TRIPLEPOINT VENTURE GROWTH BDC CORP. 2026 Q2 Earnings Call

Please go ahead. Thank you, operator.

Good afternoon, everyone, and welcome to TPVG's second quarter earnings call. During the second quarter, we made steady progress in strengthening TPVG's portfolio and financial position as we continue to take steps to enhance our portfolio's durability, grow our income-generating assets, and increase NAV to create long-term shareholder value. During the quarter, we continued with our diversification strategy by investing in venture growth stage companies across AI and other attractive investment sectors. Starting with some key highlights. During the quarter and subsequent to the end of the quarter, we monetized two investments, enabling us to further strengthen our liquidity position and enhance our financial flexibility for the benefit of shareholders. We also funded more than $47 million in debt investments, up more than 80% from the previous quarter, finishing at the high end of our guided range as we took advantage of the strong market demand.

During the quarter, we signed $306 million of term sheets with venture growth stage companies at our sponsor, TriplePoint Capital, which was an increase of 20% over the previous quarter. Our venture growth stage pipeline now exceeds more than $3 billion in deals under evaluation. Against a strong market demand, we have been maintaining yields on our new investments while also continuing to rotate our portfolio out of legacy 2020 through 2022 vintage investment sectors and into our sectors of focus on new investments. Our debt investments allocated to TPVG also climbed notably during the second quarter. Our leverage remained steady in our target range, our unfunded commitments continued to decrease significantly, and our NAV increased slightly.

As mentioned, we're pleased to have monetized two significant investments, exiting our largest outstanding loan position and selling another portion of our equity stake in Revolut, generating collectively total cash proceeds of approximately $57 million. These two transactions represent important steps in our ongoing efforts to rebalance the portfolio and strengthen our liquidity. They also demonstrate our progress in rotating through legacy positions, providing both liquidity and decreasing PIK income, and with Revolut, one of Europe's most valuable private technology companies, where we monetized only a portion of our sizable equity position. This enhanced liquidity from these two monetization events provides us with greater financial flexibility in the coming quarters. Turning to the VC market, the overall venture capital markets remained exceptionally active during the second quarter. According to PitchBook, second quarter deal value was the second highest quarterly total in a decade, trailing only the first quarter of 2026.

Through the first half of the year, $413 billion was deployed into U.S. venture-backed companies, a half-year figure that already exceeds the full year 2025 total. AI continues to define market activity. AI companies represented 86% of all the venture dollars in the period, in fact. Venture-backed AI companies also command to demand materially higher valuations over their non-AI peers, and they're definitely achieving faster valuation step-ups between the rounds. On the exit side, we're also encouraged by the increased market liquidity. Quarterly venture-backed IPO and M&A activity has been steadily increasing, and OpenAI and Anthropic have confidence we filed for offerings of their own. During the quarter, one of our portfolio companies, Kalderos, was acquired by Model N, a PE-backed company, for a sizable consideration.

Should venture-backed IPO and M&A activity continue to build momentum in the back half of 2026 and beyond, other TPVG portfolio companies could potentially be a beneficiary. As I've mentioned previously, we maintain a sizable warrant and equity portfolio that continues to grow. When you exclude the $13 million we monetized from Revolut, this marks the sixth consecutive quarter, and ninth out of the previous 10 quarters, where our warrant and equity portfolio increased in value. As of June 30, we hold warrant positions in 117 portfolio companies, and equity investments in 60. A number of these have been identified in various publications lists of top candidates for venture-backed IPOs, not only here in the U.S., but also in Europe. Turning to the portfolio, we're pleased to see continued strengthening, as fundraising activity increased significantly in the first half.

Reflecting the strength of the VC market, three of our debt portfolio companies raised incremental capital in private financing rounds during the quarter, including Inspiren, Aeradoo, and Hover, bringing the year-to-date total to 10 companies, raising approximately $1.2 billion. We also continue to execute on the path of investment sector rotation and portfolio diversification across AI, but also other attractive sectors. Specifically, we invested in companies such as Etched and Skyflow, and our priority remains on backing what we believe are category-defining companies at the forefront of adopting and deploying AI across their product offerings. We're benefiting from the AI investment mega cycle, bolstered by more than $1 trillion in AI infrastructure build-out, which helps fuel our demand. We also benefit from increasing investments in other sectors such as cybersecurity, robotics, defense and aerospace, energy resources, and health tech.

Our deal flow has also increased from the VC firms that we work with, many of which have raised multi-billion dollar funds in the last few years alone. Finally, as Mike's going to get into the details, today we're announcing a supplemental distribution of $0.12 per share to our shareholders. In summary, we continue to make steady progress in strengthening our portfolio and positioning the company for long-term success. We recognize there is meaningful work ahead for sure, and we remain focused on disciplined underwriting, strengthening the balance sheet, diversifying our portfolio, and reducing exposure to legacy investment sectors, while we capitalize on the AI-driven tailwinds out there and the attractive market opportunities to enhance our earnings power over the long term. With that, let me turn the call over to Sajal.

Thank you, Jim, and good afternoon. Q2 was another quarter of disciplined execution as we continue to build a strong foundation and position TPVG for the long term. Beginning with investment activity, TriplePoint Capital signed $307 million of term sheets with venture growth stage companies during Q2, up from $256 million of signed term sheets during Q1 2026. With regards to new investment allocation to TPVG during the second quarter, our advisor allocated $29.8 million in new commitments with five companies to TPVG, as compared to $1 million in new commitments with two companies in Q1. We expect to continue to increase our allocation of new commitments as unfunded commitments continue to expire, and as we receive prepayments and repayments over the rest of the year.

During the quarter, our fundings of $47.8 million to 10 companies were at the high end of our guided range of $25 million-$50 million. These funded investments carried a weighted average annualized portfolio yield of 12.8%. This compares to $26.6 million of fundings to seven companies in Q1, with an average annualized portfolio yield of 12.9%. During Q2, we had $28.6 million in loan prepays, resulting in an overall weighted average portfolio yield of 12.9%, and excluding prepays, our core portfolio yield was 12.3%. This compares to $23.6 million of loan prepays, an overall weighted average portfolio of 13.5% with prepays, and 12.6% without prepays in Q1. Subsequent to the end of the quarter, we sold our debt and equity investments in our European portfolio company, Prodigy Investments Limited, to a third party for $43.8 million, consistent with our Q2 mark.

Prodigy was our largest outstanding loan as of Q2, and the sale demonstrates continued progress on our goals of rotating our assets into newer vintages, diversifying the portfolio, and reducing our overall exposure to PIK income. Although we continue to see robust demand for debt financing from venture growth stage companies, our quarterly target for new fundings continues to be in the $25 million-$50 million range for 2026. As Mike will cover shortly, we intend to redeploy the Prodigy proceeds strategically as we continue to position TPVG for the long term. With regards to credit activity during the second quarter, we downgraded Trendly, an EBITDA positive and cash flow positive consumer company, from White 2 to Yellow 3, and made fair value adjustments on other loans as well due to market factors and/or performance, including Rollie.