Runway Growth Finance Corp. · NASDAQ:RWAY
Runway Growth Finance — Q4 2021 Earnings Presentation
30 slides from Runway Growth Finance's earnings presentation, Mar 3, 2022
Slide 1: Fourth Quarter 2021 Investor Presentation
Runway Growth Finance Corp. Fourth Quarter 2021 Investor Presentation March 3, 2022
Slide 2: Disclaimer and forward-looking statements
This presentation dated March 2022 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 general business, investment
Slide 3: Investment Activity in Q4 2021
Committed Capital Weighted Average Annualized Dollar- Debt Portfolio with Net Asset Value Since Inception1 Borrower LTV22 Weighted Yield3 Floating Rates Loss Rate1,4 Per Share Gross / Net Across 55 investments As of 12/31/21 At origination As of 12/31/21 As of 12/31/21 Cumulative since As of 12/31/2
Slide 4: Runway Growth key strengths
• Robust venture capital • Strategic focus on late- and • Proprietary loan solutions • David Spreng, Runway’s ecosystem & exit environment growth-stage companies with prioritize optionality, flexibility Chairman, CEO, CIO, & Founder, enables portfolio growth and strong equity sponsorship or and cust
Slide 5: Investment Highlights
INVESTMENT HIGHLIGHTS
Slide 6: Investment highlights summary
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 Rigorous Disciplined Investment Process and Proprietary Risk Analytics Diversified Portfolio across Sponsored/Non-s
Slide 7: Large and growing market for venture debt financing
350 .0 180 00 Across All Sectors 15.5 160 00 300 .0 140 00 12.5 12.2 11.6 250 .0 11.3 11.1 10.7 120 00 10.2 200 .0 9.5 100 00 8.0 150 .0 6.9 800 0 5.6 4.9 4.6 600 0 100 .0 4.4 3.4 400 0 50. 0 200 0 $30 $38 $37 $28 $32 $45 $42 $49 $74 $86 $83 $88 $144 $145 $167 $330 0.0 0 2006 2007 2008 2009 2010 201
Slide 8: Lower Loss Rates With Stronger Performance
Lower Loss Rates With Stronger Performance Loan To Value (LTV) Comparison, current versus max level Realized Loss Rates (Net, Annualized) 80% 1.4% 1.21% 80.0% 1.2% 60% 1.0% 0.90% 0.8% 40% 0.6% 60.0% 30.0% 0.4% 20% 30.0% 0.2% 14.5% 0.01% 10.0% 0% 0.0% Runway Growth Venture Debt MM Direct Runway Growt
Slide 9: Senior executive team has average of 22+ years of experience
Senior executive team has average of 22+ years of experience Years of experience 30+ 30+ 12+ 15+ David Spreng Tom Raterman Greg Greifeld Mark Donnelly Chairman, CEO, CFO, COO Managing Director, Deputy Managing Director, Head CIO, Founder CIO, Head of Credit of Origination Prior Experiences Prior Exp
Slide 10: Sponsored and Non-Sponsored Growth Lending
Sponsored Growth Lending Non-Sponsored Growth Lending • Loans to late- and growth-stage companies backed by • Loans to late- and growth-stage, private companies that are venture capital firms funded directly by entrepreneurs and founders, or no longer require institutional equity • Loans typically h
Slide 11: Steady Hand Experience, Creative Loan Structures, Ability to Scale
Steady Hand Experience Creative Loan Structures Ability to Scale Robust Network ◼ We work with ◼ Senior Investment ◼ While competitive on ◼ Bespoke solutions allow ◼ Expansive network of companies to navigate professionals have price, we are rarely the us the ability to create contacts within the ch
Slide 12: Structural protections
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 proactive borrower engagement Structural Protections RUNWAY GROWTH FINANCE CORP. 12
Slide 13: Portfolio at Fair Value $684.5 million
Portfolio at Fair Value $684.5 million1 Current Investments by Security Type (by FMV) Current Investments by Origination Channel (by FMV) 3% 2% 2% 2% Common Stock 27% Non-Sponsored Preferred Stock Sponsored Second Lien Term Loan Senior Secured Term Loan Warrant 73% 91% Cumulative since inception Cur
Slide 14: Investment yield and sources of investment income
Investment Yield Sources of Investment Income ($M) 1 2 Portfolio at FV (SM) W.A. Debt Investment Yield Interest Income Prepayment Fees Dividend Income Other 3 2% 1% 1% 1% 2% 15.6% 15.2% 15.3% 2% 2% 2% 2% 2% 14.0% 6% 13.5% 8% $685 13% 20% 22% $590 $588 $586 $552 92% 88% 83% 77% 75% Q4'20 Q1'21 Q2'21
Slide 15: Cumulative commitments and new deal activity
1,600 $1,449 250.0 1,400 Inception-to-Date: $1,233 200.0 1,200 $1,078 • 14 Upsizes or 25% of Portfolio Companies 1,000 $885 $932 150.0 • 6 Refinances or 11% of Portfolio Companies 800 600 100.0 Year-to-Date: 400 $48.3 $48.0 $41.6 $22.5 $24.4 50.0 200 • $34.0M average new deal commitment 0 0.0 • $23.
