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EX-32.2 - VLL8INC 10-K 12.31.2019 EXHIBIT 32.2 - Venture Lending & Leasing VIII, Inc.vll810k123119ex322.htm
EX-32.1 - VLL8INC 10-K 12.31.2019 EXHIBIT 32.1 - Venture Lending & Leasing VIII, Inc.vll810k123119ex321.htm
EX-31.2 - VLL8INC 10-K 12.31.2019 EXHIBIT 31.2 - Venture Lending & Leasing VIII, Inc.vll810k123119ex312.htm
EX-31.1 - VLL8INC 10-K 12.31.2019 EXHIBIT 31.1 - Venture Lending & Leasing VIII, Inc.vll810k123119ex311.htm
EX-10.3 - VLL8INC 10-K 12.31.2019 EXHIBIT 10.3 - Venture Lending & Leasing VIII, Inc.vll810k123119103.htm
EX-4.2 - VLL8INC 10-K 12.31.2019 EXHIBIT 4.2 - Venture Lending & Leasing VIII, Inc.vll810k123119ex42.htm


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-K

[X]
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the fiscal year ended December 31, 2019
OR
[  ]
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the transition period from _______ to _______
Commission File Number 814-01162
VENTURE LENDING & LEASING VIII, INC.
(Exact name of registrant as specified in its charter)

Maryland
47-3919702
(State or other jurisdiction of incorporation or organization)
(I.R.S. Employer Identification No.)

104 La Mesa Drive, Suite 102, Portola Valley, CA 94028
(Address of principal executive offices)
(Zip Code)

Registrant’s telephone number, including area code:  (650) 234-4300

Securities registered pursuant to Section 12(b) of the Act: None

Securities Registered Pursuant to Section 12(g) of the Act: Common stock, $0.001 par value
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes [ ] No [X]
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes [ ] No [X]
Indicate by check mark whether the registrant (i) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (ii) has been subject to such filing requirements for the past 90 days. Yes [X] No [ ]
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes [ ] No [ ]
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer [ ]
Accelerated filer [ ]
Non-accelerated filer [x]
Smaller reporting company [ ]
Emerging growth company [ ]
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. [ ]
Indicate by check mark if the registrant is a shell company (as defined in Rule 12b-2 of the Act).  Yes [ ] No [X]
As the registrant’s shares are not publicly-traded, the aggregate market value of the voting stock held by non-affiliates of the registrant cannot be determined.
The number of shares outstanding of each of the issuer’s classes of common stock, as of March 16, 2020, was 100,000.




Document Incorporated by Reference
                                                                    
Document Description
 
10-K Part
Specifically Identified Portions of the Registrant’s Proxy Statement for the Annual Meeting of Shareholders to be held
May 13, 2020
III

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PART I.
ITEM 1.
BUSINESS
Introduction.
Venture Lending & Leasing VIII, Inc. (the “Fund”) was incorporated in Maryland on May 6, 2015, as a non-diversified, closed-end management investment company electing status as a business development company (“BDC”) under the Investment Company Act of 1940, as amended (the “1940 Act”) and is managed by Westech Investment Advisors, LLC (the “Manager” or “Management”). The Fund is a wholly-owned subsidiary of Venture Lending & Leasing VIII, LLC, a Delaware limited liability company (the “Company”). The Fund’s investment objective is to achieve superior risk-adjusted investment returns. The Fund will primarily provide debt financing to carefully selected companies that have received equity funding from traditional sources of venture capital equity funding (i.e. a professionally managed venture capital firm), as well as non-traditional sources of venture capital equity funding (e.g. angel investors, strategic investors, family offices, crowdfunding investment platforms, etc.) (collectively, “Venture-Backed Companies”), generally in the form of secured loans. Secondarily, the Fund may provide debt financing to public and later-stage private companies. In most cases, the Fund will receive warrants for equity securities of the companies in connection with these loans. The Fund may make debt investments that are atypical, for example, to more mature public and later-stage private companies (“Special Situation Financings”), including secure loans as well as convertible and subordinated debt investments. The Fund may also make direct equity investments in Venture-Backed Companies. Prior to commencing its operations on August 12, 2015, the Fund had no operations other than the sale of 100,000 shares of common stock, $0.001 par value to the Company for $25,000 in July 2015. As of December 31, 2019, the Fund meets the requirements, including diversification requirements, to qualify as a regulated investment company (“RIC”) under the Internal Revenue Code of 1986 (the “Code”).
The Fund’s shares of common stock, $0.001 par value (“Shares”) are held entirely by the Company. As capital is required to finance the acquisition of loans, additional capital is provided by the Company.
Investment Program.
General. The Fund’s primary investment strategy is to provide debt financing, in the form of secured loans, to carefully selected Venture-Backed Companies. In most cases, the Fund will receive warrants to acquire equity securities in connection with its venture loans. The Fund’s investment objective is to achieve superior risk-adjusted investment returns. The Fund may invest up to 20% of the aggregate cost of all investments of the Fund, determined cumulatively over the life of the Fund, in Special Situation Financings. In some instances, the Fund’s Special Situation Financing investments may be in companies that have been bootstrapped (i.e. funded solely by the personal assets of their founders or other individuals), without substantial equity investment from investors or participation of venture capital investors. The Fund does not intend to invest in any company to secure control of its securities primarily for the purpose of making a profit in the sale of the controlled company’s securities, and, for the avoidance of doubt, any such investment would not constitute a Special Situation Financing. The Fund may also invest up to 10% of the aggregate amount of all investments of the Fund (determined cumulatively over the life of the Fund) in direct equity investment opportunities such as convertible debt, secondary common stock purchases or other equity instruments issued by companies of diverse capitalization and creditworthiness, including, without limitation, early-stage private companies, public and later-stage private companies, and companies undergoing restructuring or recapitalization of their existing debt or equity financing (provided, however, that any amounts paid by the Fund to acquire equity securities pursuant to the receipt or exercise of warrants or stock received in connection with the Fund’s venture loans shall not be taken into account in determining whether such 10% threshold has been met). Such direct investments generally will be in equity securities of borrowers in the Fund’s portfolio, although equity securities of other companies could also be purchased. This aggregate investment strategy involves a high degree of risk, including: illiquidity of portfolio investments; risk of default by borrowers, many of whom have no or little operating profit or cash flow as of the commencement of a financing transaction; interest rate risk; litigation risk; the speculative nature of investments in warrants for stock or directly in stock; and the risks involved in investing in privately-held and emerging companies. The Fund will make available significant managerial assistance through its officers to certain companies whose securities are held in the Fund’s portfolio, as described herein under the caption “Regulation.”
The Fund intends to use a buy-and-hold strategy where debt investments are held to maturity. All securities are evaluated on a regular basis to determine whether there should be any change to this strategy. Some debt investments are restructured, which may result in the extension of the original maturity date or other change in the instrument, including but not limited to, conversion of all or part of the instrument to equity. The Fund does not intend to purchase publicly-held securities; however, some publicly-held securities may be acquired through warrant exercises, mergers, acquisitions, and IPOs of the companies in which investments are made. Additionally, in some cases, publicly-traded securities may be issued in conjunction with loans made to public companies. When a company’s securities become publicly-traded, the Fund may hold these securities and sell them or may choose to distribute the securities directly to the Company. If held, publicly-traded securities are monitored on an on-going basis, and a variety of factors regarding the issuing company (e.g., trend in stock price, underlying business fundamentals and potential for growth, information regarding the lock-up, etc.) are used to determine when to sell these securities.
As a BDC, the Fund must invest at least 70% of its total assets in qualifying assets (“Qualifying Assets”) consisting of (a) interests in Eligible Portfolio Companies and (b) certain other assets including cash and cash equivalents. An “Eligible Portfolio Company” is a United States company that is not an investment company as defined or excluded from the definition of an investment company in Section 3 of the 1940 Act, and that either: (i) does not have a class of securities listed on a national securities exchange, or does have a class of

