Good afternoon, ladies and gentlemen, welcome to the TriplePoint Venture Growth BDC Corp. Third Quarter 2021 Earnings Conference Call. At this time, all lines have been placed in a listen-only mode. After the speaker's remarks, there will be an opportunity to ask questions and instructions will follow at that time.

This conference is being record 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 third quarter 2021.

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 remind you that during this call, management will make certain statements that relates to the 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 obligations 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..

Thank you, Operator. Good afternoon, everyone. We're glad you could all join TPVG's third quarter conference call today. The quarter was one of continued growth in execution of the 2021 playbook we have outlined on our earnings calls. This year has unfolded as expected on track for a stronger second half and a promising and exciting outlook for 2022.

The quarter’s performance continues to demonstrate the potential of TPVG's differentiated venture lending model and investment strategy. We are encouraged by the quarterly trends in our playbook that started earlier this year. And our expectation is to continue on this path in the quarters ahead.

Notably, we grew the investment portfolio to a record $767 million. And we significantly increase net asset value, achieving the highest quarterly NAV per share accretion since our IPO.

Our NAV, which reflects $0.10 per share dividend we paid last year is up $0.58 from the December 31, 2019 pre-pandemic level and $1.7 since the start of the pandemic in Q1 2020.

Signed term sheets in the quarter at TPC for venture growth stage companies increased by more than 20% over the previous quarter representing the second highest level since TPVG's IPO. This is the sixth consecutive quarter of increased signed term sheets.

This level of origination bodes well for future debt commitments in the fourth quarter and beyond. New customer debt fundings were up more than 54% for the quarter at $117 million funding fell squarely in our forecasted range and represented the third highest quarterly total since our IPO.

During the quarter, we also increased our leverage ratio, continue to diversify our portfolio and strengthen the portfolio's credit quality as measured by our quarterly scoring system. 98% of our debt investments were performing at or better than expectation as of quarters end.

This underscores the benefit of our strategy of focusing on high quality, select back venture growth stage companies and technology-driven categories.

The increase in NAV this quarter shows the power of our model with the considerable upside potential built into the portfolio from the warrants and equity kickers that we negotiate as part of our debt transactions. Demonstrating TPVG's strong potential to create long-term shareholder value.

Among the most significant contributors to increasing NAV is a continued equity fundraising rounds close by our portfolio companies, which increases the overall enterprise for value of our investments. This quarter, the most notable was Revolut’s equity financing realm.

We're proud to be part of a company with the highest valuation ever achieved that a privately held venture back technology company in the United Kingdom. Exit events at our portfolio companies also remain welcome contributors to our NAV.

We continue to experience and expect increased exit activity in our portfolio, all translating into future realized capital gains for shareholders. ForgeRock, the next generation cloud security company completed its IPO during the quarter.

Toast, a management platform for the restaurant industry also completed its IPO during the quarter and Rent the Runway, a popular fashion platform completed its IPO subsequent to the quarter.

SPAC mergers continue to provide another avenue for exit, including Nerdy completing theirs last quarter, Enjoy Technology in October and four others now on track to complete SPAC mergers in the quarters ahead. Finally, as a reminder, mergers and acquisitions of portfolio companies also represent potential future capital gain contributors.

During the quarter, portfolio company class pass was acquired by Mindbody in a private transaction, and we foresee a positive outlook for the combined entities. The venture capital market continues to be remarkably strong. Year-to-date through the third quarter, total deal value is already 43% higher than in all of 2020.

VC investments in the consumer tech, enterprise tech and FinTech categories have respectively surpassed last year's totals already by 38%, 50% and 92%. Demand remains high, of course, for IPOs by VC backed companies. Total exit value was on pace to double last year's record total. Public offerings accounted for 88% of all exit value year-to-date.

To further capitalize on this incredibly healthy VC market, we believe we have the right team, model, select VC partners and investment strategy. We continue to stick to our knitting and exercise investment discipline, focusing on companies backed by our select group of leading venture capital firms and not growing simply for the sake of growth.

