Slide 1: Second Quarter 2023 Investor Presentation
Second Quarter 2023 Investor Presentation
Slide 2: Forward Looking Statements | Disclaimer
FORWARD LOOKING STATEMENTS | DISCLAIMER Trinity Capital Inc. (the “Company”) cautions that this presentation may contain forward-looking statements that are based on current expectations and assumptions about future events, and which are not based in historical fact. The forward-looking statements i
Slide 3: Company Overview
COMPANY OVERVIEW
Slide 4: Trinity Capital Overview
TRINITY CAPITAL OVERVIEW Diversified financial solutions to growth stage companies | NASDAQ – TRIN, TRINL 15 YEAR MARKET CAP / TRACK P O R T F O L I O (2) L I Q U I D I T Y (2) R E C O R D (1) DIVIDEND YIELD $856.0M $2.6B Fundings $536.0M $130.3M Secured Loans Market C a p (3) Available 61 Companies
Slide 5: The Trinity Platform
THE TRINITY PLATFORM In an evolving market, platform diversification further strengthens Trinity’s position to capture market share and differentiates its financing solutions Business Development Company (“BDC”) Trinity’s foundation was built on its successful investment track record supporting grow
Slide 6: Why Is Trinity Different
WHY IS TRINITY DIFFERENT We understand the growth stage world and provide more than money to our portfolio company partners § Highly experienced executive team with startup experience Deep Operating § Decades of in-depth high-tech experience Experience § Numerous U.S. and International patents issue
Slide 7: Entrenched Industry Relationships
ENTRENCHED INDUSTRY RELATIONSHIPS Multiple shared portfolio companies with top Venture Capital Firms Relationships with top market share banks catering to majority of VC-backed companies We have established inter-creditor agreements with the banks Combining with bank debt results in a lower blended
Slide 8: Underwriting Approach and Risk Mitigation
UNDERWRITING APPROACH AND RISK MITIGATION Disciplined investment approach keeps our annualized loss rate at 33 bps and is more than offset by realized gains on warrant/equity investments (1) CAPITALIZATION FINANCIALS DEBT STRUCTURE Investor Syndicate Revenue & Collateral Gross Margins Cash Life Fund
Slide 9: Secured Term Loans
SECURED TERM LOANS Select Examples Term Loans Axiom Space is developing the world’s first commercial space station. § Investor Syndicate 01 C5 Capital, TQS Advisors, Declaration Partners, SECURED LOANS Boryung Pharma Partner with the banks § Use of Loan General corporate purposes 02 BACKED BY Mainsp
Slide 10: Equipment Financings
EQUIPMENT FINANCINGS Select Examples Emerald Cloud Lab is a remote-controlled life Equipment Financing science laboratory that allows scientists to conduct their experiments without being anchored to a physical lab. § Investor Syndicate 01 COMPANIES WITH CAPEX REQUIREMENTS Manufacturing equipment an
Slide 11: Financial Highlights
FINANCIAL HIGHLIGHTS
Slide 12: Q2 2023 Highlights
Q2 2023 HIGHLIGHTS § Total Investment Income of $46.0M § Net Investment Income (“NII”) of $22.1M Robust § Net Interest Margin (“NIM”) of 12.1% § NII per share of $0.61 provides 127.1% of regular distribution coverage Earnings § Increased the second quarter regular dividend distribution to $0.48 per
Slide 13: Solid Shareholder Returns