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securities listed on a national securities exchange, but has an aggregate market value of outstanding voting and non-voting common equity of less than $250.0 million; or (ii) is actively controlled by a BDC and has an affiliate of a BDC on the Eligible Portfolio Company’s Board of Directors; or (iii) has total assets of not more than $4.0 million and capital and surplus of not less than $2.0 million; or (iv) meets such other criteria as may be established by the Securities and Exchange Commission (“SEC”). Control under the 1940 Act is presumed to exist where a BDC owns more than 25% of the outstanding voting securities of the Eligible Portfolio Company. Also included in Qualifying Assets are follow-on investments in a company that met the definition of Eligible Portfolio Company at the time of the Fund’s initial investment, but subsequently does not meet such definition because it has a class of securities listed on a national securities exchange, if, at the time of the follow-on investment, the Fund (a) owns at least 50% of (i) the greatest number of equity securities of such company, including securities convertible into or exchangeable for such securities, and (ii) the greatest amount of certain debt securities of such company held by the Fund at any time during the period when such company was an Eligible Portfolio Company, and (b) is one of the twenty largest holders of record of the company’s outstanding voting securities. The Fund may invest up to 30% of its total assets in non-Qualifying Assets, including interests in companies that are not Eligible Portfolio Companies (for example, because the company’s securities are quoted on the NASDAQ Global Market (“NASDAQ”)) and Eligible Portfolio Companies as to which the Fund does not offer to make available significant managerial assistance. As a BDC, the Fund is generally prohibited under the 1940 Act from investing in securities issued by broker/dealers, investment advisers, and underwriters unless certain conditions are met. As of December 31, 2019, the percentage of non-qualifying investments in the Fund was 10.2%.
BDCs cannot acquire any assets other than those Qualifying Assets described in subparagraphs (1) through (8) below unless, at the time of the acquisition, the assets described in subparagraphs (1) through (8) below represent at least 70% of the value of the BDC’s total assets (the “70% basket”). Below is a general summary of Qualifying Assets in which the Fund may invest.
1. Securities issued in transactions not involving a public offering from issuers which are Eligible Portfolio Companies (including affiliated persons or persons that have been affiliated persons within the preceding 13 months) or from any other person, subject to such rules and regulations as the SEC may prescribe;
2. Securities purchased in transactions not involving any public offering from an issuer, or from any person who is an officer or employee of the issuer, if the issuer is a U.S. company that is not an investment company, but the issuer is not an Eligible Portfolio Company because it has issued a class of margin securities that is eligible for margin loans, and at the time of purchase the BDC owns at least 50% of (i) the greatest number of equity securities (on a fully diluted basis) of the issuer and (ii) the greatest amount of such issuer’s debt securities held by the BDC at any point in time during the period when such issuer was an Eligible Portfolio Company, and, (iii) the BDC is one of the 20 largest holders of the issuer’s outstanding voting securities;
3. Securities of any Eligible Portfolio Company that is controlled by the BDC (either alone or as part of a group acting together) and the BDC exercises a controlling influence over the management or policies, and has an affiliated person who is a director of, the Eligible Portfolio Company;
4. Securities issued in transactions not involving a public offering from U.S. non-investment company issuers subject to bankruptcy, reorganization, insolvency or similar proceeding or otherwise unable to meet their obligations without assistance (purchase may be made from affiliated persons or persons that have been affiliated persons within the preceding 13 months or in limited circumstances other persons);
5. Securities of an Eligible Portfolio Company purchased from any person in transactions not involving a public offering when no public market for the securities exists and the BDC owned at least 60% of the outstanding equity (on a fully diluted basis) of the issuer immediately prior to the purchase;
6. Securities received in exchange for or distributed with respect to the foregoing securities (including securities obtained pursuant to the exercise of options, warrants or rights relating to such securities);
7. Cash, cash items, U.S. Government securities or high-quality debt securities maturing in one year or less from the time of investment; and
8. Office furniture and equipment, interests in real estate, deferred organization and operating expenses, and other non-investment assets necessary and appropriate to the BDC’s operations.
“Making available significant managerial assistance” is defined under the 1940 Act, in relevant part, as (i) an arrangement whereby the BDC, through its officers, directors, employees or general partners, offers to provide and, if accepted, does provide, significant guidance and counsel concerning the management, operations or business objectives of a portfolio company; or (ii) the exercise by a BDC of a controlling influence over the management or polices of the portfolio company by the BDC acting individually or as part of a group acting together which controls the portfolio company. The officers of the Fund offer to provide managerial assistance, including advice on equipment acquisition and financing, cash flow and expense management, general financing opportunities, acquisition opportunities and opportunities to access the public securities markets, to the great majority of companies to whom the Fund provides venture loans. In some instances, directors of the Fund might serve on the Board of Directors or as officers of borrowers.
Venture Loans. Venture loans generally are made pursuant to a negotiated loan agreement, and are evidenced by promissory notes secured by specific equipment or other assets of the borrower financed with the proceeds of such loans, or secured by a broader lien on substantially all of the borrower’s assets where the purpose of the loan is to provide growth or general working capital to the borrower. The loans are typically secured by a first-position lien on such assets. The Fund generally receives periodic payments (usually monthly) and may