We continue to have our eyes on companies with strong growth prospects that are developing new technologies, redefining how we live, work and play.

TPVG Investments in the technology sector are on pace to comfortably surpass last year's total, and we are well positioned to generate strong returns for shareholders, continue to grow our NAV and produce NII that covers the distribution over the long term. We believe TPVG is well positioned for the remainder of this year in the long term.

The momentum is already continuing here in the fourth quarter. We're off to a really good start with a robust pipeline and strong liquidity, which positions us to continue to grow the portfolio and provide financing to companies that meet our highly selective criteria and requirements.

A great deal of the playbook we planned earlier in the year is coming to fruition and central to our game plan is continuing to execute on it for the benefit of our shareholders. With that, I'll now turn the call over to Sajal..

Thank you, Jim, and good afternoon. As Jim mentioned, we achieved the objectives we identified for the third quarter and remain well positioned for the remainder of the year and for 2022.

With regards to investment activity during the quarter, TriplePoint Capital signed $304 million of term sheets with venture growth stage companies and we closed $116 million of debt commitments to seven companies at TPVG.

We continue to partner with exciting and promising companies in our new portfolio companies this quarter includes some marquee names in the FinTech, consumer, and e-commerce ecosystems such as N26, a mobile banking company, Earnin, a financial platform that enables users to take control of their financial future.

Good Eggs, an online grocery and meal kit company and Forum Brands, a data driven Amazon business acquisition platform. We also welcome back FabFitFun, a women's lifestyle and shopping experience focus company, which had previously paid us off in 2020 after closing an equity round and has now returned to the portfolio.

During the third quarter, we added to both our warrant and equity portfolios. We received warrant in 10 portfolio companies valued at $1.7 million in conjunction with our debt commitments, increasing our year-to-date total of warrants in 27 portfolio companies received in conjunction with our debt commitments worth $5.5 million.

We also made six direct equity investments valued at $1.2 million, reflecting the access we have to high quality investment opportunities and the robust equity environment. This brings our total to $3.7 million of direct equity investments in 11 company’s year-to-date.

During the third quarter, we hit our targeted range of gross fundings for the quarter with $117 million of debt investments funded to 15 companies, which rare presented an increase of more than 50% from our fundings in Q2.

All new debt commitments made during the quarter had all or a portion funded in Q3 and 95% of the new commitments we've made in 2021 have been fully or partially funded year-to-date.

As a result of this strong funding activity, as the end of the third quarter, we had debt investments outstanding to 40 companies, an increase of almost 20% from 34 companies at the end of the prior quarter.

So far, we have funded $14 million of new loans here in the fourth quarter and our gross funding target range continues to be $100 million to $150 million for the fourth quarter. Portfolio yield remains strong. During the quarter debt investments funded carried a weighted average annualized portfolio yield of 12.8%.

Our core portfolio yield was 12.1% up slightly from 12% last quarter and 11.9% in Q1. Our overall weighted average annualized portfolio yield was 12.3% as a result of only $18 million of loan prepayments during the quarter.

So far in the fourth quarter, we've had a $28 million loan prepayment, which will generate approximately $1 million from the accelerated end of term payment. We continue to see substantial equity fundraising activity in the venture capital industry generally, and within our portfolio specifically, which is a testament to our portfolio’s quality.

During the third quarter, eight portfolio companies raised approximately $1.8 billion of capital. In addition to the 16 portfolio companies that have raised $1.6 billion of capital during the first half of 2021.

One financing of that highlight is Revolut whose $800 million raise, at a $32 billion valuation resulted in an increase of $13 million in unrealized gains for us this quarter. Our equity and warrant investments in Revolut are now valued at $15 million in total fair value.

