Trevor Martin – Investor Relations Jim Labe – Chairman and Chief Executive Officer Sajal Srivastava – President and Chief Investment Officer.

James Howe – Wells Fargo Securities Casey Alexander – Compass Point Research & Trading.

Good afternoon, ladies and gentlemen, and welcome to the TriplePoint Venture Growth’s Second Quarter Earnings Conference Call. At this time, all lines have been placed in a listen-only mode. After the speakers’ remarks there will be a question-and-answer period and instructions will follow at that time.

This conference call is being recorded and a replay of the call will be available as an audio webcast on the TriplePoint Venture Growth website. I would now like to turn the call over to Trevor Martin. Mr. Martin, please go ahead..

Thanks Phil, and thank you everyone for joining us today. Here with me are Jim Labe, Chief Executive Officer and Chairman of the Board; and Sajal Srivastava, President and Chief Investment Officer; to share with you the results for the second quarter.

Before I turn the call over to Jim, I would like to direct your attention to the customary Safe Harbor disclosure in our press release regarding forward-looking statements, and remind you that during this call we will make certain statements that will relate to the future events or the company’s future performance or financial condition, which may be considered forward-looking statements under Federal Securities Law.

We ask that you refer to our most recent filings with the Securities and Exchange Commission for important factors that could cause actual results to differ materially from these statements. We do not undertake any obligation to update our forward-looking statements or projections unless required by law.

To obtain copies of our latest SEC filings, please visit the company’s website at tpvg.com. Now I’ll turn it over to Jim..

Thanks Trevor, and welcome everyone to our second quarter earnings call. Before starting, I’m delighted to mention the addition of Andrew Olson who beings a strong skill set in venture lending BDC experience as the new CFO of our company, effective August 10. Let me now turn to the past quarter.

The second quarter was a great quarter and we set some new records, including a net investment income or NII and in portfolio yield. In fact, this was also our second consecutive quarter of record NII thanks to customer prepayments.

Consistent with the baseball analogy theme in our earnings calls, we cleared the bases and brought an all the runners this quarter. And we’re already in the batters parks which with some big hitters lined up for the next innings, the second half of 2017.

I’m going to ask Sajal to provide the details of this past quarter and our exceptional results, but as proud as we are via accomplishments for last quarter, it’s behind us. I would like to spend this time talking about the future.

We are encouraged by the outlook and the growth opportunities ahead of us and I would like to share a specific roadmap of specific direction that we are pursuing, that’s going to impact the rest of this year and also set us up for a strong 2018 as well.

These aren’t new goals for us, but they’re really a specific course of action to capitalize on the increasing opportunities out there today. All of this which is being fueled by the underlying strong current market among our select venture capital inventors, but also the conditions in the venture lending market.

Let me give you an idea of what we’re seeing. First, there’s record amounts of capital, which has been raised and being raised by our select leading venture capital investors.

As a testimony to their strength, six of these select funds alone raised more than $15 billion in new funds last year, and already two of our select funds have raised another $4 billion this year.

Second, these select leading venture capital investors collectively have now invested and deployed staggering almost $5 billion in the last six months alone. All of these represent potential future opportunities for venture loans.

Third, we’ve seen an uptick in the number in the dollar size of growth investment by a good number of these select venture capital investors, this is in the last several months.

Fourth, because of all the volatility that’s been happening in the IPO and M&A markets these days, venture growth stage companies are turning more and more to venture lending to give them flexibility with exit timing.

This trend also translates into increased venture loan opportunities as it can assist these companies in maximizing value and they have left the dependency on IPO window. Fifth, our targeted venture growth stage companies are continuing to ramp up revenues by investing heavily in sales and marketing.

And they continue to turn to venture lending to help their growth plans as a less dilutive source of financing. Finally, last but not least, our pipeline and the level of direct referrals has been growing nicely and even better than expected.

This is a benefit of our leadership in the venture lending market, our emphasis on what we call the three R’s, reputation, relationship and references and our track record. We believe the best CCs, the best entrepreneurs, and the most exciting venture backed companies continue to reach out and want to work with us.

