HTGC Hercules Capital

Michael Hara MD of IR
Scott Bluestein CEO
Seth Meyer CFO
Finian O'Shea Wells Fargo Securities
Crispin Love Piper Sandler
Devin Ryan JMP Securities
Ryan Lynch KBW
Sarkis Sherbetchyan B. Riley Securities
Casey Alexander Compass Point
Christopher Nolan Ladenburg Thalmann
John Hecht Jefferies
Call transcript
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Ladies and gentlemen, thank you for standing by and welcome to the Hercules Capital Q1 2021 earnings conference call. At this time, all participants are in listen-only mode. Later we will conduct question-and-answer session, and instructions will follow at that time. [Operator instructions] As a reminder, this conference call is being recorded. I would now like to turn the conference over to Mr. of Director Managing Hara, Investor Relations. Michael ahead, go sir. Please

Michael Hara

Scott and Thank after market relations quarter conference at Hercules Seth accessed Good Meyer, Hercules XXXX. Officer; be first close chief everyone, results you, afternoon, welcome Hercules' were are from section and call today XXXX us CFO. the can to CEO and today's investor on and Investment Charlie. With call Bluestein, quarter for financial Hercules' the from first just released

We a by at the provided for have web telephone Hercules earnings today's passcode call arranged the of replay and page release. using or in number

contained call, we delays between due date this the on filed audit to of statements based the with in and this final current those expectations. Securities and and During may the herein make financial results. Commission confirmation results may timing Actual Exchange release forward-looking from differ

the expressed the market to those forward-looking without surrounding purely statements. to guarantees including the addition, statements other are from contained in turbulence this uncertainties and our results filings to identified in the time could performance uncertainties, are other uncertainties the caused SEC. statements, factors risks not that by materially release factors statements and that and forward-looking cause historical COVID-XX not of are subject forward-looking actual In including differ are and future time the pandemic limitation, These we in current from the with

on to also any result, inaccurate, be that a those those believe and on Although we based prove forward-looking can are these the assumptions be assumptions statements incorrect. the of statements which assumptions can forward-looking reasonable, as

or Scott. hereof, the These the visit events. reliance contained To copies please turn on should are this related Hercules I'll to forward-looking no statements of obtain You forward-looking over obligation date with assumes made statements call that, filings, the in as update website. to place these SEC forward-looking our subsequent release And undue statements. of and not

Scott Bluestein

Michael, hope across XXXX you, delivered us staying and discipline our emphasize and investment today. We for healthy. Thank for our another strengthened operating solid QX Hercules expanded We all and was quarter is joining to everyone continue and that platform investment credit portfolio. strong thank results, you safe Capital.

ground team investment with new both XXXX the and hit and performance running equity record in Our gross QX commitments debt fundings. for

for as continues markets Even to with population the the progress strength. more reopenings broader plans announced vaccinations, states show and to continued

continue markets public to in and maintaining than balance staying We a us our prudent continue manage new markets equity ever. of requires strong disciplined discipline investment and conservatively underwriting, liquidity to and prioritize perform liquidity, sheet private to exceptionally maximizing core The underwriting across flexibility. operational business ensuring the abundance well, by on more substantial an

million equity Let $XXX originated million. QX. $XXX and me recap in of key for nearly performance gross highlights delivered debt We fundings gross commitments new our some of the of of over

focus Our and We fundings each of during were and technology sciences core the balanced commitments nearly we're between new life saw and our equity portfolio weighted our of company debt And towards verticals. across relationships. strength evenly quarter. in areas QX

in focused saw many expand again and to achieve lending companies origination. our we raise with As capital our our to portfolio new continued and terms equity has relationships during us debt once business which QX, throughout and loosely Even of several abundance as continue strong of in originations capital business XXXX, we create to allowed certain an existing on parameters QX, strong were certain of milestones underwriting prudent companies portfolio. though chose challenges new performance stay our disciplined to in structured

on have pipeline an continue on with The to our some each of that is currently over quality of has companies basis have time. April exposure us focus million commitments. evaluate has QX, already potential us scale new continue we to staying what active in we opportunity give that commitments XX, made to of $XXX.X pending to the will platform investments. successful as term the XXXX, billion in But a closed in an Our pipeline Since exceeds sheets. last true a Hercules seen the reputation and $XXX of sustained additional million the brand And best signed and $X of non-binding XX close we of years.