Moving to credit quality, this quarter, we achieved one of our highest quarterly credit quality ranking. The weighted average investment ranking of our debt investment portfolio improved to 1.94 compared to 2.06 as of the end of Q2 and 2.11 as the end of Q1.

Consistent with the first half of the year, no companies were added to categories three, four or five, and no companies were placed on non-accrual during the quarter. During the quarter, one company was upgraded from category two to category one and our one remaining category three company from Q2 was upgraded to category two.

Our one category four portfolio company Roli is our only loan on non-accrual and represents 2.2% of our total debt investments at fair value. During the quarter, we successfully worked with the team at Roli to secure financing from a new lead venture capital fund.

And in conjunction with this VC investor, put the company through an administration process whereby the newly emerged company called Luminary has assumed all of our outstanding debt. We have also received equity ownership in Luminary as well.

Although our loan was assumed in full, including full end of term payments and accrued interest, based on these events, we recorded an $8 million unrealized loss against our prior loan fair values during the quarter.

While the company is not out the woods, we believe they're now in the best position they have been and some time to capitalize on their Peloton for piano, hardware and software offering. During the quarter two portfolio companies successfully completed IPOs, ForgeRock and Toast.

Since beginning our partnership with ForgeRock in 2016, TPVG has lent the company $45 million of which $30 million is still outstanding. And our warrants in the company were valued at $9.4 million at the end of the quarter, resulting in $8.2 million unrealized gain during Q3. Our initial $35 million loan commitment to Toast was made in 2018.

And the fair value of our warrants was $5.1 million as of the end of the quarter, resulting in a $4.7 million unrealized gain, even though Toast never drew on their deadline and their unfunded commitment expired unused. With regards to SPACs, Nerdy completed their SPAC merger in Q3, and we received a $1 million cash success fee as result.

Transfix announced their SPAC merger during the quarter. And they along with Bird Rides, Inspirato, and Sonder represent our four announced company SPAC merger in process. So far in Q4, Rent the Runway completed their IPO and Enjoy completed their SPAC merger.

As of quarters end, we are holding shares and warrants in publicly traded companies valued at $17 million, which includes $13.5 million of cumulative unrealized gains. In addition, the current private warrant and equity portfolio held by TPVG has a record $30 million of cumulative unrealized gains based on private round valuations as of Q3.

As CrowdStrike, ForgeRock, Toast, Farfetch and others have proven when exit events do occur, there is the potential for even more gain from the winners above our balance sheet value.

We continue to be heads down focused on growing our portfolio in a discipline manner with line of sight to covering our dividend without the benefit of prepays, maintaining our solid credit profile, growing NAV, and working with some of the most exciting venture growth stage companies backed by some of the industry's best venture capital funds.

We're optimistic for a strong finish here in 2021 and excited for what's in store for TPVG in 2022. With that, I will now turn the call over to Chris..

Great. Thank you, Sajal, and hello everyone. During the quarter, we grew assets significantly while operating and administrative expenses rose only modestly. We continued to see high utilization rates on our new commitments. We increased the leverage ratio while maintaining excellent credit quality in our portfolio.

And we entered Q4 with ample liquidity at the ready. So let me take you through our financial results for the Q3 2021. Total investment income was $21.2 million with a portfolio yield of 12.3% on total debt investments for the third quarter, as compared to $23.1 million and 14.1% for the prior year period.

Total investment income reflects a lower average debt investment balance year-over-year due primarily to significant loan prepayments during the first half of 2021 and reduced income from lower levels of prepayment activity in the current third quarter. We are pleased that the onboarding yields continue to be strong and stable.

Total operating expenses were $11.3 million, as compared to $10.9 million for the prior year period. Operating expenses for the third quarter of 2021 consisted of $4.1 million of interest expense, $3.2 million of management fees, $2.5 million of income incentive fees, $0.5 million of administrative agreement expenses, and $1 million of G&A expenses.

