Q1 2024 Horizon Technology Finance Corp Earnings Call

Operator: Greetings and welcome to the Horizon Technology Finance Corporation first quarter 2020 earnings conference call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Megan Bacon, Director of Investor Relations and Marketing. Thank you. You may begin.

Greetings and welcome to the Horizon Technology Finance Corporation first quarter 2024 earnings Conference call.

At this time all participants are in a listen only mode.

<unk> and answer session will follow the formal presentation.

If anyone should require operator assistance during the conference. Please press star zero on your telephone keypad.

As a reminder, this conference is being recorded.

It is now my pleasure to introduce your host Megan Bacon director of Investor Relations and marketing.

Megan N. Bacon: You you may begin.

Megan N. Bacon: Thank you and welcome to Horizon Technology Finance corporations first quarter 2024 conference call representing the company today are that Pomeroy, Chairman and Chief Executive Officer, Jerry Michaud, President Dan divorced that Chief operating officer, and Chief Investment Officer, and Dan <unk> Chief financial.

Megan N. Bacon: Thank you and welcome to Horizon Technology Finance Corporation's first quarter 2024 conference call. Representing the company today are Rob Pomeroy, Chairman and Chief Executive Officer, Jerry Michaud, President, Dan Devorsetz, Chief Operating Officer and Chief Investment Officer, and Dan Trolio, Chief Financial Officer.

Megan N. Bacon: Sir.

Megan N. Bacon: I would like to point out that the Q1 earnings press release and Form 10-Q are available on the company's website at horizontechfinance.com. Before we begin our formal remarks, I need to remind everyone that during this conference call, the company will make certain forward-looking statements, including statements with regard to the future performance of the company. Words such as believe, expect, anticipate, intend, or similar expressions are used to identify forward-looking statements, which are subject to the inherent uncertainties in predicting future results and conditions.

Megan N. Bacon: I would like to point out that the Q1 earnings press release and Form 10-Q are available on the company's website at horizon check finance dotcom beef.

Megan N. Bacon: Certain factors could cause actual results to differ on a material basis from those projected in these forward-looking statements, and some of these factors are detailed in the risk factor discussion in the company's filings with the Securities and Exchange Commission, including the company's Form 10-K for the year ended December 31, 2023. The company undertakes no obligation to update or revise any forward-looking statement, whether as a result of new information, future events, or otherwise. At this time, I would like to turn the call over to Rob Pomeroy.

Megan N. Bacon: Before we begin our formal remarks I need to remind everyone that during this conference call. The company will make certain forward looking statements, including statements with regard to the future performance of the company.

Megan N. Bacon: Words, such as believes expects anticipates intends or similar expressions are used to identify forward looking statements. These forward looking statements are subject to the inherent uncertainties in predicting future results and conditions.

Megan N. Bacon: Certain factors could cause actual results to differ on a material basis from those projected in these forward looking statements and some of these factors are detailed in the risk factor discussion in the company's filings with the Securities and Exchange Commission, including the company's Form 10-K for the year ended December 31 22.

Megan N. Bacon: 23, the company undertakes no obligation to update or revise any forward looking statement, whether as a result of new information future events or otherwise at this time I would like to turn the call over to Rob Pomeroy.

Robert D. Pomeroy: Welcome everyone, and thank you for your interest in Horizon. Today, we will update you on our performance and our current overall operating environment. Dan Devorsetz will take us through recent business and portfolio developments. Jerry will then discuss the current status of the venture lending market, and Dan Trolio will detail our operating performance and financial conditions. We will then take some questions.

Robert D. Pomeroy: Welcome everyone and thank you for your interest in Horizon two.

Robert D. Pomeroy: Today, we will update you on our performance and our current overall operating environment, Dan divorce, It will take us through recent business and portfolio developments.

Robert D. Pomeroy: Jerry will then discuss the current status of the venture lending market and Dan Trulia will detail, our operating performance and financial condition.

Robert D. Pomeroy: We will then take some questions before we get to our specific results for the first quarter I would like to speak to the nature and current status of the venture lending business.

Robert D. Pomeroy: Before we get to our specific results for the first quarter, I would like to speak to the nature and current status of the venture lending business. Venture lending is an exciting and rewarding endeavor that is driven by the support of venture investors and the advancement of technology. The Horizon platform has one of the most experienced teams of venture lenders, and we are passionate about our industry and its prospects. We seek investment opportunities in development stage companies that drive technological innovation and are backed by committed investor support, including significant capital investment.

Robert D. Pomeroy: Venture lending is an exciting and rewarding endeavor, which is driven by the support of venture investors and the advancement of technology. The horizon platform has one of the most experienced teams debenture lenders and we are passionate about our industry and its prospects, we seek investment opportunities and development stage companies.

Robert D. Pomeroy: Does that drive technological innovation and are backed by committed investor support including significant capital investment.

Robert D. Pomeroy: These companies rely on additional capital to advance their technologies and growth. Venture debt is an essential part of this capital ecosystem. When we underwrite a venture loan, we base our investment thesis on an enterprise's strength of technology or market position, its ability to further develop its market and technology, its ability to grow or achieve revenue, its ability to attract additional and institutional capital or strategic interest, and eventually to advance to an exit or more traditional bank lending.

Robert D. Pomeroy: These companies rely on additional capital to advance their technologies and grow that.

Robert D. Pomeroy: Venture debt is an essential part of this capital ecosystem.

Robert D. Pomeroy: When we underwrite a venture loan we base our investment thesis on an enterprise's strength of technology or market position its ability to further develop its market and technology its ability to grow or achieve revenue stability to attract additional institutional capital where strategic interest in it.

Robert D. Pomeroy: Eventually to advance to an exit or more traditional bank lending.

Robert D. Pomeroy: Business plans of these younger companies are subject to many kinds of detours, and their agility to adapt and react is necessary to navigate ever-changing waters. As seasoned venture lenders, we know that plans and the environment are always changing. Sometimes there are jolts to the ecosystem, like we experienced last year with the tech bank crisis. Global unrest, higher interest rates, and pandemics, just to name a few recent shocks, can upset plans and require management, investors, and venture lenders to thoughtfully react and adapt.

Robert D. Pomeroy: Business plans for these younger companies are subject to many kinds of detours and their agility to adapt and react as necessary to navigate ever changing waters.

Robert D. Pomeroy: As seasoned venture lenders, we know the plans and the environment are always changing.

Robert D. Pomeroy: Sometimes there are jokes to the ecosystem like we experienced last year with the Tech Bank crisis.

Robert D. Pomeroy: Global unrest higher interest rates and Pandemics just to name a few recent shocks can upset plants and require management investors and venture lenders to thoughtfully react and adapt.

Robert D. Pomeroy: While we have experienced all of the impact of these shocks over the past several quarters, we are starting to see the beginnings of a recovery in the venture ecosystem. We recognize the science of recovery because we have previously seen and experienced cycles of shocks and recovery.