Slide 16: Portfolio by geography and industry
1 2 Canada 2% % 5 0 7% 5 12% % % 3% 28% 16% 38% 0% 7 54% % U.K. 11% 6% 12% 8% 3% Germany 6% Specialized Consumer Services, 8% Consumer and Other, 24.7% Other Technology, 53.9% Tech* 2% (1)(1) (1) Life Science, 21.0% (2) (1) RUNWAY GROWTH FINANCE CORP. 1. Technology, Hardware, Storage & Peripherals-
Slide 17: Weighted average internal risk rating
4.00 3.50 3.00 2.32 2.31 2.37 2.50 2.20 2.04 2.00 1.50 1.00 * 0.50 * 0.00 (1) Q4'20 Q1'21 Q2'21 Q3'21 Q4'21 Calculated after thorough Weighted average internal risk rating decreased review and discussion of each Portfolio quality is improving; during the quarter, primarily attributed to portfolio co
Slide 18: Warrant and Other Equity Holdings; Realized Gains (Losses)
$55.6 IPO $54.7 •Brilliant Earth, a Nasdaq- listed digital-first jewelry company $49.7 $48.6 $48.6 M&A Transactions •Porch Group, a Nasdaq-listed software and services company for the home services industry, went public through a SPAC with PropTech Acquisition Corp. •Ouster, a NYSE-listed lidar solu
Slide 19: Historical ROE and Leverage
Opportunity to expand investment portfolio and leverage; near term D/E target of 0.8–1.1x Historical ROE1 and Leverage 10.2% 10.2% 9.7% 9.8% 9.5% 8.8% 8.2% 7.9% Q1'20 Q2'20 Q3'20 Q4'20 Q1'21 Q2'21 Q3'21 Q4'21 0.00x 0.06x 0.09x 0.21x 0.25x 0.24x 0.16x 0.13x Runway can grow the portfolio by nearly $60
Slide 20: Earnings Per Share
$9,000 $0.25 $8,000 $0.22 $0.20 $7,000 $0.18 $6,000 Earnings Per Share $0.15 Net Income $5,000 $0.15 $4,000 $0.12 $0.10 $3,000 $0.09 $2,000 $0.06 $0.05 $1,000 $0.03 $- $- 0.50 0.75 1.00 1.25 1.50 1.75 2.00 Net Income ($ in thousands) Earnings per Share 1 1. EPS calculated on basic weighted shares ou
Slide 21: Liquidity, Balance Sheet Data and Debt Capital Structure
Liquidity Select Balance Sheet Data ($M) 2021 2020 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q Cash & Equivalents $1.8 $0.9 $0.9 $4.7 $16.8 $3.0 $1.4 $14.9 Credit Facilities $117.0 $117.0 $80.0 $61.0 - $25.0 $37.5 $99.0 Total Net Assets $473.5 $477.7 $504.2 $606.2 $376.4 $388.3 $397.4 $466.2 Debt Capital Structure (as
Slide 22: Fourth Quarter 2021 Portfolio & Financial Highlights
FOURTH QUARTER 2021 PORTFOLIO & FINANCIAL HIGHLIGHTS
Slide 23: Portfolio Yields, Dividend Yield, ROE and ROA
Portfolio Yields Annualized Dividend Yield1 3 Average LIBOR Spread Average Accounting Yield 13.8% 13.7% 11.4% 13.4% 10.9% 12.5% 10.2% 10.4% 10.4% 10.4% 12.2% 12.0% 9.6% 11.5% 11.1% 8.9% 8.8% 9.0% 7.6% 8.6% 8.8% 8.7% 8.7% 8.6% Q1'20 Q2'20 Q3'20 Q4'20 Q1'21 Q2'21 Q3'21 Q4'21 Q1'20 Q2'20 Q3'20 Q4'20 Q1
Slide 24: Statement of Operations and Statement of Assets & Liabilities
Three Months Ended Three Months Ended Twelve Months Ended Twelve Months Ended STATEMENT OF OPERATIONS December 31, 2021 December 31, 2020 December 31, 2021 December 31, 2020 Total investment income 17,580,014 16,788,667 71,358,455 57,626,303 Total operating expenses 6,651,659 5,758,954 26,866,767 19
Slide 25: $0 Credit Losses in 2021
$0 Credit Losses in 2021 RUNWAY GROWTH FINANCE CORP. 1. NAV/share calculated using weighted average share 25 outstanding during Q4 2021 of 39,593,658
Slide 26: Analyst Coverage
ANALYST COVERAGE
Slide 27: 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 Sarkis Sherbetchyan • Initiated coverage: 11/15/21 Casey Alexander • Initiated coverage: 11/15/21 Brock Vandervliet • Initiated coverage: 11/15/21 Bryc
Slide 28: Supplemental Information
SUPPLEMENTAL INFORMATION
Slide 29: Regulated by the SEC under the Investment Company Act of 1940
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 • Regulated by the SEC under the Investment Company Act of 1940 (the “1940 Act”) • Externally managed by Runway Growth Capi
Slide 30: Thank You
Se RUNWAY GROWTH FINANCE CORP Thank You
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