While the total assets under management were up sharply during the quarter, base management fee was actually down quarter-over-quarter, given this fee is calculate on the trailing two quarter gross assets – the two quarters gross assets, which were lower in the first half of the year.

Interest expense increased this quarter, as we used our credit facility to successfully increase the leverage on the portfolio with cost effective debt, offset by savings from the elimination of the higher cost baby bonds earlier in Q2.

Again, while we experienced a significant increase in total assets, administrative expenses were up only modestly, given continued operating efficiency in 2021, along with lower allocation of overhead expenses related to economies of scale at the administrator.

G&A in Q3 include at one-time workout costs and accruals for excise tax, associated with spillover income generated in periods, where income exceeded distributions over time. Net investment income was $9.9 million or $0.32 per share for the third quarter of 2021, compared to $9.4 million or $0.30 per share for the second quarter.

During the third quarter, the company recorded $3.1 million of net realized losses from the write-off of equity and warrant investments, while net unrealized gains for the third quarter were $32.1 million, resulting primarily from $36.5 million of net unrealized gains from fair value and other adjustments on the company's warrant and equity portfolio that both Jim and Sajal highlighted earlier, partially offset by $4.4 million of net unrealized losses on the company's debt investment portfolio.

Net asset value increased quarter-over-quarter and year-to-date as we achieved the highest quarter NAV accretions since our IPO. For the third quarter, net increase in net assets resulting from operations was $38.9 million or $1.26 per share.

While the nine month period ended for the third quarter, net increase in net assets resulting from our operations was $62.7 million or $2.03 per share. As of quarter end, total net asset value was $431 million or $13.92 per share, compared with $400.4 million or $12.97 per share as of year-end.

We pleased to announce that our Board of Directors has declared a regular quarterly distribution of $0.36 per share to stockholders of record as of November 30 to be paid on December 15. This includes $0.30 per share from ordinary income and $0.06 per share from long term capital gains.

We continued to retain significant spillover income, which totaled $8 million or $0.26 per share at the end of the quarter to support additional distributions in the future.

As we continue to experience portfolio growth over time and further record portfolio loan prepayments, we expect to see net investment income grow to a sustained level to cover our regular current distribution consistent with our long term track record. Now, let me move to our investment commitments.

We're pleased to note that we continue to experience high utilization rates on our new commitments during the third quarter. We ended the quarter with $156 million of unfunded commitments to 21 portfolio companies.

Of the $156 million, $45 million of the total will expire during 2021 and another $96 million will expire during 2022, if not drawn prior to expiration. 60% of these unfunded commitments have contractual floating interest rates, all of which have a primary rate set to 3.25% or higher.

This compares to the existing loan portfolio outstanding at quarter end, which had 52% contractually floating interest rates. Now just a quick update on our credit facility, our term notes and overall liquidity.

As of quarter end, we had $85 million outstanding on our credit facility and $270 million outstanding on our fixed rate investment grade term notes. The revolving credit facility is compared to fixed term debt allows us to efficiently manage our interest expense by reducing our outstanding debt when pre-payments occur.

We ended the quarter with a 0.82x leverage ratio, an increase from leverage levels of just 0.67x times at the end of the second quarter. As of the second quarter -- excuse me, as of the quarter end, the company had total liquidity of $288 million, consisting of $23 million in cash and $265 million available under our credit facility.

We expect to draw our funds under the credit facility when needed to grow the portfolio with accretive debt financing, which will benefit our shareholders. We believe that we have sufficient available liquidity to execute on the funding estimates that have been provided by Sajal earlier on the call.

And we continue to see ongoing contractual repayments and prepayments as a natural important part of our high quality and diversified lending portfolio. In addition to our strong currently liquidity, the existing seasoned and diversified portfolio provides continuous cash flows, which bodes well for sustained liquidity into 2022.

So this completes our prepared remarks, and we'd be happy to take your questions.

And so Operator, could you please open the line at this time?.

We will now begin the question-and-answer session. [Operator Instructions] Our first question today will come from Crispin Love with Piper Sandler..

