Good afternoon, ladies and gentlemen. Welcome to the TriplePoint Venture Growth BDC Corp's Third Quarter 2025 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 recorded, 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 of 2025. Today, representing the company is Jim Labe, Chief Executive Officer and Chairman of the Board; Sajal Srivastava, President and Chief Investment Officer; and Mike Wilhelms, 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 relate to future events or the company's future performance or financial conditions, 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 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 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, and welcome to TPVG's Third Quarter Earnings Call. During the third quarter, our focus remained on furthering our strategy to increase TPVG's scale, durability, income-generating assets, and NAV over the long term. We're pleased with the progress we've made in the quarter working towards these important objectives, and we expect fundings to continue to materialize over the next few quarters as we progress on our path of portfolio diversification and investment sector rotation. In addition to covering the dividend for the quarter and increasing our NAV, the third quarter marked one of growth and increased investment activity for TPVG. We took advantage of strong demand from high-quality venture growth stage companies in the sectors we are focused on to grow the debt investment portfolio. During the quarter, TPVG experienced its highest level of debt commitments and funding since 2022.
Resulting in Q3 fundings that significantly exceeded our guided range, reaching the highest level in 11 quarters. Importantly, Q3 also represented the highest level of signed term sheets with venture growth stage companies at our sponsor, TriplePoint Capital. Looking at the last three quarters alone, signed term sheets for venture growth stage companies at TPC reached almost $1 billion. At quarter's end, our pipeline also continued to remain at near record highs since 2021. Touching on the overall venture capital market, while some uncertainties and volatility certainly still remain, investment activity is rising, and venture capital deal activity increased during the quarter due primarily to all this momentum going on in the AI space. According to PitchBook, AI investments accounted for more than two-thirds of the venture deal value last quarter.
For mega deals, it was more than 70% of the deal value, a level not seen since 2021 and 2022. Another encouraging sign were increases in M&A and IPO activity, which collectively generated more than $75 billion across 362 exits, the strongest quarter for venture-backed companies since the pandemic. Turning to our own internal tracking, the number of equity rounds closed by our select venture capital investors year to date has already exceeded the aggregate total for all of last year by 34%. All these trends hold promise for what we believe are signs for continuing improvement for the venture markets versus those upheavals in the last half of 2021 and right through late 2022. We're also seeing a notable decrease in equity financing down rounds and an increase in up rounds. These days, more and more, I hear the word "uptick" in conversations in venture circles.
Certain companies, in fact, are experiencing oversubscribed equity rounds, and there's an active secondary market which has come back for some companies as well, including a few of our portfolio companies. This growing optimism that venture companies are beginning to find some paths to liquidity and should IPO and M&A markets for venture companies continue on this improvement, it represents additional opportunities. One of the potential benefits of our venture lending business that's often overlooked are the warrants we receive as part of our loan transactions and our equity investments. We have a sizable equity and warrant portfolio with warrant positions in 112 portfolio companies and equity investments in 53. As the exit market continues to evolve, we're well positioned to realize value for shareholders.
We hold positions in a number of companies which have also appeared in industry publications on their notable top IPO candidates list, companies such as Cohesity, Revolut, Dialpad, Filevine, and others. While we're encouraged by market and portfolio developments, we remain highly focused on monitoring and working through credit situations, primarily investments from the pre-market change period. Sajal will discuss those more in detail later in this call. Taking a closer look at the portfolio, we're pleased to report continued progress on diversification as we made commitments to nine new borrowers during the quarter and now 19 new borrowers year to date. As part of the diversification, we've also been leaning into increased companies characterized by substantial revenues, strong margins, solid cash runways, at or near EBITDA positive, and with a clear path to cash flow generation and debt service without the need for further equity fundraising.