the to new our XX, commitments total year. the comfortably our April QX closed the be XXXXm majority total and million, the billion towards funding $X over of of $XXX.X for exceed which us activity commitments of on expect We to consecutive pace quarter. weighted back-end pending Through puts fourth

at During events. end decreased This QX, repayments from but over and levels $XXX drove million liquidity our strong in strength very continue company early in portfolio, to see of combined exits, high of pay-offs. terms again portfolio high million, QX. loan $XXX across company the to million we were continued $XXX of guidance $XXX performance million Early at of with portfolio our

For in record net we income the new during quarter early per net fund materially that registered qX, generated million income income owned balance manage allocating a fundings level now of fee and $XX.X $X.XX was $XX.X a through elevated in and QX, of to $XX could quarter. income lower attributable investment after lower levels lower result the payoffs growth income strong fundings as of are wholly first over quarter. or prepayments our during prepayments the $XX between the total million produced decline over In portfolio QX we and guidance, of million as the investment The progress debt with net we investment although change and due expect advisor. to million with total we investment investment Even to our be this the portfolio of investment million, to share. million again and both payoffs, $XXX of private of consistent debt continued $XXX the

internal qX QX. strongest QX. midpoint XX.X% guidance XX.X% platform, X.XX credits well previous X core This With QX, compared we was on weighted QX credit to since our rating credits of Grade a Grade remained conservative credit very in to in for robust the X continued of in XX.X% and we a with again XX.X% in debt was that XX.X%, our yield X.XX QX Credit and our effective of to a above our Grade of GAAP XXXX. leverage in strength yield in rating investment a at versus very internal net liquidity the seeing improved generated our quality portfolio XX.X% and across in decreased and QX. portfolio core Our average the positioned. as speaks in versus XX.X%, to XXXX markets. X increased Overall, regulatory which it are

portfolio Our investment approximately and rated investments million fair X.X% value, In respectively, have value X $XX.X of X.X% company's four debt percentage $X portfolio or entire of value. investment the at as up respectively. and non-accrual X cost debt QX and million X% a on fair with and of a we credits made total cost cumulative the

with share a of nearly We of net capital markets performance per our portfolio, exceptionally ended QX by to strong $XXX IPO As value asset exit strong and QX unfunded continued across $XX.XX. XXXX. The and strength us exceptionally and substantial the liquidity result our robust with balance believe strong record which our ecosystem increased Overall, activity, provides we fund commitments sheet X% well million, that positioned. of strong venture to ability is million anticipated continued QX year after activity. of $XXX and our available to a our in in coverage capital the business ongoing exhibit equity

gathered our of $XX.X a total QX NVCA. has capital impact to the venture PitchBook continued of by in VC The billion $XX billion vibrancy to raised data funds according overall positively For the invested the over portfolio. and and ecosystem US,

call, raise data just that of approximately we to continues at liquidity. estimate our companies companies agreed over initial the have, And new closed for As seven current debt XX that last events, XX% to of XX-plus capital of which our , public our have either $XXX least stack filed new we've had offerings, since have recent four and have additional we their portfolio two that portfolio have an months million. or M&A had transactions. of we have earnings Year-to-date totaling most registrations

capital working transactions. the supplemental M&A next activity to we new year discuss few companies And expect Program over strong also currently I quarters. our several remain shareholder or fiscal In spec to either for are of strategic addition, our IPO like and on distribution raises would XXXX.

for addition for distribution the declaring $X.XX distribution $X.XX are next In cash XXXX. of first which equally distribution per our XXXX, the with ninth will of four fiscal quarterly $X.XX to be payable we quarters, consecutive quarter May share a beginning quarter per in share, at per supplemental also distributed

to subject ability with continue invest with earnings undistributed our distribution team platform. million XXXX, provides per As variable $XXX.X spillover final This share, forward, cents to to of of generated our additional or approximately tax the and and in QX, $X.XX going us we respect flexibility base to filings. have

