TriplePoint Venture Growth BDC Q1 2025 Earnings Call Transcript

Quartr
Provided by Quartr
May 7, 2025

Key Takeaways

  • TriplePoint signed $315 million of term sheets in Q1 and has already funded over $50 million in Q2, keeping it on track to meet its $25–50 million quarterly funding guidance.
  • The portfolio is being actively diversified into high-momentum sectors like AI, with new investments in companies such as Tetriscience, ThoughtSpot, and Airdo.
  • Net investment income was $0.27 per share versus a $0.30 per share dividend, highlighting that distribution coverage will depend on portfolio growth and prepayment activity.
  • Management notes tariff uncertainties could affect a handful of consumer and e-commerce borrowers but so far has found no material impact and continues to monitor developments.
  • With $337 million of liquidity and a leverage ratio of 1.1× (target 1.3–1.4×), TriplePoint plans to use debt capacity to expand its portfolio rather than pursue share repurchases.
AI Generated. May Contain Errors.
Earnings Conference Call
TriplePoint Venture Growth BDC Q1 2025
00:00 / 00:00

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Operator

Good afternoon, ladies and gentlemen. Welcome to the TriplePoint Venture Growth BDC Corp First Quarter twenty twenty five Earnings Conference Call. At this time, all lines have been placed in a listen only mode. After the speakers' remarks, there will be an opportunity to ask questions and instructions will follow at that time. This conference is being recorded and a replay of the call will be available in an audio webcast on the TriplePoint Venture Growth website.

Operator

Company management is pleased to share with you the company's results for the first quarter of twenty twenty five. Today, representing the company is Jim Labe, Chief Executive Officer and Chairman of the Board Sagil Srivastava, President and Chief Investment Officer and Mike Wilhelms, Chief Financial Officer. Before I turn the call over to Mr. LeBae, 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 relate to future events or the company's future performance or financial condition, which are considered forward looking statements under federal securities law. You are asked to refer to the company's most recent filings with the Securities and Exchange Commission for important factors that could cause actual results to differ materially from these statements.

Operator

The company does not undertake any obligation to update any forward looking statements or projections unless required by law. Investors are cautioned not to place undue reliance on any forward looking statements made during the call, which reflects 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. LeBae.

James Labe
James Labe
Co-Founder, Chairman and Chief Executive Officer at TriplePoint Venture Growth BDC

Thank you, operator. Good afternoon, everyone, and welcome to TPVG's first quarter earnings call. Following some positive developments in the venture markets in the fourth quarter, venture capital deal making continues to absorb and assess the uncertainties over tariffs and the broader equity market sell off and macroeconomic volatility and the impacts that all of these have on their portfolio companies. With that said, investment activity remains underway and we're experiencing strong demand from quality venture growth companies, some of which is fueled by this market. Given this backdrop, we continue to remain selective and capitalize on attractive lending opportunities, particularly in the sectors we're focused on, as we stay on our course of portfolio diversification and investment sector rotation.

James Labe
James Labe
Co-Founder, Chairman and Chief Executive Officer at TriplePoint Venture Growth BDC

We also remain focused on proactively managing the portfolio and maintaining our strong liquidity to position TPVG for the future. Q1 signed term sheets with venture growth stage companies at our sponsor TriplePoint Capital finished strong and marked the second consecutive quarter of more than $300,000,000 in signed term sheets at venture growth stage companies. It now totals almost $640,000,000 during the last two quarters. Debt commitment to TPVG also increased in Q1 as new debt commitments to venture growth stage companies in the quarter reached two year highs and this strong pace continues into this quarter. Fundings for the quarter landed at 28,000,000 and while we're only slightly past one third of the way into the current second quarter, we've already funded more than 50,000,000 The Q2 fundings to date compare favorably with our quarterly fundings guidance and we believe starts to reflect the early results of the increases we're experiencing in the signed term sheets, commitments, fundings and pipeline, as well as the increasing investment activity by our select venture capital investors over the last few quarters.

James Labe
James Labe
Co-Founder, Chairman and Chief Executive Officer at TriplePoint Venture Growth BDC

Activity in our market is being driven both by the entrepreneurs and the investors who increasingly recognize venture lending as a strategic tool. Some drivers behind the increasing demand we're experiencing, including the mounting backlog of high quality companies in the IPO queue waiting for public markets to reopen, quality growth stage companies pushing off timing of their next equity financing round, companies executing on their growth plans, those seeking financing for accretive and opportunistic acquisitions and given these market volatilities, quality companies previously without debt, whom are turning increasingly towards debt as part of their financing and capitalization strategies in this market. Going forward, we expect this strengthening demand for venture lending to continue throughout the year, fueling our expectations of renewed portfolio growth in 2025. As these venture growth companies seek strategic financing for these reasons and amid the fluctuating capital markets and macroeconomic uncertainties. During the quarter, we generated net investment income of $0.27 per share and declared our regular $0.30 per share dividend.

