TriplePoint Venture Growth BDC Corp. · NYSE:TPVG
TriplePoint Venture Growth BDC — Q1 2022 Earnings Presentation
49 slides from TriplePoint Venture Growth BDC's earnings presentation, May 4, 2022
Slide 1: Investor Presentation Quarter Ended March 31, 2022
Investor Presentation Q u a r t e r E n d e d M a r c h 3 1 , 2022 M a y 4 , 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) $542 million COMMON STOCK Price / NAV (1) TPVG (NYSE) 1.26x EQUITY RESEARCH COVERAGE DISTRIBUTIONS DECLARED 7 analysts $0.36 For Q2 2022 CREDIT RATING (2) BBB Cumulative Net Investment Income si
Slide 5: Total Shareholder Return vs. Selected Externally Managed BDC
Total Shareholder Return vs. Selected Externally Managed BDC 250% Performance (%) 1Y 3Y 5Y TriplePoint Venture Growth BDC 31.8 % 75.4 % 117.9 % External BDCs¹ 17.7 21.8 34.8 117.9% 200% Indexed Total Return 150% 34.8% 100% 50% 0% Mar-2017 Jan-2018 Nov-2018 Sep-2019 Jul-2020 May-2021 Mar-2022 TripleP
Slide 6: Trading at Premium to Selected Externally Managed BDC
Trading at Premium to Selected Externally Managed BDC 1.45x 1.35x 1.25x 1.25x LTM P/B Multiple 1.15x 1.05x 0.95x 0.89x 0.85x 0.75x Mar-2021 May-2021 Jul-2021 Sep-2021 Nov-2021 Jan-2022 Mar-2022 TriplePoint Venture Growth BDC External BDCs¹ (1) Includes public externally-managed BDCs with under $1bn
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 SHAREHOLDER • 1.75% management fee FRIENDLY • 8% annualized hurdle rate for income incentive fee FEE STRUCTURE • Total return requirement whereby incentive fees are capped at 20% of cumulative net increase in net assets r
Slide 11: Delivering Results
TriplePoint Venture Growth BDC Corp. Overview DELIVERING RESULTS ▪ $6.2 billion of cumulative signed non-binding venture growth stage term sheets at TPC (1) DEMONSTRATED ▪ $3.4 billion of cumulative originations ORIGINATIONS ▪ $2.2 billion of cumulative fundings CAPABILITIES (2) ▪ $32.3 million of c
Slide 12: Business Results: First Quarter 2022 Highlights
Business Results First Quarter 2022 Highlights • Signed $656.6 million of term sheets with venture growth stage companies at TriplePoint Capital and TPVG closed $125.7 million of debt commitments to 11 portfolio companies • Funded $62.7 million in debt investments to 10 portfolio companies with a 13
Slide 13: Business Results: First Quarter 2022 Highlights
Business Results First Quarter 2022 Highlights • Inspirato (ISPO) and Sonder Holdings (SOND) closed SPAC mergers • Eight portfolio companies raised an aggregate $805.0 million of capital in private financing Portfolio Company rounds during the quarter Updates • Debt investment portfolio weighted ave
Slide 14: Strong, Consistent Performance – Trailing Five Quarter KPIs
Strong, Consistent Performance – Trailing Five Quarter KPIs Q1 2021 Q2 2021 Q3 2021 Q4 2021 Q1 2022 $192m signed venture $251m signed venture $304m signed venture $725m signed venture $657m signed venture growth stage term sheets growth stage term sheets growth stage term sheets growth stage term sh
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 ▪ Founded in 2005 by Jim Labe and Sajal Srivastava ▪ Headquartered on Sand Hill Road in Silicon Valley with regional offices in New York City and Boston ▪ Provides debt, equity and complementary services to private
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-$25mm 36 – 48 Months Equipment Typically Fin
Slide 26: Time-Tested Investment Process & Portfolio Management
Time-Tested Investment Process & Portfolio Management Benefits From More Than 30 Years of Experience and Expertise INVESTMENT & INVESTMENT ORIGINATIONS LEGAL INVESTMENT PROCESS CREDIT ANALYSIS COMMITTEE ▪ Leads and initial ▪ Initial screening ▪ Transaction presented ▪ Transaction screening performed
Slide 27: Strong, Disciplined Portfolio Growth
Strong, Disciplined Portfolio Growth – As of 3/31/22 Signed Term Sheets at TPC; Commitments and Fundings at TPVG ($mm) (1) (1) Signed term sheet amounts not necessarily indicative of opportunities available to TPVG. 27
Slide 28: High Yielding, High Quality Portfolio