SOLID SHAREHOLDER RETURNS DIVIDEND GROWTH $6.00 $0.48 $0.50 $0.47 $0.46 $0.45 $0.45 $0.42 $0.65 $5.00 $0.40 $0.60 $0.40 $0.36 $0.60 $0.33 $0.35 $4.00 $0.29 $0.45 Net Investment Income covered $0.28 $0.30 $0.27 $0.27 $0.27 regular dividend by 127.1% in 2Q23 $0.30 $3.00 $0.25 $0.22 $0.15 $4.97 $4.49 $
Slide 14: Quarterly Income Statement
QUARTERLY INCOME STATEMENT For the three months ended (In thousands, except per share amounts) 06/30/2023 03/31/2023 12/31/2022 09/30/2022 06/30/2022 Total Investment Income $46,045 $41,538 $41,509 $38,689 $33,458 Interest expense and other debt financing costs 11,985 11,081 10,284 9,306 7,761 Compe
Slide 15: Income Source & Portfolio Yield Trends
INCOME SOURCE & PORTFOLIO YIELD TRENDS Strong Yields Produce Solid Investment Income SOURCES OF INVESTMENT INCOME PORTFOLIO YIELDS $50,000 $45,000 $1,200 17.0% 9.7% 16.2% $40,000 8.3% 5.6% 15.5% 16.0% 11.0% 18.0% $1,000 15.2% 15.0% $35,000 19.4% 14.8% 19.1% 15.0% 7.1% 14.2% 14.3% $30,000 20.4% $800
Slide 16: NII Returns and Use of Leverage
NII RETURNS AND USE OF LEVERAGE N I I R E T U R N O N AV E R A G E A S S E T S ( R O A A ) (1) & N I I R E T U R N O N AV E R A G E E Q U I T Y ( R O A E ) (2) 20.0% 17.9% 18.4% 16.5% 15.4% 14.3% 15.0% 13.5% 12.0% 11.4% 10.9% 9.7% 10.2% 9.5% 8.9% 10.0% 8.2% 7.7% 7.6% 6.5% 6.4% 6.7% 6.8% 6.8% 5.6% 6.
Slide 17: Net Investment Income (NII) per Share Bridge
NET INVESTMENT INCOME (NII) PER SHARE BRIDGE R E C O N C IL IAT IO N O F Q U A R T E R LY N II P E R S H A R E Increase Decrease Total $0.70 $0.65 $0.09 $0.61 $(0.02) $0.60 $(0.01) $0.55 $0.55 $0.50 $0.45 $0.40 $0.35 $0.30 1Q23 NII Change in Change in Change in 2Q23 NII per Share Investment Income I
Slide 18: Balance Sheet
BALANCE SHEET (In thousands, except per share amounts) 06/30/2023 03/31/2023 12/31/2022 09/30/2022 06/30/2022 Assets Total investments at fair value $ 1,148,018 $ 1,091,531 $ 1,094,386 $ 1,042,175 $ 1,051,074 Cash and cash equivalents 12,268 8,344 10,612 34,141 13,226 Interest receivable 12,117 10,4
Slide 19: Net Asset Value (NAV) per Share Bridge
NET ASSET VALUE (NAV) PER SHARE BRIDGE Reconciliation of Quarterly NAV per Share Increase Decrease Total $14.00 $0.61 $13.50 $0.74 $0.06 $13.15 $13.07 ($0.53) $13.00 ($0.06) $12.50 ($0.74) $12.00 Earnings and Investment Portfolio Share Distributions Performance Impact(1) $11.50 $11.00 1Q23 NAV Net D
Slide 20: Debt Capital Structure
DEBT CAPITAL STRUCTURE Diversified Borrowings ($ in millions) as of June 30, 2023 Debt Outstanding Undrawn Funding Source Stated Maturity Interest Rate Commitment Principal Commitment Notes: 2025 Unsecured Notes(1) $182.5 $182.5 - January 16, 2025(2) 7.00% Convertible Notes $50.0 $50.0 - December 11
Slide 21: Portfolio Highlights
J//////// PORTFOLIO HIGHLIG
Slide 22: Portfolio Diversification
PORTFOLIO DIVERSIFICATION Diversified across investment type, transaction size, industry and geography Investment Type(1) Transaction Size(1)(2) 4.2% 34.1% 25.2% Loans Greater than $30M 74.5% Equipment Financing $15M - $30M 21.3% Equity & Warrants Less than $15M 40.7% Industry Type(1) Geographic All
Slide 23: Portfolio Trends
PORTFOLIO TRENDS FIXED VS FLOATING DEBT INVESTMENTS ( 1 ) TOTAL PORTFOLIO BY INVESTMENT TYPE ( 2 ) Fixed Floating Loans Equipment Financing Equity & Warrants $1,200,000 4.2% 4.1% 4.1% $1,000,000 5.4% 4.3% 21.3% 22.5% 21.9% 21.4% 23.6% 64.4% 62.2% 67.5% 70.0% $800,000 72.1% IN THOUSANDS $600,000 $400
