Runway Growth Finance Corp. · NASDAQ:RWAY
Runway Growth Finance — Q4 2022 Earnings Presentation
32 slides from Runway Growth Finance's earnings presentation, Mar 2, 2023
Slide 1: Runway Growth Finance Corp. Fourth Quarter 2022 Investor Presentation
Runway Growth Finance Corp. Fourth Quarter 2022 Investor Presentation NASDAQ Listed I RWAY I RWAYL I RWAYZ March 2023 © Runway Growth Capital LLC 2023
Slide 2: Forward-looking Statements
Forward-looking Statements This presentation dated March 2023 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 the g
Slide 3: Overview Of Runway Growth Finance Corp.
Overview Of Runway Growth Finance Corp. Our investment objective is to maximize total return to 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 Annualized
Slide 4: Overview Of Runway Growth Finance Corp. Fourth Quarter 2022
Overview Of Runway Growth Finance Corp.1 Completed 12 Investments in New and Existing Portfolio Companies Fourth Quarter 2022 Representing $327 Million in New Commitments and $233 Million in Funded Investment Activity Loans Received $16 million from principal repayments Quarterly Investment $36.8 mi
Slide 5: The Runway Difference
The Runway Difference Public, pure-play late- Disciplined approach Sophisticated 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 Decreasing market
Slide 6: Investment Highlights
Investment Highlights RUNWAY GROWTH FINANCE CORP. 6
Slide 7: Key Investment Highlights
Key Investment Highlights Large and Growing Market for Diversified Portfolio Across Debt Financing to Late and Sponsored/Non-sponsored, VC/PE- Growth Stage Companies backed, Industries & Geographies Experienced, Proven Management Team Attractive Financial Profile Generates Supported by a Deep Bench
Slide 8: Venture Capital Activity
Venture Capital Activity Venture Capital Deal Volume Trends1 400 .0 200 00 Across All Sectors 180 00 350 .0 $345B 11,871 160 00 300 .0 140 00 250 .0 120 00 $238B 200 .0 100 00 800 0 150 .0 600 0 100 .0 400 0 50. 0 3,402 200 0 0.0 $30B 0 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 201
Slide 9: Venture Lending in Perspective: Comparison to Middle Market Lending
Venture Lending in Perspective: Comparison to Middle Market Lending (as of 12/31/22) Lower Loss Rates with Stronger Performance Loan To Value (LTV) Comparison, Current Realized Loss Rates (Net, Annualized) Versus Max Level 80% 1.2% 1.07% 80.0% 1.0% 60% 0.77% 0.8% 40% 0.6% 0.4% 20% 30.0% 30.0% 0.2% 1
Slide 10: Strong And Experienced Team
Strong And Experienced Team Investment manager’s senior executive team has experience across multiple economic cycles David Spreng Tom Raterman Greg Greifeld Chairman, CEO, CIO, Founder CFO, COO Managing Director, Deputy CIO, Head of Credit Prior Experiences Prior Experiences Prior Experiences • Co-
Slide 11: Our Credit-first, Weatherproof Approach
Our Credit-first, Weatherproof Approach Runway Is Built For All Economic Environments With Differentiated Experience To Judiciously Deploy Capital • Credit-first philosophy • Loan portfolio is 100% floating rate assets Underwriting • 99% of underlying investments are first lien senior secured loans
Slide 12: Origination Model
Origination Model Sponsored Growth Lending Non-Sponsored Growth Lending • Loans to late- and growth-stage companies backed by • Loans to late- and growth-stage, private companies venture capital and private equity firms that are funded directly by entrepreneurs and founders, or no longer require ins
Slide 13: Why Do Borrowers Choose Runway?
Why Do Borrowers Choose Runway? Disciplined and Ability to Robust Steady Hand Experience Sophisticated Loan Scale Network Structures • We work with • Senior investment • While competitive • Bespoke solutions • Expansive network companies to professionals have on price, we are allow us to create of c
Slide 14: 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 15: Portfolio Overview
Portfolio Overview Portfolio at Fair Value: $1,126.3 million Current Investments by Security Type (by FMV) Current Investments by Origination Channel (by FMV) 2% 1% 1% 24% Common Stock Preferred Stock Non-Sponsored Second Lien Term Loan Sponsored Senior Secured First Lien Term Loan 96% 76% Warrant C
Slide 16: Key Portfolio Metrics
Key Portfolio Metrics Investment Yield Sources of Investment Income 15.6% 15.2% 15.3% 15.1% 15.5% 14.0% 14.4% 13.5% 1% 1% 1% 2% 2% 2% 2% 2% 2% 12.2% 2% $1,126 2% 2% 3% 2% 3% 5% 5% $910 8% $808 $754 $685 $590 $588 $586 97% 97% $552 96% 96% 95% 96% 93% 92% 91% Q4'20 Q1'21 Q2'21 Q3'21 Q4'21 Q1'22 Q2'22
