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Trinity Capital Inc.’s (TRIN) CEO Steve Brown on Q2 2022 Results – Earnings Call Transcript


Trinity Capital Inc. (NASDAQ:TRIN) Q2 2022 Earnings Conference Call August 4, 2022 5:00 PM ET

Company Participants

Sarah Stanton – General Counsel

Steve Brown – Chairman and Chief Executive Officer

Kyle Brown – President and Chief Investment Officer

David Lund – Chief Financial Officer

Michael Testa – Chief Accounting Officer

Gerry Harder – Chief Operating Officer

Conference Call Participants

Finian O’Shea – Wells Fargo

Ryan Lynch – KBW

Christopher Nolan – Ladenburg Thalmann

Paul Johnson – KBW


Good afternoon. My name is Raisa, and I will be your conference operator today. At this time, I would like to welcome everyone to Trinity Capital’s Second Quarter 2022 Earnings Conference Call. Our host for today’s call are Steve Brown, Chairman and Chief Executive Officer; Kyle Brown, President and Chief Investment Officer; David Lund, Chief Financial Officer; Michael Testa, Chief Accounting Officer; and Sarah Stanton, General Counsel; Gerry Harder, Chief Operating Officer; and Ron Kundich, Chief Credit Officer, are also present.

Today’s call is being recorded and will be made available for replay at 8:00 p.m. Eastern Time. A replay of the webcast is available on Trinity Capital’s Investor Relations website. At this time, all participants have been placed in a listen-only mode and the floor will open for your questions following the presentation. [Operator Instructions]

It is now my pleasure to turn the call over to Sarah Stanton. Please go ahead.

Sarah Stanton

Thank you, Raisa, and welcome, everyone, to Trinity Capital’s earnings conference call for the second quarter of 2022. Trinity’s second quarter 2022 financial results were released just after today’s market close and can be accessed from Trinity’s Investor Relations website at ir.trinitycap.com. A replay of the call is available on Trinity’s web page or by using the telephone number provided in today’s earnings release.

Before we begin, I would like to remind everyone that certain statements that are not based on historical facts made during this call, including any statements relating to financial guidance, may be deemed forward-looking statements under federal securities laws. Because these forward-looking statements involve known and unknown risks and uncertainties, there are important factors that could cause actual results to differ materially from those expressed or implied by these forward-looking statements.

We encourage you to refer to our most recent SEC filings, for information on some of these risk factors. Trinity Capital assumes no obligation or responsibility to update any forward-looking statements. Please note that the information reported on this call speaks only as of today, August 4, 2022. Therefore, you are advised that time-sensitive information may no longer be accurate at the time of any replay with new or transcript reading.

Now allow me to introduce Trinity Capital’s Chairman and CEO, Steve Brown. Steve?

Steve Brown

Thank you, Sarah, and thank you to everyone joining us today. As you saw in our earnings release this afternoon, we generated solid second quarter results despite the recent turmoil in the capital markets. Trinity has been a public reporting BDC for 10 quarters now. And during this time, we continue to build our team, our track record and our operations through leveraging the platform we built over the previous 13 years.

We stated before going public in January of 2020 that we plan to scale the business by investing in best-in-class talent, growing our revenues, and expanding our NII which would contribute to our dividends. We are now navigating our second market downturn in 2.5 years as a publicly reporting company as we continue to deliver on our promises to shareholders.

In a short time since our first quarter as a public reporting BDC, our team has grown from 29 to 52 employees. Our total assets have more than doubled from under $500 million to over $1 billion, a major milestone for Trinity. Our quarterly investment income has more than tripled from $10.9 million to $33.5 million. Our NII per share has grown from $0.24 to $0.51 in the second quarter, and our core dividend has grown from $0.22 to $0.42, with our core dividend increasing now for the sixth consecutive quarter in addition to our supplemental 15% – $0.15 dividend that we paid for the last two quarters.

Trinity’s estimated spillover income is $2 per share which will allow us to continue supplementing our growing core dividend or reinvest off the balance sheet to further grow investment income for our shareholders. As I mentioned, we have weathered two economic storms since becoming a public reporting BDC. And while still in the midst of a second downturn, Trinity has absolutely delivered for our shareholders. We pride ourselves on consistent and thoughtful growth as well as dependable performance, and we’ve done just that.

Turning to some additional key highlights. We achieved another strong quarter for commitments and fundings leading to a record investment portfolio. Our origination team delivered steady deal flow, allowing us to grow our investment portfolio during the quarter, which we expect will lead to earnings growth in the second half of 2022.

