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Hello and welcome to the P10 Second Quarter 2023 Conference Call. My name is Cole, and I will be coordinating your call today. All lines will be muted during the presentation portion of the call with an opportunity for questions and answers at the end. [Operator Instructions] I will now hand you over to your host, Mark Hood, EVP of Operations and Investor Relations. Mark, please go ahead.

Good afternoon, and welcome to the P10 second quarter 2023 conference call. This is Mark Hood, EVP of Operations and Investor Relations. Today, we will be joined by Robert Alpert, Chairman and Co-CEO; Clark Webb, Co-CEO; Fritz Souder, Chief Operating Officer; and Amanda Coussens, Chief Financial Officer. Before we begin, I'd like to remind everyone that this conference call, as well as the presentation slides may constitute forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, Section 21E of the Securities Exchange Act of 1934 and the Private Securities Litigation Reform Act of 1995. Forward-looking statements reflect management's current plans, estimates and expectations, and are inherently uncertain. Actual results for future periods may differ materially from those expressed or implied by these forward-looking statements due to a number of risks factors or other factors that are described in greater detail under Risk Factors in our annual report on Form 10-K for the year ended December 31, 2022, filed with the SEC on March 27, 2023, and in our subsequent reports filed from time to time with the SEC. The forward-looking statements included are made only as of the date hereof. We undertake no obligation to update or revise any forward-looking statements as a result of new information or future events, except as otherwise required by law. I will now turn the call over to Robert.

Good afternoon and thank you for joining the call. I'm pleased to report strong fundraising and deployment during the quarter against what continues to be a challenging macro-economic backdrop. Despite current market headwinds, the trends in our business are positive for the short and long term with secular tailwinds driving private markets, asset allocation by investors. The second quarter marks our eighth financial report as a public company. And we believe the results we've consistently delivered make us a compelling business to own and they stand out among our peers in the alternative management asset industry. Our financial results demonstrate we are a resilient and durable business. We believe that we have a desirable product mix that clients value and possess a core competency at allocating capital in a way that optimizes shareholder returns. P10 revenue is based on a long-term contractually locked-up capital that generates robust margins and predictable earnings. We have unrivaled alignment with over 50% of our shares owned by insiders. Being added to the Russell indexes recently, should promote a wider shareholder base and as investors evaluate new index entrants, we think we screen well. With that, I will hand it off to Fritz.

Thank you, Robert. Fundraising and investment teams delivered a terrific quarter across all of our strategies with almost a dozen funds in the market. Our private equity strategies continued their strong 2023 performances with over $863 million added to fee-paying AUM during the quarter. After raising the hard cap to accept additional limited partners, RCP held a final close on secondary opportunities Fund IV at $797 million. RCP secondary fund strategy was recently recognized by PitchBook, and a top 10 fund family in secondary strategies. Congratulations to the RCP team for the hard work. Other standout contributors to the quarter were Bonaccord Fund II, RCP Multi-Strat Fund II and two large SMAs from RCP. Also notable in the quarter was the Bonaccord announcement that it entered into a strategic agreement with Asia Heritage, a Singapore-based asset manager and in conjunction with the agreement, appointed Chris Lerner as operating partner to lead Bonaccord's activities in Asia. The Bonaccord Asia heritage partnership will provide support to Bonaccord and its portfolio companies in crafting and executing capital formation initiatives in Asia, a critical growth market for private market allocations in P10. On the venture front, TrueBridge continued to demonstrate market leadership by raising $288 million across several funds. TrueBridge added over $100 million to their flagship Fund VIII and closed on two large SMAs that total about $160 million. We continue to see a flight to quality from institutional investors, and this plays to our strengths as we provide access to elite access-constrained funds. In the same PitchBook report, I mentioned a moment ago, TrueBridge in the covenant spot as the number one fund family in the funds-of-funds category. Well done to the TrueBridge team, and the recognition and leadership role in a highly competitive business. Our credit strategies added $71 million to fee-paying assets under management. We continue to see strong deployment demand across NAV lending or venture debt business. As it relates to WTI, we are still on track to launch Fund XI by Q1 2024. Our impact business continues its steady growth, having raised and deployed $49 million in the quarter. As the marketplace seeks investment vehicles with a track record of measurable impact, we believe enhanced capital is well-positioned for continued growth. While we are pleased to count over 3,400 LPs as clients, we also recognize the vast opportunity we have to introduce our premier strategies to a large and growing global institutional and retail investment community. Our goal is to increase awareness among the global LP community regarding the attractiveness of our platform as evidenced by our multi-decade track record in award-winning strategies. With steady secular industry growth, we believe there's opportunity to take market share. Finally, thanks to our dedicated team for a job well done. I will now hand it over to Clark.