They're generally more mature companies. They have stronger profiles and we're the senior lender, often with revolving loans, with the trade-off being lower yields given their more mature profile. Turning to investment sector rotation, we continue to actively add new borrowers focused on high potential and durable sectors, especially those that are able to leverage AI to drive product differentiation, market disruption, and efficiency. We remain excited by the horizontal market opportunity AI presents, and we believe it will be a massive megatrend that persists for many years to come. Similar to our select venture capital investors, AI is a clear center of gravity. The technology combines massive growth potential with equally large capital requirements. Particularly around GPUs, data center infrastructure, and unique models trained on proprietary data. These dynamics play directly to the strengths and advantages of our venture lending.
Providing non-dilutive growth capital to high-growth companies in capital-intensive markets. Over the past two years, we've been active in lending across a full AI stack from semiconductor companies enabling AI inference like Etched to networking infrastructure companies to power the next generation of AI data centers like Eridu. All these companies are experiencing market tailwinds and thriving in the new era of AI. Given this significant interest in AI, however, a key for us is to be disciplined in our underwriting. In AI, our focus is on whether the company's technology translates into durable, defensible value. That means real differentiation in data or model performance, early proof of enterprise adoption, and strong gross margins after infrastructure costs. We believe the companies that will win tend to build leverage over time.
Their models are going to be getting smarter, their integration stickier, and their cost of incremental insight goes down, not up. Outside of AI, the path continues to pursue selectivity, diversification, and investment sector rotation, and we continue to make great strides. We're actively investing in attractive fields outside of just AI: verticalized software, fintech, aerospace and defense, robotics, cybersecurity, and health tech, among others. As we seek to capitalize on these compelling opportunities and grow and diversify the portfolio, we continue to do so with an emphasis on U.S. companies, companies that are better capitalized and have visibility to profitability, as well as business models reflective of today's market conditions and the valuations. We continue to focus on companies that have recently raised capital, have ample cash runways, and have backing from one or more of our select venture investors.
In summary, Q3 represented a quarter of progress for us as we seek to increase TPVG's scale, durability, income-generating assets, and NAV over the long term. Importantly, we are positioning TPVG for the future to create shareholder value with the strong support of our sponsor, TPC. As we mentioned in our last quarter, as of this call, our sponsor announced the discretionary share purchase program, and further demonstrating alignment with TPVG shareholders, our advisor amended its existing income incentive fee waiver to waive in full its quarterly income incentive for each quarter in 2026. Later on the call, Mike will provide an update on these topics. With that, let me turn the call over to Sajal.
Thank you, Jim, and good afternoon. Regarding investment portfolio activity during Q3, TriplePoint Capital signed $421 million of term sheets with venture growth stage companies compared to $93 million of term sheets in Q3 2024 and $242 million in Q2. On a year-to-date basis, TPC has signed $978 million of term sheets versus $412 million over the same period in 2024. With regards to new investment allocation to TPVG during the third quarter, our advisor allocated $182 million in new commitments with 12 companies to TPVG compared to $51 million in Q3 2024 and $160 million in Q2 2025. 75% of the portfolio companies we extended commitments to during the quarter were new customers, 90% of which are in the AI, enterprise software, and semiconductor sectors, reflecting our focus on obligor diversification and sector rotation.
On a year-to-date basis, we have closed $418 million to 19 new portfolio companies and six existing portfolio companies as compared to $103 million to five new portfolio companies and four existing portfolio companies over the same period in 2024. Of our 49 obligors with outstanding loans as of 9/30, four were added to the portfolio in 2023. Six were added in 2024, and 11 were added here in 2025. Progress on our plans for obligor, vintage, and sector rotation. As Mike will cover, our outstanding unfunded obligations include 10 new customers which have yet to utilize their commitments and should add to our customer count and rebalancing efforts.
During the third quarter, in anticipation of prepayment and scheduled repayment activity in Q4, we exceeded our guided range and funded $88 million in debt investments to 10 companies as compared to $33 million to four companies in Q3 2024 and $79 million to nine companies in Q2 2025. These funded investments carried a weighted average annualized portfolio yield of 11.5%, down from 12.3% in Q2 and 13.3% in Q1. The lower overall onboarding yields in Q3 reflect a number of factors, including a higher percentage of revolving loans enabling us to be the sole lender to our portfolio companies, more robust enterprises from a size and scale perspective, including EBITDA positive borrowers, intentionally driving higher utilization of unfunded commitments at closing given substantial borrower cash cushion levels, lower OID as a result of reduced enterprise valuations, as well as the declining rate environment.