This performance positions us to capitalize on market trends even as we closely monitor recessionary pressures and the volatile macro environment. We have the right team and strategy in place heading into the second half of 2022, and I am confident in our industry-leading position as we enter into what looks to be a broader challenging credit and rate environment in the coming months.

Our credit quality in the portfolio remains strong with 98% of our debt investments at cost performing. During the quarter, we strengthened our liquidity position by selling $57.5 million of our common stock, and we upsized our KeyBank Credit Facility and availability under the facility by $100 million to a total capacity of $400 million and availability of $300 million.

Subsequent to quarter end, we reopened our 7% bond and issued an additional $57.5 million of fixed rate long-term debt due in January of 2025. Kyle will dive deeper into the trends we are seeing in the venture capital landscape, but I can speak for our entire team when I say Trinity is poised to capture opportunity in this environment. Companies will continue to look for capital providers that can add value beyond the term sheet that is exactly what Trinity team brings.

Trinity’s versatile financing solutions meet the evolving demands of today’s challenging market. We have a platform, we have a team, and we have a strategy in place that will accelerate our business through its next phase of growth in the second half of 2022. We believe our platform is built to deliver strong returns even in the current macro environment.

I will now turn the call over to Kyle Brown, our President and Chief Investment Officer, for some further thoughts on our progress and more detail on the market. Kyle?

Kyle Brown

Great. Thanks, Steve, and good afternoon, everyone. Trinity continues to build on this momentum in Q2. These efforts have put us on solid footing as we head into the second half of the year. At Trinity, culture is an important part of our strategy. We have built a unique culture of entrepreneurial spirit and attract the best and brightest talent, and we pride ourselves on this. We continue to strengthen the roster, which has led us to a healthy increase in deal volume. Our quality reputation for working with our portfolio of companies when things don’t go to plan is helping us navigate a more challenging credit rate environment now more than ever.

Turning to our results. Trinity’s impressive record of originations continued in Q2 with $302.3 million in new commitments, bringing total commitments for the first half of 2022 to approximately $608 million. We funded approximately $193.8 million of investments, leading our portfolio to grow to $1.1 billion on a cost basis, an increase of 15.8% over Q1 2022.

We set a record of $460 million of total fundings in the first half of the year. As Steve noted, the $1 billion mark for our portfolio is a major accomplishment and encapsulates the incredible work put in by our whole team. Our $193.8 million of deployments during the quarter reached 28 portfolio companies, including $117 million in gross deployments to 11 new portfolio companies and $76.8 million in gross deployments to 17 existing portfolio companies.

Gross deployments were partially offset by $44.4 million in principal repayments, of which $16.8 million was from early repayments and $27.6 million was from normal amortization. We finished the quarter with $373 million of unfunded commitments, giving us a strong pipeline through which we can grow our portfolio in subsequent quarters. All of the outstanding commitments are subject to ongoing diligence and approval by our investment committee.

The composition of our portfolio remained relatively consistent with manufacturing once again making up approximately 1/3 of our total portfolio. Professional, scientific and technical services made up 24.3%, followed by information approximately around 8%. With respect to our exposure in the digital asset sector, we have made equipment loans totaling $69.6 million on a cost basis to three publicly traded digital asset mining and hosting companies, representing approximately 6.9% of debt portfolio at cost.

These loans are secured by a first position lean on the underlying digital mining assets, which are mission-critical to their operations and they represent contractual obligations of the public company borrowers. As with our other equipment loans, these are not traditional equipment leases and the assets are held on the balance sheets of the borrowers, not Trinity. It is also important to note that these are 36-month fully amortizing facilities primarily deployed throughout 2021.

We believe that our underwriting thesis on these assets remains intact despite the recent volatility in the sector, and we are confident in our positions. Sliding deeper into the portfolio composition at fair value, approximately 73.2% of our debt portfolio or $769.7 million is comprised of secured loans, and 21.4% or $224.9 million is invested in equipment financing.

As we have said in the past, the equipment financing deals were generally funded over subsequent periods, so the commitment data will fluctuate quarter-to-quarter. The remainder of our portfolio of approximately $56.5 million at fair value is comprised of equity and warrants. While the venture capital ecosystem is still experiencing an anticipated tightening, we are well-positioned to navigate this industry correction.