High Yielding, High Quality Portfolio (1) $696.0 15.5% $52.8 $158.2 $57.6 $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 Future Potential Book Value Upside Significant Realized Gains (1) COMPANY REALIZED GAIN MULTIPLE OF COST BASIS $27.1m 26x $18.3m GAAP unrealized Gain $26.7m GAAP unrealized Gain $3.4m 4x $1.8m 160x $26.1m GAAP Cost Basis $39.3m GAAP Cost Basis $1.3m 8x 99 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 Floating Fixed Rate, Rate, 52.5% 47.5% (1) Figures based on fair value as of March 31, 2
Slide 31: Rising Interest Rates – NII Benefit
Rising Interest Rates – NII Benefit Approximate Annual NII Per Share Impact Resulting $0.10 NII Per Share Annually from Increase in Prime Rate(1) Approximate earnings increase $0.35 with a 100bps increase in rates. $0.32 $0.30 $0.20 NII Per Share Annually Approximate earnings increase $0.25 with a 2
Slide 32: Strong Credit Performance and Proactive Monitoring
Strong Credit Performance and Proactive Monitoring (1) Q1 2022 Detailed Credit Ratings(2) Category Fair Value ($mm) % Of Debt Investment # Of Portfolio Companies Clear (1) $48.5 7.0% 4 White (2) $592.5 85.1% 40 Yellow (3) $45.1 6.5% 3 Orange (4) $9.9 1.4% 1 Red (5) $- -% - $696.0 100.0% 48 (1) Debt
Slide 33: Active Customers with Debt Outstanding
Active Customers with Debt Outstanding Active Customers with Debt Outstanding 33
Slide 34: Active Customers with Warrants and/or Equity Outstanding
Active Customers with Warrants and/or Equity Outstanding 34
Slide 35: ESG Approach
ESG Approach We consider driving positive outcomes for our companies, the communities in which we operate, our employees and partners when making investment decisions Environmental Responsible Investment Highlights (1) ▪ We endeavor to invest in companies leveraging technology and sustainable busine
Slide 36: Financial Highlights
Financial Highlights As of March 31, 2022
Slide 37: Key Financial Highlights – 3/31/2022
Key Financial Highlights – 3/31/2022 Total Investment Income ($mm) Net Investment Income ($mm) Total Investments ($mm) Total Assets ($mm) Note: Total Investments and Total Assets shown on a Fair Value basis. 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) Leverage Ratio 40
Slide 41: Income Statement
Income Statement (1) 3 Months Ended 3 Months Ended 12 Months Ended 12 Months Ended March 31, 2022 March 31, 2021 December 31, 2021 December 31, 2020 Investment Income Interest Income from Investments $25,934 $19,191 $82,829 $88,572 Other Income 1,415 783 4,563 2,612 Total Investment and Other Income
Slide 42: Balance Sheet
Balance Sheet (1) As of March 31, 2022 As of December 31, 2021 Assets Investments at Fair Value $806,447 $865,340 Cash and Cash Equivalents 51,275 51,272 Restricted Cash - 7,875 Deferred Credit Facility Costs 1,946 2,170 Prepaid Expenses and Other Assets 915 1,013 Total Assets $860,583 $927,670 Liab
Slide 43: Quarterly NAV Roll Forward
Financial Results Quarterly NAV Roll Forward $0.44 $(0.36) $ 14.01 $ 13.84 $(0.25) NAV as of 12/31/21 Net Investment Income Dividend to Shareholders Realized and Unrealized Changes NAV as of 3/31/2022 in Fair Value 43
Slide 44: Disciplined and Diversified Capital Raising Since IPO
Disciplined and Diversified Capital Raising Since IPO Equity Capital Raises (1) Debt Capital Raises (1)(2) Private Received Investment Grade Rating Placement Private Notes Placement 5yr - 4.50% Notes BBB (DBRS) 5yr - 4.50% (4) BBB (DBRS) Private Placement (3) Notes 5yr – 5.00% BBB (DBRS) (1) Exclusi
Slide 45: Diversification of Debt
Diversification of Debt Facility/ Primary Interest Financial Security Issuance Outstanding (2) Rating Maturity(5) Rate (3) Covenants Size 3-Month Asset coverage, REVOLVING SPV Structure $350 Million(1) $200 Million N/A LIBOR May 31, 2024 minimum equity & CREDIT FACILITY + 3.00%(4) asset quality test
Slide 46: Research Coverage
Research Coverage Casey Alexander Devin Ryan Ryan Lynch (646) 452-7083 (212) 906-3578 (314) 342-2918 [email protected] [email protected] [email protected] Christopher Nolan Mitchel Penn, CFA Crispin Love (212) 409-2068 (212) 667-7136 (212) 466-7938 [email protected] 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 50,000 investments made representing over $400 Over $200 billion raised by US VCs over the pas
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