On a year-to-date basis, we have funded $194 million to 22 companies at a weighted average yield of 12.1% as compared to funding $85 million to 10 companies at a weighted average yield of 14.5% over the same period in 2024. During Q3, we had $15 million of loan repayments resulting in an overall weighted average debt portfolio yield of 13.2%. Excluding prepayments, our core portfolio yield was 12.8%, which was down from 13.6% in Q2, reflecting the impact of lower yields from new assets we are onboarding, as discussed earlier. On a year-to-date basis, we have had $76 million of loan prepayments as compared to $118 million of prepayments over the same period in 2023. As I will discuss in more detail shortly, after quarter's end, we received principal repayments totaling $47.5 million so far in Q4.
During the quarter, our debt investment portfolio grew by over $73 million as a result of new fundings exceeding prepayment, repayment, and amortization within the portfolio. This is the third consecutive quarter we've increased our debt investment portfolio on a cost basis, representing nearly $110 million of growth year-to-date as compared to $127 million of portfolio reduction last year. Although we continue to see robust demand for debt financing from venture growth stage companies, as demonstrated by $123 million of new term sheets, $17 million of new commitments, and $18 million of funding so far in Q4, our quarterly target for new fundings continues to be in the $25-$50 million range for Q4 2025 and early 2026 as we manage liquidity going into our debt financing process.
During the quarter, four portfolio companies with debt outstanding raised $50 million of capital compared to five portfolio companies with debt outstanding raising $216 million during the second quarter. We believe Q3 numbers were lower primarily due to timing and expect robust activity here in Q4. On a year-to-date basis, 13 portfolio companies with debt outstanding have raised compared to $402 million of capital last year. As of quarter end, we held warrants in 112 companies and equity investments in 53 companies with a total fair value of $134 million, up from $127 million in Q2, primarily related to a markup in our equity holdings in GrubMarket due to strong performance and improving market multiples. During Q3, one portfolio company with a principal balance of $29.8 million was upgraded from white to clear. One portfolio company with a principal balance of $2.1 million was upgraded from yellow to white.
One portfolio company, Prodigy Finance, a fintech focused on international graduate students with a principal balance of $40.8 million, was downgraded from white to yellow. One portfolio company, Frubana, with a principal balance of $11.1 million, was downgraded to red and moved to non-accrual as we finalize our recovery process. We did actually see slight improvements in our expected recovery from Q2's mark on Frubana despite the downgrade. During the quarter, we saw a $2.5 million increase in the fair value of our loans in orange-rated portfolio company Roley, which, in addition to winning TIME Magazine's Innovation of the Year Award for the third time, held the first close of a new equity round from its existing investors, as well as holds assigned term sheet from additional investors to participate.
As I mentioned earlier, we experienced a $5.7 million unrealized gain on our equity investment in GrubMarket as a result of performance. As a reminder, GrubMarket acquired the assets of our portfolio company, Good Eggs, in Q3 2024, and we received this equity for consideration of our then outstanding loans. Although we took a $4.6 million realized loss on our $12 million loan at the time of the transaction, this gain reduces that loss in its entirety on an unrealized basis and reflects well in our team's recovery efforts on the Good Eggs transaction. As I mentioned earlier, here in Q4, we received $47.5 million of prepayments, mostly from two portfolio companies, Thirty Madison and Moda Operandi.
Thirty Madison announced its acquisition by Remedy Meds in Q3, and as part of the transaction, nearly $30 million of our outstanding position has been paid down in Q4, with our remaining $20 million exposure amortizing over the next three months. As a reminder, Thirty Madison was an existing TPVG portfolio company, but also acquired the assets of TPVG portfolio company Pill Club and assumed our outstanding loans of $20 million in full. This transaction represents a full recovery, including end-of-term payments on both transactions, but as a reminder, both were quite seasoned loans, so very little incremental contribution to income here in Q4. We also anticipate Thirty Madison to be upgraded to clear rating here in Q4.