James Labe
James Labe
Co-Founder, Chairman and Chief Executive Officer at TriplePoint Venture Growth BDC

We're pleased with the pace of our signed term sheets and fundings to date and recognize that portfolio growth as well as prepayment activity over the course of the year will have a material impact on our ability to cover our distribution. We will continue to be mindful of both as the year progresses. Turning to the portfolio. For the first quarter, there were no credit downgrades and there was one upgrade. No new companies were added to the watch list.

James Labe
James Labe
Co-Founder, Chairman and Chief Executive Officer at TriplePoint Venture Growth BDC

We will continue to be vigilant during these market conditions and we'll discuss credit in more detail shortly. One portfolio note to address are these tariffs, which continue to be unpredictable and whose changing nature make it a difficult exercise to fully assess the impact on our portfolio. Based on our analysis of the portfolio and subject to any future tariff announcements and implementation changes, which are evolving daily and subject to country specific negotiations, we believe we have a small handful of TPVG companies with exposure and primarily those consumer and e commerce businesses sourcing from overseas, which Sajal will cover in more detail. Aside from this, we've been following our well prescribed path to portfolio diversification and industry sector rotation, continuing to actively add new borrowers in durable high potential sectors such as AI. Many companies we added to our portfolio this past quarter are reflective of this investor shift towards AI, including Tetriscience, ThoughtSpot and Airdo.

James Labe
James Labe
Co-Founder, Chairman and Chief Executive Officer at TriplePoint Venture Growth BDC

Tetriscience is an AI native data management solution for scientific use cases. ThoughtSpot is an AI analytics platform for all enterprises and Airdo is accelerating the performance of large AI models and infrastructure. We're excited by the market opportunity AI presents and believe AI will be a massive megatrend that persists for many years to come. Other companies reflecting our continued diversification and investment sector rotation include those operating in innovative and specialized software solutions, deep tech, machine learning, robotics, cybersecurity and satellite technologies, InsurTech, FinTech, health tech and others. All these sectors offer exciting investment opportunities and are experiencing strong investment momentum.

James Labe
James Labe
Co-Founder, Chairman and Chief Executive Officer at TriplePoint Venture Growth BDC

As we've stated on past calls, our focus in these new sectors continues to be on companies that have recently raised capital, have ample cash runways, backing from our select venture capital investors and prudent management teams with business models that have attractive unit economics and high retention rates. We continue to place an emphasis on today's stronger companies and opportunities in this market, including better capitalized growth stage companies, those with higher levels of revenues, promising growth trajectories, visibility to profitability and business models reflective of today's venture market conditions and valuations. We also continue to factor in and consider both potential tariff issues that could be faced and the possibility of any future macroeconomic recessionary effects when evaluating prospects as well, including actively avoiding sectors that are experiencing first order direct effects from tariffs or government spending reductions. While we'll continue to maintain our capital discipline and opt for quality over quantity, given the market conditions and the pickup in investment activity by our select venture investors, we see increased deployment of our capital and venture growth stage investments, concentrating solely on our investment sectors of focus, as well as increasing portfolio developments through the year, all of which we believe will enable us to continue to execute on our plan to increase TPVG scale, durability, portfolio diversification and income generating assets with the objective to grow the portfolio.

James Labe
James Labe
Co-Founder, Chairman and Chief Executive Officer at TriplePoint Venture Growth BDC

With that, let me turn the call over to Sajal.

Sajal Srivastava
Sajal Srivastava
Co-Founder, President and CIO at TriplePoint Venture Growth BDC

Thank you, Jim, and good afternoon. Regarding investment portfolio activity during Q1, TriplePoint Capital signed $315,000,000 of term sheets with venture growth stage companies compared to $130,000,000 of term sheets in Q1 twenty twenty four and $323,000,000 in Q4. With regards to new investment allocation to TPVG during the first quarter, we allocated $77,000,000 in new commitments with five companies to TPVG compared to $10,000,000 in Q1 twenty twenty four and seventy two million dollars in Q4. '80 percent of the commitments made during the first quarter were to new portfolio companies in the AI and enterprise software sectors, reflecting our focus on obligor diversification and sector rotation. During the first quarter, we funded $28,000,000 in debt investments to five companies as compared to $14,000,000 to three companies in Q1 and $50,000,000 to three companies in Q4.