Thank you, Fritz. As shareholders evaluate our prospects for long-term growth, it is important to consider the structural advantages that help explain our consistent performance and uphold the confidence we have as we look to the future. Robert mentioned the first advantage which is our business model. The stable construction of our model provides considerable visibility and predictability in our results. The second advantage is our specialized and unique knowledge of the middle and lower middle market, gained while operating in the space for over two decades. We've built recognizable and powerful brands with both GPs and LPs. Another output of our strategic focus on the middle and lower middle markets is a data advantage that we believe is unmatched in the market. And what many consider to be one of the least efficient parts of the private equity and debt ecosystem, we have 1000s of proprietary fund, portfolio company, and transaction data points that guide our investment decisions. And it's the data that gives us conviction to make an investment. This very same data shows that our portfolio companies are generally better positioned than larger companies to endure interest rate increases because they carry a lot less leverage. Many of our holdings have pricing power with the ability to pass on higher input prices. And they trade at reasonable multiples, making them attractive to larger sponsors, looking for add-ons and tuck-ins. By staying focused on the middle and lower middle market, we can focus on the scenes of growth rather than the entire economy. We are not a leveraged play on the S&P 500. And finally, we give LPs an opportunity to invest in access-constrained elite investment strategies and funds. If you look at our website or earnings slides, you'll see the rendering of a bridge. The bridge is included because we consider P10 to be the bridge to our specific private market verticals. We do not compete in the large part of the market where most of our peers reside. In fact, we rarely see any publicly traded competitor in our markets, nor do we have a private competitor that covers the verticals we do. In some, we believe we are unique. Turning now to the $5 billion fundraising target we provided last year, we are thrilled to hit that milestone six months ahead of schedule, which we believe is all the more impressive, given the macro headwinds that have persisted since we set our target. Despite a record rise in interest rates, steep falls in equity markets and global instability, we managed to far exceed targets we laid out when the skies were blue. As noted last quarter, we still expect to lay out a new multi-year target alongside our Q4, 2023 earnings call. In the interim, we would note that we still have a few larger strategies in the market, namely our second flagship GP stakes fund and eight flagship venture equity fund. As a result, it is certainly possible we continue strong fundraising momentum this year, though perhaps not to the same degree we saw in our record second quarter. For the full year 2023, we continue to expect to deliver double-digit growth for revenue, adjusted EBITDA and ANI. Although interest rates and the resulting interest expense will make hitting the double-digit ANI growth target more of a challenge. As we look out to 2024, we continue to expect our 11th flagship venture debt fund, alongside continuous fundraising from over a dozen funds across our platform. One last thing I want to touch on is an update on our M&A and partnership opportunities. Our perspective is that we don't have to do a deal to grow the business. We have market-leading investment strategies in both debt and equity across middle and lower-middle-market private equity, venture, and impact rounded out by our leading middle-market GP stakes strategy that fits perfectly alongside the other verticals. That said, we still see a lot of opportunities and are in constant dialogue. Our bar remains quite high. I will now turn the call over to Amanda.

