Triplepoint Venture Growth Bdc Corp. · NYSE:TPVG
Triplepoint Venture Growth Bdc — FY2022 Earnings Presentation
51 slides from Triplepoint Venture Growth Bdc's earnings presentation, Mar 1, 2023
Slide 1: Investor Presentation, Fiscal Year Ended December 31, 2022
Investor Presentation F i s c a l Ye a r E n d e d D e c e m b e r 3 1 , 2022 M a r c h 1 , 2 022 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) $369 million COMMON STOCK Price / NAV (1) TPVG (NYSE) 0.88x EQUITY RESEARCH COVERAGE DISTRIBUTIONS DECLARED 8 analysts $0.40 For Q1 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 300% Performance (%) 1Y 3Y 5Y TriplePoint Venture Growth BDC (19.0)% 18.4 % 72.6 % External BDCs¹ 0.8 9.4 34.1 250% 200% Indexed Total Return 72.6 % 150% 34.1 % 100% 50% 0% Feb-2018 Dec-2018 Oct-2019 Aug-2020 Jun-2021 Apr-2022 Feb-2023 Triple
Slide 6: Trading at Premium to Externally Managed BDC Peers
Trading at Premium to Externally Managed BDC Peers 1.40x 1.30x 1.20x LTM P/B Multiple 1.10x 1.00x 0.93x 0.90x 0.85x 0.80x 0.70x 0.60x Feb-2022 Apr-2022 Jun-2022 Aug-2022 Oct-2022 Dec-2022 Feb-2023 TriplePoint Venture Growth BDC External BDCs¹ (1) Includes public externally-managed BDCs with under $1
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: 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: 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: 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: Delivering Results
TriplePoint Venture Growth BDC Corp. Overview DELIVERING RESULTS ▪ $7.5 billion of cumulative signed non-binding venture growth stage term sheets at TPC (1) DEMONSTRATED ▪ $3.8 billion of cumulative originations ORIGINATIONS ▪ $2.5 billion of cumulative fundings CAPABILITIES (2) ▪ Net loss rate of 2
Slide 12: Fourth Quarter 2022 Highlights
Business Results Fourth Quarter 2022 Highlights • Signed $221.2 million of term sheets with venture growth stage companies at TPC and TPVG closed $104.7 million of new debt commitments to venture growth stage companies • Funded $94.6 million in debt investments to 16 portfolio companies with a 15.4%
Slide 13: Fourth Quarter 2022 Highlights: Liquidity and Credit
Business Results Fourth Quarter 2022 Highlights • Ended the quarter with a 1.36x leverage ratio • Total liquidity of $234.3 million, consisting of cash, cash equivalents and restricted cash of Liquidity and $59.3 million and available capacity under the Revolving Credit Facility of $175.0 million Ca
Slide 14: 2022 Highlights
Business Results 2022 Highlights • Earned a record NII of $63.6 million, or $1.94 per share • Generated a record total investment income of $119.4 million • Achieved a portfolio fair value of $949.3 million Financial Results • Declared and paid regular quarterly distributions totaling $1.45 per comm
Slide 15: 2022 Highlights: Liquidity and Capital Resources
Business Results 2022 Highlights • Raised $55.3 million of net proceeds from the public issuance of 4,161,807 shares of common stock • Amended the Revolving Credit Facility to, among other things, extend the revolving period from November 30, 2022 to May 31, 2024 and the scheduled maturity date Liqu
Slide 16: Strong, Consistent Performance – Trailing Five Quarter KPIs
Strong, Consistent Performance – Trailing Five Quarter KPIs Q4 2021 Q1 2022 Q2 2022 Q3 2022 Q4 2022 $725m signed venture $657m signed venture $804m signed venture $269m signed venture $221m signed venture growth stage term sheets growth stage term sheets growth stage term sheets growth stage term sh
Slide 17: 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 18: 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 19: 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 20: 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 21: 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. 21
Slide 22: 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 23: 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 23
Slide 24: 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 25: 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 26: 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 27: 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-$25mm 36 – 48 Months Equipment Typically Fin
Slide 28: Time-Tested Investment Process & Portfolio Management
Time-Tested Investment Process & Portfolio Management Benefits From More Than 30 Years of Experience and Expertise INVESTMENT & INVESTMENT ORIGINATIONS LEGAL INVESTMENT PROCESS CREDIT ANALYSIS COMMITTEE ▪ Leads and initial ▪ Initial screening ▪ Transaction presented ▪ Transaction screening performed
Slide 29: Strong, Disciplined Portfolio Growth
Strong, Disciplined Portfolio Growth – As of 12/31/22 Signed Term Sheets at TPC; Commitments and Fundings at TPVG ($mm) (1) (1) Signed term sheet amounts not necessarily indicative of opportunities available to TPVG. 29
Slide 30: High Yielding, High Quality Portfolio
High Yielding, High Quality Portfolio (1) $853.0 15.3% $48.4 $158.2 $47.9 $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 31: 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 $6.5m GAAP unrealized Gain $6.5m 13x $19.0m GAAP unrealized Gain $3.4m 4x $1.8m 160x $29.4m GAAP Cost Basis $41.4m GAAP Cost Basis 124 Warrant Inv
Slide 32: 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 December 31, 2022
Slide 33: Rising Interest Rates – NII Benefit
Rising Interest Rates – NII Benefit Approximate Annual NII Per Share Impact Resulting from Increase in Prime Rate(1) $0.10 NII Per Share Annually Approximate earnings increase with a 100bps increase in rates. $0.21 NII Per Share Annually Approximate earnings increase with a 200bps increase in rates.