Robert D. Pomeroy: While we have experienced all of the impact of these shocks over the past several quarters, we are starting to see the beginnings of a recovery in the venture ecosystem.

Robert D. Pomeroy: We recognize the signs of recovery because we have previously seen and experienced cycles of shocks in recovery.

Robert D. Pomeroy: Our senior lending team has an average tenure in the venture lending business of over 20 years. This tenure has provided us with the experience to know how to smartly support our portfolio companies through difficult times while seeking to preserve shareholders' capital and maximize net asset value. The results for the first quarter reflect our expertise and our efforts to grow our portfolio and maximize NAV in a difficult environment. Our debt portfolio yield remains strong, and our earnings continue to cover our distributions as they have for more than six years.

Robert D. Pomeroy: Our senior lending team has an average tenure in the venture lending business of over 20 years. This tenure has provided us with the experience and know how to smartly support our portfolio companies through difficult times, while seeking to preserve shareholder capital and maximize net asset value.

Robert D. Pomeroy: The results for the first quarter reflect our expertise and our efforts to grow our portfolio and maximize NAV in a difficult environment, our debt portfolio yield remains strong and our earnings continue to cover our distributions as they have for more than six years. This is the essence of the venture lending model.

Robert D. Pomeroy: This is the essence of the venture lending model. I will turn the call over to Dan, Jerry, and Dan to give you the details of our first quarter results and progress. We appreciate your continued interest and support in the Horizon Technology Finance Lab.

Robert D. Pomeroy: Turn the call over to Dan Gerry and Dan to give you the details of our first quarter results and progress. We appreciate your continued interest and support in the Horizon technology Finance platform.

Daniel Scott Devorsetz: Thanks, Rob, and good morning to everyone. Our portfolio size grew slightly in the first quarter to $711 million, as new originations in the quarter were mostly offset by prepayments and normal portfolio amortization, as well as fair value adjustment. In the first quarter, we funded five debt investments totaling $33 million, all to existing portfolio companies. Opportunities within the portfolio, both in terms of funding committed backlog to existing borrowers that achieve important operational and financial milestones, as well as providing new financing commitments to strong performing borrowers, remain an important aspect of our quarterly funding strategy.

Robert D. Pomeroy: Dan.

Daniel R. Trolio: Thanks, Rob and good morning to everyone. Our portfolio size was slightly in the first quarter to $711 million as new originations in the quarter were mostly offset by prepayments and normal portfolio amortization as well as fair value adjustments.

Dan: In the first quarter, we funded five debt investments totaling $33 million all two existing portfolio companies.

Daniel R. Trolio: Opportunities within the portfolio both in terms of funding committed backlog to existing borrowers that achieve important operational and financial milestones as well as providing new financing commitments to strong performing borrowers remains an important aspect of our quarterly funding strategy.

Daniel Scott Devorsetz: While we continue to see a steady stream of opportunities to provide financing to new borrowers, transactions that meet our underwriting standards are taking longer to develop in this challenging environment. We will remain disciplined in our approach to originating loans to new companies and expect slow and steady progress in new originations in the second quarter and the back half of the year as conditions improve. During the quarter, we experienced one loan prepayment, one refinance loan, and one partial paydown, totaling $20 million in prepaid principal. We expect modest prepayments in the second quarter of 2024. Prepayments are often driven by IPOs and M&A activity. However, while there are signs of activity in the IPO and M&A markets, it remains below normal.

Daniel R. Trolio: While we continue to see a steady stream of opportunities to provide financing to new borrowers transactions that meet our underwriting standards are taking longer to develop in this challenging environment.

Daniel R. Trolio: We will remain disciplined in our approach to originating loans to new companies and expect slow and steady progress in new originations in the second quarter and the back half of the year as conditions improve.

Daniel R. Trolio: During the quarter, we experienced one loan prepayment one refinance loan and one partial pay downs totaling $20 million in prepaid principle, we expect modest prepayments in the second quarter of 2024.

Daniel R. Trolio: Prepayments are often driven by ipos and M&A activity and while there are signs of activity in the IPO and M&A markets. It remains below normal.

Daniel Scott Devorsetz: Our onboarding yield of 13.4% during the first quarter remained high compared to our historic levels, once again reflecting the ability of our team to structure quality, high-yielding venture loans with strong follow-on investment opportunities, even in this challenging environment. We expect our capabilities in structuring and pricing transactions to continue to produce strong net investment income. Our debt portfolio yield of 15.6% for the quarter was again one of the highest yielding debt portfolios in the BDC industry.

Daniel R. Trolio: Our onboarding yield of 13, 4% during the first quarter remained high compared to our historic levels. Once again, reflecting the ability of our team to structure quality high yielding venture loans with strong follow on investment opportunities even in this challenging environment.

Daniel R. Trolio: We expect our capabilities and structuring and pricing transactions to continue to produce strong net investment income.

Daniel R. Trolio: Our debt portfolio yield of 15, 6% for the quarter was again, one of the highest yielding debt portfolios in the BDC industry.

Daniel Scott Devorsetz: We have consistently generated industry-high debt portfolio yields for many years, which is a further testament to the profitability of our venture lending strategy and our execution of that strategy across various market cycles and interest rate environments. As of March 31st, we held warrant and equity positions in 99 portfolio companies with a fair value of $31 million. Structuring investments with warrants and equity rights is a key component of our venture debt strategy and is a potential generator of shareholder value.

Daniel R. Trolio: We have consistently generated industry high debt portfolio yields for many years, which is a further testament to our profitability of our venture lending strategy and our execution of that strategy across various market cycles and interest rate environments.

Daniel R. Trolio: As of March 31, we held warrant and equity positions in 99 portfolio companies with a fair value of $31 million store.

Daniel R. Trolio: Structuring investments with warrants and equity Reits as a key component of our venture debt strategy and as a potential generator of shareholder value.

Daniel Scott Devorsetz: In the first quarter, we closed $37 million in new loan commitments and approvals and ended the quarter with a committed and approved backlog of $168 million, compared to $218 million at the end of the fourth quarter. As I referenced earlier, our committed backlog, with most of our funding commitments subject to companies achieving certain key milestones, provides a solid base to prudently grow our portfolio. As of quarter end, 90% of the fair value of our debt portfolio consisted of three and four rated debt investments, consistent with where it stood on December 31st. 10% of the fair value of our portfolio was rated 2 or 1, also consistent with December 31st, though the one-rated portion of the portfolio increased during the quarter.

Daniel R. Trolio: In the first quarter, we closed $37 million in new loan commitments and approvals and ended the quarter with a committed unapproved backlog of $168 million compared to $218 million at the end of the fourth quarter.