We saw unprecedented VC investment activity in 2021. And while overall second quarter 2022 year-over-year quarterly VC deal count was down, it still exceeded pre-2021 quarterly totals according to Pitchbook, and VC fundraising in the first half of 2022 already reached nearly 87% of all of 2021, a full year total.

While deal activity remains historically high across all stages, valuations are declining as investors refine their investment criteria. The focus industry-wide will be on prioritizing existing portfolio companies and supporting them through this environment, while sourcing fundamentally strong investment opportunities in sectors of innovation going forward.

This presents an opportunity for Trinity as a leading financing platform in the VC ecosystems. At Trinity, we pride ourselves on our established creative approach to investing that lends itself to discovering opportunities in challenging markets. While we remain vigilant in these times, we are also focused on the future, with scaling our business with a rigorous investment approach. There’s clear and consistent market demand for financing solutions, which become an attractive alternative to dilutive equity as enterprise values pull back in the current market.

We believe we have a platform that is well suited to support management teams as they execute on the next phase of growth. Our vision remains the same: to build a preeminent lending platform with a suite of solutions for emerging growth stage companies and to be the partner of choice when there is a need for financing. We are well on our way to fulfilling that objective. And our disciplined strategy, continued leadership team will accelerate our business through these turbulent plans, positioning us to emerge stronger.

With that, I’m going to turn the call over to Dave Lund to discuss our financial performance in more detail. Dave?

David Lund

Thank you, Kyle, and thank you to everyone listening in today. I opened my remarks last quarter by noting that our financial discipline and strong balance sheet have been key contributors to our strong financial performance in these volatile markets. After another quarter of similar macro challenges, we have stayed the course. Our ability to combine strong originations with a disciplined investment approach and financial foresight has enabled us to continue growing in this market.

Our debt portfolio continues to be well-positioned ahead of future anticipated rate hikes with 64.4% of our loans at floating rates compared to 59.6% at the end of Q1 and 49.3% a year ago. While on the borrowing side, approximately 63% of our outstanding debt at the end of the second quarter was at fixed rates.

As we disclosed in our 10-Q filed today, a 100 basis point increase in the prime rate would have the net effect of adding $4.1 million or approximately $0.13 per share to our annual net investment income. The steps we have taken to grow our floating rate – loan portfolio have positioned us to benefit from the Federal Reserve’s recent rate increases as well as future rate increases while improving our returns.

I will now discuss our second quarter financial and operational results. We recorded total investment income of $33.5 million, a 5.3% increase over $31.8 million of total investment income recorded during the first quarter of 2022 and an increase of 71.8% compared to the same period of 2021.

This increase from the prior quarter was attributable to higher interest income of $4.1 million on a larger loan portfolio, coupled with the higher average interest rates on our floating rate investments. We experienced significantly lower early repayments during Q2, which led to a decrease of $2.5 million in fee income compared to Q1.

Our effective yield on the portfolio for Q2 was 13.8%, a decrease from 16.3% in the first quarter, primarily driven by a decrease in non-recurring fee income which fluctuates based on the investment activity and early repayment activity. While our core yield, which excludes non-recurring fee income, remained steady with the prior quarter at 12.9%.

We incurred a total of $7.8 million of total interest expense and amortization of deferred financing costs on our various debt facilities as compared to $6.8 million in Q1. This increase was primarily due to increased borrowings under our KeyBank facility. For Q2, our weighted average cost of debt, including interest and fee amortization, was 5.6% compared to 5.9% in Q1. The slight decrease was due to borrowings under our KeyBank facility, which has a lower cost of capital at SOFR plus 285 basis points.

Our operating expenses, which are comprised of compensation, professional expenses, general and administrative expenses and estimated excise taxes of approximately $10 million during Q2 as compared to approximately $9.4 million during Q1. The increase of approximately $546,000 or 5.8% was primarily driven by increased compensation expenses related to higher headcount and restricted stock award expense.

Our strong team in which we continue to prudently invest has been a major driver of our success and they continue to maintain a strong pipeline of investment opportunities. As a result of this operating activity, net investment income for the second quarter was $15.7 million or $0.51 per basic share as compared to $15.6 million or $0.57 per basic share in the preceding quarter. We recorded net unrealized depreciation of $13.8 million during the quarter.

We recognized unrealized depreciation of $13.1 million in our loan portfolio, primarily attributed to marks on Street portfolio company due to underperformance and $11.2 million on our equity and warrant portfolio related to mark-to-market adjustments as a result of general market volatility. We also recognized and realized appreciation of $10.5 million on the flip from unrealized depreciation to realized losses of $9.6 million, primarily related to one legacy portfolio company that had been previously written down on an unrealized basis.

