TriplePoint Venture Growth BDC Corp. (NYSE: NYSE:TPVG) reported a net investment income of $15.5 million, or $0.41 per share, in its first quarter of 2024 earnings conference call. The company highlighted an increase in fundraising activity within its portfolio and a positive outlook for the venture capital market.
TriplePoint Capital signed $130 million of term sheets, focusing on sectors such as AI, cybersecurity, climate, and digital health. The management discussed the company's strategy, including a shift towards later-stage venture-backed companies and a proactive approach to financing. TPVG also declared a regular quarterly dividend of $0.40 per share, and noted a net unrealized gain in fair value of $6 million in its warrant and equity portfolio.
Key Takeaways
- TPVG reported a net investment income of $15.5 million, or $0.41 per share for Q1 2024.
- The company declared a quarterly dividend of $0.40 per share.
- TriplePoint Capital signed $130 million of term sheets with a focus on AI, cybersecurity, climate, and digital health sectors.
- Portfolio companies raised approximately $200 million in April, with Monzo contributing $430 million to the $584 million raised in the quarter.
- The company emphasized a shift in investment strategy towards later-stage venture-backed companies.
- TPVG expects credit to stabilize and is optimistic about the venture capital market's future.
- The net asset value of the company stood at $341 million.
Company Outlook
- TPVG anticipates an active year ahead with new investment opportunities.
- The company is optimistic about the future of the venture capital market.
- Management plans to maintain a strong yield profile and cover dividends through fixed-rate investments and portfolio growth.
- TPVG expects the fair value of the warrant and equity portfolio to improve as equity fundraising activity by portfolio companies continues.
Bearish Highlights
- The venture capital market remains challenging, although there are positive signs within TPVG's portfolio.
- Fundraising processes may take longer due to the current market environment.
Bullish Highlights
- TPVG's portfolio companies are increasing the frequency and magnitude of their equity fundraising efforts.
- The company is seeing positive indicators in the public equity markets and private warrant and equity portfolio.
- TPVG is actively deploying capital and looking for opportunities in the lower venture middle market.
Misses
- The timing of the credit facility was delayed, but syndicate partners remain committed.
Q&A Highlights
- TPVG aims to be proactive in encouraging borrowers to raise capital before cash runways become tight.
- The company collaborates with sponsors and entrepreneurs to facilitate fundraising.
- Monzo's $430 million raise was a significant contribution to the quarter's fundraising success.
TriplePoint Venture Growth BDC Corp. has demonstrated a robust start to 2024, with a focus on diversifying its portfolio and capitalizing on growth opportunities in the venture capital market. Despite some challenges, TPVG's strategic shift and proactive management of its investment portfolio position the company to potentially benefit from market stabilization and increased fundraising activity among its portfolio companies. Investors will likely follow TPVG's progress closely, given the company's optimistic outlook and commitment to generating strong returns for shareholders.
InvestingPro Insights
TriplePoint Venture Growth BDC Corp. (NYSE: TPVG) has maintained a consistent approach to shareholder returns, as evidenced by its regular dividend payments. The company's recent performance data and analyst insights from InvestingPro provide additional context for investors considering TPVG's stock.
InvestingPro Data:
- The market capitalization of TPVG stands at approximately $355.89 million, reflecting the company's size and market value.
- With a negative P/E ratio of -8.46, TPVG's earnings are currently not covering its share price, which could be a concern for value-oriented investors.
- The company has reported a revenue growth of 13.69% over the last twelve months as of Q4 2023, indicating an upward trajectory in its business operations.
InvestingPro Tips:
- TPVG has been paying a significant dividend to shareholders, which currently yields an attractive 16.93%. This is particularly noteworthy for income-focused investors.
- The stock's price movements have been quite volatile, which may appeal to traders looking for short-term opportunities but could be a point of caution for those with a lower risk tolerance.
For those interested in a deeper analysis, there are additional InvestingPro Tips available on TPVG, offering insights into aspects like valuation, cash flow, and profitability. Subscribers can access these tips by visiting https://www.investing.com/pro/TPVG. Use the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription, and find out why analysts have revised their earnings downwards for the upcoming period, how TPVG's liquid assets compare to short-term obligations, and the company's profitability over the last twelve months. There are 7 additional InvestingPro Tips listed in InvestingPro for TPVG that could help investors make more informed decisions.