Daniel R. Trolio: As I referenced earlier, our committed backlog with most of our funding commitment subject to companies achieving certain key milestones provides a solid base to prudently grow our portfolio.

Daniel R. Trolio: As of quarter end, 90% of the fair value of our debt portfolio consisted of three and four rated debt investments consistent with where it stood at December 31.

Daniel R. Trolio: 10% of the fair value of our portfolio was ready to wear one also consistent with December 31. So the one rated portion of the portfolio increased during the quarter. We continue to diligently work on our stress investments in order to maximize additional recoveries and as we do for all of our portfolio companies. We continue to work closely and collaboratively with man.

Daniel Scott Devorsetz: We continue to diligently work on our stress investments in order to maximize additional recoveries. And, as we do for all of our portfolio companies, we continue to work closely and collaboratively with management teams, investors, and stakeholders to help navigate the challenging environment. Meanwhile, we will continue to look towards sourcing and originating new venture loans to high-quality companies while our portfolio continues to benefit from the current interest rate environment. With that, I'll turn it over to Jerry for a look at the overall venture industry and current environment.

Daniel R. Trolio: Teams investors and stakeholders to help navigate the challenging environment. Meanwhile, we will continue to look towards sourcing in originating new venture loans to high quality companies, while our portfolio continues to benefit from the current interest rate environment.

Daniel R. Trolio: With that I'll turn it over to Jerry for a look at that overall venture industry in current environment.

Gerald A. Michaud: Thank you very much Dan turning now to the venture capital environment. According to pitch book approximately 37 billion was invested in VC backed companies in the first quarter, maintaining that relative pace that we saw for much of last year, notably VC investment in later stage companies declined 36% from the same period in 2020.

Gerald A. Michaud: Thanks so much, Dan. Turning now to the venture capital environment, according to PitchBook, approximately $37 billion was invested in VC-backed companies in the first quarter, maintaining the relative pace that we saw for much of last year. Notably, VC investment in later-stage companies declined 36% from the same period in 2023, reflecting continued concerns by venture capital investors related to overvalued later-stage companies. In addition, while exit markets did show some improvement in the quarter, venture capital firms are looking to see higher levels of exits within their own portfolios before they will be willing to invest in later-stage companies.

Daniel R. Trolio: Three reflecting continued concerns by venture capital investors related to overvalued later stage companies.

Daniel R. Trolio: In addition, well exit markets did show some improvement in the quarter venture capital firms are looking to see higher levels of exits within their own portfolios before they will be willing to invest in later stage companies. As a result insider led rounds convertible debt transactions and bridge financing continues to be the primary.

Gerald A. Michaud: As a result, insider-led rounds, convertible debt transactions, and bridge financings continue to be the primary financing support for VC-backed companies in today's environment. That said, there is an abundance of venture capital sitting on the sidelines, especially in funds raised in 2021 and 2022. VCs need to invest their committed capital before the investment period of their funds precludes further investment, and the opportunity for any meaningful returns is made nearly impossible.

Daniel R. Trolio: Financing support the VC backed companies in today's environment.

Daniel R. Trolio: That said there is an abundance of venture capital sitting on the sidelines, especially in funds raised in 2021, and 2022 Vcs need to Investor committed capital before the investment period of their funds preclude further investment and the opportunity for any meaningful returns is made nearly impossible that.

Gerald A. Michaud: That pressure, if combined with lower interest rates and the already improving IPO market, may lead to a stronger VC ecosystem during the second half of 2024. VC interest and investment in certain market segments, such as AI solutions and life science, are seeing significant increases. In terms of VC fundraising, only $9 billion was raised in the first quarter of 2024, the lowest first quarter in a decade.

Daniel R. Trolio: Russia, if combined with lower interest rates and you're already improving IPO market may lead to a stronger VC ecosystem during the second half of 2024.

Daniel R. Trolio: VC interest and investment in certain market segments, such as AI solutions and life science are seeing significant increases in terms of VC fundraising only 9 billion was raised in the first quarter of 2024, the lowest first quarter in a decade.

Gerald A. Michaud: PCs' committed capital from their LPs continues to remain at record highs as a result of amounts raised during 2021 and 2022 and much slower investment activity over the last two years. VCs have high hurdles for raising new funds based on their recent returns, quality of portfolios, size, and investment strategy. Although VC-backed exit activity remained low at $18 billion in the first quarter, there were some optimistic signs. Most notably, the successful IPOs of Reddit and Asteria Labs showed that if the macro environment can further stabilize, there should be plenty of opportunities for companies to exit via IPOs in the subsequent quarters.

Daniel R. Trolio: Pcs committed capital from their Lps continue to remain at record highs as a result of amounts raised during 2021, and 2022 and a much slower investment activity over the last two years.

Daniel R. Trolio: Vcs have high hurdles for raising new funds based on their recent returns quality of portfolios size and investment strategy.

Daniel R. Trolio: Although VC backed exit activity remained low at $18 billion in the first quarter. It was some optimistic signs most notably the successful ipos have read it and hysteria labs show that if the macro environment can further stabilize there should be plenty of opportunities for companies to exit via Ipos and the subsequent.

Daniel R. Trolio: <unk>.

Gerald A. Michaud: Meanwhile, the M&A market for venture-backed companies remained quiet as acquirers continued to stay on the sidelines. However, we continue to believe that M&A buyers in industries such as biotech, energy technology, and healthcare are best positioned to resume M&A activity, given their recent positive earnings results, rising public stock prices, and the elevated levels of cash and liquidity on their balance sheets. In terms of market conditions for new venture loan investments, we expect to remain selective in the second quarter as regards originations.

Daniel R. Trolio: Meanwhile, M&A market with venture backed companies remained at Newt as acquired has continued to stay on the sidelines.

Daniel R. Trolio: We continue to believe the M&A buyers in industries, such as biotech energy technology and health care are best positioned to resume M&A activity given their recent positive earnings results rising public stock prices and elevated levels of cash and liquidity on their balance sheets.

Daniel R. Trolio: In terms of market conditions for new venture loan investments, we expect to remain selective in the second quarter in terms of originations, while we have seen the top of our pipeline fully replenished $1 $8 billion as of today, which is a testament to our reputation and brand we are resolute in ensuring that we only fund high quality.

Gerald A. Michaud: While we've seen the top of our pipeline fully replenished at $1.8 billion as of today, which is a testament to our reputation and brand, we are resolute in ensuring that we only fund high-quality venture debt investments. Thus, we expect portfolio growth will be weighted toward the second half of the year. To sum up, we continue to navigate through the uncertain and changing VC environment. We remain focused on credit quality and providing all of our portfolio companies with support to ensure optimal outcomes while we continue sourcing high-quality opportunities for potential venture debt origination. We believe we remain well positioned to continue generating solid NII for our shareholders and building additional long-term shareholder value. With that, I will now turn the call over to Dan Trolio.