We experienced moderate adjustments to our equipment loans as they are fixed rate instruments, and I would like to point out that the future draws under these loans are adjusted to current market rates at the time of the draw. Our variable rate loans did not incur significant adjustments as the rates under these loans are adjusted with the change in prime rates.

Our net realized gains for the year to date remained strong at approximately $43 million. As we continue to realize investments, our goal is to capture upside opportunistically as we did earlier this year with our investments in Lucid and Matterport, while making judicious decisions to limit downside. Our operating activities generated strong returns for our shareholders with our ROAE or NII average – over average equity of 13.5% and our [indiscernible] or NII over average total assets of 5.9%.

Net assets increased by approximately 8% to $458 million or NAV of $14.52 per share compared to Q1 net assets of $424 million or NAV of $15.15 per share. Quarter-over-quarter, decrease of $0.53 per share or 3.5% in NAV was primarily the result of the unrealized depreciation realized losses I just discussed and the $0.15 supplemental distribution to shareholders, offset by our investment income, which exceeded our standard dividend by $0.09 per share at our accretive common stock offerings. Our talented team and disciplined investment and process returning to continues to forge forward, growing our portfolio and positioning us to continue this growth as rates rise.

I will now hand the call over to Mike Testa, our Chief Accounting Officer, who will discuss our credit performance, liquidity and capital allocation.

Michael Testa

Thanks, Steve. Starting with the credit quality, our portfolio companies continue to perform well in the second quarter of 2022 with approximately 98% of our portfolio performing at cost. We currently have four portfolio companies on non-accrual with a cost basis of $20.5 million and a fair value of $5.9 million, representing just 0.6% of the fair value of the debt investment portfolio.

Our average credit rating for the second quarter stood at 3.0 based on our one to five rating system, with five indicating very strong performance. This remains relatively consistent with our average credit rating of 3.1 in Q1 and reflects the favorable performance of our portfolio companies that we continue to closely monitor.

Moving to liquidity and capital resources. Available liquidity as of June 30, 2022, was approximately $93.2 million, including our approximately $13.2 million in unrestricted cash and cash equivalents and a borrowing capacity of approximately $80 million under our KeyBank credit facility, subject to existing terms and conditions. We continue to be active in the capital markets, completing an accretive equity offering in April, which generated $15 million in proceeds as well as an additional $7.5 million from exercise of our underwriters’ overallotment option.

We utilized our ATM offering program during the quarter, raising approximately $3 million. February 2, the end of the second quarter, we announced that we reopened those 7% unsecured notes due in January 2025 and raised $57.5 million, which we used to pay down our KeyBank facility.

As a reminder, the 7% notes, including the recent addition are called by Trinity beginning in January of 2023 and are traded on NASDAQ under the trading symbol, TRIM. Our leverage increased approximately 130% from 120% in the prior quarter. This remains in our – within our long-term target leverage ratio of between 115% and 135% depending on the timing of investment activity.

We are actively managing our liquidity and continuing to explore full capital options, while we’ll be accretive to our shareholders, such as investments under the RIA once approved. With regards to RIA progress, the review process is still within our expected time line, and we continue to work with the SEC to complete the review of our application.

On June 15, 2022, our Board declared a cash dividend of $0.42 per share for the second quarter of 2022, representing a 5% increase from Q1 2022. This is the sixth quarter in a row where we have increased our core billing. Additionally, the Board approved a $0.15 per share supplemental dividend. Both dividends were paid on July 15, 2022.

Our GAAP NNI generated coverage of approximately 121% of our core dividend for the quarter. We anticipate declaring a dividend for the third quarter of 2022 in September, subject to our Board approval. Our accumulated undistributed earnings fell over at the end of Q2 of approximately $57 million or $2.15 per share continues to afford us the opportunity to invest the capital for the benefit of our investors and maintain a consistent and meaningful distribution to our services.

Moving to the second half of 2022. Trinity continues to be front footed on as opposed to portfolio growth, adapting to a changing market, positioning our portfolio and borrowings to capitalize on rising rates and to build a team that will enable us to power through the market hazards.

That concludes our prepared remarks. I will now open the line up for questions. Operator?

Question-and-Answer Session


[Operator Instructions] And we’ll take our first question from Finian O’Shea with Wells Fargo. Your line is open.