Full transcript - Trplpnt Vnt (TPVG) Q1 2024:
Operator: Good afternoon, ladies and gentlemen. Welcome to the TriplePoint Venture Growth BDC Corp. First Quarter 2024 Earnings Conference Call. At this time, all lines have been placed in a listen-only mode. After the speakers' remarks, there will be an opportunity to ask questions and instructions will follow at that time. This conference is being recorded and a replay of the call will be available in an audio webcast on the TriplePoint Venture Growth website. Company management is pleased to share with you the company's results for the first quarter of 2024. Today, representing the company is Jim Labe, Chief Executive Officer and Chairman of the Board; Sajal Srivastava, President and Chief Investment Officer; and Chris Mathieu, Chief Financial Officer. Before I turn the call over to Mr. Labe, I'd like to direct your attention to the customary Safe Harbor disclosure in the company's press release regarding forward-looking statements and reminds you that during this call, management will make certain statements that relate to future events or the company's future performance or financial condition, which are considered forward-looking statements under Federal Securities Law. You are asked to refer to the company's most recent filings with the Securities and Exchange Commission for important factors that could cause actual results to differ materially from these statements. The company does not undertake any obligation to update any forward-looking statements or projections unless required by law. Investors are cautioned not to place undue reliance on any forward-looking statements made during the call, which reflect management's opinions only as of today. To obtain copies of our latest SEC filings, please visit the company's website at www.tpvg.com. Now I'd like to turn the conference over to Mr. Labe.
James Labe: Good afternoon, everyone, and welcome to TPVG's first quarter earnings call. During the first quarter we continued to navigate through the current venture capital markets. While the market remained slow and deal activity and deal value have yet to improve, there continues to be unique opportunities in this market for us, as well as initial signs at overall VC markets may gradually begin to improve. This includes growing command at TriplePoint Capital from what we believe are quality venture growth companies and companies across the venture stages. Complementing these initial positive signs, we continue to make progress in the first quarter with increased fundraising activity and strengthening performance at our portfolio companies and in building our pipeline, setting a strong foundation heading into the second half of this year. As we progress through the year, our focus will be on positioning TPVG for the future, while continuing to maintain our strong portfolio yield and liquidity as well as managing the portfolio. Turning to our quarterly results, we generated net investment income of $15.5 million or $0.41 per share and over earned our regular quarterly dividend. Since going public in 2014 and including the first quarter dividend, cumulative dividends to shareholders now total $15.45 per share. Over this ten-year period, we've exceeded our dividends on a cumulative basis and our objective is to continue to generate NII in excess of our regular quarterly dividend. Of note, we also continue to maintain sizable spillover income. During the quarter we improved our gross leverage ratio to 1.27 times and further enhanced our liquidity based primarily on prepayment activity, which included two prepayments totaling $30.8 million. During the quarter we continued to manage the portfolio and are encouraged by a number of positive portfolio company developments and an increase in the value of the equity and warrant portfolio. One of these developments was the growing number of fundraising rounds by our portfolio companies, which we believe signals a sign of strength. During the quarter, eight of our portfolio companies completed rounds, raising $584 million in aggregate, representing a sizable quarterly as well as year-over-year increase. Additionally, first quarter, several companies have raised rounds and others are raising this quarter. We'll continue to prioritize TPVG's long-term position in the venture lending market and we expect the remainder of the year to be more active. To this end, we're continuing on the path of diversifying the portfolio, including the sector and geographic rotation we've been talking about the last several quarters. In many respects, we think of it as being a new crop of investment sectors as well as venture growth company profiles. The NVCA labels it as a different camp of companies. In this environment, investors have become far more cautious and selective, and we believe the new and emerging crop of venture companies is strong. A number of venture growth companies have already gone through valuation resets and dealt with the market challenges. These are companies that have adjusted business models. They're on more moderate cash burn levels. They have reasonable growth objectives and are projecting paths to profitability. They're gaining a great deal of interest and traction from investors. Our focus will continue beyond investing in companies operating in these attractive sectors and ones that have recently raised fresh capital, have ample cash runways, have backing from our select venture investors, have prudent management teams and whose business models have attractive unit economics and high retention rates. We'll also continue to evaluate hold sizes, debt to equity ratios, deal structures and other key