Daniel R. Trolio: Venture debt investments, thus, we expect portfolio growth will be weighted towards the second half of the year.

Daniel R. Trolio: To sum up we continue to navigate through the uncertain and changing VC environment, we remain focused on credit quality and providing all of our portfolio companies with support to ensure optimal outcomes. While we continue sourcing high quality opportunities for potential venture debt originations we believe.

Daniel R. Trolio: We remain well positioned to continue generating solid NII for our shareholders and building additional long term shareholder value.

Daniel R. Trolio: I will now turn the call over to Dan Trulia.

Daniel R. Trolio: Thanks, Jerry, and good morning, everyone. It was a solid first quarter from an NII standpoint, as we once again generated NII that more than covered our distribution. We also made additional progress in boosting our balance sheet through our ATM program, successfully and accretively selling over a million shares in the quarter, raising $12 million, further demonstrating our continued ability to access the equity markets. In addition, we continue to diligently work with all of our companies in order to optimize outcomes for our portfolio and further enhance our credit quality.

Daniel R. Trolio: Thanks, Gerry and good morning, everyone. It was a solid first quarter from an NII standpoint, as we once again generated NII and more than covered our distributions.

Daniel R. Trolio: We also made additional progress in boosting our balance sheet through our ATM program successfully and accretively selling over a million shares in the quarter raising $12 million further demonstrating our continued ability to opportunistically access the equity markets. In addition, we continue to diligently work with all of our companies in order to.

Daniel R. Trolio: Optimizing outcomes for our portfolio and further enhance our credit quality. We believe we remain well positioned to add quality investments to our portfolio and create additional value for shareholders moving forward.

Daniel R. Trolio: We believe we remain well-positioned to add quality investments to our portfolio and create additional value for shareholders moving forward. As of March 31st, we had $91 million in available liquidity, consisting of $71 million in cash and $20 million in funds available to be drawn under our existing credit facilities. We currently have $60 million outstanding under our $150 million KeyBank credit facility and $181 million outstanding on our $250 million New York Life credit facility, leaving us with ample capacity to grow the portfolio.

Daniel R. Trolio: As of March 31, we had 91 million in available liquidity, consisting of $71 million in cash and $20 million in funds available to be drawn under our existing credit facility. We.

Daniel R. Trolio: We currently have 60 million outstanding under our 150 million Keybank credit facility and $181 million outstanding on our 250 million, New York life credit facility, leaving us with ample capacity to grow the portfolio.

Daniel R. Trolio: Our debt-to-equity ratio stood at 1.37 to 1 as of March 31, and netting out cash on our balance sheet, our net leverage was 1.16 to 1, which was within our target leverage. Based on our cash position and our borrowing capacity on our credit facilities, our potential new investment capacity on March 31st was $230 million. For the first quarter, we earned investment income of $26 million compared to $28 million in the prior period, primarily due to lower interest income on our debt investment portfolio.

Daniel R. Trolio: Our debt to equity ratio stood at 1.3 71 as of March 31st and netting out cash on our balance sheet. Our net leverage was 1.16 to one which was within our target leverage.

Daniel R. Trolio: Based on our cash position and our borrowing capacity on our credit facilities are potential new investment capacity at March 31 was $230 million.

Daniel R. Trolio: For the first quarter, we earned net investment income of $26 million compared to $28 million in the prior year period.

Daniel R. Trolio: Primarily due to lower interest income on our debt investment portfolio.

Daniel R. Trolio: Our debt investment portfolio on a net cost basis stood at $720 million as of March 31st, a modest reduction from December 31st, 2023. For the first quarter of 24, we achieved onboarding yields of 13.4% compared to 13.8% achieved in the fourth quarter. Our loan portfolio yield was 15.6% for the first quarter compared to 16.3% for last year's first quarter. Total expenses for the quarter were $13.1 million compared to $14.8 million in the first quarter of 2023. Our interest expense increased to $8.2 million from $7.1 million in last year's first quarter due to higher interest rates on our borrowing.

Daniel R. Trolio: The investment portfolio on a net cost basis stood at $720 million as of March 31st a modest reduction from December 31 2023.

Daniel R. Trolio: For the first quarter of 'twenty four we achieved onboarding yields of 13, 4% compared to 13, 8% achieved in the fourth quarter.

Daniel R. Trolio: Our loan portfolio yield was 15, 6% for the first quarter compared to 16, 3% for last year's first quarter.

Daniel R. Trolio: Total expenses for the quarter were $13 1 million compared to $14 8 million in the first quarter of 'twenty three are.

Daniel R. Trolio: Our interest expense increased to $8 2 million from $7 1 million in last year's fourth quarter due to higher interest rates on our borrowings.

Daniel R. Trolio: Our base management fee was $3.2 million, comparable to the prior period. We had an incentive fee of $300,000 in the first quarter compared to an incentive fee of $3 million for last year's first quarter. This was due to the deferral of incentives otherwise earned by our advisor in the quarter under our incentive fee cap and deferral mechanism. The deferral was driven by unrealized and realized losses on our portfolio. As 2024 progresses, we expect deferrals to end.

Daniel R. Trolio: Our base management fee was $3 2 million comparable with the prior year period.

Daniel R. Trolio: Yeah, an incentive fee of $300000 in the first quarter compared to an incentive fee of $3 million for last year's first quarter.

Daniel R. Trolio: This was due to the deferral of incentive fees otherwise earned by our adviser in the quarter under our incentive fee cap and deferral mechanism.

Daniel R. Trolio: The deferrals, driven by unrealized and realized losses on our portfolio.

Daniel R. Trolio: At 2024 progresses, we expect deferrals to end.

Daniel R. Trolio: Net investment income for the first quarter of 24 was $0.38 per share compared to $0.45 per share in the fourth quarter of 23 and $0.46 per share for the first quarter of 23. The company's undistributed spillover income as of March 31 was $1.30 per share. We anticipate that the size of our portfolio, along with the portfolio's elevated interest rates and our predictive pricing strategy, will enable us to continue generating NII that covers our distribution over time. Given the current macro environment, we continue to expect repayment activity will remain light in the near future.

Daniel R. Trolio: Net investment income for the first quarter of 'twenty four was 38 per share compared to 45 per share in the fourth quarter of 'twenty, three and 46 cents per share for the first quarter of 'twenty three the company's undistributed spillover income as of March 31 was $1 30 per share.

Daniel R. Trolio: We anticipate that the size of our portfolio along with the portfolio as elevated interest rates and our predictive pricing strategy will enable us to continue generating NII that covers our distribution over time given.

Daniel R. Trolio: Given the current macro environment, we continue to expect prepayment activity will remain light in the near future.