When we turn to our goals, they remain simple and straightforward. We haven’t wavered from this from the get-go. They are to continue to deliver the returns that are unique venture lending model has been generating, and to grow our investment portfolio in a disciplined fashion. Specifically, here’s the near- and long-term objectives.

We want to grow our new commitments and our customer fundings. We want to return to our targeted leverage ratio on the 0.6 to 0.8 range, and we want to drive our warrants in equity gains. And all of this is aimed at growing up portfolio to cover the dividend without the benefit of prepayments.

Having outlined these objectives, I’m pleased to say however we don’t believe these are difficult objectives. This is not a stretch. This is not a difficult roadmap. We already started to make significant progress on these and let me run through what I mean by that.

The first is simply looking at our closed deals or commitments which already stood at $146 million for the six months ended June 30. The second is customer fundings or customer funding level.

We generally provide the expectation and been talking about $30 million to $60 million per quarter, we’ve already funded $20 million of that this quarter already. The third is the unfunded commitments level. At quarter’s end, this was at a $146 million of outstanding obligations representing more visibility into potential future venture loan drawdown.

The fourth is our outstanding signed term sheets to venture growth stage companies with the sponsor level. These are terms sheets we already have in-house. During the second quarter it was $144 million. As of today, it’s already up by another $115 million on top of that.

We now stand at a healthy $250 million of signed term sheets to the sponsor level in-house of growth companies and $90 million of this was signed up last month July alone. The fifth is our originations pipeline. In the last quarter we showed close to $1 billion of venture growth opportunities under evaluation at the sponsor level.

Not only the highest in years, but we are encouraged by the diversity of companies, strength of investors and the quality inside, these are transaction opportunities for us.

Finally, we’re also benefiting from the expansion phase of the sponsor level, which already includes geographic expansion, originations and investments staff additions, adding Andrew as our CFO and some other strategic initiatives underway. Each of these factors will contribute to what we believe will be a strong finish for this year and into 2018.

Again, while one can promise the future of guarantee results, we plan to continue to work hard and believe the current market conditions that I outlined and the demand will support these goals. We’re starting around the bases and score some runs.

So that’s our plan, and I’m pretty excited about the growth phase, the momentum underway and the potential here. We believe we’re well on our way to the strong finish for this year, but also positioned and positioning ourselves for a great 2018. With that, let me turn the call over to Sajal..

Thank you, Jim, and good afternoon everyone. In Q2, we signed approximately $144 million of term sheets at TriplePoint capital and closed $106 million of debt investments and $1 million of equity investments. On a year-to-date basis we signed $193 million of term sheets and closed $146 million of debt and equity investments.

New customers in the quarter included Blue Bottle Coffee, which is a rapidly growing specialty coffee roaster retailer. The company capitalizes on a national-wide moment to source, roast and brew single origin coffee using partitional methods; I believe they call foam to mug [ph].

Blue Bottle has raised more than $120 million of equity capital from investors including Index Ventures, Google Ventures, Fidelity, Morgan Stanley and others.

PillPack which is a full-service pharmacy that delivers a better simpler experience through convenient and presorted monthly packaging for medications, along with modern technology and personalized service, where customers can e-mail, text or call their PillPack pharmacists at any time to ask questions or clarify instructions.

PillPack has raised more than $110 million of equity capital from investors including Accel Partners, Charles River Ventures, Menlo Ventures, Accomplice and others.

View Glass which designs and manufactures dynamic glass for office and commercial buildings that can change tint in response to weather conditions or smartphone commands reducing heat and glare. View helps build owners save on HVAC system costs, as well as provide a high end-to-end experience.

View’s installed its smart glass at 350 corporate offices, airports, hospitals, stadiums and universities, including Levi’s Stadium and San Francisco International Airport. View’s raised more than $750 million of financing from investors, including Coastal Ventures, Madrone Capital, Corning and others.

View recently announced $200 million financing, which was led by TIAA and BlackRock.