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receive a final payment equal to a percentage of the original loan amount, payable at maturity of the loan (whether as stated or accelerated). The interest rate and amortization terms of venture loans and all other transaction terms are individually negotiated between the Fund and each borrower.
The documentation for venture loans include representations, warranties, covenants and events of default intended to protect the Fund and which are customary for commercial transactions of this type and size. Typical material terms include restrictions on additional debt, covenants to maintain the loan collateral and keep it adequately insured and free of liens, prohibitions against sale or other disposition of the assets except under specified conditions, and acceleration provisions making the remaining outstanding amounts under the loan immediately due and payable and giving rise to a right to take possession of the collateral upon certain events of default, including failure to make required payments, insolvency, and failure to comply with covenants. There can be no assurance that the value of the collateral at the time of default will be at least equal to the outstanding amount due under the loan.
Typically, loans are structured as commitments by the Fund to provide financing, in one or more advances over a specified period of availability, determined as part of the underwriting process. The commitments of the Fund to finance future asset acquisitions or growth capital needs is typically subject to the absence of any default under the loan and compliance by the borrower with requirements relating to, among other things, the type of assets to be acquired, and if applicable, the borrower’s achievement of performance-based milestones. Although the Fund’s commitments generally provide that the Fund is not required to continue to fund additional asset purchases or growth capital if there has been a material adverse change in the borrower’s financial condition, a borrower’s financial condition may not be as strong at the time a loan is funded as it was when the related commitments were made.
Warrants. The Fund generally acquires warrants to purchase equity securities of the borrower in connection with financings. It is anticipated that such warrants, generally, will be distributed by the Fund to the Company simultaneously with, or shortly following, their acquisition. The terms of the warrants, including the expiration date, exercise price, and terms of the equity security for which the warrant may be exercised, are negotiated individually with each borrower, and are likely to be affected by the price and terms of securities issued by the company to its venture capitalists and other holders in equity financings close in time to the Fund’s making of the loan commitment. Based upon the Manager’s past experience, it is anticipated that most warrants will be exercisable for a term of five to ten years, and will have an exercise price based upon the price at which the borrower most recently issued equity securities or, if a new equity offering is anticipated, the future price of such equity securities (and sometimes a “blended price”). In certain transactions, it is anticipated that warrants will be issued with an exercise price that is waived in connection with an initial public offering or acquisition. The equity securities for which the warrant will be exercised generally will be convertible preferred stock (of which there may be one or more classes) or common stock. Substantially all the warrants and underlying equity securities will be restricted securities under the Securities Act of 1933 (the “1933 Act”) at the time of issuance; the Fund generally negotiates registration rights with the borrower that may provide “piggyback” and S-3 registration rights, which permit the owner of the warrant under certain circumstances to include some or all of the securities that will be acquired upon exercise of the warrant in a registration statement filed by the borrower. The Fund generally will negotiate “net issuance” provisions in the warrants, which allow the owner of the warrant to exercise the warrant without payment of any cash, and thereby receive a net number of shares determined by the increase in the value of the issuer’s stock (at the time of exercise) above the exercise price stated in the warrant.
Equity Securities. The Fund did not during the prior year, but may, make direct investments in equity securities (including convertible notes) having an aggregate cost of up to 10% of the aggregate cost of all investments of the Fund determined cumulatively over the life of the Fund (provided, however, that any amounts paid by the Fund to acquire equity securities pursuant to the receipt or exercise of warrants or stock received in connection with the Fund’s venture loans shall not be taken into account in determining whether such 10% threshold has been met). For example, the Fund may invest equity in a follow-on round of financing to maintain or increase its ownership stake. In some cases, equity investments may be made in companies where the Fund does not have an existing loan. Additionally, the Fund anticipates selectively pursuing opportunistic equity purchases, which may take the form of primary or secondary stock purchases. The Manager expects that the equity securities generally will be convertible preferred stock, though it is possible the Fund would invest directly in common stock of Venture-Backed Companies or convertible notes which convert into common stock of Venture-Backed Companies. It is likely that, as in the case of warrants, direct equity investments, if made by the Fund, generally will be distributed to the Company simultaneously with, or shortly following, their acquisition, although, in this case, as a result of U.S. federal income tax and 1940 Act requirements, such equity investments may be held by the Fund for a longer period of time prior to their distribution to the Company.
Investment Policies. For purposes of the investment policies (other than the diversification standards below), references to the percentage of the Fund’s total assets “invested” in securities of a company will be deemed to refer, in the case of debt financings, to the total amount of financings that the Fund has committed to provide, and in the case of equity investments, to the cost basis of such equity investments; the Fund will not be required to divest securities in its portfolio or decline to fund an existing commitment because of a subsequent change in the value of securities the Fund has previously acquired or committed to purchase.
Diversification Standards. The Fund is classified as a “non-diversified,” closed-end investment company under the 1940 Act. However, the Fund seeks to qualify as a RIC, and therefore, must meet diversification standards under the Code.
To qualify as a RIC and obtain the special pass-through status available to RICs under the Code, the Fund must meet the issuer diversification standards under the Code that generally require that, at the close of each quarter of the Fund’s taxable year, (i) not more than 25% of the value of its total assets is invested in the securities of a single issuer, and (ii) at least 50% of the value of its total assets is represented by cash, cash items, government securities, securities of other RICs and other securities (counting each investment in such other securities only if the value of such securities does not exceed 5% of the value of the Fund’s total assets and the Fund does not own more than 10% of the outstanding voting securities of the issuer of such securities). For purposes of the diversification requirements under the Code, the