Daniel R. Trolio: To summarize our portfolio activities for the first quarter, new originations totaled $33 million, which were offset by $11 million in scheduled principal payments and $20 million in principal prepayments and partial paydowns. We ended the quarter with a total investment portfolio of $711 million. Given the macro environment, we expect to remain selective in the near term with respect to origination.

Daniel R. Trolio: To summarize our portfolio activities for the first quarter, new originations totaled $33 million, which were offset by $11 million in scheduled principal payments and $20 million in principal prepayments and partial pay downs.

Daniel R. Trolio: We ended the quarter with a total investment portfolio of $711 million given the macro environment, we expect to remain selective in the near term with respect to originations.

Daniel R. Trolio: On March 31st, the portfolio consisted of debt investments in 54 companies with an aggregate fair value of $671 million, and a portfolio of warrant, equity, and other investments in 103 companies with an aggregate fair value of $40 million. Based upon our outlook, our board declared monthly distributions of $0.11 per share for July, August, and September 2024. We remain committed to providing our shareholders with distributions that are covered by our net investment income over time.

Daniel R. Trolio: At March 31, the portfolio consisted of debt investments in 54 companies with an aggregate fair value of $671 million and a portfolio alright equity and other investments and 103 companies, where the Niagara fair value of $40 million.

Daniel R. Trolio: Based upon our outlook our board declared monthly distributions of <unk> 11 per share for July August and September 2024.

Daniel R. Trolio: We remain committed to providing our shareholders with distributions that are covered by our net investment income over time.

Daniel R. Trolio: Our NAV as of March 31st was $9.64 per share, compared to $9.71 as of December 31st, 2023, and $11.34 as of March 31st, 2023. The $0.07 reduction in NAV on a quarterly basis was primarily due to our paid distributions, including the $0.05 per share special distribution and adjustments to fair value, partially offset by net investment income. As we've consistently noted, nearly 100% of the outstanding principal amount of our debt investments bear interest at floating rates with coupons that are structured to increase if interest rates rise with interest rate floors. This concludes our opening remarks. We'll be happy to take any questions you may have at this time.

Daniel R. Trolio: Our NAV as of March 31st was $9.64 per share compared to $9.71 as of December 31, 2023, and $11.34 as of March 31 2023.

Daniel R. Trolio: The 7% reduction in NAV on a quarterly basis was primarily due to our paid distributions, including the five cent per share special distribution and adjustments to fair value.

Daniel R. Trolio: Partially offset by net investment income.

Daniel R. Trolio: As we've consistently noted nearly 100% of the outstanding principal amount of our debt investments bear interest at floating rates with coupons that are structured to increase if interest rates rise with interest rate floors.

Speaker Change: This concludes our opening remarks, we'll be happy to take questions. You may have at this time.

Operator: Thank you. Ladies and gentlemen, we will now be conducting our question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate that your line is in the question queue. You may press star 2 if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys.

Speaker Change: Thank you, ladies and gentlemen, we will now be conducting a question and answer session. If you would like to ask a question. Please press star one on your telephone keypad, a confirmation tone will indicate that your line is another question queue. You May press star two if he would like to remove your question from the queue for participants using speaker equipment.

Speaker Change: It may be necessary to pick up your handset before pressing the star keys one.

Speaker Change: One moment, please let me poll for questions.

Operator: One moment, please, while we poll for questions. Thank you. Our first question is coming from the line of Bryce Rowe with B Riley Securities. Please proceed with your question.

Speaker Change: Thank you. Our first question is coming from the line of Bryce Rowe with B Riley Securities. Please proceed with your question.

Bryce Wells Rowe: Great. Thanks and good morning. I wanted to maybe start with the net unrealized losses here for the quarter. There are a lot of moving parts with several of the portfolio companies. Maybe you guys could speak to the write-up of the Evelo investment, which looked like a pretty meaningful write-up quarter over quarter.

Bryce Wells Rowe: Great Thanks, and good morning.

Bryce Wells Rowe: Good morning wanted to maybe start with the.

Bryce Wells Rowe: The net unrealized.

Bryce Wells Rowe: Losses here for the quarter, you know a lot of moving parts with with several of the portfolio companies.

Bryce Wells Rowe: Maybe maybe you guys could speak to the write up of the <unk>.

Bryce Wells Rowe: Hello investment and it looked like a pretty meaningful right out.

Bryce Wells Rowe: Or every quarter.

Gerald A. Michaud: Yeah, hi, this is Jerry. So when we valued it at the end of the last quarter, it was coming off of a failed clinical trial for 2939. And, you know, we were just kind of trying to get our arms around what the potential value of the assets were. It was a pretty depressed biotech market in general in 2023.

Bryce Wells Rowe: Yes, Hi, this is Jerry.

Gerald A. Michaud: So when we marked it at the end of the last quarter. It was it was coming off of the failed clinical trial for <unk> 2939 and <unk>.

Gerald A. Michaud: Just kind of trying to get our arms around.

Gerald A. Michaud: But the potential value of the assets where it was.

Gerald A. Michaud: Pretty depressed biotech market in general for 2023 so.

Gerald A. Michaud: So, you know, I think we valued it at around a million dollars. However, since then, we've been working very closely with the company and their investors. And there are some significant opportunities for the potential value of some of their assets. And so we're working diligently to try to obviously maximize that value. So while I don't have anything specific to report today, and the company has not reported anything specific today, we are working very closely with them and believe over the next quarter or two, we should be able to hopefully maximize some of the value. So we put it at where we put the value of where we believe right now. There appears to be some interest in some of the value of their technology.

Gerald A. Michaud: Yeah.

Gerald A. Michaud: We market at around $1 $1 billion. However, since then we've been working very closely with the company and our investors.

Gerald A. Michaud: There is.

Gerald A. Michaud: There is some significant opportunities.

Gerald A. Michaud: For the potential <unk>.

Gerald A. Michaud: <unk>.

Gerald A. Michaud: Some of their assets and so we're working.

Gerald A. Michaud: Diligently to try to obviously maximize.

Gerald A. Michaud: So while I don't have anything to report specific today and the company has not reported anything specific today.

Gerald A. Michaud: We are we are working very closely with them and believe over the next quarter or two.

Gerald A. Michaud: We should see.

Gerald A. Michaud: To be able to hopefully.

Gerald A. Michaud: So by some of the value. So we put it at where we put the value where we believe right now.

Gerald A. Michaud: There appears to be.

Gerald A. Michaud: Some interest in some of the value of their technology.

Bryce Wells Rowe: Okay, that's helpful, Jerry. And then maybe another one just on some marks. I mean, you had an additional non-accrual added. It looks like that fair value mark relative to cost wasn't too terribly much different versus last quarter. And then NEXE, you saw kind of a write-down. There's been some talk of that over the last couple of conference calls. Maybe an update on those two non-accruals, NEXCAR and NEXE, if you wouldn't mind?

Speaker Change: Okay. That's helpful. Jerry.