metrics. We're excited by the increase in signed term sheets. Following the 70% increase in venture growth signed term sheets that we experienced in the fourth quarter term sheets signed by TriplePoint Capital increased an additional 30% in the first quarter to a total of $130.5 million. And here in the second quarter already, we've signed almost $30 million of new term sheets at TriplePoint Capital. Many of these signed term sheets are in investment sectors that are consistent with the same sectors that our select venture investors have and are continue to shift into. This includes AI, cyber security, climate and digital health. In addition, there's increased and renewed interest in vertical software, hardware and robotics, semiconductors, applied tech, environmental and sustainability technologies, and aerospace as examples. As we've been citing, this includes a number of our portfolio of companies that are already operating in these stronger performing categories, with some making considerable progress, such as Corelight, Loft Orbital, Hover [ph], Arcadia Power, Flash, Calderos [ph], Overtime, and others. Through both discussions with our select VC's, as well as reflecting on transactions, we've recently signed up and others that we're continuing to evaluate in this market on an ongoing basis. New investment activity in particular has pivoted towards, no surprise, the artificial intelligence applications and infrastructure category. Some of our companies come to mind. For example, K Health, which pairs clinicians with advanced AI to provide data driven, personalized care around the clock and FitOn, a leading digital wellness platform that serves as an always on individual full gym and wellness coach with no equipment needed. Uniphore, which introduced the first multimedia AI and data platform built specifically for the enterprise using generative, knowledge and emotional AI, is another one. Although the overall VC markets continue to remain sluggish, particularly for growth stages, there are a few emerging signs of future promise. Dry powder, the undeployed funds at venture capital firms remain significant, at $300 billion across the venture landscape. On an increasing basis, we are hearing the word optimistic make its way into more conversations with venture capital investors and companies. We're hearing it usually in connection with increased opportunities for new investments, but also on the outlook for a future pickup in venture M&A and IPO activity. We believe that once the IPO markets come back and M&A activity returns to more historical levels, it will be a sea change for growth stage companies, especially those companies within our portfolio that are outperforming in this market. It will also attract growth stage investors to return to the market. With our outstanding warrant positions in more than 97 portfolio companies and equity positions within more than 46 portfolio companies, we believe we stand to benefit in this additional way to our debt returns when the market returns to a better M&A and IPO landscape. In the meantime, we'll continue to position TPVG for when the overall VC market conditions improve. TriplePoint Capital, our sponsor will continue to invest in its people and our platform, including building our originations and investment teams, portfolio management capabilities and our support staff. TriplePoint is well positioned to capture the business as overall market conditions improve. For now, we'll remain active in the market and plan to continue building a pipeline consisting of venture growth stage companies positioned for strength under current market conditions. These are all critical elements for the long-term that we believe position us to build NAV and create sustainable shareholder value. With that, I'll turn the call over to Sajal.
Sajal Srivastava: Thank you, Jim and good afternoon. Investment pipeline activity increased for the third consecutive quarter as TriplePoint Capital signed $130 million of term sheets with venture growth stage companies, compared to $100 million in Q4 and $58 million in Q3, reflecting an increase in origination activity by our investment teams, an increase in direct referrals from our select venture capital funds and more importantly, an increase in what we believe are high quality companies looking for debt financing. With regards to new investment allocation to TBVG during the first quarter, TriplePoint Capital allocated $10 million in new commitments with one new portfolio company to TBVG, compared to $4 million in new commitments with two existing portfolio in Q4 and $6 million of new commitments with three companies in Q3. The commitment made during the first quarter was to FitOn an all in one health and wellness and preventative care platform. Here in Q2, we've closed $20.5 million of new commitments with one new portfolio company in the AI and software industry and one existing portfolio company in the financial technology industry. During the quarter, TBVG funded $13.5 million in debt investments to three portfolio companies, which is down from $24.4 million in debt investments to six portfolio companies in Q4 and slightly higher than the $12.7 million we funded to five companies in Q3. These funded investments carried a weighted average annualized portfolio yield of 14.3% in originations. Approximately 75% of the fundings this quarter came from new investment origination during the quarter. Our quarterly gross funding target continues to be in the $25 million to $50 million range and we expect to be at the higher end of the range as we increase the allocation of new investments to TPVG over the course of the year. During