I our in briefly on our expanding very first like our stage investment registered opportunity current and the diversify to first our growth platform. future strengthening our expand own level advisor institutional closed Advisor potentially in platform progress service to wholly first the pleased venture as to in a while fund that future establishing credit of fund. would have this made and Having are After we the Finally, enhancing touch to private terms us funds investment of XXXX, raised investment quarter Hercules gives and companies. and capabilities and and we

capital term by the we that of diverse our potentially would the have our now Advisor, anticipate to to over investors their I I share that business stage certain funding ramps to new Hercules financing thank thankful expect I work, up. able the have and a that Capital size Hercules growth from the tirelessly RIA, continued each and to to Hercules premier for being chosen take advisor we employees Capital short more of and remains venture them as closing, it over commitment. ultimate to funds to expenses work Hercules benefit up time preferred their am partner. activities and the subject provider their to call from of performance growth with ensure the will of ramp each the of portfolio our benefit term, will grateful distributions do managed XXX-plus companies and While Longer turn Advisor In to and make that that having institutional Seth. Capital companies. also from to to expect Capital effort will our investments. Hercules and we under like Hercules platform for

Seth Meyer

you, afternoon And Thank and ladies Scott. gentlemen. good

a investment grow at Hercules. the book by loan We million which to which us quarter, QX, a total million were commitment elevated strong during pre-payments the $XX.X This by from gave decline quarter. strength to investment quarter to very team again, funding mentioned, allowed of in the us prior great portfolio income the another replace was Scott XXXX. As was the We market. the for the start delivered able our share appreciation triggered once result had of NAV portion of broader portfolio of and during $XX.X the per cost and

$XXX.X was early but which to again guidance Our million, the range. levels elevated pay-off reduced within

investments the RIA costs. we $XX.X initial Advisor, allowed our $X.X quarter. private fund. and a QX our the certain successfully initial at certain to million allocations portion fund, total a helped first fundings allocate private of fund, This we by as also to fund During our loan managing during the commitments growth healthy to closed Net the Hercules and us private billion expenses result, to allocated the of to grow

$XX.X Net As realized was let's usual, to a statement pay-offs attributable the activity, decline investment per higher compared related to $XX.X prior the in fee was in result driver or unrealized areas, QX, the highlights, leverage decrease a compared $X.XX The decrease quarter. then income the share total performance was statement NAV, portfolio Total million I'll the income main income finally quarter XXXX. elevated investment our for the liquidity and in investment and outlook. that, and the to lower and prior to of turn as the attention the income highlights. focus performance on QX income and With following experienced repayments a income QX. to early and decrease and million interest

unfunded and with Our in yields yields core line slight XX.X% modest in fourth with income XX.X% to The quarter. effective expired the the the quarter yield prior and XX.X% and largely a quarter in quarter, first in decrease were XX.X% a decline to were the core in due respectively, from compared commitments.

from quarter Turning of $XX.X million $XX.X slightly prior million. the those expenses expenses fees in for expense to to for million increased to related of million fee down the to million million period operating were $XX.X $XX.X Interest for higher compensation increased ending prior the the and were of the expenses partial compared the to of in increase increase due expenses $XX.X taxes expenses operating RIA, our recognition first to our securitizations first pay $XX gross normally The million the to SBA quarter. payroll increased quarter, to in the quarter. in expenses, from in fundings higher the million. quarter. to run RIA, and by quarter the cost due Net reinvestment and Net instruments. recharged mainly the $XX.X truck debentures $XX.X costs SG&A prior was SG&A the the which acceleration to recharged driven

securitizations associated our consistent with a and to small prior debenture cost quarter excluding debt Our the X.X%. increase cost at prior compared of loan driven from fees The by repayments. quarter SBA retirements acceleration weighted average debt, of with which both the was additional early adjusted the X.X%, was debt represented

unrealized realized now switch activity. Let's to NAV, and

increased the in quarter net $XX.XX disposed to change after per increase main of for of prior an unrealized appreciation appreciation $X.XX quarter-over-quarter. During share mainly unrealized million, X.X% was written-off. the the to of driver per reversal share. our NAV due million This $XX.X or investments The NAV of per $X by share increase represents

primarily warrant million market appreciation portfolio, equity driven of movement. unrealized of was change million the contributed and $XX.X the to and $XX.X mark which of Our net by our

the net by the of million position. $X.X loan also of loss portfolio offset gains equity yields in comprised from $X.X $X.X The debt appreciation. pertaining of declines of positions, market the million from Our quarter disposal of gains realized in million million benefited to the contributing net one of realized $X