We also experienced a $15.7 million paydown on our loans to Moda Operandi here in Q4, a yellow-rated asset, as a result of the company raising incremental equity and debt financing, and our remaining loans of $10 million have had their maturity dates extended. Should Moda continue to perform well, we would anticipate the company to be upgraded to white over time. While some of these journeys may take longer than expected, these developments demonstrate why our team continues to dedicate time and effort on the recovery journey and also that we are building some momentum with regards to some of our historical names. In closing, we remain aligned with our stakeholders, disciplined in our underwriting, and mindful of the volatile market environment as we execute on our plan for positioning TPVG for the long term.
We continue to target well-positioned and well-capitalized new customers in attractive sectors to drive investment fundings and earnings power to build shareholder value. With that, I'll now turn the call over to Mike.
Thank you, Sajal, and good afternoon, everyone. During the third quarter, we funded $88 million of new debt investments, up from $79 million last quarter, reflecting the continued expansion of our investment pipeline and conversion of signed term sheets into closed commitments. We received $15 million of prepayments and early repayments during the quarter, driving a net increase of approximately $73 million in our debt investment portfolio at cost, which now totals $737 million at quarter end as compared to $627 million at December 31, 2024, a 17% increase. As of September 30, 2025, the company had total liquidity of $234 million, consisting of $29 million of cash and cash equivalents and $205 million of available capacity under our revolving credit facility.
Of the $205 million of available capacity under the revolving credit facility, there was $53 million of available borrowing base that could be drawn on as of September 30, 2025. We ended the quarter with a leverage ratio of 1.32 times and a net leverage ratio of 1.24 times, both well within our target range and reflecting increased deployment of capital to fund the debt portfolio. Subsequent to quarter end, the company has already received $48 million of principal prepayments, providing additional liquidity to support new fundings and positioning the company well for the upcoming $200 million note maturity in the first quarter of 2026. We ended the quarter with $264 million of unfunded commitments, up from $185 million last quarter. Of these unfunded commitments, approximately $60 million are milestone-based.
The commitments are well laddered over the next several years, with $14 million expiring in Q4 2025, $152 million in 2026, $71 million in 2027, and the final $27 million in 2028. Turning to our operating results, total investment income for the third quarter was $22.7 million, with a weighted average portfolio yield of 13.2%, compared to 14.5% in the prior quarter. The decrease in yield primarily reflects a lower level of prepayment income, lower yields on our debt investment portfolio, in part due to decreases in the primary and a slightly larger mix of lower-yielding, recently originated loans reflective of the market and borrower characteristics. 66% of our debt portfolio is floating rate, and 46% of those floating rate loans were at their floors as of September 30th.
Following the 25 basis point Fed rate cut in late October 2025, floating rate loans at their rate floors increased to 52%. As a result, we expect the impact of any further interest rate reductions on our net investment income to be limited, particularly as lower base rates would also reduce interest expense on our floating rate revolving debt. Total operating expenses for the quarter were $12.3 million, consisting of $6.8 million from interest expense, $3.4 million of base management fees, $0.6 million of administrative expenses, and $1.6 million of G&A expenses. In the current quarter, $2.1 million of income incentive fees were earned but fully waived by the advisor. Year-to-date, the advisor has waived $3.3 million of income incentive fees. In addition, under the shareholder-friendly total return requirement, income incentive fees were further reduced by $3.1 million earlier this year.
Together, these actions have increased net investment income by approximately $6.5 million year-to-date. As a result of the continued fee waivers mentioned by Jim earlier, we do not expect to incur any income incentive fee expense for the fourth quarter of 2025 or for all of 2026. Net investment income for the quarter was $10.3 million, or $0.26 per share, compared to $11.3 million, or $0.28 per share, in the prior quarter. Our net increase in net assets resulting from operations was $15.2 million, or $0.38 per share, which included $0.13 per share of net realized and unrealized gains, primarily from unrealized gains on debt and equity positions. These gains were partially offset by a small unrealized foreign currency loss of $0.5 million, or $0.01 per share.