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percentage of the Fund’s total assets “invested” in securities of a company will be deemed to refer, in the case of financings in which the Fund commits to provide financing prior to funding the commitment, to the amount of the Fund’s total assets represented by the value of the securities issued by the borrower to the Fund at the time each portion of the commitment is funded.
Industry Segment Diversification. The Fund generally seeks to invest no more than 30% of its total assets in securities of companies in any single industry. The broad industry categories in which the Fund anticipates that most of its investments will fall (and within each of which there may be several “industries” for purposes of the industry diversification policy) include computers and storage, semiconductor and equipment, internet, medical devices, software, and several other categories.
Investment Guidelines. In selecting investments for the Fund’s portfolio, the Manager will endeavor to meet the investment guidelines established and approved by the Fund’s Board of Directors. The Fund may, however, make investments that do not conform to one or more of these guidelines when deemed appropriate by the Manager. Such investments might be made if the Manager believes that a failure to conform in one area is offset by exceptional strength in another or is compensated for by a higher yield, favorable warrant issuance or other attractive transaction terms or features.  
Stage of Development Guidelines. The Manager seeks to diversify the Fund’s portfolio based on the development stage of the companies in which it invests. Generally, Venture-Backed Companies fall into several lifecycle stages, including the following:  

Early or seed stage companies represent the initial stages of a start-up company’s development. These companies have raised varying amounts of equity capital to prove a concept and qualify for larger sums of start-up capital. Their activities generally are limited to product development, scientific and market research, recruiting a management team and proving early business traction. These companies generally have investor syndicates that include early stage investors such as high net worth angel investors, venture capitalists, incubators, and crowd funding platforms.
Emerging growth stage companies have a proven early product/market fit and have initiated or are about to initiate full-scale operations and sales but may not be showing a profit.
Mezzanine stage companies are approaching or have attained break-even or profitability and are continuing to expand.
    
The Manager refers to its investments in seed and start-up companies as “Early Stage” and investments in emerging growth companies and mezzanine companies as “Expansion Stage.” The Manager seeks to diversify its investments across stages. The classification of companies by stages of development involves a subjective judgment by the Manager, and it is possible that other investors or market analysts would classify the same companies differently than the classifications used by the Fund.

Quality Guidelines. The Manager seeks to invest the majority of the Fund’s aggregate investments (determined cumulatively over the life of the Fund) in investments that meet many of the following guidelines:

Company Guidelines.

The company has a minimum capitalization of at least $1.0 million.
The company has at least six months’ worth of available cash to fund its operations or indications from its equity investors that they will make investments necessary to provide such cash.
The company’s equity investors have indicated a current intention to make additional equity financing available to the company, or the company has a forecasted positive cash flow.
The company’s business plan contemplates sales of at least $25.0 million within five years.
The company has previously closed equity financing or will close equity financing prior to the funding of the loan.

Transaction Guidelines for Loans.

The term of the loan does not exceed 60 months and does not extend beyond December 31, 2025.
Debt service requirements of the loan are, in the opinion of the Manager, not likely to become an impediment to the company raising additional capital.
The loan is secured by all or substantially all of the borrower’s assets.

Equity Venture Capital Support Guidelines.

The company’s equity investors have (i) in the opinion of the Manager, significant venture capital and/or industry experience, and (ii) follow-on capital to support the company.

Special Situation Financings. The Manager may invest up to 20% of the Fund’s aggregate investments determined cumulatively over the life of the Fund in Special Situation Financings. Such Special Situation Financings could include investments targeted towards late-stage or public companies seeking additional growth capital to expand product offerings, increase market penetration or fund strategic acquisitions of other companies or technology. In these situations, the Fund would only consider investing in this Special Situation Financings if it determined it to be of equivalent or better quality as compared to a senior secured loan made to the Fund’s more typical portfolio companies. Further, the Fund may also choose to subordinate existing outstanding debt as part of a restructuring or work-out