Good afternoon. And thank you for taking my question. So first, on debt funding in the fourth quarter, so we know you're forecasting, I think it's $100 million to $150 million of debt fundings, I think in the path that you've said that you would expect to be at the high end there in the fourth quarter. So I'm wondering if that still stands.

And then just, would you be able to also give a little bit of color on directionally, what you would expect in the first quarter of 2022? Do you think there should be kind of a pullback there due to some seasonality? Or do you think the momentum could actually remain elevated?.

Hi, Crispin, this is Sajal. I'll start with – I'd say, listen, I think the key thing with portfolio fundings to take away too, is that, they occur late in the quarter.

And so when they do happen, so they don't necessarily contribute to income in the quarter, which they occur, but more likely occur contribute into subsequent quarters, so as a first starting point. To the second point with regard, listen, I think we give a range because we're comfortable with the range.

And so I would say, we feel, again, Q4 is generally the busiest quarter. Obviously, we've had $14 million of fundings quarter-to-date, but we continue to be really confident about the range that we give and we’re cautiously optimistic about being towards the high end, but there's a reason why – we've given a range.

With regards to '22, listen, I think we're continue to be cautiously optimistic that this momentum or this not momentum is the wrong word, but this step increase in venture equity and venture debt demand will continue into '22.

And so I would say, although we haven't yet kind of formulated our business plan for '22, I wouldn't be surprised to say that we would take up our original first half of the year numbers as compared to '21 over '22, but I'm not yet ready to – I don't think we're ready yet to say Q4 to Q1, but I definitely say the first half of the year is generally slower and I think we'd expect that '22 would be higher than the first half of '21..

Okay, great. Thanks, Sajal. That's all very helpful. Just one other question from me, so in the past, I think you've talked about having a $2 billion pipeline, but I don't think that was mentioned today. So I'm just curious if that still holds and I know that's the whole TriplePoint platform.

So I'm also a little bit curious of what related to that $2 billion pipeline or whatever the pipeline is now is related to TPVG or kind of also the TriplePoint platform as a whole?.

Yes. Great question, Crispin. So the pipeline continues to be very strong, it's over $2 billion at the platform level to ask – answer your question and higher than last quarter and with the venture growth stage TPVG companies, it's over $1 billion of that..

Great. Thank you, Jim. And thank you both for taking my questions..

Our next question comes from Casey Alexander with Compass Point..

Hi, good afternoon. Would it be your expectation that in the fourth quarter given the amount of funding that you achieved in the third quarter, as well as the prepayment that you already see in the fourth quarter.

Would that be enough for you to believe that you would cover the dividend with net investment income in the fourth quarter?.

Chris, do you want to take that question?.

Yes. So, Casey, thanks for the question. It clearly is something that's on our mind. I think we're on a journey here going from $0.30 to $0.32 and working our way up to the current dividend of $0.36. So I think we have line of sight on origination activity. Prepayments luckily have been a little lighter than what we've seen in the first half of the year.

So as you can see, we successfully leveraged up the portfolio. So it's all of those things combined that will drive to ultimately what we're trying to get to at year end, which is get to the $0.36 or covering the current dividend. So we see a line of sight towards that. One of the challenges that everyone has is time of funding.

So with $100 million to $150 million target origination activity or funding origination activity would be when does that happen? And so if we hit those numbers and fund them all in late December, it would be more challenging obviously to make that.

So I think the proof is in the putting over the next 60 days of when our timing of fundings will be and the contribution to margin and to NII. So we're on the path. It's still too early to tell, but we definitely have line of sight on it..

Okay. Thank you for that. Secondly, Sajal, you discussed a lot of capital markets transactions that are taking place for your portfolio.

Should we be thinking then you've already had one prepayment of $28 million, should we be thinking about a number that is measurably higher than that in the fourth quarter? How do you feel about? And I know you guys have a sightline into the capital plans of a lot of your portfolio companies, where do you think that works out in the fourth quarter?.