Sajal Srivastava
Sajal Srivastava
Co-Founder, President and CIO at TriplePoint Venture Growth BDC

These funded investments carried a weighted average annualized portfolio yield of 13.3%, down slightly from 13.5% in Q4. TBVG was at the low end of our guided range for fundings, primarily due to timing, with a number of fundings occurring immediately after quarter end as demonstrated by our $50,000,000 of fundings already here in the second quarter. During Q1, we had $17,000,000 of loan prepayments, primarily for more seasoned loans, resulting in an overall weighted average portfolio yield of 14.4% as compared to core portfolio yield of 14.1%, excluding prepayments, which was slightly down from core portfolio yield of 14.2%, excluding prepayments in Q4. '4 portfolio companies with debt outstanding raised $137,000,000 during the quarter compared to six portfolio companies raising $96,000,000 in Q4. As of quarter end, we held warrants in 102 companies and equity investments in 48 companies with a total fair value of $117,000,000 flat from Q4.

Sajal Srivastava
Sajal Srivastava
Co-Founder, President and CIO at TriplePoint Venture Growth BDC

As Jim mentioned, no new companies were added to our credit watch list during the quarter and the weighted average sorry, the weighted investment ranking of our debt investment portfolio was 2.12 as compared to 2.27 as of the end of the prior quarter. One company, DOT Fiddari, was upgraded from category three to category two as part of its announced merger with Luquiero, where our loans were assumed in full and extended. The combined business, which will continue to focus exclusively on European markets, announced they are projected to generate over $130,000,000 in revenues this year. We continue to have the same five companies in our category four ranking. These are not new situations or reflective of our recent originations.

Sajal Srivastava
Sajal Srivastava
Co-Founder, President and CIO at TriplePoint Venture Growth BDC

These are companies that we generally identified years ago as challenged, and we continue to work with them and their investors to target profitability, liquidity and or exit events. With regards to tariffs, as Jim mentioned, although the situation is evolving, we have reviewed our portfolio to identify those companies potentially impacted and continue to monitor the potential near term and long term impact. We have not seen any impact to our AI, software, B2B and enterprise focused portfolio companies and believe that the risk, if any, lies with our consumer and e commerce companies. We benefit from the fact that many of our consumer and e commerce companies are either European companies, primarily selling in Europe or U. S.

Sajal Srivastava
Sajal Srivastava
Co-Founder, President and CIO at TriplePoint Venture Growth BDC

Companies that source locally. The few U. S. And European companies that we have determined may have some U. S.

Sajal Srivastava
Sajal Srivastava
Co-Founder, President and CIO at TriplePoint Venture Growth BDC

Tariff exposure are primarily companies that source their products throughout Asia and sell in The U. S. Most of them are actively working to see if there are opportunities to change their supply chains and source products in lower tariff regions, increase pricing and or expand their sales outside of The U. S. We expect to know more as the administration's long term approach is solidified, but we as of yet have not seen any material business impact to these few companies, but they are all preparing for it.

Sajal Srivastava
Sajal Srivastava
Co-Founder, President and CIO at TriplePoint Venture Growth BDC

On a more broader basis, we are seeing a significant increase in the volatility in the market and macro activity. As of yet, we have not seen material changes in venture capital equity investment activity from traditional venture capital investors. Although there was optimism earlier in the year that the IPO and M and A markets would open soon in 2025, we believe that the capital markets are closed for the time being, which is creating increased demand for investment capital, including debt financing. We expect more will be known over the course of the year. But as Jim mentioned, we continue to see and manage our pipeline in a disciplined fashion and probe prospective companies and the potential impact of these sources of volatility on their businesses as we determine whether they are worthy of our capital.

Sajal Srivastava
Sajal Srivastava
Co-Founder, President and CIO at TriplePoint Venture Growth BDC

As we step back, we saw improving market conditions in the venture capital market in the first quarter, both from a deal activity basis and from an equity fundraising perspective and believe those events will bode well for the outlook for our obligors in their credit quality. But given the recent volatility and the geopolitical uncertainty, we will continue to real time assess portfolio company performance and outlook over the course of the year and update our marks and values accordingly. During the quarter, we also participated in Revolut's secondary process, selling $2,300,000 of our holdings, resulting in a realized gain of $2,300,000 on our initial investment. The secondary process was originally announced in August 2024 at a $45,000,000,000 valuation, primarily for Revolut employees. We continue to hold $34,400,000 of warrants and equity at fair value in Revolut.

Sajal Srivastava
Sajal Srivastava
Co-Founder, President and CIO at TriplePoint Venture Growth BDC

As some of our investors may be aware, Revolut just filed its annual financials in April and announced revenues of $4,000,000,000 up 72% and net profit of $1,000,000,000 roughly double from 2023. In closing, we remain focused on executing our plan for position TBBG for 2025 and beyond by building overall scale, diversification and durability, targeting well positioned and well capitalized new customers in attractive sectors and increasing the pace of new commitments and investment fundings. We will remain disciplined and mindful of the volatile market environment as we continue along the path with the goal of driving TPVG's earning power over the course of 2020. With that, I will now turn the call over to Mike.