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arrangement in order to allow the company to successfully complete a transaction such as an acquisition or round of financing. There can be no assurance that the subordination will work to the benefit of the Fund. The Manager will target companies whose cash flow from operations and cash reserves are expected to service the Fund’s investment on a current basis. Investments may be structured as senior debt, convertible debt, or other debt/equity structures. In addition, Special Situation Financings could include investments in a “troubled” company undergoing a restructuring or recapitalization of its existing debt or equity, and making investments in subordinated debt, providing bridge financing to a company which is in the process of raising additional private equity, planning an initial public offering or is seeking to enter into a business combination through which it would be acquired. In some instances, these companies will have been bootstrapped (i.e. funded solely by the personal assets of their founders or other individuals), without any substantial investment from venture capital or other investors. As of December 31, 2019, the Fund made Special Situation Financings of less than 1% of total commitments.
International Investments. As a BDC, the Fund may invest in companies which are not Qualifying Assets, as long as at the time of such investment, at least 70% of the value of the Fund’s total assets are invested in Qualifying Assets. An Eligible Portfolio Company must be organized under the laws of, and have its principal place of business in, the United States. Therefore, the Fund could invest up to 30% of its total assets in foreign-based companies. If reasonably practicable, investments in foreign based companies would be secured by foreign-based assets in addition to being secured by any assets located in the United States.
Leverage. The Fund borrowed money and intends to continue borrowing from, and could enter into secured contracts, which instruments may be considered debt securities, with banks, insurance companies and other lenders to obtain additional funds to originate loans (and possibly for Special Situation Financings), if such borrowings are available on terms that are acceptable to the Manager and Board of Directors of the Fund. It is possible, due to potential future tightening of the credit markets, that the Fund may not be able to secure such borrowings on acceptable terms. Any borrowings of the Fund will be subject to the asset coverage requirements under the 1940 Act, including borrowings in excess of 5% of total assets for temporary purposes, and all borrowings for emergency purposes that are not “temporary.”
Temporary Investments. Pending investment, and until distributions to the stockholders are made, the Fund will invest excess cash in: (i) time deposits, certificates of deposit and similar instruments of highly-rated banks; (ii) securities issued or guaranteed by the U.S. government, its agencies or instrumentalities; (iii) repurchase agreements that are: (a) issued by highly-rated banks or securities dealers; and (b) fully collateralized by U.S. government securities; (iv) short-term high-quality debt instruments of U.S. corporations; and (v) money market funds and other pooled investment funds whose investments are restricted to those described above. The average maturity of such investments, weighted by their par value, will not exceed 90 days.
Other Investment Policies. The Fund will not sell securities short (except to the extent the Fund has a warrant for, or owns, shares equal to the number of shares which is the subject of the proposed short sale), purchase securities on margin (except to the extent the Fund’s permitted borrowings are deemed to constitute margin purchases), purchase or sell commodities or commodity contracts (except interest rate hedging transactions in connection with the Fund’s permitted borrowings), or purchase or sell real estate. The Fund may, however, write puts and calls, and acquire options, as a hedge for equity investments or to increase return through a covered call. The Fund will not underwrite the securities of other companies, except to the extent they may be deemed underwriters upon the disposition of restricted securities acquired in the ordinary course of their business. The Fund may, however, use borrowed funds for its lending activities. See the discussion herein under the caption “Risk Factors - General - Leverage.”
The Fund’s investment objectives, investment policies and investment guidelines (other than its intended status as a BDC) are not fundamental policies and may be changed by the Fund’s Board of Directors at any time.
Regulation. As a BDC, the Fund is required to invest in Eligible Portfolio Companies and (with certain exceptions) make available to them significant managerial assistance. Eligible Portfolio Companies, and the regulations governing assets a BDC can acquire, are described under the heading “Investment Program” above.  
The Fund, as a BDC, may sell its securities at a price that is below its net asset value per share, provided that a majority of the Fund’s disinterested directors, or not interested parties of the Fund under Section 2(a)(19) of the 1940 Act (i.e., independent director), has determined that such sale would be in the best interests of the Fund and its shareholder and upon the approval by the holders of a majority of its outstanding voting securities, including a majority of the voting securities held by non-affiliated persons, of such policy or practice within one year of such sale. A majority of the disinterested directors also must determine in good faith, in consultation with the underwriters of the offering if the offering is underwritten, that the price of the securities being sold is not less than a price which closely approximates market value of the securities, less any distribution discounts or commissions. As defined in the 1940 Act, the term “majority of the outstanding voting securities” of the Fund means the vote of (i) 67% or more of the Fund’s Shares present at a meeting, if the holders of more than 50% of the outstanding Shares are present or represented by proxy, or (ii) more than 50% of the Fund’s outstanding Shares, whichever is less.
Many of the transactions involving a company and its affiliates (as well as affiliates of those affiliates) which were prohibited without the prior approval of the SEC under the 1940 Act prior to its amendment by the 1980 provisions are permissible for BDCs, including the Fund, upon the prior approval of a majority of the Fund’s disinterested directors and a majority of the directors having no financial interest in the transactions. However, certain transactions involving certain persons related to the Fund, including its directors, officers, and the Manager, may still require the prior approval of the SEC. In general, (i) any person who owns, controls, or holds power to vote, more than 5% of the Fund’s outstanding Shares; (ii) any director, executive officer, or general partner of that person; and (iii) any person who directly or indirectly controls, is controlled by, or is under common control with, that person, must obtain the prior approval of a majority of the Fund’s disinterested directors, and, in some situations, the prior approval of the SEC, before engaging in certain transactions involving the person or any company controlled by the Fund. The 1940 Act generally does not restrict transactions between the Fund and its eligible