During the quarter we also invested equity in Casper, which is I’m sure many of you already know has disrupted the bedding industry with its innovative and foldable beds, its direct-to-consumer sales model, and even more recently its partnership with traditional retailers.

Casper has raised more than $240 million of equity capital, including – from investors, including NEA, IVP and others. We participated in the $107 million – $170 million equity around the Casper closed in Q2 led by Target, which also included participation from the company’s VC investors and other high profile investors.

During Q2 we funded $57 million of debt investments to six companies, $1 million of equity in one company, and acquired warrants value of $1.3 million in four companies. The new debt investments funding during a quarter had a weighted average portfolio yield of 14.8%.

We also had $130 million in customer repayments and prepayments from five portfolio companies. Two of these representing $50 million of principal were from the acquisitions at Birst and Xirrus, which we announced last quarter.

Another two representing $40 million of principal were some have CrowdStrike and Farfetch, both which closed massive equity rounds during the quarter. CrowdStrike raised more than $100 million and Farfetch raised more than $400 million. And finally one representing $40 million was due to a refinancing.

As a result of the customer prepayments, our portfolio yield was a record 19.9%. Without customer prepayments, our portfolios yield is 13%, which was up from 12.5% last quarter, so equally impressive in our opinion.

I know customer prepayments have been a hot topic across the BDC industry this year, so I thought it would be helpful to spend a couple of minutes and share our thoughts with you. I think the first key element for investors to understand is that the dynamics of customer prepayments are very different for us than for most other BDCs.

There are two primary drivers behind the flow of prepayments, as well as a secondary third factor. The two primary drivers are; first, acquisitions, where our companies are acquired; and second, large private capital raises, where our customers raise substantial rounds of equity capital.

In our opinion, both are good reasons for company’s prepayment loans and practically speaking these are also factors beyond our control. I’ll address acquisitions first, which I think is a no-brainer.

If you recall the football field analogy from our investor deck, where our goal is providing venture group stage financing in assisting our customers going from the red zone or the 20-yard line to the end zone, we view acquisitions as the equivalent of a fourth goal – sorry, fourth quarter field goal or touchdown to win the game.

This is the outcome that everyone, our entrepreneurs, our select VCs, even ourselves are all playing for in order to generate a great outcome. Everyone at this point is typically cashing out and moving on. We believe these acquisitions validate our venture growth lending approach and attest to the high quality and appeal of our portfolio companies.

Now with regards to large equity capital raises, we’re seeing a healthy amount of these right now given the strong equity fund raising environment.

I think we view these capital raises as the equivalent of scoring points during the course of the football game, which is generally what one wants and has to do in order to win the game, and for which our cash burning companies generally need to do in order to have the operating runway to get to their IPO or acquisition.

These equity rounds are beneficial to us and we typically get some points up on the board for ourselves through accelerated fees and income, and oftentimes unrealized gain on our equity and modern portfolio.

But the beauty is that the game isn’t over for us and our portfolio companies are now stronger than before because of our three R’s approach, where we focus on relationships, references and reputation and the high growth nature of our portfolio company that will still likely need more capital to win the game.

And so we take our seat on the bench until the fourth quarter when they may need their capital again to help them with the game-winning drive and we get to collectively score again. I hope that makes sense and I hope I didn’t overdo it with our football analogy, but I think it works pretty well in our opinion.

Now the secondary factor for our prepays is refinancings. These represent a small percentage of our prepay activity and given the fact that we have deep longstanding relationships with our portfolio companies and their select VC sponsors, we generally know about our follow-on or refinancing opportunity in advance.

Depending on whether or not we want to stay involved or move on, we either take action or let our portfolio companies know if it makes sense to talk to other lenders. We use refinancing as a secondary factor because again they represent a small portion of the prepay and repay activity we’ve experienced.

We had only one prepay this quarter due to refinancing. We actually looked back at the data. And since our IPO, TPVG has had prepays from 18 companies, seven which were related to acquisitions, seven were related to equity rounds, and only four were related to refinancing.