Q1, we had $30 million of loan prepayments, with prepayment related income contributing to an overall weighted average portfolio yield of 15.4% in line with the past two quarters levels of prepayment activity and portfolio yield. Excluding prepayment, core portfolio yield was 14.7%, up from 14.4% in Q4 and 14.1% in Q3. With regards to fundraising activity, as Jim mentioned, eight portfolio companies with debt outstanding raised $584 million during the quarter, up from five portfolio companies raising $157 million last quarter and three companies raising $47 million in Q3. Monza represented the lion's share of the fundraising activity, having raised approximately $430 million at a $5 billion valuation during the quarter. This data does not include Metropolis or Cohesity's announced financings. As we discussed during our last earnings call, we are seeing capital raising activity within our portfolio picking up and have several portfolio companies either in active fundraising discussions or expecting to launch a fundraising process shortly. Approximately $200 million of new capital was raised by our portfolio companies in April alone. We believe this fundraising activity should bode well for the long-term credit quality of our portfolio companies as well as for the potential value of our warrant and equity portfolio. As of March 31, we held warrants in 97 companies and held equity investments in 46 companies with a total fair value of $78 million. Our warrant and equity portfolio experienced a $6 million net unrealized gain in fair value or $0.16 per share for the quarter, primarily driven by new equity round valuations, improving public trading multiples and continued financial performance of our portfolio companies, as well as improving stock prices for our publicly held portfolio. During the quarter, the aligned [ph] company was acquired by Orchard Technologies, Dia & Company was acquired by FullBeauty Brands and Underground Enterprises completed its asset sale and liquidation process. Dia and Underground were removed from the credit watch list and we realized losses of $8.9 million from these events, of which 5.1 was previously recognized on an unrealized basis in prior quarters. During the quarter, two companies were downgraded from category 2 to category 3, primarily due to short runway in conjunction with upcoming financing or strategic events already underway, and are expected to be either upgraded or removed from the watch list upon completion. One portfolio company, TFG Holdings with a fair value of approximately $18 million, was downgraded from category 3 to category 4 during Q1 and was acquired here in Q2. Our loan has been paid off in cash and a seller note in line with our mark for Q1 and will be removed from our watch list in Q2. One portfolio company Outdoor Voices, which is in the strategic process, was downgraded from category 4 to category 5, and we expect the process to be completed in Q2. While our total percentage of category 3, 4 and 5 investments rose slightly this quarter, I would like to point out that we expect upgrades to a few of our category 3 rated investments over the course of 2024 as a result of achieving sustained profitability and/or completing financing events that are underway, as well as the fact that we've already removed TFG, a category 4 rated loan here in Q2 as a result of its acquisition. Managing our existing portfolio continues to be a high priority for us as a result of increased equity fundraising, increased acquisition activity and improving operational performance by our portfolio companies, we expect credit to continue to stabilize over the course of 2024 with the frequency of new credit development slowing and in certain cases, the potential for upgrading of credit ratings. With regards to the new investment opportunities, as Jim mentioned, we are seeing what we believe are more companies of higher quality starting to come to the equity and debt markets, and we believe that these new investments have the potential to be a very strong vintage of venture capital and venture lending opportunities. We believe our efforts over the past year to reduce leverage and unfunded commitments to boost liquidity from prepayments and repayments, proceeds from sale under our ATM program, as well as extending and the upcoming renewal of our credit facility, put TPVG in a position to take advantage of the improving pipeline of new deals as the year unfolds. We believe that by returning to portfolio growth over the course of 2024 and into 2025, and by continued focus on smaller hold sizes and industry sector rotation with companies that have generally recently raised new equity capital, we will continue along our goals of increased portfolio durability and diversification. As we look to onboarding new loans, we intend to maintain our strong yield profile not only by maintaining spreads, but also by continuing to incorporate fixed rate investments, which along with anticipated portfolio growth, will bode well for our ability to continue to cover our dividend. Finally, as equity fundraising activity continues by our portfolio companies and public market multiples improve, we expect to see improvement in the fair value of our warrant and equity portfolio. In closing, we remain focused on our business and will continue to follow our long-term playbook of generating strong returns for fellow shareholders and we look forward to what's in store for TPVG and our shareholders for what we believe will be improving conditions in both the overall venture capital and venture lender markets over the course of 2024 and 2025. With that, I'll now turn the call over to Chris.
