Runway Growth Finance Corp. · NASDAQ:RWAY
Runway Growth Finance — Q3 2021 Earnings Presentation
23 slides from Runway Growth Finance's earnings presentation, Nov 4, 2021
Slide 1: Runway Growth Finance Corp. Third Quarter 2021 Investor Presentation
Runway Growth Finance Corp. Third Quarter 2021 Investor Presentation November 4, 2021
Slide 2: Forward-Looking Statements
FORWARD-LOOKING STATEMENTS This presentation dated November 2021 is being provided by Runway Growth Finance Corp. (the “Company”) for discussion purposes only and is neither an offer to sell, nor a solicitation of an offer to purchase, an interest in the Company. It is solely intended to describe th
Slide 3: Overview of Runway Growth Finance Corp
OVERVIEW OF RUNWAY GROWTH FINANCE CORP Our investment objective is to maximize our total return to our stockholders by providing financing solutions to late and growth-stage companies that are more flexible than traditional credit and less dilutive than equity. Committed Capital Weighted Average Ann
Slide 4: The Runway Difference
THE RUNWAY DIFFERENCE Public, pure-play late Flexible approach Creative financing Seasoned and growth-stage to underwriting solutions meet the management team lending platform sponsored and non- borrowers’ needs with distinguished sponsored deals as they scale track record • Robust venture capital •
Slide 5: Investment Highlights
INVESTMENT HIGHLIGHTS
Slide 6: Key Investment Highlights
KEY INVESTMENT HIGHLIGHTS 1 Large and Growing Market for Debt Financing to Late and Growth Stage Companies Experienced, Proven Management Team Supported by a Deep Bench of Dedicated 2 Investment Professionals 3 Provide Critical Capital to Robust, High-Growth Companies 4 Rigorous Disciplined Investme
Slide 7: Venture Capital Continues to See Elevated Levels of Activity
VENTURE CAPITAL CONTINUES TO SEE ELEVATED LEVELS OF ACTIVITY ~2,500 venture funds, 2021 will be the fourth $221B dry powder ~29,000 venture backed consecutive year with managing $450B in available to support companies in the US2 deployments >$100B in AUM1 future investment4 Venture Equity1 3Q’21: 3,
Slide 8: Venture Lending in Perspective: Comparison to Middle Market Lending
VENTURE LENDING IN PERSPECTIVE— COMPARISON TO MIDDLE MARKET LENDING Lower Loss Rates With Stronger Performance Loan To Value (LTV) Comparison, current versus max level Realized Loss Rates (Net, Annualized) 80% 1.4% 1.3% 80.0% 1.2% 60% 1.0% 0.9% 0.8% 40% 0.6% 60.0% 30.0% 0.4% 20% 30.0% 0.2% 0.2% 13.4
Slide 9: Strong and Experienced Team
STRONG AND EXPERIENCED TEAM Senior executive team has average of 26+ years of experience Investment professionals have average of 23+ years of experience Years of experience 30+ 30+ 12+ 15+ 28+ David Spreng Tom Raterman Greg Greifeld Mark Donnelly Rob Lake Chairman, CEO, Chief Financial Managing Dir
Slide 10: Origination Model
ORIGINATION MODEL Sponsored Growth Lending Non-Sponsored Growth Lending • Loans to late and growth-stage companies backed by venture • Loans to late and growth-stage, private companies that are capital firms funded directly by entrepreneurs and founders, or no longer require institutional equity • L
Slide 11: Why Do Borrowers Choose Runway?