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portfolio companies. While a BDC may change the nature of its business so as to cease being a BDC (and in connection therewith withdraw its election to be treated as a BDC) only if authorized to do so by a majority vote (as defined by the 1940 Act) of its outstanding voting securities, shareholder approval of changes in other fundamental investment policies of a BDC is not required (in contrast to the general 1940 Act requirement, which requires shareholder approval for a change in any fundamental investment policy).
Dividends and Distributions. The Fund intends to distribute to its shareholder all equity securities received from portfolio companies simultaneously, or shortly following, their acquisition and substantially all of its net investment income and net realized capital gains, if any, as determined for income tax purposes less appropriate reserves. Applicable law, including provisions of the 1940 Act, may limit the amount of dividends and other distributions payable by the Fund. Income dividends will generally be paid quarterly to shareholders of record on the last day of each preceding calendar quarter end. Substantially all of the Fund’s net capital gain (the excess of net long-term capital gain over net short-term capital loss) and net short-term capital gain, if any, will be distributed annually, or on a more frequent basis as determined by the Manager.
The Manager has exercised, and the Board of Directors ratified, its discretion to extend the Fund’s investment period for two additional quarters after September 30, 2019, thereby allowing the Fund to make new commitments through March 31, 2020 and to fund commitments through March 31, 2021, the end of the Fund’s investment period. Following the end of the investment period, the Fund will begin to distribute to investors all proceeds received from principal payments and sales of investments, net of reserves and expenses, principal repayments on the Fund’s borrowings, amounts required to fund financing commitments entered into before such date, and any amounts paid on exercise of warrants. Distributions of such amounts are likely to cause annual distributions to exceed the earnings and profits of the Fund available for distribution, in which case such excess will be considered a tax-free return of capital to a shareholder to the extent of the shareholder’s adjusted basis in its shares and then as capital gain. The Fund may borrow money to fund shareholder distributions, to the extent consistent with the 1940 Act and a prudent capital structure.
Competition. Other entities and individuals compete for investments similar to those proposed to be made by the Fund, some of whom may have greater resources than the Fund. Furthermore, the Fund’s need to comply with provisions of the 1940 Act pertaining to BDCs and provisions of the Code pertaining to RICs might restrict the Fund’s flexibility as compared with its competitors. The need to compete for investment opportunities may make it necessary for the Fund to offer borrowers more attractive transaction terms than otherwise might be the case.
Executive Officers. The following are the executive officers of the Fund. All officers serve at the pleasure of the Fund’s Board of Directors.
Name and Position with Fund
Age
Occupation During Past Five Years
Ronald W. Swenson, Chairman and Director
74
Chairman, Chief Executive Officer, Director, and other positions for Westech Investment Advisors since 1994
Maurice C. Werdegar, Chief Executive Officer
54
Chief Executive Officer, Chief Operating Officer, Director and other positions for Westech Investment Advisors since 2001
David R. Wanek, President
45
President and other positions for Westech Investment Advisors since 2001
Jay L. Cohan, Vice President, Assistant Secretary
54
Vice President, Assistant Secretary and other positions for Westech Investment Advisors since 1999
Judy N. Bornstein, Vice President, Chief Financial Officer, Chief Compliance Officer, Treasurer and Secretary
55
Vice President, Chief Financial Officer, Chief Compliance Officer, Treasurer and Secretary for Westech Investment Advisors since 2019. From 2017 to 2019, she served as the Chief Financial Officer of Generate Capital. Prior to joining Generate Capital, she spent 11 years as Managing Director, CFO, and Chief Compliance Officer of American Infrastructure Funds.
Employees. The Fund has no employees; all of its officers are officers and/or employees of the Manager, and all of its required services are performed by officers and employees of the Manager.
Available Information. The Fund’s office is located at 104 La Mesa Drive, Suite 102, Portola Valley, CA 94028, and the phone number is (650) 234-4300. The Manager maintains a website at https://westerntech.com/.
The SEC maintains a website, www.sec.gov, that contains reports, proxies and information statements filed by the Fund.
ITEM 1A.  
RISK FACTORS
GENERAL
    
Reliance on Management. The Fund will be wholly dependent for the selection, structuring, closing and monitoring of its investments on the diligence and skill of the Manager, acting under the supervision of the Fund’s Board of Directors. Although the operating principals of the Manager have a long history of combined experience in investing in venture lending transactions and equity investments, there can be no assurance that the Fund will attain its investment objective. Furthermore, the Manager does not have substantial experience investing in Special Situation Financings such as convertible and subordinated debt of public and late-stage private companies. The officers

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of the Manager will have primary responsibility for the selection of the companies in which the Fund will invest, the negotiation of the terms of such investments and the monitoring and servicing of such investments after they are made. Although the officers of the Manager intend to devote such time as is necessary to the affairs of the Fund, they are not required to devote full time to the management of the Fund. Furthermore, there can be no assurance that any officer will remain associated with the Manager or that, if an officer ceased to be associated with the Manager, the Manager would be able to find a qualified person or persons to fill the position.
Illiquid and Long-Term Investment. On last day of the calendar quarter of the fifth anniversary of the first investment by the Fund (or, if earlier, the Company), the Fund will cease to make any new equity investments as well as investments in venture loans (except pursuant to commitments made before the fourth anniversary, or if applicable, the extended commitment date (up to 2 calendar quarters)), and will distribute to its shareholder all proceeds received from principal payments and sales net of: (i) reserves and expenses; (ii) principal repayments on the Fund’s borrowings; (iii) amounts required to fund financing commitments entered into before such fourth anniversary, or if applicable, the extended commitment date; and (iv) any amounts paid on exercise of warrants or otherwise paid to protect the value of existing investments (including, for example, pay-to-play provisions and purchases of equity securities in “down rounds” to avoid dilution). The Fund’s Articles of Incorporation provide that, on December 31, 2025, the Fund automatically will be dissolved without any action by its shareholder. From and after such dissolution, the Fund’s activities will be limited to the winding-up of its affairs, the liquidation of its remaining assets and the distribution of the net proceeds thereof to its shareholder. Although the Fund generally would not make any loan with a stated maturity date later than December 31, 2025, it is possible that, due to a default by a borrower or a transaction restructuring due to a borrower’s financial difficulties, such a loan may remain outstanding in whole or in part beyond its original maturity date. Furthermore, the Fund may not be able to sell warrants it receives from borrowers, or the equity securities (including those received upon exercise of warrants or conversion of debt instruments or in connection with restructuring of a troubled loan), to the extent those investments were retained by the Fund and not distributed earlier to its shareholder, for a significant period of time due to legal or contractual restrictions on resale or the absence of a liquid secondary market. As a result, the liquidation process might not be completed for a significant period after the Fund’s dissolution. In addition, it is possible that, if certain of the Fund’s assets are not liquidated within a reasonable time after the Fund’s dissolution, the Fund may elect to make a distribution in kind of all or part of such assets to its shareholders. In such case, the shareholders would bear any expenses attendant to the liquidation of such assets.
Although shares of the Fund have been registered under the Securities Exchange Act of 1934 (the “Exchange Act”), there will be no trading market for shares in the Fund (which are all owned by the Company), and thus shares of the Fund should be considered illiquid.
Competition. Other entities and individuals compete for investments similar to those made by the Fund, some of whom, with respect to investments in the form of loans, and many of whom, with respect to the equity investments and convertible and subordinated debt, have greater resources than the Fund. Furthermore, competition could increase given the low barriers to entry in the industry. Additionally, the Fund’s need to comply with provisions of the 1940 Act pertaining to BDCs and, if the Fund qualifies as a RIC, provisions of the Code pertaining to RICs, might restrict the Fund’s flexibility as compared with its competitors. The need to compete for investment opportunities may make it necessary for the Fund to offer borrowers or companies in which it makes equity investments more attractive terms than otherwise might be the case. If the Fund encounters increased competition from other entities or individuals or is hindered by the provisions of the BDC’s or RIC’s, the Fund may not fund new investments, which would impact the operations of the Fund.
Convertible Debt.  Convertible debt instruments issued by public and late-stage private companies may comprise some of the Special Situation Financings in which the Fund may invest. Convertible debt generally offers lower interest yields than non-convertible debt of similar quality. The market value of debt tends to decline as interest rates increase and, conversely, to increase as interest rates decline. The market value of convertible debt, however, often reflects the market price of common stock of the issuing company when that stock price is greater than the conversion price of the convertible debt. The conversion price is the predetermined price at which the debt instrument could be exchanged for the associated stock. As the market price of the underlying common stock declines, the price of the convertible debt tends to be influenced more by the yield of the debt instrument. Thus, it may not decline in price to the same extent as the underlying common stock.
Subordinated Debt. Some of the Special Situation Financings in which the Fund may invest may consist of subordinated debt instruments, which tend to be predominantly high-yield non-convertible debt securities. Investments in high-yield securities involve substantial risk of loss. Sub-investment grade non-convertible debt securities, or comparable unrated securities, are commonly referred to as “junk debt” and are considered speculative with respect to the issuer’s ability to pay interest and principal and are susceptible to default or decline in market value due to adverse economic or business developments. The market values for high-yield securities tend to be very volatile, and these securities are less liquid than investment grade debt securities.
Leverage. The Fund currently borrows money and intends to continue borrowing and could enter into secured contracts, which instruments may be considered debt securities, with banks, insurance companies, and other lenders to obtain additional funds to originate loans (and possibly Special Situation Financings), if such borrowings are available on terms that are acceptable to the Manager and Board of Directors of the Fund. It is possible, due to potential future tightening of the credit markets, that the Fund may not be able to secure such borrowings on acceptable terms. Any borrowings of the Fund will be subject to the asset coverage requirements under the 1940 Act, including borrowings in excess of 5% of total assets for temporary purposes, and all borrowings for emergency purposes that are not “temporary.” Under the 1940 Act, the Fund may not incur borrowings unless, immediately after the borrowing is incurred, such borrowings would have “Asset Coverage” of at least 200%, generally, and of at least 150% if certain conditions are met. “Asset Coverage” means the ratio which the value of the Fund’s total assets, less all liabilities not represented by (i) the borrowings and (ii) any other liabilities constituting “senior securities” under the 1940 Act, bears to the aggregate amount of such borrowings and senior securities. The practical effect of this limitation is to limit the Fund’s borrowings and other senior securities to 50% of its total assets less its liabilities other than the borrowings and other senior securities. The 1940 Act also requires that, if the Fund borrows money, provisions be made to prohibit the