Yes. I'd say, Casey. I think we continue to believe it's this one to two, a quarter. I would say, I mean, I'll pick ForgeRock is a great example, right? They IPOed in Q3 and they didn't pay us off. And so I would say, we're definitely seeing a slowdown in kind of the immediate reaction to prepay a loan after initial capital raise.

It's some good efforts on our side. And so I'd say at least at this time, we don't expect to change in that lower pace of prepays, but again, portfolio company developments can happen in big equity rounds, but at least right now we continue to guide to that one to two a quarter..

Okay. Thank you. I'll step back in the queue. Thank you..

Our next question comes from Finian O'Shea with Wells Fargo Securities..

Hi everyone. Good afternoon.

Jim or Sajal, can you talk about the new capital formation om venture lending, sort of the impact if at all, what you're seeing out there the impact for new origination and so forth?.

Sure.

It sounds like maybe your question is the competitive dynamic of – in the eventual lending industry, is that's correct?.

Yes. Yes..

So I'd say, listen I'll take Jim's usual statement. Listen, our primary competition is equity and we're in a strong equity market. And so equity from quality institutional investors continues to be a competitive – significant competitive element.

And as we've shown this year, we've been able to compete and defend appropriately from the venture lending landscape.

I think from our perspective is, similar to our market has very similar nuances to the middle market, right? We all have our spots in particular, listen, we're very much focused on our group select high quality venture capital funds, tech only, or tech enabled and consumer.

And so we're the trusted partner to our core sponsors and their portfolio companies. I think as a whole, the venture lending market, just like the VC equity market is very large and growing. And so I think as we see new entrance or capital formation or whatever it may be, I think it's a big enough market and we all kind of happily coexist together.

And we all have our kind of sweet spots. And so I'd say, we're not seeing any material change in competitive dynamics or, I mean, the portfolio isn't showing any change of pricing or prepay activity. So continue to defend based on brand reputation and track records..

That's helpful.

And would you say, there's any shift in the yield structures, like is there still similar EOT pricing, for example, we're that come down in some spots across the industry? Curious if you have any view on that?.

Yes. So just add to what Sajal was saying, various parties out there have all kinds of different focuses, be it equipment, life science, or whatever. And this market is not about price. At least for TriplePoint, it's not about competition along the lines of price. And the yields are holding up very, very well.

And we're feeling really good in terms of yield. I just want to differentiate it in terms of maybe be the middle market, where it's more important in terms of price. It's about reputation, references, relationships, track record, it really isn't about price..

Got it. That's helpful. Thanks so much and congrats in the quarter..

Thank you..

Our next question comes from Christopher Nolan with Ladenburg Thalmann..

Hey guys, what's the thinking on the supplemental dividend? Is it – are you going to wait until the EPS cover the base dividend before considering that?.

Yes, Chris, Sajal, here. Yes, listen, I think, for us, it's premature to, to talk about a supplemental dividend. I think the good news is we have spillover.

It's helping for the earlier quarters this year where we didn't cover, but I would say too soon to discuss unless obviously capital gains and when some of these realized warrant and equity gains unlock, I think that would be the timing. And so we're still locked up for most of these IPO related assets..

And Sajal, where you're sitting right now, where do you see the direction of the leverage ratio in the fourth quarter in?.

Oh, I mean, we'd love to continue to grow it right, as some of the prior questions, right? I mean, if we hit our game plan of our fundings target, we'll definitely take leverage up. I think the challenge is always prepayment activity, and again, we have the good problem, our portfolio amortizes.

So every quarter, we – every month actually, we're getting principle back from natural amortization. So I would say, borrowing an acceleration of prepayments we would expect portfolio growth and leverage to increase here in Q4..

Great. Thank you..

Our next question comes from Ryan Lynch with KBW..