Christopher Mathieu: Thank you Sajal and hello everyone. During the first quarter, we made notable progress on a number of financially focused efforts which we believe have improved our overall position. We generated strong interest income from our diversified loan portfolio. As expected, we intentionally had another light quarter of originations and fundings. We over earned this quarter's dividend and we also improved leverage to 1.27 times on both a gross and net basis. At the same time, we made further progress reducing unfunded commitment levels in the first quarter from $118 million to $73 million and as a result, TPVG has ample liquidity at the ready to support our existing portfolio companies, satisfy our unfunded commitments and make selective new investments. For the first quarter, total investment income was $29.3 million with a portfolio yield of 15.4% as compared to $33.6 million with a portfolio yield of 14.7% for the prior year period. The decrease in total investment income was primarily driven due to lower average debt portfolio as compared to a year ago. For the first quarter, total operating expenses were $13.8 million as compared to $15.1 million for the prior year period. These expenses consisted of $7 million of interest expense which was lower this quarter due to reduced overall leverage, $4.3 million of base management fees $611,000 of administrative expenses and $1.8 million of G&A expenses, which were generally flat to last quarter. Due to the shareholder friendly total return requirement under the incentive fee, there was no incentive fee this quarter. Further, we expect limited incentive fee expense during the remainder of 2024. For the first quarter, net investment income totaled $15.5 million or $0.41 per share, compared to $18.6 million or $0.53 per share for the prior year period. For the first quarter, net realized losses on investments totaled $8.8 million. This was primarily in connection with the write-off of investments of two portfolio companies. Of note, $5.1 million or 58% of the realized loss on these companies, was previously included in unrealized losses and was reclassified from unrealized to realized in the quarter. As such, $3.8 million of the realized loss in 2024 had no impact on net asset value in the quarter. For the first quarter, net change in unrealized gains on investments was $1.3 million, consisting of $6.2 million of net unrealized gains on the warrant and equity portfolio resulting from fair value adjustments and $4.9 million in net unrealized gains from the reversal of previously reported unrealized losses from the investment portfolio that were realized during the period reduced by $9.8 million of net unrealized losses on the debt portfolio resulting from fair value adjustments. As of quarter end, net asset value was $341 million or $9.02 per share, compared to $346 million or $9.21 per share as of yearend. We declared a regular quarterly dividend of $0.40 per share with a record date of June 14 to be paid on June 29. In addition to over earning the dividend, we continue to retain sizable undistributed income, which totaled $42.3 million or $1.12 per share, at the end of the period. Now just an update on unfunded investment commitments, overall liquidity and balance sheet leverage. We successfully reduced our unfunded commitments from $118 million at year end to $73 million at quarter end. As of quarter end, total liquidity was $312 million, consisting of $1 million in cash and $311 million available under the revolving credit facility. We had $30.8 million of prepayments and $6.8 million of scheduled principal amortization, generating $37.6 million of liquidity during the quarter. We continue to maintain a diversified capital structure. As of the end of the quarter, a total of $434 million of debt was outstanding, consisting of $395 million of fixed rate investment grade notes and $39 million outstanding on our revolving credit facility, which has a $350 million total aggregate commitment. We paid down our revolving credit facility and improved our overall leverage during the quarter. We ended the quarter with a leverage ratio of 1.27 times. This week, we entered into an amendment to our credit facility which extends the revolving period into Q3 so that we can finish documenting the annual renewal of the facility. We expect that the new revolving period will mature on November 30, 2025, with final maturity on May 31 of 2027. Existing lenders are engaged in driving to documentation closing in an orderly manner. We have three steps to the ladder of term debt maturities with the maturity scheduled to occur in 2025, 2026 and 2027. The most near term is $70 million maturity in March of 2025. Given the very attractive 4.5% fixed interest rate on this balance, we expect to keep this balance outstanding until its scheduled maturity. Depending on market conditions at that time, we expect to either issue a new tranche of similarly sized notes in Q1 of 2025 or use our revolving credit facility to pay off those notes at maturity. Later this year we will evaluate the refinancing of the two remaining maturities, which include $200 million at 4.5% fixed rate due in March of 2026 and $125 million at 5% fixed rate and due February of 2027 to allow ample opportunity and time to consider cost effective alternatives. Given the very favorable rates on the existing notes, we do not expect to prepay or refinance these amounts until near their original maturity dates. In connection with the term notes, DBRS has signed an investment grade credit rating in connection with those transactions and recently reported a BBB low rating and investment grade issuer rating. In addition, DBRS increased its outlook on TPVG to stable. So this completes our prepared remarks today. And so, operator, could you please open the line for questions at this time?
