Triplepoint Venture Growth Bdc Corp. · NYSE:TPVG
Triplepoint Venture Growth Bdc — Q2 2023 Earnings Presentation
49 slides from Triplepoint Venture Growth Bdc's earnings presentation, Aug 2, 2023
Slide 1: Investor Presentation
Investor Presentation Q u a r t e r E n d e d J u n e 3 0 , 2023 A u g u s t 2 , 2 023 w w w. t p v g . c o m
Slide 2: Forward Looking Statements
Forward Looking Statements Some of the statements in this presentation constitute forward-looking statements, which relate to future events or our future performance or financial condition. The forward-looking statements contained in this presentation involve risks and uncertainties, including state
Slide 3: TriplePoint Venture Growth BDC Corp.
TriplePoint Venture Growth BDC Corp. Externally-Managed BDC Focused on Providing Customized Debt Financing With Warrants and Direct Equity Investments to Venture Growth Stage Companies in Technology and Other High Growth Industries Backed by a Select Group of Venture Capital Firms 3
Slide 4: TriplePoint Venture Growth BDC Corp. Overview
TriplePoint Venture Growth BDC Corp. Overview NII Return (Average Equity & Average Assets) MARKET CAP (1) $418 million COMMON STOCK Price / NAV (1) TPVG (NYSE) 1.10x EQUITY RESEARCH COVERAGE DISTRIBUTIONS DECLARED 8 analysts $0.40 For Q3 2023 CREDIT RATING (2) BBB Cumulative Net Investment Income si
Slide 5: Total Shareholder Return vs. Externally Managed BDC Peers
Total Shareholder Return vs. Externally Managed BDC Peers (1) Includes public externally-managed BDCs with under $1bn in total assets (FDUS, SCM, WHF, HRZN, GAIN, GLAD, BKCC, PTMN, MRCC, OFS, OXSQ, GECC, ICMB, LRFC, SSIC, RAND, EQS, SVVC) Note: Market data as of July 26, 2023. Source: Bloomberg 5
Slide 6: Trading at Premium to Externally Managed BDC Peers
Trading at Premium to Externally Managed BDC Peers (1) Includes public externally-managed BDCs with under $1bn in total assets (FDUS, SCM, WHF, HRZN, GAIN, GLAD, BKCC, PTMN, MRCC, OFS, OXSQ, GECC, ICMB, LRFC, SSIC, RAND, EQS, SVVC). Note: Market data as of July 26, 2023. Source: Bloomberg 6
Slide 7: TriplePoint Venture Growth BDC Corp. Overview
TriplePoint Venture Growth BDC Corp. Overview - The 4 R’s - HIGHLY DIFFERENTIATED Relationships Reputation BUILT FOR SUCCESS References Returns ALIGNED WITH PUBLIC SHAREHOLDERS DELIVERING RESULTS 7
Slide 8: Overview: Highly Differentiated
TriplePoint Venture Growth BDC Corp. Overview HIGHLY DIFFERENTIATED ▪ Lend to venture capital backed companies at the venture growth stage INVESTMENT ▪ Target companies backed by a select group of leading venture capital investors STRATEGY ▪ Focus on technology, life sciences, and other high-growth
Slide 9: Overview: Built for Success
TriplePoint Venture Growth BDC Corp. Overview BUILT FOR SUCCESS • Externally-managed business development company (BDC) STRUCTURE • Common stock trades on the New York Stock Exchange: “TPVG” • $395.0 million in aggregate principal amount of private institutional notes • Managed by an affiliate of Tr
Slide 10: Overview: Aligned with Public Shareholders
TriplePoint Venture Growth BDC Corp. Overview ALIGNED WITH PUBLIC SHAREHOLDERS • 1.75% management fee SHAREHOLDER • 8% annualized hurdle rate for income incentive fee FRIENDLY • Total return requirement whereby incentive fees are capped at 20% of cumulative net increase in net assets resulting from
Slide 11: Overview: Delivering Results