At quarter end, net asset value increased to $355.1 million, or $8.79 per share, up from $8.65 at June 30. Now turning to our capital structure. As of quarter end, total debt outstanding was $470 million, consisting of $375 million of fixed-rate term notes and $95 million drawn on our $300 million floating-rate revolving credit facility. Our term notes carry maturities in March 2026, February 2027, and February 2028, all at fixed rates. With our 2026 maturity approaching, our capital management strategy remains focused on maintaining liquidity and flexibility while optimizing our fixed-to-floating debt mix. We expect to refinance the $200 million March 2026 notes with a combination of new fixed-rate unsecured notes and available revolver capacity during the first quarter of 2026. We are in the final stages of renewing our $300 million revolving credit facility, which matures at the end of this month.
While the renewal amendment has not yet been executed, the preliminary terms outlined to date are constructive and favorable for the company. We expect the renewal to support our growth trajectory and align with our long-term capital plan. Regarding distributions, on October 14, our board declared a regular quarterly distribution of $0.23 per share and a supplemental distribution of $0.02 per share, payable on December 31st to shareholders of record as of December 16th. The supplemental distribution was declared in order to enable the company to distribute all of the company's remaining undistributed taxable income from the prior year. As of September 30, we had estimated spillover income of $43.4 million, or $1.07 per share. As a reminder, we announced during our August call that our sponsor, TriplePoint Capital, launched a 14 million share repurchase program to buy TPVG stock below NAV.
Through quarter end, TPC purchased about 591,000 shares for roughly $3.9 million, leaving about $10 million available under the program. TPC plans to adopt a 10b5-1 plan once the trading window reopens, which will allow purchases to continue automatically after the 30-day cooling-off period. The program continues to demonstrate our sponsor's confidence and alignment with shareholders. Looking ahead, our priorities remain consistent. We will continue to focus on sector rotation in our debt portfolio, maintaining credit quality, and preserving balance sheet flexibility as we prepare for the refinancing of our 2026 notes. With robust sponsor support and a growing investment pipeline at the platform level, TPVG remains well-positioned to generate long-term shareholder value. That concludes my prepared remarks. Operator, please open the line for questions.
Thank you. We will now begin the question and answer session. To ask a question, you may press star, then one on your touch-tone phone. If you are using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star and then two. At this time, we will pause momentarily to assemble our roster. Your first question today will come from Crispin Love with Piper Sandler. Please go ahead.
Thank you. Good afternoon. First, can you just discuss what you need to see in order to increase your funding guidance? The last couple of quarters have been very active. I believe you mentioned early on that you expect fundings to remain solid. Is the key driver there leverage and liquidity holding you back, or are other factors at play? I guess I'm asking if it's more internal factors rather than external as you look at it.
Hi, Crispin . This is Sajal. I would say, obviously, quality of opportunity and credit quality selectivity drives number one. I would say, absolutely, we're very much focused on the upcoming refinancing of our debt. We are mindful of liquidity and leverage ratios going into that for the time being. Coming out of that, we'll, again, adjust and act accordingly.
Okay. Great. That all makes sense. Just on credit quality, metrics in the quarter are mostly stable, slight uptick in non-approvals on a dollar basis. Can you discuss what you're seeing in credit in your portfolio and then broadly in the venture lending space? Has your credit underwriting changed at all recently? You mentioned more revolving loans. I believe you said larger enterprises. Just curious if there's any changes there.
Yeah. Let me start with maybe overall credit. I would say credit performance. I would say, listen, this was a good quarter in terms of demonstrating kind of the advisor and the platform's kind of credit workout and recovery process and our commitment to resolving situations. We understand some situations may take longer than others, but with the developments with GrubMarket and Thirty Madison in particular, again, demonstrating the hard work that goes into these things and the patience and commitment and getting kind of positive outcomes in those situations. Obviously, Roley has been a long journey. We have some positive developments here this quarter. We are comfortable. We are happy about that. As we alluded to with some of the other names, we are expecting upgrades here in Q4.