Gerald A. Michaud: And maybe maybe another one just on marketing you had.

Gerald A. Michaud: An additional additional non accrual added.

Gerald A. Michaud: It looks like that.

Gerald A. Michaud: Fair fair value Mark relative to cost wasn't too terribly much different versus last quarter.

Gerald A. Michaud: And then next thing you saw kind of a write down and there's been there's been some talk of that over the last couple of conference calls maybe maybe an update on those two non accruals next car next if you wouldn't mind.

Daniel Scott Devorsetz: Bryce, this is Dan Devorsetz. Good questions. How are you doing?

Gerald A. Michaud: Sure Bryce this is Dan divorced that's good.

Speaker Change: Good questions.

Dan: How're you doing the the answer to that is quite similar to what Jerry was describing with velo in that there is for both of them. There is there is different degrees of technology going concern value asset value that we are looking to maximize and working on.

Daniel Scott Devorsetz: The answer to that is quite similar to what Jerry was describing with Avello in that for both of them, there's different degrees of technology going on, concern, value, asset value that we are looking to maximize and working on with both companies, management teams, investors, and third parties. There are parties interested in both of those companies' assets and businesses. Similar to what Jerry said, we're working through that. It's gonna be probably another quarter or two, maybe a little more to get to the other side of that.

Dan: With the with both companies.

Dan: Management teams investors and third parties.

Dan: There are.

Gerald A. Michaud: Parties interested in both of those companies assets and businesses.

Gerald A. Michaud: Similar to what Jerry said, we're working through that is going to be probably another quarter or two maybe a little more to get to the other side of that.

Daniel Scott Devorsetz: We mark the values this quarter based on all of that, the technology, the going concern value, and the interest that we're seeing in the market. For Nexi in particular, there was a small recovery, a small sale of one of the subsidiaries of Nexi that was reported in the Canadian courts that resulted in a small recovery. There is a lot of activity around the broader business, including the company's technology and customer base.

Gerald A. Michaud: We mark the values this quarter based upon.

Gerald A. Michaud: All of that the technology, the going concern value in and the interest that we're seeing in the market.

Gerald A. Michaud: For next year in particular, there was a small recovery small sale of one of the one of the subsidiaries of vaccine that was reported in the Canadian courts at.

Gerald A. Michaud: Resulted in a small recovery there is.

Gerald A. Michaud: A lot of activity around the broader business, including the the company's technology and and customer base still volume.

Bryce Wells Rowe: Okay. All right. I appreciate that.

Speaker Change: Alright, I appreciate that.

Daniel Scott Devorsetz: And then maybe maybe just a question around potential origination and repayment activity, the backlog that you noted, can you give us a sense of the kind of mix there between existing companies and potentially, you know, new platform companies? And then from a repayment perspective, I heard a couple different adjectives. I heard modest and I heard light. So just trying to kind of handicap what that actually kind of means, or could mean if we want to just talk about a range of potential repayment activity over the next couple quarters, that'd be helpful.

Speaker Change: And then maybe just a question around.

Speaker Change: Hum potential origination and repayment activity. The backlog that you noted can you give us a sense of kind of the mix there between existing companies and potentially new platform companies and then from a prepayment perspective I heard a couple of different adjectives I heard model.

Speaker Change: I heard a light.

Speaker Change: So just trying to kind of handicap, what what that what that actually kind of means or could mean, if we wanted to just talk about a range of potential repayment activity over the next couple of quarters that'd be helpful. Thanks.

Daniel Scott Devorsetz: Dan Devorsetz again. I think somewhere between modest and light is the way to model it now. Yeah, exactly. The first question about the backlog numbers that were mentioned, I think that is entirely committed backlog to existing borrowers in the portfolio, primarily milestone-based, so that's the number that was referenced in the prepared remarks. In terms of new originations, we are seeing activity at the top of the funnel for quality companies looking for venture loans.

Speaker Change: Dan Dan divorced as again, I think somewhere between modest in light is the way to model it.

Speaker Change: Yes exactly.

Speaker Change: The first question of the backlog numbers that was mentioned I think that that is entirely committed backlog to existing borrowers in the portfolio primarily milestone base. So that's the number that was referenced in the prepared remarks in terms of new originations we are seeing.

Speaker Change: Activity at the top of the funnel for Florida.

Daniel R. Trolio: Quality companies looking for venture loans. It is taking a long time to develop as I as I mentioned. So we are we are not rushing anything looking for companies that meet our underwriting hurdles and structuring transactions that are win win for everybody.

Daniel Scott Devorsetz: It is taking a long time to develop, as I mentioned, so we are not rushing anything, looking for companies that meet our underwriting hurdles and structuring transactions that are a win-win for everybody. So those are taking longer given this environment, so again, later this quarter and the back half of the year, we think that volume is going to pick up, but right now, it is really top of the funnel activity at the moment.

Daniel Scott Devorsetz: So those are taking longer given this environment. So.

Bryce Wells Rowe: Later, this quarter and back half of the year, we think that volume is going to pick up but right now it is it is.

Daniel Scott Devorsetz: Really.

Daniel Scott Devorsetz: Top of the funnel activity at the moment okay.

Speaker Change: Okay I'll jump back in queue I appreciate it.

Daniel Scott Devorsetz: Yeah.

Operator: Thank you. As a reminder, ladies and gentlemen, if you would like to ask a question at this time, please press star 1 on your telephone keypad. Please hold while we pull for additional questions. Thank you. Our next question is coming from Paul Johnson with KBW. Please proceed with your question.

Operator: Okay, I'll jump back in queue. Appreciate it. Thank you. As a reminder, ladies and gentlemen, if you would

Speaker Change: Thank you as a reminder, ladies and gentlemen, if you would like to ask a question at this time. Please press star one on your telephone keypad. Please hold while we poll for additional questions.

Speaker Change: Okay.

Operator: Thank you. Our next question is coming from Paul Johnson with <unk>. Please proceed with your question.

Paul Conrad Johnson: Yeah, good morning guys. Just on the lower interest income this quarter, I mean, was that primarily just a function of just kind of lower, excuse me, lower activity in the quarter, or are you guys seeing any kind of compression on, you know, spreads for...

Paul Conrad Johnson: Yeah. Good morning, guys just on the lower interest income this quarter I mean was that primarily just a function of just kind of lower.

Paul Conrad Johnson: Keeps me lower activity in the quarter or are you guys seeing any kind of compression on spreads for the loans.

Paul Conrad Johnson: Okay.

Daniel R. Trolio: No, Paul. It's a combination of a couple of things. The portfolio size and the prepayment activity was lower this quarter, and the amount of income and acceleration of fees that were related to those repayments were down. And so, as you can recall, the first quarter normally is a lower quarter for us in regards to prepayment and that type of activity, so we're not seeing spread compression.