Mike Wilhelms
Mike Wilhelms
CFO at TriplePoint Venture Growth BDC

Thank you, Sajal, and hello, everyone. During the first quarter, we funded debt investments totaling $28,000,000 and had a relatively low level of prepayments and early repayments of $18,000,000 when compared to recent quarters, which resulted in an increase to the debt portfolio by $5,000,000 With the strong investment pipeline previously mentioned by Jim and the company's current liquidity strength, we believe we are well positioned to grow our portfolio and create long term shareholder value. We ended the quarter with $117,000,000 of floating rate unfunded investment commitments, of which $19,000,000 was dependent upon certain portfolio companies reaching specific milestones. This represents a 60% increase from a year ago, reflecting the continued expansion of our investment pipeline over recent quarters. TPVG has ample liquidity to support our existing portfolio companies and satisfy our unfunded commitments.

Mike Wilhelms
Mike Wilhelms
CFO at TriplePoint Venture Growth BDC

As of 03/31/2025, the company had total liquidity of $337,000,000 consisting of cash, cash equivalents and restricted cash of $42,000,000 and available capacity under its revolving credit facility of $295,000,000 Of the $295,000,000 of available capacity under the revolving credit facility, there was $124,000,000 available borrowing base that could be drawn as of 03/31/2025. We reduced our leverage profile during the quarter ending with a leverage ratio of 1.1 times. After netting the cash on our balance sheet, our net leverage stood at 0.97 times. Given the cash we have on our balance sheet, the available borrowing base at quarter end and our target leverage range of 1.3 times to 1.4 times, we believe we have the funding capacity to meaningfully grow our investment portfolio. Turning to our operating results.

Mike Wilhelms
Mike Wilhelms
CFO at TriplePoint Venture Growth BDC

For the first quarter, total investment income was $22,500,000 with a portfolio yield of 14.4% as compared to $29,300,000 with a portfolio yield of 15.4% for the prior year period. The decrease in total investment income was due primarily to a lower average debt portfolio as compared to a year ago, while the lower portfolio yield reflected the impact of prime rate reductions and less accelerated prepayment income in the quarter. For the first quarter, operating expenses were $11,700,000 as compared to $13,800,000 for the prior year period. These expenses consisted of $6,400,000 of interest expense, 3,300,000.0 of base management fees, 602,000 of administrative agreement expenses and $1,400,000 of G and A expenses. Due to the shareholder friendly total return requirement under the incentive fees, there were no incentive income sorry, there were no income incentive fees during the first quarter of twenty twenty five and 2024.

Mike Wilhelms
Mike Wilhelms
CFO at TriplePoint Venture Growth BDC

We expect limited to no incentive fee expense during the remainder of 2025. The company's net investment income for the first quarter of twenty twenty five was $10,700,000 or $0.27 per share as compared to a net investment income of $15,500,000 or $0.41 per share for the first quarter of twenty twenty four. For the first quarter of twenty twenty five, net realized gains on investments totaled $2,300,000 resulting primarily from the partial sale of equity in one portfolio company. During the first quarter of twenty twenty four, the company recognized net realized losses on investments of 8,800,000.0 Net change in unrealized losses and investments was $300,000 for the current quarter, consisting of $2,500,000 of net unrealized losses from the reversal of previously recorded unrealized gains on investments realized during the period and $1,600,000 on the debt investment portfolio resulting from fair value adjustments, offset by $2,600,000 of net unrealized gains from foreign currency adjustments and $1,200,000 of net unrealized gains on the existing warrant and equity portfolio resulting from fair value adjustments. During the first quarter of twenty twenty four, the company recognized net unrealized gains on investments of $1,300,000 The company's net increase in net assets resulting from operations for the first quarter of twenty twenty five was $12,700,000 or $0.32 per share as compared to net increase in net assets resulting from operations of $8,000,000 or $0.21 per share for the first quarter of twenty twenty four.

Mike Wilhelms
Mike Wilhelms
CFO at TriplePoint Venture Growth BDC

As of 03/31/2025, net asset value was $347,000,000 or $8.62 per share compared to $345,700,000 or $8.61 per share as of 12/31/2024. On April 30, our Board declared a regular quarterly dividend of $0.30 per share with a record date of June 16 to be paid on June 30. We continue to retain sizable undistributed income with estimated spillover income of $42,500,000 or $1.06 per share at the end of the period. We are focused on increasing our net investment income in the coming quarters through debt investment portfolio growth and increasing balance sheet leverage. Now an update on our debt capital structure and balance sheet leverage.