Finian O’Shea

Hi, everyone. Good afternoon. Thank you. I appreciate the color on the crypto mining exposure. Just one question there. How do you assess the risk of the depreciation or obsolescence as newer and more productive machines come out? Is there an impact perhaps with newer machines that use less electricity or produce more, taking share and lowering the profitability of more legacy companies? Or are you isolated from those sorts of impacts? Thank you.

Gerry Harder

Hi, Finian. This is Gerry Harder. Yes. That’s a great question. So the – I’ll say a couple of things. So our equipment financings to the three publicly traded portfolio companies, those represent the latest, most recent equipment as of the time of those financings. And so what we see is the typical lifetime of these miners deployed in the field is five years. Our financings are 36 months. We do keep our eye on halving events for the Bitcoin mining specifically.

The next halving event is 2024. That’s when newer models tend to come out in conjunction with those inflection points in crypto. So the other thing I would say is in minor plugged in and deployed and actively mining is far greater than the value of the miners sitting on a pallet on a loading dock. But even if we look to those market prices, we’re still well below 100% LTV or under 90% LTV even with the depressed prices today.

Kyle Brown

And Finian, one other point there, many of the companies we have, we have these latest generation machines out with, they are still utilizing older machines. If they’re profitable, they’ll continue running them. And our miners are profitable somewhere around $8,000 per Bitcoin. And so to the extent new machines do come out in 2024, we have already underwritten to be fairly off risk at that point. We assume the companies will continue to utilize the machines if they’re profitable.

Finian O’Shea

Very helpful. Appreciate that. Just a small follow-up for me. Apologies if I missed this. Can you give us some color on what you’re seeing for new origination yields given lower perceived at least equity valuations in the venture market? Thank you.

Kyle Brown

Sure. So we are – I think – I’ll speak to the question from a – I think from a credit standpoint and what we’re seeing. And we are seeing more opportunities. We are seeing companies get revalued, and the marker for kind of what fits for venture capital firms right now in terms of valuation has been lowered. And again, that doesn’t necessarily impact us even with our portfolio.

The majority of our gains are on rates and fees, and we’re not looking for substantial upside, the equity or warrants to hit the returns we have over the years. And so we are seeing a revaluation. We’re seeing kind of multiples of revenue go down across sectors, and we are seeing a lot of opportunities for companies looking for less dilutive capital via debt instrument. And so – and then from an underwriting perspective, we are obviously kind of focused on companies having adequate runway, 18, 24 plus months of runway, and that’s something we’re really focused on from a credit perspective.


[Operator Instructions] We’ll take our next question from Paul Johnson with KBW. Your line is open.

Ryan Lynch

Hey, good evening, guys. Thanks for taking my questions. Ryan, this afternoon – this evening. I’m just curious in this environment, kind of going along with sense questions to higher demand for venture capital debt. Are you guys securing higher – being able to secure a higher payment fee income spread so we can potentially expect the lower prepayment fee income this quarter to potentially higher prepayment fee quarters in that kind of back half of most these loans in the percentage?

Kyle Brown

Thanks for the question, Paul. This is Kyle. We are seeing higher-priced facilities. Rates have increased. Some of that is rates have gone up overall as the Fed increases rates. But we are seeing a little bit higher pricing. There’s a little bit more demand, maybe a little bit less capital available. And so we expect to see some slight increases over subsequent quarters on pricing. But overall, not significant shifts one way or the other.

Ryan Lynch

Got it. Appreciate that. I’m just curious in care, you don’t have this, but if you have any sort of observation no matter how in general, just in terms of liquidity from your portfolio companies and your various venture capital partners. Do you guys have any statistics there to share at all that kind of give an idea of what sort of cash some of your companies are holding on to at the moment?

Gerry Harder

Yes. I mean, we – and this is Gerry. Thanks for the question. So we’re obviously tracking cash life of our portfolio companies very closely. It’s a significant factor in our credit rating system. Weighted average basis across our portfolio, cash life is around 15 months. So the majority of our portfolio of companies have at least 12 months of cash life at this point. We are definitely seeing a trend within the portfolio as companies face or are concerned about either valuations or scarcity of equity capital. And so they’re definitely in a mode of trying to increase their profitability and move more quickly to a cash flow positive state as opposed to the spend for growth mentality that we sometimes see.

Ryan Lynch

Got it. Appreciate that. I’m just curious, I mean, do you track or do you disclose at all what percent of your loans essentially have any sort of additional debt or bank debt that could potentially, I guess, be senior to any of your loans within those companies. Is there any color you can provide?