Thank you, Clark. Fee paying assets under management were $22.2 billion, a 20% increase on a year-over-year basis. In the second quarter, $1.3 billion of fundraising and capital deployment was offset by $708 million and stepdowns and expiration. For the remainder of 2023, we expect $320 million and additional stepdowns and expiration. This is about $117 million more for the remainder of the year than we previously expected. The variance is primarily attributable to the timing of certain impact deals that are concluding their key paying period. Revenue in the second quarter was $62.5 million, a 34% increase over the second quarter of 2022. Average fee rate in the quarter was 113 basis points, driven by continued expansion of our direct strategies such as WTI, Bonaccord and Hark. In the quarter, approximately $300 million as fundraising was closed a quarter earlier than expected. Another contributor to record second quarter performance was $4.8 million as catch-up fees, most of which is attributable to RCP, its final close on secondary opportunities Fund IV. The fee rate for the quarter excluding catch-up fees was 104 basis points. Operating expenses in the second quarter were $52.1 million, a 68% increase over the same period a year ago. The increase is primarily attributable to additional compensation benefits and non-cash stock-based compensation expenses related to the acquisitions of WTI, Bonaccord and Hark. GAAP net income in the quarter was $2.1 million, and 81% decrease year-over-year. Adjusted EBITDA in the second quarter was $34.8 million, a 35% increase over what we reported in the second quarter of 2022. Adjusted EBITDA margin was 56% with strength attributable to catch-up fees in the quarter. For the full year, we continue to expect margins to be in the range of 51% to 52%. For the second quarter, adjusted net income or ANI was $26.7 million, a 15% increase over the $23.2 million reported in the second quarter of 2022. As Clark noted, rising interest rates have created a headwind on ANI growth. So, at 15% year-over-year we are still pleased with the results. The good news is, what is currently a headwind should become a tailwind as we generate cash and delever. Cash taxes for the full year should be between $3 million and $4 million and we continue to benefit from our tax assets. As a reminder, they are composed of two distinct assets. The $162 million net operating loss and $383 million in tax amortization. Cash and cash equivalents at the end of the second quarter were $23 million. As of today, we had an outstanding debt balance of $271.2 million and $98.5 million available on the revolver. No shares were repurchased in the quarter and we have $18.9 million available on the buyback program. We also continue to pay our quarterly dividend. We declared a dividend of three in a quarter, since first on August 10, 2023 to stockholders of record and the close of business on August 31, 2023 and payable on September 28, 2023. Finally, at June 30, 2023, our Class A shares outstanding were 43,823,473 and Class B shares outstanding were 72,381,726 shares. Thank you. Now let's turn it over to the operator for a few questions.

[Operator Instructions] Our first question is from Ken Worthington with JPM. Your line is now open.

Hi, good afternoon. Thanks for taking the questions. Maybe, firstly, given the enthusiasm we're seeing for your investment capabilities and the greater breadth of products that you have today versus a couple of years ago. We've been thinking about P10 being able to attract bigger LPs, bigger checks and ultimately some bigger funds. How are you seeing the aggregation of your various investment capabilities leading to that thesis maybe even being correct or are we sort of outside the realm of reasonableness thinking that that's sort of the direction that your business is going to head to?

Yes, Ken. This is Clark. It's a great question. I'll touch on part of it, and I'm sure the team can jump in as well. I think that I would say a couple of things. The first is, we are thrilled by the fact that we hit our $5 billion of guidance that we set out in the quarter of 2021 when the skies were blue and the markets were strong. Little did we know that we would have six quarters of record rises in interest rates and record drops in stock prices and here we are six quarters in, still two quarters ahead of time, and we've not just crossed the $5 billion we've done it quite handily. So, congratulations to the team. I think it is a testament to the power of the platform and not being reliant on any one vertical or any one strategy. I would say that's point one. Point two, it's a great point. We should give our breadth of manufacturing and the fact that we are very unique. There is not another engine that looks like us in investment manufacturing. We should be able to attract larger LPs with larger check sizes over time. That is a long sales cycle and it has certainly not been the easiest six quarters to be having the dialog. But we are absolutely in dialog. I still think we're in the bottom of the first inning, with respect to what we think we can do over the next many years, but it is a - it's a long baseball game. The good news is, we are firing on all cylinders as we progress through that game. So the fact that we had to rate, we were able to raise the hard cap twice for the secondary fund and we still had oversubscription at that point. And if you look at the fund size between Secondary Fund IV and Secondary Fund III was near doubling, that's very encouraging. When you look at our GP stakes strategy, the target of $1.25 billion is nearly 2x what Fund I was, very encouraging. We obviously have some well-known funds that will be in the market next year and we fully expect to have success there. So, I think we are doing the things that we need to do to grow at a strong double-digit rate. The thing that gives me excitement is when you asked the question, I am not yet ready to say, Ken, where there we're landing the $1 billion SMAs. I would like for us to get there. I think we can, it's still going to take time. But while we're planting seeds, we've got great things humming at the underlying verticals.