Mike Wilhelms
Mike Wilhelms
CFO at TriplePoint Venture Growth BDC

As of quarter end, total debt outstanding was $380,000,000 consisting of $375,000,000 in fixed rate investment grade term notes and $5,000,000 drawn on our $300,000,000 revolving credit facility. During the quarter, we raised $50,000,000 in aggregate principal through a private issuance of senior unsecured investment grade notes due February 2028. In March, '70 million of senior unsecured investment grade notes matured and was fully repaid. This net reduction in fixed rate term debt reduced our leverage ratio, which declined from 1.16 times as of 12/31/2024 to 1.1 times as of 03/31/2025. We have three term debt maturities scheduled for March 2026, February '20 '20 '7 and February 2028.

Mike Wilhelms
Mike Wilhelms
CFO at TriplePoint Venture Growth BDC

Later this year, we plan to evaluate refinancing options for the $200,000,000 of notes maturing in March 2026. In April 2025, DBRS reaffirmed TPVG's investment grade rating in connection with the fixed rate term notes, assigning a BBB low long term issuer rating with a stable trend outlook. This completes our prepared remarks today. And so operator, could you please open the line for questions at this time?

Operator

Thank you. We will now begin the question and answer session. And our first question comes from Crispin Love from Piper Sandler. Please go ahead.

Crispin Love
Crispin Love
Director at Piper Sandler Companies

Thank you and good afternoon. First, can you share your fundings outlook for the second quarter and beyond? You called out more than $50,000,000 in funding so far in the second quarter. So have you updated your 25,000,000 to $50,000,000 quarterly fundings guide expectations for later in the year? And apologies if I missed that in the prepared remarks.

Sajal Srivastava
Sajal Srivastava
Co-Founder, President and CIO at TriplePoint Venture Growth BDC

Chris. This is Sajal. I'll take it. So as we said, yes, our outlook for the first half of the year is 25,000,000 to $50,000,000 a quarter. And so we have not changed the outlook for Q2 on a full year or sorry, mid year basis when we combine Q1 and Q2.

Sajal Srivastava
Sajal Srivastava
Co-Founder, President and CIO at TriplePoint Venture Growth BDC

So we think we'll make up the shortfall for Q1 here in Q2.

Crispin Love
Crispin Love
Director at Piper Sandler Companies

Okay. Sounds good. And then just looking at the credit metrics, first quarter appears to be pretty stable. No material losses in realized or unrealized and the migration in your credit categories was pretty positive. So can you speak to your views on credit today, the outlook going forward, especially with the environment being much different today versus the end of the first quarter?

Sajal Srivastava
Sajal Srivastava
Co-Founder, President and CIO at TriplePoint Venture Growth BDC

Sure. And I as I said in my prepared remarks, we started off the year seeing really improved market conditions in the venture market. Our portfolio companies increased fundraising activity, increased investment activity by VCs, positive outlook for the capital markets and the exit environment. And so again, expecting that to bode well for our operators and credit quality. But obviously, with Liberation Day and other volatility and geopolitical uncertainty, it's hard to assess that's a real time impact.

Sajal Srivastava
Sajal Srivastava
Co-Founder, President and CIO at TriplePoint Venture Growth BDC

So I would say, we're on top of the portfolio monitoring company performance and outlook and then we'll adjust accordingly. But also, as I said, listen, we have not seen an immediate impact of tariffs so far to those companies that would be impacted or have some impact. So I think we're taking it day by day real time, but we have not seen a material impact. But I think it's hard to comment and outlook for the rest of the year right now just given the volatile market conditions.

Crispin Love
Crispin Love
Director at Piper Sandler Companies

Great. Thank you. All makes sense. I appreciate the comments, Sajal.

Operator

The next question comes from Doug Harter from UBS. Please go ahead.

Douglas Harter
Douglas Harter
Equity Research Analyst at UBS Group

Thanks. Hoping you could talk about your willingness to do share repurchase as a way to kind of bring leverage up to the target range versus making new investments and how you think about that trade off? Mike, do you want to take that question?

Mike Wilhelms
Mike Wilhelms
CFO at TriplePoint Venture Growth BDC

Yes. I mean, we're as I mentioned in my prepared remarks, we have a target leverage of 1.3 to 1.4. So for us, we're looking to, as we've stated throughout the prepared remarks, grow the portfolio and we plan to do that with debt capital rather than repurchasing any shares that would have the same effect of bringing our leverage up.

Douglas Harter
Douglas Harter
Equity Research Analyst at UBS Group

Okay. Thank you.

Operator

The next question comes from Casey Alexander from Compass Point. Please go ahead.