In fact, prior to this quarter, our last prepay do to refinancing was in Q2 2015 after our portfolio company EndoChoice had gone public and refinanced this. Keep in mind that unlike most other lenders, the new assets we funded this quarter exceeded the yield of the assets prepaid, which again we think is a great data point.

Now with regards to visibility of prepays, it really varies as there maybe equity or acquisition events underway that may or may not come to fruition. We historically guide to at least one prepay a quarter and interestingly we had visibility on our strong prepays early in the year.

So despite coming out of Q4 at the higher end of our target leverage ratio and our stock trading at record highs in Q1, we did not pull the trigger on equity raise even though we could have because of this visibility and because we didn’t want to set the cap in our stock.

So let me be clear, we see a strong path for portfolio growth and we expect to be back to our target leverage ratio in the coming quarters. At quarter’s end, our unfunded commitments totaled $146.5 million for nine companies, of which $25 million is dependent upon the companies reaching milestones before the debt commitment becomes available to them.

$36 million of the $146.5 million will expire during 2017. During Q2 we had $16 million of unfunded commitments expiring. Moving on to credit quality. As of June 30, the weighted average internal credit rating of the debt investment portfolio was 2.06, as opposed to 1.94 at the end of the prior quarter.

So another strong quarter for credit performance and our fourth consecutive quarter with no credit downgrade. As a reminder, under our rating system, loans are rated from one to five with one being the strongest credit rating, and new loans are generally rated two.

During the quarter, we removed $60 million of loans from category one, $47 million of loans from category two, and $23 million of loans from category three, due to repays and prepays. We had $51 million of new loans for category two, and $6 million of new loans to an existing customer for category one as a result of new fundings.

As I mentioned during last quarter’s call, we received our first profit distribution from GoGreen Light, the party which acquired KnCMiner which was sooner than expected reflecting the performance of GoGreen Light.

We took these amounts plus other small collections received and applied them to our cost and fair value reducing our position by $317,000.

We are very close to receiving the large distribution from the trustee this quarter and will then revisit our mark as well as treat GoGreen Light as an equity investment with the royalty structure and remove it from our credit watch list.

There were no material changes to Mind Candy during the quarter, although we are pleased to see they’ve been getting some favorable price, acknowledging some of their recent accomplishments and upcoming plans.

With regards to realize losses, during the second quarter we had $1.7 million of realized losses, which are related to the acquisitions of Birst and Xirrus. With regards to unrealized gains and losses, during the quarter we had $800,000 of net realized gains on investment portfolio.

This consisted of a $700,000 net unrealized loss which was related to debt portfolio primarily as a result of the reversing previously recognized unrealized gains from the loans that prepaid during the quarter, offset by reversals from prior markdowns, as well as gains from marking up our loans as they moved closer to maturity.

$1.2 million of net unrealized gain on our warrant portfolio, primarily due to markets due to equity rounds, as well as reversals of the prior markdowns. And filing a $300,000 net unrealized gain on our equity portfolio, primarily due to increases in the closing price per share as of new tenants.

I would now like to cover some of the financial highlights for the second quarter, which I’m pleased to say will be my last time covering on the call, as Andrew will take this section over next quarter. Our total investment and other income was a record $15.7 million, up 67% from Q2 2016.

Our expenses were $6.9 million, consisting of our base management fee of $1.7 million, our incentives fee of $2 million, our credit facility and interest expenses of $2.2 million and our administrative and general expenses of $1 million.

These numbers are higher than Q2 2016 reflecting strong portfolio performance in 2017, as well as due to the total return requirement of our best-in-class fee structure in 2016. Our net investment income was a record $8.8 million, up almost 18% from a year ago, again as a result of strong portfolio performance.

On an annualized return basis, our net investment income represented a 16.6% ROE and an 10.3% ROA, both record levels for us at the NII level, and again, a nice demonstration of the earnings power of our business without warrants and equity gains.