Brilliant. Thank you. Want to follow up on stepdowns. Would you consider 2023 to be unusual from a fee stepdown perspective? Maybe remind us where you see stepdowns, where you don't? And what assuming 2023 is not typical, what should normal look like each year from sort of the stepdown perspective?

Hi, Ken. Therefore, stepdowns for 2023, it is a bit unusual and that we had the WTI step down this year. And that stepdown is expected to occur only every three years. So that's where you're seeing a bit higher stepdown in exploration for 2023.

Yes. And then Ken, as we think about it on a normalized basis, we're managing north of $20 billion. We say our average duration is around nine years at inception of the fund. And we are growing at a good clip. And so the idea of having stepdowns and expirations of around $1.5 billion a year is not outrageous, some years it will be closer to $1 billion. It is possible, you can get north of $1.5 billion, as well as we get bigger, those stepdowns will grow. But that's a good problem to have. And then the other thing is we do tell the vast majority of our fee-paying AUM, we are receiving management fees on the committed dollars, which gives us a tremendous amount of visibility into our fees over time. There are some strategies where it's on deploy dollars, and then when you sell investments, you lose that fee-paying AUM. In the quarter, we had some nice realizations in the impact business and so we actually had more expirations than we expected, but that's always a good thing when you can realize a good investment. So, it will toggle between that low single-digit billion all the way up to $2 billion. But again as we grow over time or we lengthen, as we grow over time it should grow, if we can lengthen the average duration that'll help provide some ballast against it.

Great. Thanks very much.

Thank you, Ken. Our next question is from Michael Cyprys with MS. Your line is now open.

Hey, good afternoon. Thanks for taking the question. I wanted to come back to some of the commentary we're hearing from others across the industry. Just on the banks retrenching, creating opportunities for private lenders to step in. Maybe you could just give us a little bit of a flavor for the different parts of your platform where you guys could participate? Where do you see the biggest opportunity across your platform? And maybe you could talk about some of the steps that you are, it might take over the next 12 months to further capitalize on this opportunity set and any thoughts on how meaningful this could be if you're able to quantify that for P10. Thank you.

Yes, it's a great question. We are fortunate to be in the sweet spot in a couple of our markets, where the opportunity set is better than it's ever been. Those verticals primarily are in our venture debt business, obviously with the news of the largest venture debt bank in the spring having issues that have created a very unique competitive environment. NAV lending, we really do dominate the lower-middle market and when you have high interest rates and a tougher realization market, drawing additional capital through a NAV loan allows private equity GPs to continue to deploy capital into their portfolio to try to accelerate value growth over time. So we have an extraordinary pipeline there. And then even in our impact business, our impact business is in three different verticals. Two of the verticals we think we are extremely unique from the Inflation Reduction Act, the idea that there is a tremendous amount of capital going into renewable energy and then also impact real estate brownfield and greenfield real estate projects to clean up the environment. But then the third is actually small business lending. So we have a 20-year track record of originating small business loans to minority-owned businesses, veteran-owned businesses, women-owned businesses. I think we have a 20-year loss rate that you measure in almost double-digit basis points cumulative. I think it's just over triple digits, but don't hold me to that. And so, we are seeing extraordinary demand there as well. I think the real challenge for us over the next 12 months is going to be raising capital to fit the demand. In venture credit, we see a great opportunity; in NAV lending, we see a great opportunity; in impact credit, we see a great opportunity. We still continue to see a great opportunity in our SBIC Credit vintage which really does take the place of a bank. And so, we might see an acceleration in the rise of Fund V there, Fund IV is currently deploying quite nicely. The key for us in 2024 is going to be raising capital behind those strategies. These are niche strategies, we love that because we think they are protected most that generate great returns. But it also means there is more of an education on the LP front. And so, we do believe the more conversations we have, we are convinced that we've got great manufacturing and we hope to be landing wins over the next 12 months.