leverage. discuss to on Moving

leverage securitizations, XX.X% and next regulatory was respectively, Our the GAAP position runoff. in and heading to and which two the partial XX.X%, quarter. putting us in now Netting respectively, which GAAP of compared the cash leverage the repayment a XX.X% XX.X% are quarter strong balance was leverage on with out decreased prior sheet, due to regulatory the into very the our and

announced up includes Our of the fixed with notes private a the a second million financing. X.XX%. This of five-year in was arrangement $XX in tranche leverage March million placement private coupon November the totaling issuance $XXX in placement of XXXX,

addition, interest debentures In of utilize X.XX%. started and $XX.X third license million of our have has attractive SBA annual we to drawing rate down

This new with by result, SBA liquidity we As a strong quarter additional as capital the ended amounts the well license, our available million. the of as via $XXX excludes raised RIA.

by As repayments. as course a and collections, reminder, our liquidity continues to normal be our as early enhanced monthly well interest principal

outlook Finally, to to apply QX, continues guidance on the XX% our XXXX. for core yield points, of XX%

slightly SG&A For always QX $XX $XX quarter, below second the the employer expect expenses to as payroll of quarter, million million higher has we taxes. prior

fee two weighted and recognition. This quarter borrowing early We to to is capitalized assigned expect are decrease second companies whether dependent increased modestly. natural the are our repayments heavily costs on runoff, in triggering securitizations, portfolio to now which

a securitizations. the assumed normal have We weighted to allocation

$XXX to to in Although in prepayment Scott, the million communicated by expect second $XXX difficult predict, we million as quarter. activity very

is that a RIA RIA able capital, the anticipate we go operational basis. to to being allocate outside managing Now the forward expenses on and

the expect For quarter. of look similar closing, are the with expense building in second on quarter, to forward the the success level what of pleased we allocation And start QX. we a to In of XXXX. saw we

over given call. continue begin We I we Q&A current to now things the our to the to you. environment. will Charlie, to us focus Charlie call believe portion the the position that best will on of over turn operating


Fargo the with [Operator sir. Finian from first Wells of line question Securities. you, O'Shea Instructions] Your Thank comes

open. Your is now line

Finian O'Shea

Hi, everyone. afternoon. Good

B downs BDC? were some Can this some drop that RIA. First private matter, will over of least quarter. at the vehicle provide that on for will the one if into you then And the the or Scott, question was that saw just different color or that transaction I the Hercules if ongoing? startup there on strategy funds type how versus be

Scott Bluestein

time anticipate in Sure. currently of. essentially an was that's of going QX been that you out it fund, of private to see we speak the concentration vary the on be anticipate raised are because or quarterly will a this continue quarterly HTGC issues, reasons drivers being be We will on fundings to anticipate would could a a It could could commitments HTGC degree private the is its be Thanks, that also will certain basis. to a basis. fund from fund and of the the to parts the The that you Fin. the deal, but funded varying that allocated and certain of transactions size the at same it fund. to has will one go-forward basis a to would invested We're continue originated that industry diversification, would own be not that on What saw allocation only deals the And basis. originally the that be we and can to on on certain or go-forward do business. private

Finian O'Shea

And origination that co-invests just clear existing rather to were dropdowns? Okay. be those new issuer than

Scott Bluestein

are Those fundings were QX to allocated private fund. in new the new Correct. and commitments that

Finian O'Shea

Okay, just second you. expenses. thank And then on the

-- general? of forward? AUM taxes Was costs any market between were I and driver said the Overall you that can there such? change versus in can expect Seth up. And rate of think in kind if compensation that what larger payroll most expense break down were the going we

Seth Meyer


related were So increase of the expenses spend. funding the to mainly the

million a closer. will the higher run-off that as do. beyond the tax for $XX to for pretty taxes the can get guidance forward, as than quarter-on-quarter. give payroll always significant QX, QX $XX we was going quarter guidance really, will they And jump there always regulate rest. employer and payroll So The say is million we

Finian O'Shea

Okay, great.

so So all for thanks me, much.