As a result of the unrealized and realized gains and losses I spoke of earlier, our net increase in net assets was $7.9 million or $0.50 per share, our second highest ever. As of June 30, our net assets were approximately $217 million or $13.52 per share, up $0.14 or about 1% from the end of Q1. As of Q2, we held 82 investments in 36 companies.

Our investments included 44 debt investments, 28 warrant investments and 10 direct equity investments. The total cost and fair value of these investments were approximately $251.3 million and $253.8 million respectively, 55% of our debt investments were floating rate.

As of June 30, our total cash position was $83.5 million and we had $140 million available on our $200 million revolving credit facility, are higher than usual cash position at quarter end was due to the timing of certain prepayments that occurred on June 30.

Subsequent to the end of a second quarter, we raised approximately $72.3 million of net proceeds from the issuance of baby bonds priced at 5.75%. The transition was upsized from a base deal of $55 million as result of strong institutional demand in participation.

From what our bankers told us, we are the only BDC in the past 10 years to raise under-rated baby bonds under 6%. We have exercised our option to redeem our $54.6 million of baby bonds priced at 6.75% at our vis-à-vis quarter, incurred in acceleration of $1.1 million of unamortized cost.

On a several analysis basis, the 104 basis point reduction in rate will lower our interest expense by roughly $550,000 a year, offset by the slightly larger debt size and funding raising cost.

For the third quarter of 2017, our Board of Directors declared a distribution of $0.36 per share payable on September 15 to stockholders of record as of August 31. With that, I’ll turn the call back over to Jim..

Thanks, again, Sajal. At this point we will be happy to take your questions. Operator, could you please open the line..

Thank you, Jim. We will now begin the question-and-answer session. [Operator Instructions] The first question comes from Jonathan Bock with Wells Fargo Securities. Please go ahead..

Good afternoon, James Howe filling in for Jonathan Bock, and thank you for taking my questions. First, there’s no doubt that you delivered strong results this quarter, but can you comment on the ability to truly scale this business. The portfolio today is really concentrated, I think just 16 portfolio companies in total.

And so growth is really needed to diversify and also improve recurring cash flow, also a less concentrated portfolio would leave you with less impact from individual repayments. But with the short duration of assets it seems that TPVG is always battling to fully leverage the portfolio.

So would investment team growth help here or is the market opportunity really more niche rather than something that can be scaled?.

It’s Joe – I think an interesting question, I would say there are a couple of factors. I think first is a little bit of the challenge of our size and scale given our current market cap.

So I’d say at the high level we see strong demand, strong market conditions, again, we have a $143 million of unfunded commitments, we have $115 million of the signed term sheets, we have several hundred million dollars of term sheets outstanding. And so we see, again, the ability to quickly grow and scale.

I think our challenge has been we picked great companies. And when you work with great companies, other people, particularly, equity investors and acquires want to work with those same companies. And so to have 14 of our portfolio companies either acquired or closed make it around the financing, it’s a fact we’re very proud of.

But at the same time, it causes the challenge that they’re either paying us off or there is lose in liquidity where the CFOs can do the math. And they’d say, great, that’s why I pay you 14-plus percent, so do I – well, I’m adding zero on the cash I have.

And so I would say, again, these are good things, good reasons for why we had the prepaid, but we see strong demand, as Jim said, strong finish to grow the portfolio over the next couple of quarters..

That’s helpful and thank you for that. And then just next question on the restricted cash of $71 million.

What falls into that bucket and why is that restricted?.

Yes. When we get prepays from our portfolio companies, it goes to their pledged collateral for our credit facility. They have the flow through the waterfall of our credit line. So we don’t get those proceeds unless we apply it down to the principal balance or the next distribution date which is typically the 15 of the month..

That’s very helpful, thank you for that. And that’s it for me. Thank you for taking my questions..

Great..

The next question comes from Casey Alexander with Compass Point Research & Trading. Please go ahead..

Hi. A couple of questions here. In your subsequent events you call out that you’ve only had $1.8 million in prepayments thus far this quarter. And a competitor actually called out that they expected to see somewhat slower prepayments in Q3 and Q4.