Slide 34: Strong Credit Performance and Proactive Monitoring
Strong Credit Performance and Proactive Monitoring (1) Q4 2022 Detailed Credit Ratings(2) Category Fair Value ($mm) % Of Debt Investment # Of Portfolio Companies Clear (1) $55.9 6.6% 3 White (2) $699.0 81.9% 48 Yellow (3) $88.9 10.4% 5 Orange (4) $9.1 1.1% 1 Red (5) - - - $853.0 100.0% 57 (1) Debt i
Slide 35: Active Customers with Debt Outstanding
Active Customers with Debt Outstanding 35
Slide 36: Warrants and/or Equity Outstanding
Warrants and/or Equity Outstanding 36
Slide 37: Warrants and/or Equity Outstanding (cont.)
Warrants and/or Equity Outstanding (cont.) 37
Slide 38: Financial Highlights
Financial Highlights As of December 31, 2022
Slide 39: Key Financial Highlights – 12/31/2022
Key Financial Highlights – 12/31/2022 Total Investment Income ($mm) Net Investment Income ($mm) Total Investments ($mm) Total Assets ($mm) Note: Total Investments and Total Assets shown on a Fair Value basis. 39
Slide 40: 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 41: 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. 41
Slide 42: Financial Highlights
Financial Highlights NII Return on Average Equity (ROAE) and NII Return on Average Assets (ROAA) Leverage Ratio 42
Slide 43: Income Statement
Income Statement (1) 3 Months Ended 3 Months Ended 12 Months Ended 12 Months Ended December 31, 2022 December 31, 2021 December 31, 2022 December 31, 2021 Investment Income Interest Income from Investments $34,430 $25,172 $116,573 $82,829 Other Income 519 697 2,851 4,563 Total Investment and Other I
Slide 44: Balance Sheet
Balance Sheet (1) As of December 31, 2022 As of December 31, 2021 Assets Investments at Fair Value $949,276 $865,340 Cash and Cash Equivalents 51,489 51,272 Restricted Cash 7,771 7,875 Deferred Credit Facility Costs 4,128 2,170 Prepaid Expenses and Other Assets 1,869 1,013 Total Assets $1,014,533 $9
Slide 45: Quarterly NAV Roll Forward
Financial Results Quarterly NAV Roll Forward 45
Slide 46: Disciplined and Diversified Capital Raising Since IPO
Disciplined and Diversified Capital Raising Since IPO (1) Equity Capital Raises (2) Private Debt Capital Raises (2)(3) Private Placement Notes Received Investment Grade Rating Placement Notes 5yr – 5.00% Private BBB (DBRS) Placement 5yr - 4.50% Notes BBB (DBRS) $125.0 Retail Retail 5yr - 4.50% Revol
Slide 47: Diversification of Debt
Diversification of Debt Facility/ Primary Interest Financial Security Issuance Outstanding (2) Rating Maturity(5) Rate (3) Covenants Size Asset REVOLVING 2.90% + 3- coverage, SPV Structure $350 Million(1) $175 Million N/A Month November 30, 2025 minimum CREDIT FACILITY SOFR(4) equity & asset quality
Slide 48: 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 49: Appendix
Appendix
Slide 50: 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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