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declaration of any dividend or other distribution on the shares (other than a dividend payable in shares), or the repurchase by the Fund of shares, if, after payment of such dividend or repurchase of shares, the Asset Coverage of such borrowings would be below 200% (or 150%, as applicable). If the Fund is unable to pay dividends or distributions in the amounts required under the Code, it might not be able to qualify for the pass-through status as a RIC or, if qualified, to continue to so qualify.
The Fund has a secured, syndicated loan facility with a borrowing availability of $280.0 million and the outstanding balance under the facility as of December 31, 2019 was $179.0 million.

The use of leverage increases investment risk. The Fund’s use of leverage is premised upon the expectation that the Fund’s all-in borrowing costs will be lower than the return the Fund achieves on its investments. To the extent the income or capital gains derived from investments purchased with borrowed funds exceeds the cost of borrowing, the Fund’s overall return will be greater than if leverage had not been used. Conversely, if the income or capital gain from the investments purchased with borrowed funds is not sufficient to cover the cost of borrowing, or if the Fund incurs capital losses, the return to the Fund will be less than if leverage had not been used and therefore, the amount available for distribution will be reduced or potentially eliminated. Furthermore, since the calculation of the investment management fee is based, commencing two years after the closing of the offering, on a percentage of the managed assets, such fee will be higher if the Fund utilizes leverage than if no borrowings were incurred.
Lenders have required that the Fund pledge all assets as collateral for borrowings and have required that the Company provide guarantees or other credit enhancements. The Company, however, will not pledge its assets to secure such borrowings as this could result in unrelated business taxable income to its tax-exempt members. If the Fund is unable to service the borrowings, the Fund may risk the loss of such pledged assets.
Lenders required that the Fund agree to loan covenants limiting the Fund’s ability to incur additional debt or otherwise limiting the Fund’s flexibility, and loan agreements may provide for acceleration of the maturity of the indebtedness if certain financial tests are not met. To minimize risks associated with borrowing money at floating rates and lending money at fixed rates, the Fund may enter into interest rate hedging transactions with respect to all or any portion of the Fund’s borrowings. There can be no assurance that such interest rate hedging transactions will be available in forms acceptable to the Fund. In addition, entering into interest rate hedging transactions increases costs to the Fund. Finally, it is possible that the Fund could incur losses from being “over-hedged,” which would result if the debt that was hedged is repaid faster than expected.