TriplePoint Venture Growth BDC Corp. Overview DELIVERING RESULTS ▪ $7.8 billion of cumulative signed non-binding venture growth stage term sheets at TPC (1) DEMONSTRATED ▪ $3.8 billion of cumulative originations ORIGINATIONS ▪ $2.6 billion of cumulative fundings CAPABILITIES (2) ▪ Net loss rate of 1
Slide 12: Business Results: Second Quarter 2023 Highlights
Business Results Second Quarter 2023 Highlights • Net investment income (NII) of $18.8 million, or $0.53 per share • Generated total investment income of $35.2 million Financial Results • Net asset value of $379.4 million, or $10.70 per share • Declared and paid quarterly distribution totaling $0.40
Slide 13: Business Results: Second Quarter 2023 Highlights
Business Results Second Quarter 2023 Highlights • Ended the quarter with a 1.67x gross leverage ratio • Ended the quarter with liquidity of $199.4 million, comprised of $89.4 million of cash Liquidity and and cash equivalents and $110.0 million of credit facility availability Capital Resources • In
Slide 14: Strong, Consistent Performance – Trailing Five Quarter KPIs
Strong, Consistent Performance – Trailing Five Quarter KPIs KPI Q2 2022 Q3 2022 Q4 2022 Q1 2023 Q2 2023 $804m signed venture $269m signed venture $221m signed venture $199m signed venture $114m signed venture growth stage term sheets growth stage term sheets growth stage term sheets growth stage ter
Slide 15: Investment Highlights
Investment Highlights Industry Leading Differentiated Sponsor With Premium Investment Brand, Track Record Strategy and Platform Attractive Risk- Large And Growing Adjusted Returns Market With High With Equity Upside Barriers to Entry Potential Experienced Team Strong Financial Profile With Time-Test
Slide 16: Highly Experienced Management Team
Highly Experienced Management Team JIM SAJAL CHRIS LABE S R I VA S TAVA M AT H IE U Chairman & President & Chief Executive Officer Chief Investment Officer Chief Financial Officer • Co-Founder of TriplePoint • Co-Founder of TriplePoint • Joined TriplePoint Capital Capital Capital in 2019 as CFO • Pi
Slide 17: TriplePoint Capital - Industry Leading Venture Lending Credit Platform
TriplePoint Capital - Industry Leading Venture Lending Credit Platform KEY HIGHLIGHTS ▪ Launched in 2005 by Jim Labe and Sajal Srivastava ▪ Headquartered on Sand Hill Road in Silicon Valley with regional offices in New York City, San Francisco and Boston ▪ Provides debt, equity and complementary ser
Slide 18: TriplePoint Capital Differentiated Investment Strategy
TriplePoint Capital Differentiated Investment Strategy Target venture capital Invest with TPC’s Select backed companies Group of leading venture across the globe capital investors Primary focus in technology and other Unique, multi-stage high-growth industries investment approach – the Lifespan Appr
Slide 19: TriplePoint Capital - Financed 650+ Leading Companies
TriplePoint Capital - Financed 650+ Leading Companies (1) (1) Selected list of current and past TriplePoint Capital customers including at TPVG. 19
Slide 20: TriplePoint Capital's Unique Lifespan Approach
TriplePoint Capital’s Unique Lifespan Approach Identifies Strong Opportunities and Establishes Relationships Across All Stages TPVG’s Target Stage PUBLIC • Publicly traded shares VENTURE GROWTH STAGE LATER STAGE • “Crossed the chasm” • Generally at least $20 million in revenues EARLY STAGE • Further
Slide 21: TPVG's Approach / Venture Growth Stage
TPVG’s Approach / Venture Growth Stage We Take Our Customers Through The Red Zone To the End Zone Venture Seed Early Later Growth Stage Stage Stage Stage 21
Slide 22: Why Do High Growth Companies Use Venture Debt?