Slide 24: Hypothetical Warrant Upside
HYPOTHETICAL WARRANT UPSIDE For Illustration Purposes Only 2X MULTIPLE 136 Warrant Positions in 84 Portfolio Companies • Proceeds of $50.2 million (2X) • Potential gain of $13.3 million § GAAP fair value ~ $28.7 million or $0.36 per share § GAAP cost ~ $23.7 million § ~ $50.2 million in nominal exer
Slide 25: Disciplined Credit Rating
DISCIPLINED CREDIT RATING Consistent and Disciplined Underwriting Standards $1,100 3.5 $1,000 3.0 2.9 $900 2.8 2.8 2.8 3.0 $800 $700 2.5 $600 Total Debt Investments (FV, $ in million) (1) $1,049 $1,043 $1,094 $500 $995 $997 2.0 Weighted Investment Credit Rating $400 $300 $200 1.5 $100 $0 1.0 2Q22 3Q
Slide 26: Interest Rate Sensitivity
INTEREST RATE SENSITIVITY ANNUALIZED INTEREST RATE SENSITIVITY ($ in thousands, except per share data) $15,000 $0.40 $0.30 72.1% floating rate debt $0.30 $10,000 investment portfolio as $0.15 $0.20 $10,886 $5,000 $0.10 of June 30, 2023 (1) $5,443 $- $- $(5,264) $(0.10) $(5,000) $(10,099) $(0.14) $(0
Slide 27: Diversified Portfolio
DIVERSIFIED PORTFOLIO Select List of Current & Historical Investments © 2023 Trinity Capital Inc. | 27
Slide 28: Venture Capital and Lending Market
VENTURE CAPITAL AND LENDING MARKET
Slide 29: Venture Capital Market
VENTURE CAPITAL MARKET US VC Deal Activity (1) $400 18,990 20,000 18,086 18,000 $350 16,000 $300 13,621 13,577 14,000 Dollars Invested ($ in billions) 12,484 $250 11,864 11,792 # of Deals 11,166 10,946 12,000 10,041 $200 10,000 8,195 8,000 $150 6,000 $100 4,000 $50 2,000 $146 $152 $172 $348 $247 $50
Slide 30: Venture Capital Fundraising
VENTURE CAPITAL FUNDRAISING US VC Fundraising Activity (1) $180 $160 $140 $120 $100 $80 $60 $40 $20 $160 $167 $22 $37 $43 $51 $46 $72 $71 $91 $33 $- 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 Capital raised ($ in billions) (1) As of June 30, 2023, per Pitchbook NVCA Venture Monitor Q2 20
Slide 31: Venture Debt Market
VENTURE DEBT MARKET US Venture Debt Deal Activity (1) $40 4,500 3,844 4,000 $35 3,261 3,328 3,500 $30 2,982 3,042 Dollars Invested ($ in billions) 2,828 3,000 2,721 2,667 $25 # of Deals 2,500 $20 2,127 2,000 1,717 $15 1,500 $10 967 1,000 $5 500 $12 $17 $16 $15 $27 $34 $34 $35 $36 $8 $7 $- - 2013 201
Slide 32: Analyst Coverage
ANALYST COVERAGE
Slide 33: Extensive Industry Analyst Coverage
EXTENSIVE INDUSTRY ANALYST COVERAGE Followed by eight firms Ryan Lynch Fi ni an O’ Shea Mi tchel l Penn Vi l as Abr aham (initiated coverage 2/23/2021) (initiated coverage 2/23/2021) (initiated coverage 5/3/2021) (initiated coverage 2/23/2021) Br yce Rowe Chr i stopher Nol an Casey Al exander Kyl e
Slide 34: Supplemental Information
SUPPLEMENTAL INFORMATION
Slide 35: Regulation & Structure
REGULATION & STRUCTURE Trinity Capital Inc. is an Internally Managed BDC under the 1940 Act and has elected to be treated as a RIC for Federal Income Tax Purposes beginning with its Taxable Year ending December 31, 2020 BUSINESS DEVELOPMENT COMPANY (BDC) § Regulated by the SEC under the Investment C
Slide 36: Thank You
THANK YOU We look forward to our growing partnership. T R I N I T Y C A P. C O M 3 6