Speaker Change: No Paul.

Daniel R. Trolio: A combination of a couple of things the portfolio size and the prepayment activity was lower this quarter.

Daniel R. Trolio: And the amount of income and acceleration of fees that were related to those prepayments were down and so as you can recall the first quarter normally is a lower quarter for us and we in regards to prepayment and that type of activity. So we're not seeing spread compression.

Paul Conrad Johnson: Got it. Thanks.

Paul: Got it thanks, and then just.

Paul Conrad Johnson: Around you know kind of the current environment.

Paul Conrad Johnson:

Gerald A. Michaud: And then, you know, kind of the current environment. It sounds like it's still a fairly cautious environment for venture capital. In terms of the convertible transactions, preferred capital, creative ways that sponsors or partners have come in to bridge the gap as the market remains, obviously, cautious. I mean, are those sorts of solutions in any way in competition with the venture debt markets? Or is this capital that's coming in to replace debt in any way? Or should this just kind of be seen as more or less a bridge to the next financing round?

Paul Conrad Johnson: It sounds like it's still a fairly cautious environment for venture capital.

Gerald A. Michaud: In terms of like the convertible.

Gerald A. Michaud: Transactions, you know preferred capital kind of creative ways that sponsors or partners have kind of come in to kind of.

Gerald A. Michaud: You know bridge the gap as the market remains obviously cautious I mean are those sorts of solutions you know had to step in in any way in competition with the venture debt markets or is this capital that's coming in to.

Gerald A. Michaud: To replace that in any way or is it just should just kind of been seen as more or less a bridge to the next financing round.

Gerald A. Michaud: Yeah, I guess, as I think about our own portfolio, I would say that it's not in competition with the debt; we are often asked, in combination with some sort of equity transaction, whether it be convertible debt or some sort of bridge, to, you know, potentially help with modified terms; it's going to extend the runway of our portfolio company and get them to some sort of reflection point. So it's definitely not in competition with us at all relative to our own portfolio, as we're seeing new transactions come into the market.

Speaker Change: Yeah I guess.

Gerald A. Michaud: Think about our own portfolio I would say that it's not in competition with the debt.

Gerald A. Michaud: We are often.

Gerald A. Michaud: Asked.

Gerald A. Michaud: In combination with some sort of equity transaction, whether whether it be convertible debt or.

Gerald A. Michaud: Some sort of bridge.

Gerald A. Michaud: To potentially help with modified terms, it's going to extend the runway of our portfolio company and get them to <unk>.

Gerald A. Michaud: Some some sort of inflection point.

Gerald A. Michaud: And this is, you know, we talked about the top of the funnel really being quite robust right now; we are seeing, I think, a reality check from the equity markets. I think, from, you know, during 2023, they went out to the debt market on many occasions, and unfortunately, found out that there wasn't enough support from the equity holders to get venture debt, the venture debt market excited about a lot of companies that were actually doing pretty well, So I think we're starting to see some of that now where they're coming back to the market with some of their portfolio companies, where they're making a realistic attempt to provide significant liquidity and asking the venture debt market to provide some additional debt financing.

Gerald A. Michaud: It's definitely not in competition with us.

Gerald A. Michaud: At all relative to our own portfolio as we're seeing new transactions.

Gerald A. Michaud: Come into the market and this is what we talked about the top of the funnel really being quite robust right now we are seeing.

Gerald A. Michaud: I think a reality check from the equity markets I think.

Gerald A. Michaud: During 2023, they went out to the debt market on many occasions, and unfortunately found out that.

Gerald A. Michaud: There wasn't enough support from the equity holders to get.

Gerald A. Michaud: Venture debt.

Gerald A. Michaud: That market excited about a lot of companies that we're actually doing pretty well, but just didn't have the liquidity.

Gerald A. Michaud: They gave us gave us meeting the market that market kind of.

Gerald A. Michaud: Comfort. So I think we're starting to see some of that now where they are coming back to the market.

Gerald A. Michaud: With with some of their portfolio companies, where they're making a realistic attempt to provide significantly liquidity and asking the venture debt market to provide some additional debt.

Gerald A. Michaud: And so we're starting to see those opportunities. It's a bit of a green shoot thing; we haven't, we didn't see much of that 23 at all. So we're starting to feel, you know, better. And I hope that comes across at the top of our funnel. But as Dan mentioned, because of everything that's taken place with a lot of these companies over the last year, just trying to understand how to underwrite them at this point, you know, if market conditions for the company and whatever their strategy is still are, is, is consistent with what we saw before, that's taking a little bit longer.

Gerald A. Michaud: Financing and so we're starting to see those opportunities.

Gerald A. Michaud: It's a bit of a green shoot we haven't we didn't see much of that 23 at all so we're feeling starting to feel better I hope that's come across.

Gerald A. Michaud: About the top of our funnel, but as Dan mentioned.

Gerald A. Michaud: Because of everything that's taken place with a lot of these companies over the last year, just trying to understand how to underwrite them at this point if market conditions for the company and whatever their strategy is still as is consistent with what we saw before.

Gerald A. Michaud: So, you know, in terms of funding activity, that could be, you know, take a little bit longer, be a little bit slower, but we are definitely seeing improvement in both more equity capital coming in for new companies, and if they realistically want to want to access venture debt.

Gerald A. Michaud: That's taking a little bit longer. So you know in terms of funding activity that could be.

Gerald A. Michaud: Take it take a little bit longer and be a little bit slower, but we are definitely seeing improvement in both.

Gerald A. Michaud: More equity capital coming in for new companies.

Gerald A. Michaud: They realistically want to want to access the internet.

Paul Conrad Johnson: Got it. I appreciate it. That's a very helpful detail. That's all for me. Thanks.

Speaker Change: Got it I appreciate it.

Paul Conrad Johnson: Helpful detail, that's all for me thanks.

Paul Conrad Johnson: Okay.

Operator: Thank you. Our next question is coming from Christopher Nolan with Lattenberg Zalman. Please proceed with your question.

Paul Conrad Johnson: Thank you. Our next question is coming from Christopher Nolan with Ladenburg Thalmann. Please proceed with your question.

Christopher Whitbread Patrick Nolan: Hi. To follow up, excuse me; I joined the conference late. Just to follow up on Paul's line of questioning, are you seeing more deal flow from tech companies which are looking to take out debt financing from another BDC?

Christopher Whitbread Patrick Nolan: Hi, Paul.

Christopher Whitbread Patrick Nolan: Oh excuse me I joined the conference late.

Christopher Whitbread Patrick Nolan: To follow up on pulse line of questioning.

Christopher Whitbread Patrick Nolan: Are you seeing more deal flow from tech companies, which are looking to.

Christopher Whitbread Patrick Nolan: Which are debt financing from another BDC.

Christopher Whitbread Patrick Nolan: So this is Dan divorce, it's Chris that's a common.