Casey Alexander
Senior Vice President & Research Analyst at Compass Point Research & Trading LLC

Yes. Thanks for taking my questions. I've got a few here. Sajal, in that guide, normally, you give us some view of what you expect repayments and prepayments might be during the quarter. Do you have any view of that in the second quarter?

Sajal Srivastava
Sajal Srivastava
Co-Founder, President and CIO at TriplePoint Venture Growth BDC

Yes. I think we Casey, we still expect on average one to two prepayments per quarter. I think as we saw in Q1 and in Q4, we're seeing these are from older vintages. So the impact from an NII perspective is low. So we don't expect it to materially impact NII, but we still expect one to two a quarter.

Casey Alexander
Senior Vice President & Research Analyst at Compass Point Research & Trading LLC

Okay. And then secondly, curious how that was the sale of Revolut. This is like a multipronged question. I'm curious how you guys got in there because you're not actually employees. Did you have the opportunity to sell more?

Casey Alexander
Senior Vice President & Research Analyst at Compass Point Research & Trading LLC

And also how did the sale compare to your fourth quarter mark on those shares?

Sajal Srivastava
Sajal Srivastava
Co-Founder, President and CIO at TriplePoint Venture Growth BDC

Yes. So I'd say great Revolut launched this process, I believe it was August of twenty twenty four. And as mentioned, it was intended to be an employee only transaction. And then over the course of 2024, I guess, on strong investor demand, they opened it up to a very small percentage to its institutional investors. So we were able to participate through the thanks to Revolut, allowing us and other institutional investors to secondary a very, very small amount.

Sajal Srivastava
Sajal Srivastava
Co-Founder, President and CIO at TriplePoint Venture Growth BDC

So it was very much thanks to Revolut, and it's a very controlled process for secondary. So we don't see the opportunity unless Revolut opens it up again, which there's been some talk in the press about potentially another secondary, but it's all speculation at this point. And then, generally kind of on par with our mark, maybe a little bit of transaction costs, but believe generally in line.

Casey Alexander
Senior Vice President & Research Analyst at Compass Point Research & Trading LLC

So the 2,300,000.0 or $2,500,000 gain was mostly a reversal of previously unrealized

Sajal Srivastava
Sajal Srivastava
Co-Founder, President and CIO at TriplePoint Venture Growth BDC

Yes.

Casey Alexander
Senior Vice President & Research Analyst at Compass Point Research & Trading LLC

Okay.

Casey Alexander
Senior Vice President & Research Analyst at Compass Point Research & Trading LLC

Correct. Great. On Outfittery, it's great that it was upgraded. You I thought I heard you say I misunderstood because it sounded like the intention was for it to be repaid, but then I heard extended. And I'm not sure what's what there, whether you're using the transaction as an opportunity to exit that loan or if you're still going to be in it subsequent to the deal?

Sajal Srivastava
Sajal Srivastava
Co-Founder, President and CIO at TriplePoint Venture Growth BDC

Yes. No, as I mentioned in my remarks, our loan was assumed and our loan was extended. So we stayed in it was a private to private. So these are two private companies. So it wasn't a scenario to be paid off.

Sajal Srivastava
Sajal Srivastava
Co-Founder, President and CIO at TriplePoint Venture Growth BDC

It was a scenario where we now have the benefit of security being senior secured in an enterprise much larger now with a strong profitability profile.

Casey Alexander
Senior Vice President & Research Analyst at Compass Point Research & Trading LLC

Really? I mean, why would a private just a change of control, I thought, would automatically trigger an ability to demand repayment. Am I mistaken?

Sajal Srivastava
Sajal Srivastava
Co-Founder, President and CIO at TriplePoint Venture Growth BDC

Yes. It was again a coordinated consolidation of the company. So I would say it wasn't a scenario where we wanted to demand repayment or had the opportunity.

Casey Alexander
Senior Vice President & Research Analyst at Compass Point Research & Trading LLC

Okay. And then back to the share repurchase. I mean, the dividend yield on the stock is 20%. There is likely greater leverage for shareholders in a repurchase than there is in putting new money out. And you have in the past, in the few years after your initial IPO, you did do some substantial share repurchases.

Casey Alexander
Senior Vice President & Research Analyst at Compass Point Research & Trading LLC

I'm curious why the reluctance to do them now when the math clearly works in favor of shareholders if you do some share repurchases?

Sajal Srivastava
Sajal Srivastava
Co-Founder, President and CIO at TriplePoint Venture Growth BDC

Yes. I'll take that, Casey. And then Mike, you can jump in. But I'd say, as Jim talked to, given the pipeline and the line of sight, the portfolio funding, we can increase our leverage organically through deployment, and it's going to help achieve our objectives of portfolio diversification, obligor diversification and growing NII. So we think given the line of sight we have to near term portfolio growth, it's a better use.

