yield on the portfolio. Total investment income reached a record, totaling $119.4 million for the full year, as compared to $87.4 million for the prior year period. We reported a weighted average portfolio yield of 14.7% for the full year and 13.7% for the prior full year. Prime rate increased 7 times in 2022 to 7.5%, with two of those increases in the fourth quarter and a further increase to 7.75% in the first quarter of 2023.…

Yes, of course. Thank you. We will now begin the question-and-answer session. [Operator Instructions] The first question this evening comes from Crispin Love with Piper Sandler. Please go ahead.

Thanks. Good morning, everyone. First, I'm just curious on your portfolio companies liquidity. So, how are your portfolios company's runway in terms of liquidity? And are you able to cite what percent of companies have 12-month liquidity on hand and how that compares to historical norms, just given volatility in markets, coupled with some of your common stock companies are focused on limiting cash burn given the environment?

Yeah. Good question, and it's – good afternoon, Crispin, and I think you said, good morning, by the way. But yeah, so TPVG, about 85% of our companies have more than six months of cash runway and more than 60% -- a little over 60% more than 12 months. And it is something that we actively follow for sure on a monitoring basis.

And I would say from our perspective, that doesn't include the liquidity from capital commitments they have from us. So that's cash that they have on hand with their equity capital. So cash from our unfunded commitments drive those numbers and percentages up. And then I would say that, generally speaking, we're seeing burn rates getting lower and lower. So we expect runway to be extended for the majority of the portfolio companies over the course of the year as well.

Okay. Great. Thank you, Jim and Sajal, very helpful there. And then next question is, Chris, you alluded to it a little bit at the end of your remarks, but your leverage is currently at 1.36 times, which I believe is near the high end of your targeted range. So first, can you just remind me what your target leverage ranges are? And what types of levels might lead you to raise equity capital to bring those levels lower?

Yeah. So the 1.36 is the gross number. We do have about $57 million, $58 million of cash on the balance sheet. So kind of net or the true level is 1.22, which I would describe as in our range. So 1.2 to 1.3, 1.4, those are all within acceptable ranges kind of to continue operating without worrying about pulling the trigger for and overnight.

Given the liquidity that we have projected, I think Chris said, the portfolio will generate $200 million of cash proceeds plus the pre-payment activity. We sort of have line of sight of a significant amount generated from the portfolio itself this year.

Perfect. Thank you. And I appreciate you taking my questions.

The next question comes from Kevin Fultz with JMP Securities. Please go ahead.

Hi. Good afternoon, and thank you for taking my question. Coupon yield increased 20 basis points compared to the September quarter, which is a bit lower than I would have expected given the move in the prime rate. Was the quarter-over-quarter change impacted by Medly Health, I guess, I'm just looking for any insight you can provide there?

Yes. So Sajal mentioned one part, which is one of the primary changes happened late in the quarter. So we'll see the full benefit of that here in Q1. But yes, we put Medly on non-accrual back to October 1, so there was some impact from that as well.

Okay.

And then keep in mind, two-thirds of the portfolio is floating rate, one-third is fixed rate. So again, you won't see a direct 100% point-for-point as rates increase.

Sure. That makes sense. And then just one clerical question on Medly Health. I was scanning the schedule of investments and noticed two, I think, small dip loans outstanding at quarter end. I just wanted to confirm that they were repaid post quarter end and that all Medly Health investments are off the books now.

Yes, we can confirm that. They paid those off last week. The transaction, as Jim described, is behind us, including the full repayment of the bargain we struck for the DIP financing.

Okay. Great. That’s it for me. Thanks for taking my questions.

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

Hey guys. Back to Medly again. Jim, did I hear you correctly saying that the company sort of imploded following a failed equity raise?

There was actually a little bit more to it than that. Medly, optionally was a digital pharmacy and delivery business and they did raise significant equity dollars and accretive acquisition and revenue scale, and there were a number of lenders also caught up in this, including Silicon Valley Bank with a healthy exposure. But it's an ongoing case in legal matters. I'm not able to elaborate much further at this time, but we are moving forward with the portfolio and putting that behind us.

Yes. And maybe just to clarify, Chris, so it was a filled kind of debt financing, and then there was additional financing that the inside investors as well as us put together to finance a plan to profitability for the company, but it was post that financing from existing investors and us when some of the impropriety activity that Jim had talked about that the bankruptcy financings -- filings had mentioned were discovered, and that's when things imploded.

