TriplePoint Venture Growth BDC Corp. · NYSE:TPVG
TriplePoint Venture Growth BDC — Q1 2020 Earnings Presentation
41 slides from TriplePoint Venture Growth BDC's earnings presentation, May 6, 2020
Slide 1: Investor Presentation, Quarter Ended March 31, 2020
Investor Presentation Q u a r t e r E n d e d M a r c h 3 1 , 2020 M a y 6 , 2 02 0 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. Snapshot
TriplePoint Venture Growth BDC Corp. Snapshot Structure Publicly traded business development company (BDC) TPVG (NYSE) – Common Stock Symbol TPVY (NYSE) – 5.75% Notes Due 2022 (1) IPO Date March 5, 2014 Market Capitalization $215.5 million as of May 5, 2020 Price $7.01 per share at May 5, 2020 Distr
Slide 4: 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 4
Slide 5: 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 6: Overview: Built for Success
TriplePoint Venture Growth BDC Corp. Overview BUILT FOR SUCCESS • Externally-managed business development company (BDC) • Common stock trades on the New York Stock Exchange: “TPVG” STRUCTURE • $74.8 million in aggregate principal amount of notes trade on the New York Stock Exchange: “TPVY” • $70.0 m
Slide 7: 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 FEE STRUCTURE cumulative net increase in net assets r
Slide 8: Overview: Delivering Results
TriplePoint Venture Growth BDC Corp. Overview DELIVERING RESULTS DEMONSTRATED $3.6 billion of signed non-binding term sheets at TPC (1) ORIGINATIONS $2.5 billion of cumulative originations CAPABILITIES (2) $1.5 billion of cumulative fundings $737.7 million portfolio size at cost HIGH YIELDIN
Slide 9: First Quarter 2020 Highlights
Financial Highlights FIRST QUARTER 2020 HIGHLIGHTS Earned net investment income of $12.2 million, or $0.41 per share; Signed $79.5 million of term sheets with venture growth stage companies at TriplePoint Capital LLC (“TPC”), and TPVG closed $102.6 million of new debt commitments to venture grow
Slide 10: Recent Developments
Financial Highlights RECENT DEVELOPMENTS Since March 31, 2020(1): The Company received $10.0 million of principal prepayments generating approximately $1.1 million of accelerated income; TPC’s direct originations platform entered into $46.5 million of additional non-binding signed term sheets wi
Slide 11: 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 12: Highly Experienced Management Team
Highly Experienced Management Team JIM LABÉ SAJAL SRIVASTAVA CHRIS MATHIEU Chairman & President & Chief Financial Officer Chief Executive Officer Chief Investment Officer Co-Founder of TriplePoint Co-Founder of TriplePoint Joined TriplePoint Capital Capital Capital in 2019 as CFO Pioneer of
Slide 13: TriplePoint Capital Platform Overview
TriplePoint Capital Platform Overview 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 privately-held, venture capital-backed c
Slide 14: 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 15: TriplePoint Capital - Financed 400+ Leading Companies
TriplePoint Capital - Financed 400+ Leading Companies (1) (1) Selected list of current and past TriplePoint Capital customers 15
Slide 16: 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 17: 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 17
Slide 18: 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 19: Compelling Relative Risk-Adjusted Returns
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 returns from accelerati
Slide 20: 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 21: 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-$25mm 36 – 48 Months Equipment Typically Fin
Slide 22: Time-Tested Investment Process & Portfolio Management
Time-Tested Investment Process & Portfolio Management Benefits From More Than 30 Years of Experience and Expertise INVESTMENT & INVESTMENT ORIGINATIONS LEGAL INVESTMENT PROCESS CREDIT ANALYSIS COMMITTEE Leads and initial Initial screening Transaction presented Transaction screening performed
Slide 23: Strong, Disciplined Portfolio Growth
Strong, Disciplined Portfolio Growth – As of 3/31/20 Signed Term Sheets at TPC; Commitments and Fundings at TPVG ($mm) (1) $3,617.9 $3,490.0 $2,604.4 $2,501.0 $2,386.3 $1,718.2 $1,615.8 $1,542.0 $1,451.3 $1,198.4 $922.2 $1,106.4 $873.8 $771.5 $657.2 $446.0 $484.5 $420.5 $270.0 $262.0 $159.9 2014 201
Slide 24: High Yielding, High Quality Portfolio