Why Do High Growth Companies Use Venture Debt? Value Proposition of Venture Debt Helps finance Provides runway Additional business acceleration and/or extension for validation provides expansion of the achieving additional negotiating leverage business milestones for higher valuations Complements Lo
Slide 23: Venture Debt Provides Compelling Relative Risk-Adjusted Returns
Venture Debt Provides Compelling Relative Risk-Adjusted Returns High Yields to Maturity With VC Equity Support & Low Total Leverage ▪ Generally short term financings (3-4 years) Higher Return Potential ▪ Typically amortizing facilities Through Warrants and Prepayments ▪ Prepayments typically boost r
Slide 24: Venture Growth Stage Market
Venture Growth Stage Market Fragmented Market with Limited Competition Given High Barriers to Entry S E E D S TA G E EARLY STAGE E A R LY S TA G E DEBT FUNDS L AT E R S TA G E LATER STAGE OTHER DEBT FUNDS VENTURE BDCs VENTURE BANKS V E N T U R E G R O W T H S TA G E OPPORTUNISTIC DEBT FUNDS PUBLIC 2
Slide 25: Illustrative TPVG Product Pricing Summary
Illustrative TPVG Product Pricing Summary Customized Debt Financing Based On Analysis of the Prospective Obligor PRODUCT TRANSACTION SIZE TERM COLLATERAL WARRANTS Growth Capital $5mm-$50mm 36 – 60 Months Senior On All Assets Typically Loans Equipment $5mm-$25mm 36 – 48 Months Equipment Typically Fin
Slide 26: Time-Tested Investment Process & Portfolio Management
Time-Tested Investment Process & Portfolio Management Benefits From More Than 30 Years of Experience and Expertise INVESTMENT & INVESTMENT ORIGINATIONS LEGAL INVESTMENT PROCESS CREDIT ANALYSIS COMMITTEE ▪ Leads and initial ▪ Initial screening ▪ Transaction presented ▪ Transaction screening performed
Slide 27: Strong, Disciplined Portfolio Growth
Strong, Disciplined Portfolio Growth – As of 6/30/23 Signed Term Sheets at TPC; Commitments and Fundings at TPVG ($mm) (1) (1) Signed term sheet amounts not necessarily indicative of opportunities available to TPVG. 27
Slide 28: High Yielding, High Quality Portfolio
High Yielding, High Quality Portfolio (1) $853.2 14.7% $44.3 $158.2 $44.4 $158.2 MILLION YIELD(2) MILLION MILLION (2) MILLION (2) MILLION DEBT PORTFOLIO YIELD PROFILE WARRANT PORTFOLIO EQUITY PORTFOLIO DEBT INVESTMENT FAIR WEIGHTED AVERAGE YIELD WARRANT FAIR VALUE DIRECT EQUITY FAIR VALUE VALUE ON T
Slide 29: Warrant & Direct Equity Investments
Warrant & Direct Equity Investments Significant Realized Gains MULTIPLE OF Future Potential Book Value Upside COMPANY REALIZED GAIN COST BASIS $27.1m 26x $2.1m GAAP unrealized Gain $6.5m 13x $15.4m GAAP unrealized Gain $3.4m 4x $2.9m 105x $28.9m GAAP Cost Basis $42.3m GAAP Cost Basis 123 61 Warrant
Slide 30: Portfolio Overview – Secured, Diversified Lending
Portfolio Overview – Secured, Diversified Lending (1) Diversified Across Subsectors of High Secured by Either the Entire Enterprise or Growth Industries Specific Assets Portfolio of Fixed and Floating Rate Loans (Based on Outstanding Principal) (1) Figures based on fair value as of June 30, 2023 unl
Slide 31: Rising Interest Rates – NII Benefit
Rising Interest Rates – NII Benefit Approximate Annual NII Per Share Impact Resulting from Increase in Prime Rate(1) $0.09 NII Per Share Annually Approximate earnings increase with a 100bps increase in rates. $0.18 NII Per Share Annually Approximate earnings increase with a 200bps increase in rates.
Slide 32: Strong Credit Performance and Proactive Monitoring
Strong Credit Performance and Proactive Monitoring (1) Q2 2023 Detailed Credit Ratings(2) Category Fair Value ($mm) % Of Debt Investment # Of Portfolio Companies Clear (1) $113.8 13.3% 7 White (2) $638.3 74.8% 38 Yellow (3) $58.5 6.9% 5 Orange (4) $14.2 1.7% 2 Red (5) $28.4 3.3% 4 $853.2 100.0% 56 (
Slide 33: Active Customers with Debt Outstanding
Active Customers with Debt Outstanding 33
Slide 34: Warrants and/or Equity Outstanding
Warrants and/or Equity Outstanding 34
Slide 35: Warrants and/or Equity Outstanding (cont.)