Sajal Srivastava
Sajal Srivastava
Co-Founder, President and CIO at TriplePoint Venture Growth BDC

And then if we don't see that portfolio growth, then exploring other options and other ways to address the dividend yield, address being underlevered. But I think where we see the opportunity and the quality and achieving the other strategic long term objectives for TBDG makes sense to deploy in portfolio growth because it again, it helps us achieve some of the other elements of the playbook that we've articulated that are in the better long term interest of the stakeholders.

Operator

The next question comes from Brian McKenna from Citizens.

Brian Mckenna
Brian Mckenna
Director - Equity Research at Citizens JMP

I appreciate all the detail on quarter to date funding. Two more questions on that front. Apologize if I missed these. But any sense of the weighted average yield on these investments? I'm curious how this compares to 13.3% reported in the first quarter.

Brian Mckenna
Brian Mckenna
Director - Equity Research at Citizens JMP

And then what does the sector mix of these investments look like?

Sajal Srivastava
Sajal Srivastava
Co-Founder, President and CIO at TriplePoint Venture Growth BDC

Yes. I'll take this. So Brian, generally, the 13.3 is kind of consistent with where we were last quarter. So generally, the yield asset of the Q1 assets and what we're seeing here in Q2 as well, obviously, down year over year just given the Fed, the rates that have come down since a year ago. So I would say that kind of is dealing with the reality, but again, attracting high yielding, high quality assets.

Sajal Srivastava
Sajal Srivastava
Co-Founder, President and CIO at TriplePoint Venture Growth BDC

And then as we look at sector rotation, I think that's even we're very proud of the companies that we've added, particularly the last two quarters, we're not only the majority of our deployment has been into new obligors, but they've also been in new sectors or in sectors that we've been underrepresented such as AI and enterprise software. And really glad to increase our exposure to those other sectors and really solid, strong vertical sectors, particularly given the volatility in the market right now.

Brian Mckenna
Brian Mckenna
Director - Equity Research at Citizens JMP

Got it. That's helpful. And then I guess on the portfolio rotation, I mean, where are you in this process? Is there a way to think about how much more of the portfolio on a percent basis still needs to be rotated? I'm just trying to think through that a little bit more as well.

Sajal Srivastava
Sajal Srivastava
Co-Founder, President and CIO at TriplePoint Venture Growth BDC

Yes. I would say we still have a couple of quarters to go. I would say early in the journey, and it's not just about sector rotation, it's about portfolio scale. And so it's about increasing the earnings power of the business to ensure coverage of distribution. So I'd say early, hard at work.

Sajal Srivastava
Sajal Srivastava
Co-Founder, President and CIO at TriplePoint Venture Growth BDC

We're not going to rush it. We're going to continue to be disciplined as we look at opportunities. So I'd say those are our goals, but we're not going to get there overnight. We're going to take our time and do it methodically and thoughtfully.

Brian Mckenna
Brian Mckenna
Director - Equity Research at Citizens JMP

Okay. That's helpful. And then one more follow-up, if I may. Just a bigger picture question. So it feels like the industry and your business is finally on the other side of a pretty lengthy downturn here.

Brian Mckenna
Brian Mckenna
Director - Equity Research at Citizens JMP

TriplePoint has operated through a number of different cycles and operating environments over the past two decades. So reflecting back a little bit on the last few years, I mean, there anything that you've learned from this most recent downturn? Anything you maybe would have done differently from a portfolio or business perspective? And then ultimately, what are you doing today to make sure you're in the best position to navigate kind of any and all environments moving forward?

Sajal Srivastava
Sajal Srivastava
Co-Founder, President and CIO at TriplePoint Venture Growth BDC

Yes. I think we've answered this a couple of calls. Absolutely, always learning. So anyone that tells you that they haven't or shouldn't or won't it's not the way to run a credit business. So absolutely, there's been a fair amount of learning over the past couple of years.

Sajal Srivastava
Sajal Srivastava
Co-Founder, President and CIO at TriplePoint Venture Growth BDC

Every cycle again, Jim and I have been through multiple cycles together, as you mentioned, over our now twenty five years of working together. So I'd say we're learning every day. And I'd say it's different. It's very much stage sectors, funds, syndicates. I mean, cycle, there's some new elements.

Sajal Srivastava
Sajal Srivastava
Co-Founder, President and CIO at TriplePoint Venture Growth BDC

But I would say, big thing, the takeaway for the past couple of years is we were operating in a zero interest rate environment. And so we saw business models that were quite capital intensive that both equity investors and lenders were supportive of. And when the cost of capital changed, the market conditions changed, it was harder than we all thought for those high burn businesses to bring that burn back down to more reasonable levels. So I'd say that's one element. And then I think we definitely saw an element of syndicate issues with nontraditional investors in the cap table.

