Good afternoon, ladies and gentlemen. Welcome to the TriplePoint Venture Growth BDC Corp. Third Quarter 2024 Earnings Conference Call. At this time, all lines have been placed in a listen-only mode. After the speaker's remarks, there will be an opportunity to ask questions, and instructions will follow at that time. This conference is being recorded, and a replay of the call will be available in an audio webcast on the TriplePoint Venture Growth website. Company management is pleased to share with you the company's results for the third quarter of 2024. Today, representing the company is Jim Labe, Chief Executive Officer and Chairman of the Board, Sajal Srivastava, President and Chief Investment Officer, and Matthew Galiani, Interim 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 law. You are asked to refer to the company's most recent filings with the Securities and Exchange Commission for important factors that could cause actual results to differ materially from these statements. The company does not undertake any obligation to update any forward-looking statements or projections unless required by law. Investors are cautioned not to place undue reliance on any forward-looking statements made during the call, which reflect management's opinions only as of today. To obtain copies of our latest SEC filings, please visit the company's website at www.tpvg.com. Now I'd like to turn the conference over to Mr. Labe. Please go ahead.

Thank you, Operator. Good afternoon, everyone, and welcome to TPVG's third quarter earnings call. During the quarter, we made further progress on the core priorities we have been focused on as we executed on our playbook of managing both the portfolio and positioning TPVG for the future. I'd like to share some of the highlights for the quarter. We increased our NAV by 3% to $9.10 per share. We over-earned our dividend, generating $13.8 million in NII, or net investment income, equaling $0.35 per share. We maintained our strong portfolio yield, achieving a 15.7% weighted average portfolio yield for this quarter, and our core yield increased 1% over the previous quarter. We improved our weighted average credit score with three upgrades for companies on the watchlist and one downgrade from Clear to White. We maintained our target leverage range of 1.1x. We renewed our credit facility to $300 million during the quarter with an accordion feature to increase it up to $400 million. We enhanced our financial strength and liquidity, ending the quarter with $340 million in total liquidity. We had a reduction in the number of companies on non-accrual status. We had $70 million of additional signed term sheets for venture growth stage companies come in at TriplePoint Capital post the quarter's end. And finally, we reported $8.8 million in net realized and unrealized gains, including continued increases in fair value in our warrant and equity investment positions. Our warrant and equity positions now constitute warrant positions in 95 portfolio companies and equity investment positions in 48. We believe these positions bode well for our ability to improve NAV over the long-term. Underscoring this point, we realized an increase in fair value on our Revolut warrant and equity positions, which contributed to the quarterly NAV increase. Moving to credit…

Thank you, Jim, and good afternoon. During the third quarter, TriplePoint Capital signed 94 million of term sheets with venture growth stage companies down from 188 million in Q2. This reflects our continued selectivity given market conditions as well as an element of seasonality as signed term sheets so far in Q4 are already at 70 million. With regards to new investment allocation to TPVG during the quarter, TriplePoint Capital allocated 41 million in new commitments to four companies to TPVG, including two new portfolio companies, compared to 52 million in new commitments and two new portfolio companies in Q2. Commitments to new portfolio companies during Q3 included Panorama Education, an education software platform backed by General Atlantic, Emerson Collective, Chan Zuckerberg Initiative, and other investors, as well as Aquilas, a fintech infrastructure company backed by Oak, Bullpen Capital, Mubadala Capital, and other investors. During the quarter, we also had follow-on investments in one recent new portfolio company as well as refinancing of another existing portfolio company in conjunction with an upsize. During the quarter, TPVG funded 33 million in debt investments to four portfolio companies, which is slightly down from 38.7 million in debt investments to five portfolio companies in Q2, as fundings were primarily related to transactions closed during the quarter. Year-to-date, we have funded 85.2 million to 10 portfolio companies. Debt investments funded this quarter carried a weighted average annualized portfolio yield of 13.4% at origination, down from 15.5% in Q2, given the combination of lower base rates, lower yields associated with asset-based financings, as well as more robust enterprises we're lending to. Our quarterly gross funding target continues to be in the 25 million to 50 million range for Q4 and as we head into 2025. As a reminder, new fundings don't materially contribute to income…

Thank you, Sajal, and hello, everyone. For the third quarter, total investment income was $26.5 million with a portfolio yield of 15.7% as compared to $35.7 million and a portfolio yield of 15.1% for the prior year period. The decrease in total investment income was primarily due to a lower-weighted average principal amount outstanding on our income-bearing debt investment portfolio. For the third quarter, total operating expenses were $12.7 million as compared to $16.6 million for the prior year period. These expenses consisted of $7.1 million of interest expense, $3.4 million of base management fees, and $2.2 million of general and administrative expenses, of which $150,000 represents an increase to our excise tax accrual from the prior quarter due to an increase in estimated undistributed income, or spillover income, for the full fiscal year. The company did not incur an incentive fee this quarter. For the third quarter, net investment income totaled $13.8 million or $0.35 per share as compared to $19.1 million or $0.54 per share for the prior year period, and our net increase in net assets resulting from operations for the third quarter totaled $22.6 million or $0.57 per share compared to $2.1 million or $0.06 per share for the three months ended September 30, 2023. During the quarter, the company recognized net realized losses on investments of $5 million, primarily due to the acquisition of one portfolio company, where as a result we received equity in the acquirer in consideration for our loans. Net change in unrealized gains on investments for the third quarter was $13.9 million, consisting of $9.4 million of net unrealized gains on the existing warrant and equity portfolio resulting from fair value adjustments, $5.2 million of net unrealized gains from the reversal of previously recorded unrealized losses on investments that were realized…

We will now begin the question-and-answer session. [Operator Instructions] Our first question comes from Crispin Love of Piper Sandler. Please go ahead.