And I guess as a follow-up related to that, I mean I know in your comments, you're saying that many of your portfolio companies are raising equity, but are they doing down rounds?

Yes, I mentioned that a little bit. They're doing down rounds, but there's also up rounds by the way, going on. There's kind of a mixture of both. We do have down round protection in passing in a number of our companies. But we're more focused on the companies raising the capital and making payments and the debt service. But yes, for sure, and we anticipate there will be, as I mentioned, more down round.

Great. And then Chris, just a reminder, does the look back reset every year, or is it cumulative to on capital gains going back to the IPO?

It goes back to the IPO. It's cumulative. There's no reset.

Okay. So the whole Medly thing should impact incentive fee accruals at least for a couple of quarters, I would think.

Yes. It fully impacted the -- there was no incentive fee for Q4, and it's expected to impact Q1 as we expect some recovery in the overall portfolio, but there'll be some impact unknown right now, but some impact in Q1 as well.

Understood. Okay. Thanks for taking my questions.

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

Hey, good afternoon. Yes, I wanted to first touch on your commentary on expected funding for the year, $300 million to $500 million. I know you said you expect $200 million of scheduled repayments in the year. But given where you guys are from a leverage standpoint, at this point, aren't your funding basically just going to match your repayment. And so really just the level of prepayments that you get above this $200 million scheduled repayments was probably going to be the number that you guys are going to be looking at for gross -- for funded investments throughout the year, or am I missing something with that?

Yeah. It's an interesting question, Ryan. So I would say what we're seeing generally is -- it's somewhat surprising is lower overall utilization of unfunded commitments. And so -- and again, I think it's a testament to the quality of the portfolio companies that they're focusing on cutting their burn, focusing on raising equity capital, not looking to dip into leverage to fund them necessarily in this environment. So I'd say, overall, we've definitely seen a drop in unfunded utilization. And then as we look to new origination, I think it's a balance, I'd say, as we commented on, the companies that were originating transactions with right now are generally companies that have recently raised equity round. So we're seeing fresh reset valuations or appropriate valuations vis-à-vis where multiples are, but their company is sitting on significant liquidity. And so we're not expecting significant utilization at closing, but utilization over time as they continue to execute, operate grow, so more back half loaded. And so that's why, as we said, we see funding, although originations will continue at our current pace and growing over the course of the second half. But we see fundings to be light here in the first and second quarter and then pick up as the originations activity pick up.

Okay. Yeah, understood. And then correct me if I'm wrong, I believe you said half of the funding this quarter were to new companies and half were to existing companies. Out of those existing companies, are those fundings that are just already unfunded commitments that were drawn down by those existing portfolio companies, or are those companies that were in your portfolio that you committed brand new, I guess, commitments to those businesses or…?

Yeah, just to clarify the commitment. So of the new commitments made during the quarter, half were to new portfolio companies and half were to existing portfolio companies. So that was not utilization. That was new commitments.

Okay. That makes sense. And then just one last one for me. Reading just some of the stuff on Medly, it sounds like that was a pretty unusual scenario that went on there with some improprieties going on. I'm just curious, understanding the backdrop was a very unusual situation. Were there any lessons that you guys learned from the whole process and what could be done -- could have been done different in the future?

I'd start by saying that had a very unusual set of facts and circumstances. As I mentioned, there are other lenders, SCB, others, were all caught off guard and also exposed. So, I just don't think there'd be any different.

Yes. Well, let me take it more holistically. Listen, I think as a lender as a whole, every credit situation is a learning experience. So absolutely, we will have and we'll continue to learn. And the great news is 24 years of Jim and I learning together, and so I would say, absolutely learning from it. I'd say specific takeaways again, you can learn from debt-to-equity ratios, LTV ratios, things of that, Ryan, but analyzing business plans, but when you talk about impropriety activities, it's hard to -- there's a reason why people are -- things that they're doing. So, I would say we're very open-minded and having conversations internally with auditors and accountants and lawyers on techniques. But I would say, there was no smoking gun, so to speak, that as we look back to our originations activities in our credit activities that would have necessarily identified it.

Okay. Understood and totally getable with that kind of unusual nature of the investment. That’s all from me. I appreciate the time this afternoon.

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

Thanks. As always, I'd like to thank everyone for listening and participating in our call today. We look forward to talking with you all again in the very next quarter, in another two months or so. So, thanks again, and everyone, have a nice day. Goodbye.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.