And which of those strategies would you say is more scalable? Just given your focus on the lower and middle market space question often comes up just around, how do you sort of navigate any sort of potential constraints on growth given you're not looking at the larger part of the marketplace. Are there parts of your business where you are looking at the larger part of the marketplace and how do you sort of navigate around such that this doesn't constrain your growth?

Yes. We don't need to be in the larger part of the marketplace, because we really dominate these three verticals. And they are very large verticals. If you just look at SVB in venture debt, they were tens of billions of dollars in terms of size. So there is a very large hole in that market. NAV lending is growing, leaps and bounds. And then look at the trillions that are coming through the Inflation Reduction Act. So, of all the things we're worried about scalability in those three verticals is the least of our concerns. It really is raising the capital to fund these strategies. These are such unique risk-adjusted returns. Our NAV lending business really acts like an Investment-grade bond, despite having a return that's literally 2x, what you get in an Investment-grade Bond. Our venture debt strategy has a loss rate that looks like a high-yield bond despite a return profile that is 2x to 3x what a high-yield bond returns. And then our impact credit in many cases we're lending against tax equity, which is basically government guaranteed and generating an 11% or 12% return. So, again, 104 - a 2x increase on the risk-adjusted return relative to an underlying treasury. We feel like we have the product. There's plenty of room for us to grow. The key is going to be finding those large SMAs, finding those LPs that want to put real money to work and that's what we're focused on.

Great. And just a follow-up if I could on the fee rate. I think it was like 104 basis points in the quarter. I mean is that the right run rate to kind of think about on a go-forward basis here? Just any help on the fee rate ex the catch-ups?

Yes. Generally, about 105 is I believe what we've guided to.

Great, thank you.

Thank you, Michael. Our next question is from Ben Budish with Barclays. Your line is now open.

Hi, there. Thanks for taking my question. I was wondering if you can kind of revisit the original $5 billion, kind of maybe explain a little bit like where did you just price so much to the upside. And then kind of alongside that, I think the last quarter, the guidance was a strong second half of the year. I think you indicated that maybe you wouldn't be quite as half as the second quarter, but is that still sort of your expectation? If we look on, maybe the average over the last couple of quarters should the second half of this year still be like relatively strong.

Yes. When you think about the original $5 billion target, we rarely - I don't know if we ever in our projection models have fund sizes that double intra-fund. So when we talk about a secondary fund going from $400 million to $800 million, when we talk about a GP stakes fund going from $650 million to $1.25 billion. Those are wins for the home team. So we had a net - we're just having a number of those happen across the board. And then we're also - we are winning SMA business, especially in our private equity vertical. And that's something we don't really factor in when we think about cadence for fundraisers. That is the - that's the first question. Can you remind me the second?

It was the outlook for the back half of the year. The original guidance was a stronger back half than the first half, but then obviously the second quarter surprised to the upside. So, perhaps the second, the back half is not going to be quite as strong. But to what extent was, the second quarter is a result of maybe some funds from, the third quarter being pulled in early, or do you still expect the second half to be relatively strong, but perhaps not quite as strong as the second quarter?