Operator: Absolutely. [Operator Instructions] Today's first question comes from Finian O'Shea with Wells Fargo. Please go ahead.
Finian O'Shea: Hey, everyone. Good afternoon. First one on the credit facility, I appreciate the update there, actually two parts sort of. Can you touch on what has set up the issue of needing to finish documentation? I don't think we've come across that issue. If that's routine or something more related to recent performance? And then, Chris, I think you flagged last quarter that the pay down was planned to satisfy, or eventually satisfy, but until then to pay down for the diversification test. Correct me if I'm wrong, if that's still the case, are you at a point where you're able to draw or how far from that would you be given the current portfolio? Thanks.
Christopher Mathieu: Great. Yes. So let me take both of those. So the timing on the credit facility, all these syndicate partners are engaged, and the commitment levels will remain the same. It really was to do with our yearend financial reporting and getting the documentation done. So it was the close proximity to our issuance of our [indiscernible] to get the approvals and the documents done, so they're going through, I would say, the normal cadence. We just added another 30 or 60 days to the, the time period to get the documentation done to avoid the drama associated with doing that in the ordinary course. On the other question you had, we have no need any more to gross up the balance sheet. We don't have any non-qualifying assets in the unfunded commitment bucket any longer. That was cleared out over the last two or three quarters. So we successfully paid down the credit facility right after the end of the quarter of Q1 and did not need to gross up the balance sheet again. So that issue is behind us. And as Jim mentioned about the diversification of geo and sector specific opportunities in the future, we don't expect currently that that would return to be an issue. So you should expect gross and net leverage to be more tightly coordinated as opposed to the outlier that you saw in the prior couple of quarters.
Finian O'Shea: Okay, great, thanks. And a follow-up for Sajal. It sounds like it's more constructive on the VC funding backdrop. I think you flagged a few examples on portfolio companies seeking and or attaining financing from the outside. We hear storylines figures like this from all the venture BDCs every quarter, and it's hard to really tell what it means. So if you were to communicate just more in, say plain English, or give some anecdotal examples of how much the fundraising is improving for companies that need it, that would allow for a more constructive or comfortable outlook on our end? Anything you're able to do there would be appreciated. Thank you.
Sajal Srivastava: Yes, let me start with, listen, I think the data shows the overall VC market continues to be challenging, so let's just be clear. VC fundraising investment activity, it was either flat or down, Q1 to Q4. So the VC investment continues to be slow and we're hoping to see that pick up. I think, as Jim said, there are certain sectors or certain pockets where we're seeing more activity than others. But to be very clear, it's still a very tough market in the VC world. What we're excited about or pleased with is within our portfolio. We're seeing our portfolio companies increase the frequency and the magnitude of their equity fundraising efforts, which I think is very important in terms of, as we said, overall credit outlook and credit quality. And I think the other good news is not only are the sizes of the raises increasing, but it's also companies across the credit rating. So it's not just the category ones and category two. We've had category three portfolio companies raise equity as well. And so I think the distribution of the fundraising activity, the size of the fundraising, the frequency of the fundraising, all are important. Again, initial indicators, it doesn't mean we're out of the woods, but as we said, we expect credit to stabilize over the course of 2024 and we think these are all positive data points. And then here in Q2, again seeing continued strong equity fundraising activity by our portfolio companies is a positive sign.
Finian O'Shea: Great, thank you so much.
Operator: I apologize. And our next question comes from Crispin Love with Piper Sandler. Please go ahead.
Crispin Love: Thanks. I appreciate you taking my question. First, can you just discuss your views on the net investment income and funding trajectory and when you think you could be north of that $50 million quarterly number? I think you're still saying kind of $25 million to $50 million. Just given the portfolio here is decreased for four consecutive quarters; do you think you're getting back to a point where you can begin growing the portfolio? And then also, what are your expectations for NII per share with it just sitting above the dividend in the most recent quarter.