Do you get the same sense from the market and from your portfolio that that’s likely to be the case?.

Hi, Casey, it’s Sajal here. Yes, I agree. I’d say as we feel that the level of prepayment activity is definitely slowed down given, again, the acquisitions and the equity activity..

So that you think would make it a little bit better runway to get back closer to your target leverage ratio then?.

Correct, correct. Although we lose the benefit of obviously the accelerated fees and income from prepays which are nice, but yes absolutely helps us to greater growth filling up the portfolio..

Understood. Now you also mentioned that you’ll have in this coming quarter $1.1 million of accelerated unamortized costs from the call of the baby bond. There’s also going to be sort of interest crossover period, where both baby bonds are going to be outstanding at the same time.

Do you know how much that sort of additional crossover interest is going to be? I mean, many BDCs just sort of said that that’s sort of a one-time transition cost that’s not repeatable.

Do you have any sense for how much that’s going to be?.

I’ve to do the math, but it’s essentially 30 days, right, so we gave the call notice that was 30 days to 40 days between when we gave the notice and when we actually paid off. It’s essentially a month and the six and three quarters is the double interest I guess is for the crossover period..

All right, okay. So would it be your estimation, obviously, the first two quarters have had a lot of prepays and net investment income far exceeded the dividend, but obviously the invested balance is well below and it would be reasonable to assume that the next quarter or two may come in shy of the dividend.

But would it be reasonable to assume that in terms of your total results you’re likely to cover the dividend for the year?.

Yes, Casey, that’s absolutely our goal. I think you get the game plan. We haven’t spent that much time on emphasizing. We really feel the commitment level and the fundings level and everything’s looking very good for third and fourth quarter and that’s our goal..

And to emphasize, on a absolutely on a taxable income basis we are highly confident that the portfolio today certainly know material changes will absolutely cover for the full year, and obviously the impact of accounting we haven’t talked with our finance department, they’re worried about the impact of one-time costs, but confident, highly confident on a taxable income basis, absolutely..

And just for my clarification.

Can you walk me through that scenario with KnCMiner one more time please?.

Sure. So as you recall, right, we’ve got the bankruptcy trust, which is liquidated assets; and being a bankruptcy trust, we’re at the final stages, though we’re still kind of going through the paperwork and the process to get the cash distribution from them which will be several million dollars. So that amount will paydown or balance.

And the remaining balance that we have will be assumed and fold by GoGreen Light and then GoGreen Light is required to pay us under this equity royalty structure to get us whole.

The great news as I mentioned last quarter and this quarter as well as we’ve got a nice small initial distribution based on GoGreen Light’s performance in 2016, which we weren’t expecting a profit distribution for our recovery model.

So it’s a great nice upside to get that recovery this year, but we are expecting again the line share of trusts, proceeds from the asset sales this quarter. And then the remaining full liability will then be assumed by GoGreen Light..

I thought you did give a number for the amount of that distribution from GoGreen Light, am I right?.

I don’t believe we have, but it’s several million. And, again, once we get it, we’ll….

No, I don’t mean from the bankruptcy trust, I mean from the profit sharing, from the royalty..

The amount that we have, well, it was $317 that we paid down this quarter. So that included – sorry, $317,000 so that included a portion of which was profit distribution and a portion was other collections that we had received from earlier KnC payments.

Right. Okay, great. All right, thanks. Thanks for taking my questions, I appreciate it..

Thank you, Casey..

[Operator Instructions] This concludes our question-and-answer – looks like we have – okay. This concludes our question-and-answer session. I would like to turn the conference back over to Jim Labe for any closing remarks..

Great, thanks. I’ll close again by saying, we’re very excited about the potential to trajectory and the momentum here for last half of this year. And I want to express my appreciation to everyone for your continued interest and your support in TriplePoint Venture Growth. Thanks, and we’ll speak with you again soon..

The conference has now concluded. Thank you for attending today’s presentation. You may now disconnect..