I think as Jim talked to, I mean, a key element is the improvement in the equity markets and the fundraising activity is number one. I think the second thing is obviously performance by our portfolio companies. Mind you, we have to be balanced. It is all very sector-specific as well. We are balancing overall positive trends in the venture equity markets with sector-specific challenges and company-specific challenges. I would say we are pleased with the team's effort here in the quarter. With regards to the overall venture segment, I cannot say I can only speak to the tech world and the tier- one VC world where we operate. Again, we are continuing to see strong demand. We are continuing to see strong performance. We are very much focused on that.
As we look to overall originations focus, I think as Jim talked to, very much we're avoiding the frothiness that we're seeing in certain sectors and areas and really leaning in on our core strengths, working with the best venture capital funds, the best entrepreneurs, and seeing where we can be helpful and collaborative with their portfolio companies, and then taking advantage of opportunities where we can earn additional return for lower risk, be it in a revolving loan or lending to an EBITDA-positive company with a stronger yield profile that we normally target.
Great. Thank you, Sajal. Appreciate you taking my questions.
Your next question today will come from Doug Harder with UBS. Please go ahead.
Hi, this is Corey Johnson on for Doug Harder. Last quarter, you were able to give some guidance in terms of about the number of repayments you expected for each quarter. For the upcoming quarters, has your view, as the market seems to possibly be heating up, has your view on the pace of prepayments possibly changed? Do you have any line of sight into any upcoming repayments or realization?
Yeah. Hi, Corey. Sajal, I'll take this first. I would say our guidance continues to be to expect one prepayment a quarter for 2026, just based on market conditions. More importantly, given the amount of prepay activity that we've seen over the past two years and the newer vintages we're putting in place, we would expect that pace to generally slow down. That is why we're guiding to one on average per quarter. As we mentioned in our filings, here in Q4, we've had a little more than one in terms and these were more unique situations, Thirty Madison and Moda and another portfolio company. I'd say Q4 was an exception, but generally, we continue to expect one a quarter. Again, those loans that we'll be prepaying will be our more seasoned loans. We're not expecting significant or material.
Excess income from an NII perspective.
Great. Thank you.
The next question will come from Christopher Nolan with Ladenburg Thalmann. Please go ahead.
Hey, guys. On the debt refinance. As I recall, this $200 million note is investment grade. Is that correct?
Yes, it is.
Yeah. Also, as I recall, to be index eligible for investment grade, the debt amount, I believe, has to be, what, $200 million or so and above. Is that correct?
That's one of the factors.
Yeah. And so.
Yes, it is.
Yeah. I guess my basic question is, if you're using a combination of new notes and the bank facility, is it fair to say that the new notes that you're going to be issuing will not be investment-grade index eligible? Is that correct?
No, that's not. We're expecting to issue roughly $100 million-$125 million. That number is to be finalized, but we're expecting that to be investment grade.
Not index eligible, which I believe impacts the coupon rate a little bit, doesn't it?
Correct. Again, given the quantum and given where rates are, we do not think having a significant that large of long-term fixed-rate debt in this environment makes sense, given, again, the prepayment activity that we experience and wanting to have the ability to use our revolver to pay down as we have prepays.
Okay. I guess on a related question, where do you see the leverage ratio going? From Jim's comments and Sajal's comments, it sort of indicates that the portfolio is going to grow in the fourth quarter.
We're actually not expecting, given the prepayment activity that we're seeing in the fourth quarter, we're expecting little to no growth. Our guidance from a leverage standpoint is 1.3-1.4. As you know, Chris, we came in at 1.32. I think we'll come in right about that level at the end of December as well.
Great. Okay. Thanks, guys.
Our guidance is $1.3-$1.4.
Great. Thanks.
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.
Thank you. As always, I'd like to thank everyone for listening and participating in today's call. We look forward to updating and talking with you all again next quarter. Thanks and have a nice day.
The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.