Yes. We definitely wanted to call out. The second quarter was a record quarter, which I don't know many folks who are able to produce that in the second quarter, a record fundraising quarter. So we're certainly proud of that. We would not anticipate continuing to eclipse our record quarters in the third and fourth quarter. We did call out in the script, we have two decent-sized strategies in the market, one being GP stakes and the other being our TrueBridge, Fund VIII. We are very excited about those strategies whether that capital comes in in the third quarter or the fourth quarter or the first quarter or even the second quarter. We are less focused on, we'll obviously recoup all of those management fees with catch-up. So we certainly have the potential to keep showing growth in Q3 and Q4. That is just fine. But a lot of it's going to come down to those two strategies. And we are - we see very strong demand in those strategies. So we feel good about them, whether they're in Q3 or Q4 or maybe Q1, we're less focused on.

Got it, that's helpful. Maybe one follow-up on the secondary strategy. Is there any - so with RCP obviously with the fund-to-fund, we see you coming to market every year. Any thought on the secondary funds piece of that speeding up or is what we've been seeing the last couple of funds sort of the right cadence and then along the same lines, maybe SEF RCP in secondaries in general? I think you're right now you're only in private equity, and we're starting to see some of your kind of larger publicly traded peers launch secondary funds and incremental sort of asset classes. So, any thoughts in terms of expanding the secondaries to real estate infrastructure credit anywhere else like that?

Yes. This is Fritz. I think, I call back and work with the teams directly on this. Proud to say that we actually just started doing our secondaries in the venture world, it's a first-time fund, which is always a little bit harder to do. But early indications are that we should be able to reach our target on that fund. So, we're starting to launch that certainly in that area. We continue to see a lot of interest in secondaries. And so both from the fundraising side, we just see and the deployment side. Whether that will come up quicker, I think the average pace on secondaries if I think through the history has been about every 3-ish years. That's probably where we would see this from when we started deploying capital, which was about a year ago. So I could don't hold me to this, and Amanda and Mark, maybe you can correct me. But I could see that strategy coming back to market here in 2025 most likely.

Got it, very helpful. Thanks a lot.

Our next question is from Michael Brown with KBW. Your line is now open.

Hey, great. Thank you very much. So I appreciate the - that you certainly have a very compelling strategic mix today. So M&A is certainly not necessary for your strategy going forward here. But just like to hear a little bit about what you're seeing in the M&A environment, how you think about your strategy now that you do have a diversified scale the business. And then if something does come across that's transformational, how would you approach that from a leverage perspective? What's kind of your constraints there?

Yes. If you - we talk about this all the time. If you think about where we are today, we really are in three verticals, lower-middle market private equity, venture capital and lower-middle market impact. Within those verticals, we cover the capital stack, all the way from the junior most equity to the senior most debt, and we like to think we dominate those verticals, with track records that are measured in decades not years or quarters. And then beyond that, we have our GP stakes business that we think is very synergistic because as we live in these lower-middle market verticals and see GPs that we believe are going to be the next three-letter name on the New York Stock Exchange, we love the opportunity to take a stake in those. So, the ecosystem today is very unique and we think works really, really well and produces investment returns that are truly differentiated. We also believe having now been in these verticals now for a while, that we don't need to do another acquisition to be a much larger business than we are today. The markets are big enough, our manufacturing we think is good enough, we are constantly trying to innovate launching new strategies within the same vertical. Fritz mentioned but going into secondary's on the venture side, obviously some of our peers have had a lot of success there. So, we're constantly trying to innovate and do more in the things we do well. All that being said, it is a very high bar for us at this point to bring on a new strategy or a new vertical. But we are constantly in discussion. We are not the type of firm that is jumping at every banker-led process. Frankly, if a GP is looking to sell, we're probably not the right partner. Most of our deals, the vast majority are unbanked and they're really based on relationships and marriages. And that's the way we think about it. And so, we have dialog right now seeds that we planted years ago that we still reach out to and talk to, folks that we just met in the last handful of months. Those conversations are always ongoing. We have no idea when one will strike. We'd be surprised if nothing strikes over the next couple of years, and we would not be surprised if multiple things strike. But it really is a, it's a relationship building. These are not bank deals, and given our track record at this point and the asset classes that we're in. I would just reiterate it, it's a high bar. We would love for it to be a vote of confirmation and excellence when GPs actually elect to join our platform because they're in a good crowd.