Sajal Srivastava: Yes. Let me start with funding’s Crispin, this is Sajal here. So again, we continue to have our target of $25 million to $50 million. I think we're focused on our target of $25 million to $50 million. I mean we're mindful, obviously, of our leverage ratio. And so as we look to what funds that $25 million to $50 million, it's a combination of contractual portfolio repayments, prepayment activity, as well as use of our ATM. And so we want to obviously manage our expectations there. And I think a combination of that too is also, as I mentioned in my prepared remarks, as we increase the allocation for new investments, then that will enable us to be towards the higher end of that range. I think we don't want to overset expectations in terms of exceeding that range. I think, again, let market conditions continue to stabilize and improve, and I think we can, have a conversation about exceeding it. But I'd say right now our goal is to use the liquidity that we have and expect to have to maintain the range that we've targeted.
Crispin Love: Okay, great. And then I guess just any expectation on NII per share going forward, just sitting pretty close to the dividend?
Christopher Mathieu: Yes. Crispin, this is Chris. So when we think about kind of the long term view of NII, this, I guess I would describe it as we think of a lot of different components there. Kind of top line yields. Certainly you heard news today, no change in prime rates. So I think our storyline on top line yields are stable and strong. When you think about prepayment frequency, size and vintage, vintage matters, we've spoken about that in the past. When a loan prepays that has only been around half its life, there's a lot more additional fee income or accelerated fees that we can enjoy. So that's, we know prepayments are a natural part of the venture lending model and we look forward to them. And they typically have been coming in one or two, a quarter. We have line of sight on a couple that we've spoken about in the past. And then I guess the other part is cost of capital or cost of debt. And as I mentioned, our term debt right now for the next two and three plus years is pretty locked in at attractive pricing. So when we think about cost of debt on the existing balance sheet, we're in a good place there. And the other variable, I guess I would say, is on the operating expense side. So we've had some volatility from excise tax in 2023, given the over earning of the dividend we've had a couple of quarters where we had some legal fees from some workouts. So it's those type of things that we think about when we look at covering the NII threshold that we've been at, so and of course, the likelihood of incentive fees in coming back. So we reported no incentive fee this quarter. It looks like, based on where we are from, a NAV decline over 2023, that it looks like it'll take at least a few quarters to have that come back. So all that said, it creates a view of a pretty stable NII and dividend.
Crispin Love: Okay, great, Chris, thank you. And then can you just give an update on where leverage is today? Is it safe to assume it's pretty close to where it was at the end of the quarter? And are you able to utilize the credit facility today to fund investments? I'm not sure if I missed that.
Christopher Mathieu: Yes. So we are at the same level of leverage now, maybe slightly less today. And then as far as use of the facility, we have full use of it. We can advance and borrow in the ordinary course. It's fully compliant and in full use, and the revolving period is in good order, so there's no restrictions or limitations on that use.
Crispin Love: Okay, great. Thanks. I appreciate you taking all my questions.
Operator: Thank you. And our next question comes from Vilas Abraham with UBS. Please go ahead.
Vilas Abraham: Hi, everybody. Thanks for taking the question. You touched on this a little bit with your previous answers, but just on new money yields versus existing portfolio yields. Can you just talk about that? It sounds like you think it's going to be stable. I thought I saw there might be some compression in the levels there. Just talk about the spreads, any dynamics there that we should be thinking about moving forward?
Sajal Srivastava: Hi, Vilas. This is Sajal. Yes, I would say so. Our new asset yield has been pretty consistent, 14.3%. So generally stable. And we continue to expect that to be stable for a couple of reasons. One is obviously we set the prime rate to the current prime rate on our transactions. For those floating rate transactions, we have about 40% of our book is fixed rate investments. And so, and then as we look to the targeted rates for what our team originates at, so I'd say we expect to continue to maintain our portfolio yield for new assets, regardless of rate environment.
Vilas Abraham: Okay. And yes, you mentioned fixed rate investments. What's your ability now to make those kinds of investments? Just given that kind of general expectation is that rates are going to be lower at some point in the next one to two years?
Sajal Srivastava: Yes, I'd say we're opportunistic when it comes. It's a function of, as we look to overall structure and credit and risk of a transaction. So it’s absolutely something our deal teams are considering and our credit teams are evaluating. And so I would say there's no -- it's not 100%, but it's very much opportunistic and depending on the company and the structure and the opportunity.
Vilas Abraham: Okay. Got it. And just a general message on NAV, I guess, is it fair to listen to your comments and kind of interpret that you feel like we're at a trough here? And just given some of the dynamics you're seeing in the portfolio around some of the upgrades you're expecting. And I think you mentioned credit stabilization throughout the year, that we're kind of flat to up here as we go through the year.