High Yielding, High Quality Portfolio (1) (2) $661.7 12.7% $158.2 $22.5 $158.2 $28.9 MILLION(1) YIELD(3) MILLION(2)(1) MILLION MILLION(2)(1) MILLION DEBT PORTFOLIO YIELD PROFILE WARRANT PORTFOLIO EQUITY PORTFOLIO DEBT INVESTMENT FAIR WEIGHTED AVERAGE YIELD WARRANT FAIR VALUE DIRECT EQUITY FAIR VALUE
Slide 25: 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 Human Consumer Non- Resources/Recrui Commercial Multimedia and Durables, 1.5% tment, 1.4% Services, 1.4% Design Software, 1.4% Dire
Slide 26: Strong Credit Performance and Proactive Monitoring
Strong Credit Performance and Proactive Monitoring (1) $700 2.50 2.09 2.06 2.05 2.06 2.03 2.09 2.05 1.97 1.94 2.02 2.02 1.95 2.00 $600 1.85 1.94 1.92 1.87 2.00 $500 $400 1.50 ($mm) $300 1.00 $200 0.50 $100 $0 0.00 Q1-16 Q2-16 Q3-16 Q4-16 Q1-17 Q2-17 Q3-17 Q4-17 Q1-18 Q2-18 Q3-18 Q4-18 Q1-19 Q2-19 Q3
Slide 27: Portfolio Overview – Debt Investments
Portfolio Overview – Debt Investments 27
Slide 28: Portfolio Overview – Warrant and Equity Investments
Portfolio Overview – Warrant and Equity Investments 28
Slide 29: Financial Highlights
Financial Highlights As of March 31, 2020
Slide 30: Key Financial Highlights
Key Financial Highlights – As of 3/31/20 Total Investment Income ($mm) Net Investment Income ($mm) $73.4 $38.3 $64.6 $35.0 $51.5 $26.3 $42.1 $43.6 $23.0 $22.0 $25.3 $12.8 $20.8 $12.2 2014 2015 2016 2017 2018 2019 3/31/2020 2014 2015 2016 2017 2018 2019 3/31/2020 Total Investments ($mm) Total Assets
Slide 31: High-Yielding Portfolio
High-Yielding Portfolio (1) $700 25.0% $600 19.9% 19.3% 20.0% 18.0% 16.5% 16.8% 17.2% 16.5% $500 15.7% 15.4% 13.9% 15.0% 15.3% 13.7% 13.6% 15.0% $400 13.2% 12.7% ($mm) 12.8% $300 10.0% $200 5.0% $100 $0 0.0% Q1-16 Q2-16 Q3-16 Q4-16 Q1-17 Q2-17 Q3-17 Q4-17 Q1-18 Q2-18 Q3-18 Q4-18 Q1-19 Q2-19 Q3-19 Q4
Slide 32: Strong Yields Enhanced By Prepayments
Strong Yields Enhanced By Prepayments (1) Yields on Debt Investments 25.0% 19.9% 19.3% 20.0% 17.2% 18.0% 16.8% 16.5% 16.5% 15.7% 15.0% 15.4% 15.3% 13.2% 13.7% 13.6% 13.8% 13.9% 14.0% 14.0% 12.7% 15.0% 13.0% 12.8% 12.5% 14.3% 13.6% 13.7% 13.5% 13.6% 13.9% 13.7% 13.7% 13.2% 12.8% 13.0% 12.7% 10.0% 10.
Slide 33: Financial Highlights: ROAE, ROAA and Leverage
Financial Highlights NII Return on Average Equity (ROAE) and NII Return on Average Assets (ROAA) 18.0% 16.6% 14.8% 14.9% 16.0% 13.6% 12.9% 14.0% 12.1% 11.9% 12.0% 12.2% 12.0% 10.2% 8.9% 10.0% 8.0% 7.8% 8.0% 10.3% 9.7% 9.0% 9.4% 6.0% 8.3% 8.6% 7.7% 7.1% 6.8% 4.0% 5.7% 6.0% 5.2% 5.1% 2.0% 0.0% Q1-17 Q
Slide 34: Q1 2020 Income Statement
Q1 2020 Income Statement (1) 12 Months Ended 12 Months Ended 12 Months Ended 3 Months Ended 31-Dec-2017 31-Dec-2018 31-Dec-2019 31-Mar-2020 Investment Income Interest Income from Investments $50,035 $62,610 $70,524 $20,274 Other Income 1,475 2,038 2,863 567 Total Investment and Other Income 51,510 6
Slide 35: Q1 2020 Balance Sheet
Q1 2020 Balance Sheet (1) As of As of As of As of 31-Dec-2017 31-Dec-2018 31-Dec-2019 31-Mar-2020 Assets Investments at Fair Value $372,103 $433,417 $653,129 $713,155 Short-Term Investments at Fair Value 124,909 19,999 – – Cash 4,484 3,382 20,285 84,693 Restricted Cash 5,522 6,567 6,156 887 Deferred
Slide 36: Disciplined and Diversified Capital Raising Since IPO
Disciplined and Diversified Capital Raising Since IPO Equity Capital Raises (1) $81.0 $94.9 Public Offering $22.6 $294.6 Accretive to NAV Public and $96.1 Private GSAM Private Offering Only Offering Accretive to NAV Public Offering Accretive to $147.6 Accretive to NAV NAV 2014 (IPO) 2015 2016 2017 2
Slide 37: Overview of Leverage
Overview of Leverage SUMMARY OF WAREHOUSE CREDIT FACILITY Facility Size: $300 million – with an additional $100 million available subject to approval by Lenders Lenders: Deutsche Bank AG (Syndication Agent), KeyBank, TIAA Bank, Union Bank, Hitachi Capital and NBH Bank Structure/Collateral: Drop-down
Slide 38: Research Coverage
Research Coverage Casey Alexander George Bahamondes Mitchel Penn (646) 452-7083 (212) 250-1587 (410) 583-5976 [email protected] [email protected] [email protected] Chris York Ryan Lynch Christopher Nolan (415) 835-8965 (314) 342-2918 (212) 409-2068 [email protected] lynchr@k
Slide 39: Appendix
Appendix
Slide 40: 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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