Okay.

Okay. This is Fritz. And one thing to that what Clark just said, which we're seeing these are marriages, right? And most of the deals we're looking at are not banged. So, we take our time getting to know the teams and strategies. And one of the things we're seeing in the private equity a little bit is people not - the other firms not being successful in the fundraising that we've seen inside our own verticals. So, it's one of the reasons we're very proud of our groups that they are outperforming right now and raising a lot of capital where we have seen others that have not maybe hit some of their numbers. So, we just continue to hang around and continue to port them and date them and we're moving the time is right.

And in terms, you also asked about funding acquisitions. So I just wanted to add that the acquisition would be funded with a mix of cash, stock and earnouts that we have in the past and we have about $98.5 million available on our credit facility currently.

Okay, great. Well, thank you for all that color. I'll leave it there.

Our last question is from John Campbell with Stephens Inc. Your line is now open.

Hey, guys. This is AJ Hayes stepping on for John. Congrats on the quarter and thanks for taking our questions. For WTI, the goal is obviously to raise the next fund in 2024. And I think generally, it has been expected by us and maybe some investors to see that fund size jump up maybe $40 million to $50 million like we've seen over the last couple of the fundraise is just incremental step-ups there. So question on that, given the macro obviously WTI now being part of P10 and maybe some other factors such as SEF be a failure. The question is roughly like $550 million fundraising goal for Fund XI now is somewhat on the conservative side of things. Additionally, can you maybe size up the potential impact of this WTI fundraising on overall P10 average fee rates and EBITDA margins maybe next year?

Yes. So I would say, it's too early to tell on the fund size. We certainly would prefer not to go backward in terms of fund size. And the good news in terms of how WTI deploys capital, they will turn on their next fund and still be deploying from their predecessor fund. And so in some ways, if we raise a little more, maybe we turn on the Fund after that Fund XII a little later if we raise a little less than a much bigger number than we just turn on Fund XII earlier. So, there is a cadence in terms of deployment. Our fundraising is really driven by deployment. As we noted, we feel like the deployment environment today is better than it's ever been, and so that would lead us to certainly hope that the fund size can grow, Fund - tend to Fund XI. We are having dialog at this point and we have talked about that Q1 is a - as a first close. So I would say, it's a little too soon to tell that we do not believe there is another venture debt player out there that looks like us. We are excited about introducing WTI to a number of new LPs. It is not an easy time to raise money in a venture. It really is extraordinary what TrueBridge has been able to do and we think WTI will do as well. But venture allocations have gone down a lot this year in terms of net new commitments. But we are aligning WTI up to be as successful as they can be, certainly feel like we can deploy more money in this next fund than we had in the prior fund.

Great, thanks for the color there. And then obviously, there is no M&A in the quarter, buybacks we did pay down a bit of the revolver. And I know you guys just kind of talked through M&A a bit there. But can you talk perhaps to your preferred capital allocation avenue here, how you're thinking about balancing all three of those options?

Sure, great question. When we look at our - with interest rates going up so much, our cost of debt is up near 7.7%. When we think about capital allocation, when we don't have any imminent M&A, we obviously have all this free cash flow and a dividend that's easily covered. So, our choice is to buy back stock or pay down debt. When we think about valuations and return on incremental capital, even today, it's probably accretive to buy back stock. But the optionality given that rates are - interest rates are so high relative to where they were, that incremental return on capital by buying back stock want to diminish our liquidity, which we hear loud and clear from investors that we need more liquidity in the marketplace. And secondly, by being able to pay down debt, that continues to give us optionality as we see opportunities on the M&A front to relever and take that back up to make an accretive acquisition. So that's how we think about it.

There are no additional questions waiting. So I'll pass the conference back to the management team for any closing remarks.

Thank you everyone for joining us. We look forward to seeing you at the - at any conferences. Obviously, we're around to take questions. As you can tell, we're very excited about the opportunities ahead of us, and we look forward to speaking with you all or seeing you next quarter. Thanks.