of with Piper line the Love Sandler. from comes question Crispin next Your

open. now is line Your

Crispin Love

think color on trends have little been The the seeing? my in give more model. portfolios, metric grade First, for best X.XX a record the can credit on I that you quarterly the quality that you've I

did during what what significantly the changed quarters? So drove you it guess recent versus lower see just has quarter? And that I

Scott Bluestein

Kristen. Sure. Thanks,

overall think just the I liquidity. is that one, from things. which of it's strength attributable to Most portfolio two it's Number a seeing. perspective we're

had kind larger more companies last larger have financings. As companies now of the rounds of our Several on more we've to continue liquidity. earnings right several we've and raised calls, highlighted of record and

Those that sort we at had a of of weighted average basis, we've which biggest then so pandemic, migration credits. one rated are in quarter above started had quarters the first rated X our In of that a in of that the if the is are about capital, the then quarterly a And COVID And is credits. rating either the well And are you of improvement. was capitalized credit show to Those rated contemplating driver on we rated when XXXX, were X four QX abundantly look to philosophy X.XX. or our increase were we a to drivers raise once roughly the capital. or And now X.XX. The performing or QX, companies consecutive companies the down we we those them reduction general in are X. upgrade expectations. either are equity second raise companies two the

drivers. opportunities the and to we're were the portfolio. right And that the those speaks it to seeing just biggest the team our invest across has strengths that in I of done job identifying terms two in tremendous think So the

Crispin Love

caused you that that me. new some more it's for One great. about new for geared said just curious That's I'm think relationships, relationships. of more you Thanks. were towards what I that going? for that and talk during that recent Okay, investments? does of they your your the Can that process just reopening is kind do diligence more the diligence that with changing had the to last comfortable pandemic? months you've processes the have it Or several way and recovery with helpful.

Scott Bluestein

our Sure, stage growth sciences We've both I technology markets. the seeing performance we're life venture credit think really from it And team. team investment tremendous the team. our to goes and our seen parts the across and our of just

portfolio our pipeline $X done billion team And right has in I on been I now strongest it's made a in and some and the comment over technology think of that we pipeline. Our paint us QX. use, want you ones to We on quality But funding time, of done has from the with we terms the then towards side. expanding team And from performance, very and deals flexible that in numbers that what more is to And dollars. that's saw terms aggressive pipeline to the companies. the investments commitment our quality were we've QX. the job after, building existing life the think portfolio weighted perspective, we a want great and to new And perspective trying both get in creative, the investments. strong investments seen in sciences as a with new to those finding allow we go both and mentioned respect in had call, that solutions


next the Your from Devin with line Ryan JMP. comes question if

open. is line Your

Devin Ryan

Good evening, everyone.

Scott Bluestein


Devin Ryan

my little maybe starting been questions a sec have hit scrutiny. maybe the to asked of one indigestion additional and some, Most when SPAC of mark, on bit just you're

some the of I'm how of things things SPAC to market just expectations just process. curious just that any with boom, at And other there companies kind you slows in in if point kind down, going affecting of with of some are have in for be forward? developments your things that or may picture all that the kind the considerations of guys bigger So

Scott Bluestein

around announced that much some we transactions say slowdown creating now some all. that in a positions tell of I to companies. seen Sure. a We're certain but accounting are days. SPAC legacy issues not There's to have we are backup within has now, of the our have Right a filings. there related think would XX have to of is process. here issues that certainly monitoring that at a that review. portfolio, it's companies over for in the The warrant primarily There's new terms you five I backup terms is SEC And pretty fair bit SPAC slowdown of XX closely. in SEC raising little market a been last

as of conversations additional are the that process All of in other remain those transaction. companies current date. And we're back several portfolio force of aware an active

we're monitoring it. So

are aware broader slowdown that not our have seen We market, in impact we portfolio that yet. a but of

Devin Ryan

follow what size a just And -- that funds, you terrific. then the can other on expected credit any if is be institutional kind Okay, up color of cadence quick helpful? of that. regulations obviously and that on private just on would And investment

Scott Bluestein


a So initial at to credit private of it's non-registered fund time not size this institutional disclose the the We're going fund. the at least fund. for

that around up, level As ramps RIA fund the we make managing. AUM what of will disclosure is

the bigger I that comment initial invest would additional powder of $XXX several fund is gives make think I to with. picture dry that this million us

should one funds, larger private to explore differentiated the funds and very It us give the accretive models. to to us some new And us future be transactions, us as ability potentially it select into offer it should the go to ability should differentiated time potential over It expect expand give to structures to ability give the smaller the pricing We platform. after Hercules after some transactions. the go also to first the and should ability well. give verticals

And terms HTGC business. and something it's of been something in the it's number a for we've on of excited very we're that So investment working that about years. diversifying expanding

Devin Ryan

you taking appreciate congratulations Well, great. and questions. my Okay,

Scott Bluestein

Sure. Thanks.



next Lynch with KBW. the comes Your line from of question Ryan

Your is now line open?