Slide 17: Key Portfolio Metrics
Key Portfolio Metrics Committed Capital ($M) $2,332 Inception-to-Date: $2,005 $1,789 • 27% Portfolio Companies Upsized (19 Portfolio $1,589 Companies, 29 Upsize Transactions) $1,449 $1,233 • 8 Refinances or 11% of Portfolio Companies $1,078 $885 $932 $48.3 $48.0 $50.0 $47.5 $61.7 $46.7 2022 Year-to-
Slide 18: Highly Diversified Portfolio
Highly Diversified Portfolio Portfolio at Fair Value by Industry as % of Net Assets Portfolio Fair Value by Geography as a % of Net Assets 1 2 Canada 2% % 0 5 6% 5 % % 13% 61% 60% 7 %16% 0% U.K. 54% 13% 11% 15% 8% 3% Germany 8% Breakout Across Verticals Consumer Services & Products 15% Technology 58
Slide 19: Portfolio Risk Ratings
Portfolio Risk Ratings Investments at Fair Value by Weighted Average Risk Rating1 Risk Rating Category1 1% 7% 2.32 2.31 2.37 2.20 2.22 2.04 2.10 2.12 1.98 92% * * Category 2 Category 3 Category 5 Q4'20 Q1'21 Q2'21 Q3'21 Q4'21 Q1'22 Q2'22 Q3'22 Q4'22 Stable Q3-2022 to Q4-2022 Average Risk Rating 1. 1
Slide 20: Warrants & Equity Portfolio
Warrants & Equity Portfolio Warrants and Other Equity ($M) Warrant and Other Equity Holdings $60.0 $56.7 $54.7 • 28 Companies with both loan and warrant investments $49.5 $50.5 $48.6 $50.0 • 9 Companies with warrant investments only $42.7 $40.0 $35.5 • 5 Companies with shares of common or preferred
Slide 21: Strong Balance Sheet Provides For Flexibility & Growth
Strong Balance Sheet Provides For Flexibility & Growth Historical ROE1 and Leverage Private 12.8% Capital Net IPO Call of Proceeds $19M of $93M 10.2% 10.1% 9.8% 9.8% 9.5% 8.8% 8.3% 7.9% Q4'20 Q1'21 Q2'21 Q3'21 Q4'21 Q1'22 Q2'22 Q3'22 Q4'22 0.21x 0.25x 0.24x 0.16x 0.13x 0.26x 0.40x 0.60x 0.97x Opport
Slide 22: Earnings Per Share: Interest Rates & Asset Sensitivity
Interest Rates & Asset Sensitivity Rising Interest Rate Impacts on Net Income and EPS1 Basis Point Movement in SOFR Rate $18,000 $0.45 $16,000 $0.40 $0.38 $14,000 $0.35 $0.34 $12,000 $0.30 $0.29 Earnings Per Share $10,000 $0.25 Net Income $0.24 $8,000 $0.20 $0.20 $6,000 $0.15 $0.15 $4,000 $0.10 $0.1
Slide 23: Leverage & Liquidity
Leverage & Liquidity Liquidity 2022 2021 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q Cash & Equivalents $3.5 $6.8 $5.8 $5.8 $1.8 $0.9 $0.9 $4.7 Credit Facilities $129.0 $117.0 $250.0 $88 $98.0 $98.0 $135.0 $154.0 Net Assets $597.5 $579.4 $573.7 $576.1 $473.5 $477.7 $504.2 $606.2 Debt Capital Structure2 KeyBank Credit F
Slide 24: Portfolio & Financial Highlights
FOURTH QUARTER 2022 Portfolio & Financial Highlights RUNWAY GROWTH FINANCE CORP. 24
Slide 25: Portfolio Highlights
Portfolio Highlights Accounting Yield1 Annualized Dividend Yield2 13.3% 12.2% 10.9% 13.8% 14.1% 10.4% 10.4% 9.6% 12.5% 12.2% 12.0% 12.2% 9.1% 11.5% 11.4% 8.7% 11.1% 7.0% Q4'20 Q1'21 Q2'21 Q3'21 Q4'21 Q1'22 Q2'22 Q3'22 Q4'22 Q4'20 Q1'21 Q2'21 Q3'21 Q4'21 Q1'22 Q2'22 Q3'22 Q4'22 Weighted Average Inter
Slide 26: Financial Highlights
Financial Highlights Three Months Ended Three Months Ended STATEMENT OF OPERATIONS December 31, 2022 December 31, 2021 Total investment income 36,806,455 17,580,014 Total operating expenses 18,445,473 6,651,659 Net investment income 18,360,982 10,928,355 Net realized and unrealized gain 131,995 8,37
Slide 27: Q4 NAV/Share Bridge
Q4 NAV/Share Bridge $0 Credit Losses in 2022 RUNWAY GROWTH FINANCE CORP. 1. NAV/share calculated using weighted average share outstanding during Q4 2022 of $40,531,403 © Runway Growth Capital LLC 2023 | 27
Slide 28: Analyst Coverage
Analyst Coverage RUNWAY GROWTH FINANCE CORP. 28
Slide 29: Robust Industry Analyst Coverage
Robust Industry Analyst Coverage Finian O’Shea, CFA Initiated coverage: 11/15/21 Melissa Wedel, CFA Initiated coverage: 11/15/21 Mitchel Penn, CFA Initiated coverage: 11/15/21 Casey Alexander Initiated coverage: 11/15/21 Vilas Abraham Initiated coverage: 11/15/21 Erik Zwick, CFA Initiated coverage:
Slide 30: Supplemental Information
Supplemental Information RUNWAY GROWTH FINANCE CORP. 30
Slide 31: Regulation and Structure
Regulation and Structure Runway Growth is an externally managed, non-diversified closed-end management investment company that has elected to be regulated as a BDC and treated as a RIC for tax purposes. Business Development Company (BDC) Regulated Investment Company (RIC) • Regulated by the SEC unde
Slide 32: Contact us with any questions or comments.
Contact us with any questions or comments. investors@runwaygrowth.com
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