WHY DO BORROWERS CHOOSE RUNWAY? Steady Hand Experience Creative Loan Structures Ability to Scale Robust Network We work with Investment While competitive on Bespoke solutions allow Expansive network of companies to navigate professionals have price, we are rarely the us the ability to crea
Slide 12: Runway Has an Edge in Pricing Risk and Ascribing Company Value
RUNWAY HAS AN EDGE IN PRICING RISK AND ASCRIBING COMPANY VALUE APPROACH TO UNDERWRITING Low Loan-to-Value Structured amortization schedule “Core vs. Growth” – Understanding of cash burn of the borrower Covenants that allow us to act before problems become critical Active portfolio monitoring and pro
Slide 13: Portfolio Overview (as of 9/30/21)
PORTFOLIO OVERVIEW (as of 9/30/21) Portfolio at Fair Value $586.4 million1 Current Investments by Security Type (by FMV) Current Investments by Origination Channel (by FMV) Preferred stock Common stock 3% Non-sponsored 3% Warrant 27% 3% First lien senior secured 82% Sponsored 73% Cumulative since in
Slide 14: Key Portfolio Metrics
KEY PORTFOLIO METRICS Investment Yield Committed Capital ($M) Cumulative Commitments Avg. New Deal Size $1,205.5 Portfolio at FV ($M)¹ W.A. Debt Investment Yield² 22. 5% $1,200.0 $160.0 $1,051.5 18.3% 100 0 $140.0 $1,000.0 $904.8 15.6% 17. 5% 15.2% 15.3% $859.8 800 14.5% 14.8% $120.0 13.5% $800.0 $6
Slide 15: Highly Diversified Portfolio (as of 9/30/21)
HIGHLY DIVERSIFIED PORTFOLIO (as of 9/30/21) Investments by Sub-Industry as a % of Net Assets1 Investments by Geography % of Net Assets3 12% Healthcare Application Technology Software 28% 21% 0% 55% 6% 0% 37% 53% 7% U.K. 7% 9% <1% Specialized HR and Consumer Services Employment 9% Services 14% Inter
Slide 16: Portfolio Risk Ratings
PORTFOLIO RISK RATINGS Weighted Average Risk Rating Debt Investments at Fair Value by Risk Rating 2.42 2.40 2.37 2.33 2.32 2.31 2.20 Q1'20 Q2'20 Q3'20 Q4'20 Q1'21 Q2'21 Q3'21 * Scale of 1-5, lower score indicates higher credit quality rating Category 3, 1% Consistently strong credit quality; a resul
Slide 17: Warrants & Equity Portfolio
WARRANTS & EQUITY PORTFOLIO Warrants and Other Equity ($M) Year-to-Date IPO and M&A Activity $55.6 $54.8 IPO $49.7 $48.6 •Brilliant Earth, a Nasdaq-listed, digital-first jewelry company $41.1 $39.4 M&A Transactions $35.3 •Ouster, a NYSE-listed, lidar solutions company, went public through a SPAC mer
Slide 18: Strong Balance Sheet Provides for Flexibility & Growth
STRONG BALANCE SHEET PROVIDES FOR FLEXIBILITY & GROWTH Opportunity to expand investment portfolio and leverage; near term D/E target of 0.8–1.1x Historical ROE1 and Leverage Illustrative 3Q21 ROE2 at Higher Leverage 13.4% 9.8% 10.0% 9.5% 9.4% 9.0% 8.8% 8.8% 8.0% 2018A 2019A 2020A 1Q'21 2Q'21 3Q'21 3
Slide 19: Key Financial Metrics
KEY FINANCIAL METRICS Liquidity Post-IPO Liquidity Select Balance Sheet Data ($M) Balance Sheet subsequent to IPO Cash on hand $ 2.7 2021 IPO proceeds2 $ 94.0 1Q 2Q 3Q Cash & Equivalents $1.8 $0.9 $0.9 Cash available post-IPO $ 96.7 Credit Facilities $117.0 $117.0 $80.0 Debt outstanding $ - Total
Slide 20: Third Quarter 2021 Portfolio & Financial Highlights
THIRD QUARTER 2021 PORTFOLIO & FINANCIAL HIGHLIGHTS
Slide 21: Portfolio Highlights
PORTFOLIO HIGHLIGHTS Portfolio Yields Annualized Dividend Yield1 13.8% 13.7% 13.4% 12.5% 12.2% 12.0% 11.4% 11.5% 10.9% 10.2% 10.4% 10.4% 10.4% 9.6% 13.3% 13.2% 13.2% 12.5% 12.2% 12.1% 11.6% 8.6% 8.8% 8.7% 8.7% 8.6% 8.9% 8.8% Q1'20 Q2'20 Q3'20 Q4'20 Q1'21 Q2'21 Q3'21 1Q'20 2Q'20 3Q'20 4Q'20 1Q'21 2Q'
Slide 22: Financial Highlights
FINANCIAL HIGHLIGHTS Three Months Ended Three Months Ended Nine Months Ended Nine Months Ended STATEMENT OF OPERATIONS September 30, 2021 September 30, 2020 September 30, 2021 September 30, 2020 Total investment income 18,610,066 14,215,723 53,778,440 40,837,634 Total operating expenses 7,868,942 4,
Slide 23: Thank You
Se RUNWAY GROWTH FINANCE CORP Thank You
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