Ryan Lynch

Hey, good afternoon, guys.

that to And is ways what at strategy raised. talk take getting you sizes HTGC that in to what HTGC? and is guys commitment what just fund of Can sort I just at potential had different somewhat you allow comparative strategy I'm what on your it deal that will at will if currently the opportunities about strategy, larger to Or up? basically open that is, one, First you the just new borrowers? the one the strategy private is that another down run same

Scott Bluestein

Sure, Ryan.

see an and managed have us the expanding of Having will being terms Initially that challenges investment some issues growing restrictions certain and both. number we've for are strategy. with and credit is more potentially internally having of private in there deal ancillary allow we historical and it's the complimentary Overtime, think From this to answer a BDC. and expect allow the to platform. classes, those existing private I diversifying allow complimentary had it's very fund us covered to years, to do, investment to manage initially, is us it of and that doing. to us that asset I what be of of we're able internally potentially ancillary into at business just you're we to strategy we verticals. otherwise new fund take not very will think BDC And is advantage new would what to credit the the But that the may structure. managed least opportunities go because mitigate to going

Ryan Lynch

Okay, understood.

strong You mentioned of really plus a deals. pipeline, billion

it given like equity seems be the when so, could pipeline pipeline, space, that debt route of versus Are venture backdrop? the deal could really side? what that of the financing? that about and companies a we're just are and company Are very route conversations a a said, talking the venture already sort big also use just or companies, deal competitor go the are companies pipeline. guess good determine a you're could just because very high-quality with debt ecosystem, that's big having, You these venture valuations well that I potential high-quality that these that as strong capital what been companies raised amount go the pipeline? the that these those in your to the of in into characteristics you financing of use And chance that guys a as the equity

Scott Bluestein

also the are round for and we a seen equity question, last financing burn public capital, I or to a and say this now the continuing investing perspective right market are perspective. to capital. that the private our and It's they three a years, for of Ryan. a voracious this from in, in invest the and both we've that, And two in great markets, continuing companies said need look, there's are have would growth, over they no we've calls biggest competitor is question the from now

you're with cases, as capital. majority opportunities rounds think competing team may state. see right equity with a at priced meaningful capitalized is for continuing trying solutions are as sides. structured But from that that these still their companies tailored we of going us. long it equity these yes, quality lot flexible, that's find well in to time equity and I to worked raised of have appropriately. the pretty capital And both many at companies what creative, debt our raise to are that aggressive that looking And to doing, So, what are that's to supplement custom of a and structured recently, spending choose be now Yes, continue can the

terms that what include of pipeline. In we in

that that with, We are use it's least working system backed are sort viable looking in that capital, comfortable are companies a markets had include of believe that pipeline by number institutional investors to we we we opportunity. that And that in where that companies an or pursuing, have are interested companies we that raise and the we sectors debt to conversation opportunities. at are with have one we that company in internal are companies track

Ryan Lynch

for the That's really appreciate Okay. time I this helpful me. all color. afternoon. That's

Scott Bluestein

Ryan. Thanks, Sure.


B. the of from comes Your next Sarkis question Sherbetchyan Riley line with Securities.

open. now is line Your

Sarkis Sherbetchyan

here Good question this afternoon, morning. my and taking thanks for

of billion that's think dollar quarter do touch as for going pipeline think wanted you ‘XX? the originations of mentioned fiscal out Just that the you Do And you to cadence about quarter. on be first in with expect how origination to second play to throughout activity line we levels?