Sajal Srivastava
Sajal Srivastava
Co-Founder, President and CIO at TriplePoint Venture Growth BDC

And so VCs act differently than strategics, then act differently than financial investors. And so they have different alignment in terms of their objectives when they have when it comes to pricing the valuation of a company or protecting an investment. So I'd say these are some of the takeaways. Appropriate amounts of leverage vis a vis the equity base. So I'd say the great news is as we deploy now, we've learned from the twenty five years Jim and I together, Jim's almost forty years in the industry as a pioneer.

Sajal Srivastava
Sajal Srivastava
Co-Founder, President and CIO at TriplePoint Venture Growth BDC

And so and we're excited about what we're seeing and how we're deploying today and learning from that and managing through the current environment. Helpful. Thanks,

Operator

Our next question comes from Christopher Nolan from Ladenburg Thalmann. Please go ahead.

Christopher Nolan
Senior VP - Equity Research at Ladenburg Thalmann & Co. Inc

Hey, guys. What percentage of the debt investments are at their floors?

Mike Wilhelms
Mike Wilhelms
CFO at TriplePoint Venture Growth BDC

30 five Yes, sorry, I jumped in there. Yes, roughly 35%. So we have 62% of the portfolio is floating and roughly 35% is at the floor.

Christopher Nolan
Senior VP - Equity Research at Ladenburg Thalmann & Co. Inc

All right. And can you walk me through this dynamic because I'm going go back to what Doug and Casey were talking about these repurchases and it makes no sense to me. You got a good chunk of your investment portfolio no longer at the floor. The forward curve is implying more than one Fed rate cut. Your 10 Q shows that your earnings are impacted by lower rates.

Christopher Nolan
Senior VP - Equity Research at Ladenburg Thalmann & Co. Inc

Your new investments are show the yields are your dividend yield is 20.4%. Your stock is trading 32% below book. And you want to grow the portfolio rather than buy back stock. I mean, just seems to be a no brainer to buy back stock and aggressively. And I don't mean to be but it's a this is a real question mark because who I mean, if the Board is signing off on this, you got to ask whether or they really know what they're talking about.

Sajal Srivastava
Sajal Srivastava
Co-Founder, President and CIO at TriplePoint Venture Growth BDC

Yes. I mean, Chris, I'd say so again, I think the again, by virtue of them being at the floors, it means that as rate goes down, rates go down, that we won't see reduction in yield. So that's the good news, right, of having fixed rate sorry, floating rate loans with prime floors that are locked in. So we won't see we'll only see the benefit as our cost of capital and the leverage side on our floating or revolving facility reduces. I think the issue though is, listen, one of the challenges we have is our concentration and our chunkiness and lumpiness.

Sajal Srivastava
Sajal Srivastava
Co-Founder, President and CIO at TriplePoint Venture Growth BDC

And so the only way to achieve that plus rotate out of sectors that may be more impacted by recession or other challenging economic environments is to grow the portfolio. So it's a balance. We're not saying so we're saying as long as we continue to see and have line of sight of high quality portfolio growth to achieve long term objectives like portfolio diversification, sector rotation, increasing some of the other goals and objectives, making ourselves more diversified, we think that's the way to navigate in the near term. And then again, we're not suggesting in the long term that isn't an option or in the realm of possibility. But as we look to the next one to two quarters, we think that's the best use of capital.

Christopher Nolan
Senior VP - Equity Research at Ladenburg Thalmann & Co. Inc

Okay. Thank you.

Operator

This concludes our question and answer session. I would like to turn the conference back over to Mr. Jim Labe for any closing remarks. Please go ahead.

James Labe
James Labe
Co-Founder, Chairman and Chief Executive Officer at TriplePoint Venture Growth BDC

Thank you, operator. As always, I'd like to thank everyone for listening and participating in today's call. We look forward to updating you and talking with you all again next quarter. Thanks again and have a nice day.

Operator

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

Executives
    • James Labe
      James Labe
      Co-Founder, Chairman and Chief Executive Officer
    • Sajal Srivastava
      Sajal Srivastava
      Co-Founder, President and CIO
    • Mike Wilhelms
      Mike Wilhelms
      CFO
Analysts
    • Crispin Love
      Director at Piper Sandler Companies
    • Douglas Harter
      Equity Research Analyst at UBS Group
    • Casey Alexander
      Senior Vice President & Research Analyst at Compass Point Research & Trading LLC
    • Brian Mckenna
      Director - Equity Research at Citizens JMP
    • Christopher Nolan
      Senior VP - Equity Research at Ladenburg Thalmann & Co. Inc
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