Good afternoon, and thanks for taking my questions. Really excellent quarter guys on several different fronts.

My question has to do with, when you guys post a quarter like this with several different equity or warrant positions, increasing in value significantly, whether it's public market, event or increased valuation rounds, does that influence at all, how you guys are approaching the market when you guys are looking to do new deals? Would that at all influence the pricing that you guys are looking to achieve on those loans? Because it seems to be that you could, when you see big games like this, you could be more aggressive on the yield aspect on some of these top companies that you see in the private markets in order to have access to either some equity or warrants in those companies.

Just any thoughts on a big quarter like this sort of influencing that interplay between yield upfront yield on the debt versus getting access to equity investments in these high growth super instrumental companies?.

Yes. Great question, Ryan. So let me be clear, we are a lender. We are not a venture capital fund or venture capitalist. And so we are in the business of providing fantastic, if lawyers, let me say that, debt returns to our investors.

And so fundamentally it's all about the yield, the debt yield and ensuring that given the risk profile and our risk assessment and ensuring that we get participation with the equity kickers and the warrants. And so we don't subsidize one for the other, Jim and I working together, I don't know now, is it 24 years? I lost count.

So we've been through this, billions of capital to know better. And, but I'll use the example of Revolut, right? I mean, Revolut is just a great winner in the FinTech space, but guess what TPVG lend to Monzo. We just closed a deal this quarter with N26, which are large bellwether FinTech companies that actually compete with Revolut.

And we continue – despite the fact that FinTech challenger bank is such a sector where we're seeing significant upticks and rounds and valuations. We continue to hold our pricing on the debt side while still getting equity kickers.

I mean, I'll pick on N26, again, it's in the public domain, they raised $900 million round at a $9 billion valuation during the quarter, and guess what we lent to them. So again, it just shows you the quality, how we're the go-to for the premier VCs and when we have sector expertise and track record, candidly, it creates demand.

Portfolio companies want to work with us because of the knowledge because of the expertise. And so, yes, just, again, we would never subsidize one for the other. We've been this in too long to know that and to do that. And we just stick to our knitting..

Got you, understood. The other question I had, which was kind of addressed, but I want to kind of hit it on a different way. Right now you have about $0.26 of spill over income or about $8 million.

Is that a level that you guys would like to assume or maintain going forward, because as we look out a year or two, there could be potentially big changes in that number.

So is that a level where you're at today, something you want to maintain? Or is that something that you guys are comfortable meaningfully growing in the future?.

Yes, let me start, Ryan, Chris or Jim can add. So maybe first is, I would say, we haven't formally established a level of what's the appropriate level of spill over to have, other than we're glad to have spill over. It's an important thing.

I think the balance of that is, that shareholder's money, right? So for us, it's important for our shareholders to benefit from the returns that we make and distributing to them. And again, we have a history of special dividends doing those. I think it's – we've done it twice, so important for us to do that.

And so I think, and again, not necessarily related to capital gain events, but also when we have strong core earnings. So I would say, listen, I think it's a fine balance of wanting to make sure and to show and demonstrate to investors.

The benefit of the return profile of owning our shares in terms of dividends and special distributions at the same time, it's great to have, the ability to smooth over some lumpy quarters, like we've had earlier this year. But listen, I think we continue to be confident.

If you look at the return profile of our assets, they continue to be strong and credit quality continues to be stable. We continue to grow the portfolio. And so we're not looking to spill over as an excuse to cover, right for us, we should be covering and we will be covering.

And it's just a matter of, again, coming through some strong quarters of prepay activity and reloading our portfolio. So hopefully that answers your question..

Yes. I appreciate the time this afternoon. Really nice quarter guys..

This concludes our question-and-answer session. I'd like to turn the call back over to Mr. Labe for some closing the remarks..

Thank you, Operator. As always, I'd like to thank everyone on the call for participating in the call. We look forward to talking with you all again, next quarter. Thanks, again. Take care..

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