Scott Bluestein

already In QX We're of in the to subsequent April million commitments going obviously the through closed fundings of that commitments. XX. guidance terms any fact not provide we highlighted events disclosure, Sarkis. quarter-to-date Sure, we've $XXX or

that XX. be to non-binding another we pipeline, million still but optimistic another strong April sheets, signed closed where $XXX the us term feel will numbers, from spectrum the be is perspective, that to million fundings gets have up and I With $XXX QX commitments through pending of that our determined. think, end are approximately pretty in have we and quarter We

Our focus is on quality.

the making is on and sure structured focus Our is documented. documentation that appropriately

things slip quarter-over-quarter. sometimes And

our of gives very commitments. the ability terms on or a commitments. us fundings to strong So that manage I in tremendous confidence But business we think terms think have quarterly of don't I pipeline year in quarterly

Sarkis Sherbetchyan

for what at what the speak the a thanks providing or feel economic of if And contribution here the comfortable just generation? with us you can at scale more you income in to BDC to would those great, terms have planned that. follow maybe up along And Maybe point fee Thank you. on Advisor. Now, want to stuffs? metrics

Seth Meyer

sure. Yeah,

So about initially, cost the be will sharing. QX the that you contribution $XXX,XXX. main saw we in was Like expect

the dividend a it'll Based income expect the similar be So then amount and performance next just that initially, then a towards a allocated, going a some raise dividend that's of I we may start take and would the generate XXXX hope. cost we reimbursement eventually to the are to the way of a the that that's we in cost the eventually the that to we about enough time funds see, of million, stream it dividends on sharing BDC. being to happen under But cover would accruing as of based midpoint on costs to allocation stream. might fund, would costs But QX, and think BDC.

Sarkis Sherbetchyan

you. Great, thank


line Your Casey the Alexander with of next Compass comes from question Point.

Your now line open. is

Casey Alexander

that RIA lot Good One here. I two the is schedule no Yeah, do have questions, morning. of million the basis value but of a with cost investments. $X.X there is is in showing of my

how that arrived value So at? curious just was I'm

Seth Meyer

discounted a originations the when went prior based first really And Yeah, and And could of see raised. we've available other that the we dividend cash valuations a are on RIA analysis that we through then And did we was fund did a occur back occur? it it. result of publicly question we to and based that Casey, to compare flow the discounted in the flows way analysis sure so sense. that developing, we fund to on allocations that comparison cash that And sure. occur. expect flow the as made going We made it

Casey Alexander


portfolio fees done and So eventually be the your that will out of the sort this based of is with a upon generated. DCF, filling expectation

So that great RIA. managed until correct? the other to are for Is by variation that we funds look that are shouldn't there a being number

Seth Meyer

good That's Casey. precisely right, analysis. That's a

Casey Alexander

million. the Okay, the great. $XXX that after the is, second pre-payments net were quarter question originations about My given for

know of large the of fund into how size which went So capital don't the a external to seems funds, that the the about originations But net large the XX% I Hercules amount. to relative like the committed portfolio. fund’s is

have my you curious is allocation you what vehicle, of sort Because investment So I'm when that understanding the have some is? policy a co need allocation to a stated policy.

Scott Bluestein

Casey. Sure,

fairly the But and also depending your point to the of in do Deals investment So will we looking the liquidity. that, and flexibility change about allocated. fundings fundings and way be $XXX think a new equal would just and the XX% million, policy. million of higher conservative on have than strategy way overall is think available allocation I ability certainly we were about at look based quarter it. diversification sector, focus. roughly adopted the the it allocated out, footing we've $XX on at We primarily I number the we're

to you So your XX% to in were XX% you're the about that versus speaking XX% comments.

Casey Alexander

it. fund Right, to coming have prepayments any but the new doesn't back


to So, I in drawing it's getting but away of understand new the is investments from itself. it only essence, XX% BDC the fundings,

Scott Bluestein

managed that's of owned is it that before. an wholly deals are have up BDC the the there could caveats two, it that a initial not externally two at investing taking have lot And no level an do a on RIA. not private fund. probably as is This we now ramps vehicle we Number away fund done. to If us. by managed investments is this able some otherwise be didn't that one, the alongside private mentioned Sure, then a private with basis we're to we potentially

riA of from activities XXX% BDC. the of and public shareholders the benefit accrues accretes the the So to