Gerry Harder

Yes. I mean we most certainly do, right? The vast majority of our portfolio is first lien, either enterprise or equipment. But with that said, this question we get a lot, about 27% of our debt portfolio is blanket. Second thing, we will work with certain senior lenders, well known in the industry, Silicon Valley Bank, Western Alliance Bank, Pacific West Bank, and there’s just a small handful of companies that we will work with typically because we have experience with them over time. But we are well aware of the total debt held by our portfolio of companies.

To give you some comfort, considering senior and Trinity debt, the median loan to value in our portfolio is about 14%. And we do mark our assets to market every quarter. So as we get third-party valuation marks for portfolio companies, we’re adjusting that in real time. So we think we’re still in good territory from a loan-to-value standpoint.

Kyle Brown

Yes. And further, Paul, we are generally – those are generally deals where – it’s a very strong company. And we are comfortable with the senior piece in there, piece that we would be comfortable doing ourselves. But that much lower cost of capital creates blended cost that gives the company additional runway. So that’s – we think of those as typically strong deals.


[Operator Instructions] We’ll take our next question from Christopher Nolan with Ladenburg Thalmann. Please go ahead.

Christopher Nolan

Hey, guys. What was the driver of the realized loss again? I missed it.

David Lund

Yes. The realized loss was primarily one company that we have had in the portfolio since 2016.

Christopher Nolan

Do you want to name the company?

David Lund

Sure. Store Intelligence, yes. And that had been written down on an unrealized basis. So we had a full recovery on a fair value basis from the first quarter.

Christopher Nolan

Got it. And I think in the queue Store Intelligence, I think has an equity piece still there?

David Lund

That’s correct.

Christopher Nolan

Okay. Great. I guess the increase in the dividend came as surprise given that the market overall seems to be weakening. Is it driven by exploration, the spillover or anything along those lines?

David Lund

This is Dave. The dividend is driven by our operational performance and our forward-looking expectations in terms of performance as well, knowing that we have to distribute 90% of our earnings. We try to make sure that we’re doing that so that we’re not in a position where we’ve got a huge spillover that creates problems for us in the future.

Christopher Nolan

Great. And then I noticed that I think your leverage target went up a little bit. Should we expect the leverage to be at sort of the higher end of that range or to drift lower going forward?

David Lund

Clearly, we’re trying to manage the leverage down. We are expecting some repayments from what we’ve been told from investors. But we wanted to manage it’s around 125%. Clearly, we were taking actions to address that funding capability.

Christopher Nolan

Great. Okay. Thank you.


[Operator Instructions] Our next question is a follow-up from Paul Johnson with KBW. Your line is open.

Paul Johnson

Hey, guys. Sorry about that, the call, that dropped earlier. But I think I heard most of your answer. I appreciate it. That’s very helpful answers. But one more question, if I may. I’m just curious like in this environment, what are you seeing or how do you feel that most of your VC partners, I guess, are sort of playing this downturn so far? Is it – majority of this is cutting back on expenses, getting ready, potentially for recession and, I guess, the winter along is kind of VC fundraising kind of in preparation for that? Or do you find that guys are perhaps finding more potentially very good opportunities, just obviously, the valuations down and among most high-growth companies pretty significantly. Any kind of comments there would be helpful? And that’s all for me.

Kyle Brown

This is Kyle. I think we’re seeing a couple of things. You have groups with capital who have really kind of – they have two different things they’re really chewing on right now, which is, one, we need great deals. And this fund is probably going to be defined by the investments made out of it over the next 18 to 24 months, combined with making sure they are still able to get opportunities. I think this market probably is a little bit differ than other downturns and then you have really mature companies with sound business models, real technology.

And most of these VCs are teetering between being very careful and opportunistic and also making sure that they’re able to get into deals and deploy capital during this time. We’re seeing that, on new opportunities, we’re seeing that within the portfolio. It’s much less about not getting and deploying money. It’s much more about what valuation, right? And I think we’ll continue to see that. I think we all agree that Trinity has technology and its a great place to continue to be investing, and we’re glad to be servicing that sector.

Paul Johnson

Got it. Appreciate it. That’s all for me, and congratulations on a good quarter.

Kyle Brown

Thanks, Paul.


It appears we have no further questions at this time. This does conclude today’s program. Thank you for your participation, and you may disconnect at any time.

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