Daniel Scott Devorsetz: So this is Dan Devorsetz, Chris. That's a common use of proceeds for venture debt, refinances, and different markets; they're used for different reasons. But primarily, when we're looking at potentially replacing another lender, we want to make sure that we're not refinancing a problem account. Just replacing debt with debt is not a good use of our funds. But if it's a natural progression from a smaller lender to a larger lender where you're both replacing debt but providing growth capital as well, oftentimes with additional equity, that's the types of opportunities we do look at. There are deals coming to market where it is a straight swap, and that is usually a bad sign that the existing lender doesn't want to re-up, and those are situations we would avoid.

Daniel Scott Devorsetz: Use of proceeds for for venture debt is is refinances and in different markets are used for different reasons, but primarily when we're looking at potentially replacing another lender we want to make sure that we're not refinancing a problem account it would.

Daniel Scott Devorsetz: Just replacing debt for debt is not is not a good use of our funds, but if it's a natural progression from a smaller lender to a larger lender where you both re re placing debt providing growth capital as well oftentimes with additional equity. That's that's the types of opportunities. We do look at there are there are.

Daniel Scott Devorsetz: Sure.

Daniel Scott Devorsetz: Deals coming to market, where it is a straight swap and that is usually a bad sign that the existing lender doesn't want to re up and those are situations, where we would avoid.

Christopher Whitbread Patrick Nolan: And also, I guess as a follow-up question, the venture debt market, at least as it pertains to BDCs, seems to be really bifurcated. You've got some of the larger players who seem to have real pricing power, lower costs of capital, and they're just getting, you know, better deal flow in general. How are you guys competing with that? I mean... to offer a lower rate, and the Terms and Conditions. I mean, because it seems like there's a real separation between the higher, larger ones. Well, you know,

Daniel Scott Devorsetz: I'm also.

Daniel Scott Devorsetz: A follow up question the venture debt market at least as it pertains a BDC seem to be really bifurcated.

Christopher Whitbread Patrick Nolan: You've got some of the larger players who seem to have real pricing power.

Christopher Whitbread Patrick Nolan: Lower cost of capital.

Christopher Whitbread Patrick Nolan: Yes.

Christopher Whitbread Patrick Nolan: Getting better deal flow in general.

Christopher Whitbread Patrick Nolan: How are you guys competing with that I mean.

Christopher Whitbread Patrick Nolan: Do you offer lower rates do you offer a little easy in terms of conditions I mean, because it seems like there's a real separation between.

Christopher Whitbread Patrick Nolan: Some of the larger players than the others.

Gerald A. Michaud: Well, you know, basically, there's really only one larger player, but I think, basically, the market is, relative to BDCs, pretty much a set market. You know, I think we can compete, we certainly can compete with any venture lender relative to price. Size becomes an issue, obviously.

Speaker Change: Well you know essentially.

Gerald A. Michaud: There's really only one larger player but.

Gerald A. Michaud: I think.

Gerald A. Michaud: Basically the market is relative to Bdcs is it's pretty much set market.

Gerald A. Michaud: I think we can compete we certainly can compete with.

Gerald A. Michaud: Any venture lender relative to price.

Gerald A. Michaud: Size becomes an issue obviously, we don't want redoing.

Gerald A. Michaud: We don't want to be doing transactions that are just, you know, too large of a percentage of our own portfolio. We actually pay very close attention to our top 10 investments in the portfolio at all times to see where we are. Our ability to raise capital, as Dan Trolio mentioned earlier, has actually been pretty good in a really difficult market. We did a follow-on round last year in a, you know, difficult market, and we've been using our ATM to continually raise capital.

Gerald A. Michaud: Be doing transactions that are just.

Gerald A. Michaud: Two larger percentage of our own portfolio, we actually pay very close attention to our top 10 investments in the portfolio at all times.

Gerald A. Michaud: See where we are.

Gerald A. Michaud: Our ability to raise to raise capital as Antonio.

Gerald A. Michaud: And Troy mentioned earlier has actually been pretty good in a in a really difficult market.

Gerald A. Michaud: We did a follow on equity round last year in a difficult market and we've been using our ATM to continually raise capital. So I think we have liquidity to fund transactions and can be competitive.

Gerald A. Michaud: So I think we have liquidity to fund transactions and can be competitive, and I don't think we are actually being competitive. We're competing for deals every day, so we have a sense of what's out there in the marketplace, so we can. So I think size is probably one that, in fact, does impact our ability. I think the other thing that has changed in our market is the tech banks. Everything that's happened since the SVB situation last year, they're still trying to settle in on where they want to be in the market, and we have seen more collaboration relative to working with tech banks than we had seen prior to SVB.

Gerald A. Michaud: No I don't think we are actually being competitive we're competing for deals every day. So we have a sense of whats out there in the marketplace.

Gerald A. Michaud: So we can't so I think size is probably one that did in fact does impact our ability.

Gerald A. Michaud: I think the other thing that has changed in our market is.

Gerald A. Michaud: The tech banks everything that's happened since the.

Gerald A. Michaud: The SPV situation last year, they are still trying to settle in on where they want to be in the market and we have seen more collaboration.

Gerald A. Michaud: Relative to working with tech banks, and we had seen prior to SBB.

Gerald A. Michaud: So there's an opportunity for us, and there's a situation where, you know, we can be very price competitive because we can use some sort of combined price between the bank and Horizon to provide very attractive financing for venture capital-backed companies.

Gerald A. Michaud: So there's opportunity there for us and there is a situation where we can be very price competitive because we can use some sort of combined.

Gerald A. Michaud: Price between the bank and in Horizon two.

Gerald A. Michaud: To be to provide very attractive financing for venture.

Gerald A. Michaud: Venture capital backed companies.

Gerald A. Michaud: Okay.

Gerald A. Michaud: Okay.

Robert D. Pomeroy: Thank you. There are no further questions. I would now like to turn the call back over to Robert Pomeroy, Chairman and CEO, for closing comments.

Gerald A. Michaud: Thank you there are no further questions I would now like to turn the call back over to Robert Pomeroy, Chairman and CEO for closing comments.

Robert D. Pomeroy: Thank you all for joining us this morning. We appreciate your continued interest and support in Horizon, and we look forward to speaking with you again soon.

Robert D. Pomeroy: Thank you all for joining us. This morning, we appreciate your continued interest and support in Horizon, and we look forward to speaking with you again soon this will conclude our call.

Operator: Ladies and gentlemen, this does conclude today's teleconference. We thank you for your participation, and you may disconnect your lines at this time.

Speaker Change: Ladies and gentlemen, this does conclude today's teleconference. We thank you for your participation and you may disconnect your lines at this time.

Operator: Okay.

Operator: Yeah.

Operator: Yeah.

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Operator: Okay.

Operator: [music].