Casey Alexander

I questions. your right. All you. great. taking Okay, my Thank appreciate


line question Ladenburg comes Christopher Nolan from Your next with Thalmann. the at

is line now open. Your

Christopher Nolan

again. How much Hi, quick RIA to the on question with? leverage going entity that run-off you're

Seth Meyer

ratio So one we're the the life one a over going of of to to fund. target leverage

Christopher Nolan

the the And supplemental in declare Gotcha. why first quarter? full dividend

Scott Bluestein

that years, $X.XX call our bit on QX respect clearly we spillover given we was a the of the competence think number sitting calls. stated a pretty we've establish a policy clarity It’s and little to provided goals that last XXXX to for continuity And was more talked those I $X.XX the our And something on on couple it about comfort that and one sort trajectory done supplemental and a we quarter of still our would bit little is the for is give two which think our last was thing bit more more to do. little $X.XX XXXX. course quarterly it that to that of clarity what distributions a base are things. record an with distribution. shareholders of $X.XX. on for we've an on two quarters the two appropriate for that versus that us the the We six of in we shareholders, visibility consistency at eight business more thought one, level in a just our based appropriate per Number declares This And two, provides of number be the shareholders basis. to which of declare to things, a thought the important

Christopher Nolan

specifically? law, the would HTGC tax. they debt become and what were ministration be what think outlined an Biden venture would the to gains is market impact If Finally, on discussing increasing the you that capital the also significantly

Scott Bluestein

impact to Yeah, honestly I that see HTGC. an of much with respect think you'll don't

will next it's perspective and on still it terms it It's be an native watching, reform a or couple our has could but the And broader business growth still just things out something that through an of we'll we're material And think early. a from how think process. has markets. of a venture overall TBD a there we it of in tax quarters. over think our the much market. change perspective. I just impact closely don't These play watch think very of a I of market, debt kind very on bit little sort lot impact from the go not to I It's

Christopher Nolan

Thanks, Scott.

Scott Bluestein



Your of next with Jefferies. from John question the line comes Hecht

is now open. line Your

John Hecht

Yeah, do to I'll last the is there of, kind you and them. of on going going what is was thing pretty ask question pandemic. technology? Or over what last focusing change I through of the in you think the you're your I to going ask pretty observed is for kind living your we've biotech guess, portfolio any Scott, one investing year, it's similar you channels opportunity was But in versus forward? other within what set to the consistent -- versus be think given

Scott Bluestein

made it's it's focus that's Yeah, us what's built successful. consistent. on pretty with I a The diversification. this business, we And way think think I

on have advantage. making we irrespective transactions, technology those all diversified, that the broadly technology, to sort life stage ability have on of sure a sponsor-backed have venture later going we on ability three to do on ability tremendous outperform, focus of competitive continue We to to the to to focus on focus is the we perspective. sciences, things the the And we're going to of ability ability and is from focus a business what's the macro have having

John Hecht

very thanks Perfect, much.

Scott Bluestein

Sure. Thanks, John.


Fargo. from [Operator of Instructions] Your Wells question with the comes O'Shea next Finian line

open. line now Your is

Finian O'Shea

on with moment a dialogue guys, ago. Hi, up a your Casey just follow

My policy at cash that's the newer understanding be rather on is based based on On where available capital be fund applicable would advantaged. given is leveraged on RIA, think than fund the any co-investment you that it liquidity. might allocation is said -- I the convention

allocation it so Is is why new the So described? normal is that case? as fund that or the much got

Scott Bluestein

have I was doing now normal. things able the would our have vehicles. And it's on again that at do allocation business. -- think was its It pursuant as, was about to away, available own. approved both likely deals cases, In wouldn't are these was And challenges I not right? to most BDC that again, have being otherwise was it not we're that deal done. issues the the or of gross where vehicle, of we could across taken board primary fairly It it is XX% look every these to with it allocated. deals we the driver fundings the the being think I liquidity done was policy XX% it of It

Finian O'Shea

Thank Okay, you. that's helpful.

Scott Bluestein

thanks. Sure,


Presentors, no we have Instructions] question And [Operator time. this at please further continue.

Scott Bluestein

We look operator. you, Thank reporting for to our QX, call. to forward thanks earnings joining Thank our call And you. next our everyone XXXX progress on today.


call. participating. Ladies and for gentlemen, this conference Thank concludes you today's

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