Just first off, just on the news of the day with Trump winning the Presidential election, can you just discuss some of the potential implications, whether it's positives or negatives for TriplePoint deal activity and just the venture capital ecosystem as a whole? Thank you.

Hi, Crispin. I'll take the question. Listen, I think it's too early for us to opine on the impact to the venture markets or interest rates or inflation. We're far from experts on that. I think what we can opine on is, we do think that potentially this new administration will see a more favorable M&A environment, and so we think that our portfolio companies and capital markets will see some benefits. So we think exit activity should improve, which will be, potentially positive for capital markets activities, which could theoretically be beneficial for potential IPO activity as well. But too soon to say, and yes, we're far from experts on that.

Absolutely, no. I appreciate all the color there, Sajal, makes sense. And then, just on credit quality, I was just scanning the 10-Q during the prepared remarks, but it looks like non-improvement costs improved to $29 million from $68 million last quarter. Sajal, can you just discuss some of the major changes driving the decrease there? Apologies if you hit on them in the prepared remarks, but I just don't think I got them all down.

Sure, yes. Kind of two obligors. The improvement was due to two obligors. One was Good Eggs, which we announced last quarter, had been acquired subsequent to quarter end by GrubMarket, and so that was the removal of them. We did receive equity in GrubMarket as a result. And then the second one was we put Moda Operandi back on accrual as a result of us modifying our loans to them in conjunction with them raising a new round of financing.

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

Hey, what was the portfolio company that drove the realized loss, please?

It was Good Eggs. It was as a result of the acquisition and our receiving equity for our debt instrument. We took a realized loss.

Good Eggs was non-accrual last quarter, as I recall.

Correct.

Okay, great. And then interest expenses declined, helping drive your net investment income up quarter-over-quarter. What was the catalyst for that decline?

Yes. I think in particular, lower utilization on the credit facility, just given where we had lower fundings and prepay activities, so we didn't have to utilize the revolver and so benefited from it. And then, of course, we had the lower expense of the term loan at, I think, under 5%.

Great. And then finally, I appreciate the comments, as always, in terms of the condition of the venture market. Are you seeing any changes in the industry sectors within the venture capital markets, which are seeing more capital inflows?

Yes, Jim, do you want to take that one?

Yes. We are starting to see signals, slow but gradual signals of, I guess I'd call it continued investor sector rotation, but also increased investment activity and deployment of, it's now over $300 billion, which venture capitalists are sitting on the sideline to deploy here. But in terms of sectors, a little bit more space economy, defense economy, we're seeing robotics, cybersecurity, insure tech, and these are all in addition, of course, to AI. So there is, I guess, starting to hear more and more about disruptive technologies and innovative technologies and investment opportunities for us. It's on the increase.

Our next question comes from Paul Johnson of KBW. Please go ahead.

Just on your comments around, not being as a favorable time to invest, being a little bit more cautious, not time to quite open the spigot for deployment. Can you just kind of expand on that a little bit and just describe, I guess, why you're a little bit more cautious now? Is it holding back and waiting for more M&A activity, or what's kind of the reasoning there?

Yes, I'll take that question. Sorry, go ahead, Jim.

No, that's all right. Go ahead, Sajal.

I was going to say, I think it's an important thing just to see where the venture capital equity investors are deploying their capital and their pace of investment. So I think, Paul, it's important for us. We want to make sure that we're lending to those companies that are attracting follow-on capital from those investors. And so while we have a strong pipeline and companies reach out, new companies every quarter, in some quarters there are companies in sectors that can attract capital. And so that's why they're calling lenders or reaching out. So for us, we don't want to be pressured to put, or we're not pressured to put capital out the door. So we want to be very selective to ensure that we're lending to companies, as Jim described, that have recently raised financing, that have validated their last rounds, or in industry sectors that are experiencing growth or businesses that are growing. And so you've got to manage the timing of when they come to market versus when companies that may not have those favorable characteristics come to market and choose not to work with them, even though it's low-hanging fruit.

That makes sense. And where are we, I mean, at this point in terms of valuations? I mean, are the down rounds and such, is that behind us at this point? I mean, are the companies that are raising, doing so, higher valuations? Kind of where are we, I guess, relative to where venture valuations were at, pre-rate hike 2022?

Yes. Well, and again, I know PitchBook has a fair amount of data on this. So I would say, you know, two answers to this question. One, very high level, I think for PitchBook, the good or the bad is a number of the unicorns that have raised, large rounds of financing during the peak period, not all of them have come back to market yet. And so I would say we're still in a period generally of recalibration and reality check for certain companies. I would say more closer to home as we look to our portfolio, particularly from the activity in, during Q3, again, record level of activity, record level of amount raised, so to speak, or improving that record. But also increasing round sizes, increasing diversification of industry sectors, and more importantly, improving valuations. And that's why we saw it in the warrant and equity portfolio. Beyond just Revolut, we saw improvement. So we're pleased to see that. So there's definitely a class of companies that still need that kind of valuation check. But I think more importantly within our portfolio, we are seeing a balance of both flat rounds, down rounds, and up rounds.

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

As always, I'd like to thank everyone for listening and participating in today's call. We look forward to updating and talking with you all again next quarter. Thanks again, and everyone have a nice day. Goodbye.

The conference is now concluded. Thank you for attending today's presentation, and you may now disconnect.