Warrants and/or Equity Outstanding (cont.) 35
Slide 36: Financial Highlights
Financial Highlights As of June 30, 2023
Slide 37: Key Financial Highlights – 6/30/2023
Key Financial Highlights – 6/30/2023 Total Investment Income ($mm) Net Investment Income ($mm) Total Investments ($mm) Total Assets ($mm) Note: Total Investments and Total Assets shown on a fair value basis. 37
Slide 38: High-Yielding Portfolio
High-Yielding Portfolio (1) (1) Weighted average portfolio yields on debt investments for periods shown are the annualized rates of interest income recognized during the period divided by the average amortized cost of debt investments in the portfolio during the period. The weighted average portfoli
Slide 39: Strong Yields Enhanced By Prepayments
Strong Yields Enhanced By Prepayments (1) Yields on Debt Investments Early Prepays (1) Weighted Average Portfolio Yield on Debt Investments includes all prepayment income. 39
Slide 40: Financial Highlights
Financial Highlights NII Return on Average Equity (ROAE) and NII Return on Average Assets (ROAA) Gross Leverage Ratio 40
Slide 41: Income Statement
Income Statement (1) 3 Months Ended 3 Months Ended 6 Months Ended 6 Months Ended June 30, 2023 June 30, 2022 June 30, 2023 June 30, 2022 Investment Income Interest Income from Investments $34,501 $26,995 $66,754 $52,928 Other Income 650 433 2,025 1,849 Total Investment and Other Income 35,151 27,428
Slide 42: Balance Sheet
Balance Sheet (1) As of June 30, 2023 As of December 31, 2022 Assets Investments at Fair Value $941,955 $949,276 Cash and Cash Equivalents 78,410 51,489 Restricted Cash 11,020 7,771 Deferred Credit Facility Costs 3,420 4,128 Prepaid Expenses and Other Assets 2,530 1,869 Total Assets $1,037,335 $1,01
Slide 43: Quarterly NAV Roll Forward
Financial Results Quarterly NAV Roll Forward ( $0.40 ) $0.53 $ 11.69 ( $1.12 ) $ 10.70 NAV as of 03/31/23 Net Investment Income Dividend to Shareholders Realized and Unrealized Changes in NAV as of 06/30/23 Fair Value 43
Slide 44: Disciplined and Diversified Capital Raising Since IPO
Disciplined and Diversified Capital Raising Since IPO (1) Equity Capital Raises (2) Debt Capital Raises (2)(3) Private Placement Received Investment Grade Rating Private Notes Placement 5yr – 5.00% Notes BBB (DBRS) 5yr - 4.50% BBB (DBRS) (1) Dollars shown in millions. (2) Exclusive of underwriting d
Slide 45: Diversification of Debt & Laddered Maturities
Diversification of Debt & Laddered Maturities Facility/ Primary Debt Interest Security Issuance Outstanding(2) Rating Maturity(5) Financial Instrument Rate(3) Size Covenants 2.90% + 3- Asset coverage, Revolving SPV November 30, $350 Million(1) $240 Million(1) N/A Month minimum equity & Credit Facili
Slide 46: Research Coverage
Research Coverage Casey Alexander Devin Ryan Ryan Lynch (646) 452-7083 (212) 906-3578 (314) 342-2918 calexander@compasspointllc.com dryan@jmpsecurities.com lynchr@kbw.com Christopher Nolan Mitchel Penn, CFA Crispin Love (212) 409-2068 (212) 667-7136 (212) 466-7938 cnolan@landenburg.com Mitchel.Penn@
Slide 47: Appendix
Appendix
Slide 48: Strong Demand For Venture Debt
Strong Demand For Venture Debt Venture Capital-Backed Companies Rely on a Combination of Equity and Debt to Fund Growth Demand for venture debt is driven by VC fundraising and investment activity More than 60,000 investments made representing over $1 trillion Over $400 billion raised by US VCs over
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TriplePoint Venture Growth BDC — Q2 2023 Earnings Presentation on 6ix