Sajal Srivastava: Yes, listen, teams are hard at work managing the priorities. Portfolio is a high priority. I think we feel good about the equity fundraising activity. Listen, I think credit is stabilizing, but it's still a very, challenging venture overall venture capital market and so we want to be mindful and practical and reasonable, better expectations. But again, I think we're seeing some positive indicators. We're also feeling good about the public equity markets and at least where those multiples are as we look to our public, sorry, our private warrant and equity portfolio. We obviously saw some value accretion here this quarter. And we expect if markets continue to stabilize and improve, we would see some more fair value coming there. So I'd say it's a balance, but we don't want to be too optimistic. We want to be real. And this still continues to be a challenging environment, but we're doing a good job managing through it.
Vilas Abraham: Okay, if I could just squeeze one more in here. You talked a little bit about shift in terms of sector and geography, in terms of strategy. Have you considered at all a shift in the stage of venture backed companies you invest in, namely trying to go maybe a little bit later stage? And is that even possible given triple points set up? Just curious around your thoughts there.
Sajal Srivastava: Yes, listen, I think as a credit manager, our job is to evaluate all of our performance and investment strategies. So we're obviously always looking at our performance. I would say you bring up an interesting point. I think in the bigger picture, given the economic environment and the capital markets environment, we are absolutely seeing companies stay private longer. And as a result, we're seeing demand from companies later in the stages. We call it lower venture, middle market. These are EBITDA, positive venture capital-backed companies that are coming back to us for follow on financing or that were companies that were over funded with equity during their venture stages or early growth stages, but now recognize that they're going to be private for longer. And so we're absolutely looking at those opportunities. We're excited about those opportunities, assuming the yield profile fits. But yes, we are absolutely seeing from opportunities from later than what we call venture growth, EBITDA positive or lower venture middle market companies. And they absolutely fit into the investment strategy of TPVG and, are actively deploying capital and looking at opportunities there.
Vilas Abraham: All right, I appreciate all the color. Thank you.
Operator: Thank you. And our next question comes from Paul Johnson with KBW. Please go ahead.
Paul Johnson: Yes, thanks for taking my questions. Most of mine have been asked, but I wanted to ask just about the 584 raised or so during the quarter for your portfolio companies. I think you said it, but I might have missed the company name, but I was wondering if that was skewed by any, just one particular company or deal that was in that number.
Sajal Srivastava: Yes, Paul, it was one name. Monzo raised 430 of the 584.
Paul Johnson: Got it. Thanks. And then how much ability do you have to kind of push on those borrowers that are running up to their kind of maturity dates, possibly getting tight on cash runway? How much ability do you have to sort of push them to go back to market and raise, of course, where it's possible, even in the case where that's likely to be a down round?
Sajal Srivastava: Yes, listen, our approach is to be proactive. So it's before they're pushing up against short runway or pushing up against the maturity wall. So I think our approach has always been, and we pride ourselves on the collaboration with not only the companies, but their sponsors, our select VC. So our goal is to be as proactive as possible and to encourage them to raise capital either internally and externally. So I would say we are absolutely encouraging and I think the sponsors, the VC's as well, and the entrepreneurs, everyone is realistic and wants where it makes sense. And so I'd say it's very much a collaborative conversation, but the key is to do it before runway gets short. The challenge is what we see in this environment is these events are taking longer. And so that's the key is companies are in process rounds used to happen within a matter of months and now it's taking longer. We're seeing term sheets may not necessarily close. So it's being proactive during that process of fundraising that is important from a credit management perspective.
Paul Johnson: Got it. I appreciate that. That's all from me, thanks.
Operator: Thank you. And our next question comes from Christopher Nolan with Ladenburg Thalmann. Please go ahead.
Christopher Nolan: All of my questions have been asked. Thanks.
Operator: Thank you. And this concludes our question-and-answer session. I'd like to turn the conference back over to Mr. Labe for any closing remarks.
James Labe: Thanks, operator. As always, I'd like to thank everyone for listening and participating in today's call. I hope you found it helpful. We look forward to updating and talking with you again next quarter. Thanks again and have a nice day. Goodbye.
Operator: Thank you. This concludes today's conference call. We thank you all for attending today's presentation. You may now disconnect your lines and have a wonderful day. Goodbye.
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