Regulation. The Fund has elected to be treated as a BDC under the Small Business Incentive Act of 1980, which modified the 1940 Act. Although BDCs are not required to register under the 1940 Act and are relieved from compliance with a number of the provisions of the 1940 Act, there are now greater restrictions in some respects on permitted types of investments for BDCs. Moreover, the applicable provisions of the 1940 Act continue to impose numerous restrictions on the activities of the Fund, including restrictions on leverage and on the nature of its investments. While the Fund is not aware of any judicial rulings under, and is aware of only a few administrative interpretations of, the Small Business Incentive Act of 1980, there can be no assurance that such Act will be interpreted or administratively implemented in a manner consistent with the Fund’s objectives or manner of operation.
Litigation. The Fund could be subject to litigation by borrowers, based on theories of breach of contract to lend, “lender liability,” or otherwise in connection with its loan and investment transactions. The defense of such a lawsuit, even if ultimately determined to be without merit, could be costly and time-consuming to the Fund. The Fund may become party to certain lawsuits from time to time in the normal course of business. While the outcome of any legal proceedings cannot now be predicted with certainty, the Fund does not expect any such proceedings will have a material effect upon the Fund’s financial condition or results of operation. Management is not aware of any material pending legal proceedings involving the Fund.
Tax Status. The Fund must meet a number of requirements, described herein under the caption “Federal Income Taxation,” to qualify for the pass-through status as a RIC and, if qualified, to continue to so qualify. For example, the Fund must meet specified asset diversification standards under the Code which might prove difficult if certain borrowers with larger commitments drew on their committed financing at a rate faster than other borrowers to whom smaller commitments were made, particularly during the early periods of the Fund’s operations. If the Fund experiences difficulty in meeting the diversification requirement for any fiscal quarter of its taxable year, it might accelerate capital calls or, if available, borrowings in order to increase the portion of the Fund’s total assets represented by cash, cash items, and U.S. government securities as of the close of the following fiscal quarter and thus attempt to meet the diversification requirement. The Fund, however, would incur additional interest and other expenses in connection with any such accelerated borrowings, and increased investments by the Fund in cash, cash items, and U.S. government securities (whether the funds to make such investments are derived from called equity capital or from accelerated borrowings) are likely to reduce the Fund’s return. Furthermore, there can be no assurance that the Fund would be able to meet the diversification requirements through such actions. Failure to qualify as a RIC would deny the Fund pass-through status and, in a year in which the Fund has taxable income, would have a significant adverse effect on the return of the Fund. Tax laws are dynamic and tax laws either in the U.S. or in foreign jurisdictions could change causing a different than expected outcome.
The Fund has received an opinion that, assuming the Fund’s election to be a BDC under Sections 6(f) and 54 of the 1940 Act will be valid and will remain in effect and that the Fund otherwise meets the qualification requirements set forth in Section 851(b) and the distribution requirements in Section 852(a) of the Code, if the Fund’s status as a RIC is challenged by the Internal Revenue Service (the “IRS”) in court and properly litigated, a court of competent jurisdiction will respect that status for federal income tax purposes. If the SEC were to disallow the Fund’s election to be treated as a BDC, then the Fund would not be eligible to be treated as a RIC and, therefore, would be subject to federal corporate tax on its income and gains. The opinion referred to above is based on the Code, regulations thereunder, IRS

10



rulings, procedures and pronouncements, court decisions and other applicable law as of the date hereof, and certain representations that the Fund has made to its legal counsel. Legal opinions, however, are not binding on the IRS or the courts, and no ruling has been or will be requested from the IRS. No assurance can be given that the IRS will concur with such opinion.
Allocation of Expenses. If the Fund is not deemed to be engaged in a trade or business, individuals and certain other persons who are members of the Company will be required to include in their gross income an amount of certain Fund expenses relating to the production of gross income that are allocable to the Company. These members, therefore, will be deemed to receive gross income from the Fund in excess of the distributions they actually receive. Such allocated expenses were deductible by an individual member as a miscellaneous itemized deduction, for 2017, subject to the limitation on miscellaneous itemized deductions not exceeding 2.0% of adjusted gross income to the extent the Fund is not engaged in a trade or business. However, for the years 2018 through 2025, no deduction for such expense would be allowed. For the tax years 2026 and beyond, the provision will expire and the expenses would be deductible under the pre-2018 law as currently written.
Calculation of Management Fee. As compensation for its services to the Fund, for the two-year period that commenced with the first capital closing, which took place on August 8, 2015, the Manager received a management fee (“Management Fee”) computed and paid at the end of each quarter at an annual rate of 2.5% of the Company’s committed equity capital (regardless of when or if the capital was called) as of the last day of each fiscal quarter. Following this two-year period, starting on August 12, 2017, Management Fees are calculated and paid at the end of each quarter at an annual rate of 2.5% of the Fund’s total assets (including amounts derived from borrowed funds) as of the last day of each quarter. 
    
Risks Related to Cybersecurity. Increased reliance on technology by the Fund and its service providers and portfolio companies has increased the risks posed to their respective information systems. The Fund and its service providers and portfolio companies are susceptible to operational and information security risks that include, among other things: human error and negligence; theft; the unauthorized monitoring, release, misuse, loss, destruction or corruption of confidential and highly restricted data; denial of service attacks; unauthorized access to relevant systems; compromises to networks or devices that the Fund and its service providers use to service the Fund’s operations; and operational disruption or failures of physical infrastructure or operating systems.

Cyber-attacks against or security breakdowns of the Fund or its service providers or portfolio companies may adversely impact the Fund and its shareholders, potentially resulting in, among other things: financial losses; the inability of Fund shareholders to transact business and the Fund to process transactions; exposure of personal information belonging to the Fund and its shareholders and violations of applicable privacy and other laws; regulatory fines, penalties, reputational damage, reimbursement or other compensation costs; and/or additional compliance costs. The Fund may incur additional costs for cybersecurity risk management and remediation purposes. In addition, cybersecurity and privacy risks may also impact the Fund’s transactional counterparties, governmental and other regulatory authorities, exchange and other financial market operators, banks, brokers, dealers, insurance companies and other financial institutions, which could cause the Fund to suffer losses.

In general, cybersecurity attacks and breaches include, but are not limited to, efforts by bad actors to gain unauthorized access to systems, networks, devices or other digital systems (e.g., through “hacking” or malicious software coding) for purposes of misappropriating assets or sensitive information, corrupting data or causing operational disruption. Cyber-attacks also may be carried out in a manner that does not require gaining unauthorized access, such as causing denial-of-service attacks on websites (i.e., efforts to make services unavailable to intended users) or using a phishing scheme to impersonate an executive or vendor to cause an unauthorized transfer of funds. There can be no assurance that the Fund or its service providers or portfolio companies will not suffer losses relating to cyber-attacks or other information security breaches in the future.

While information risk management systems and business continuity plans have been developed which are designed to reduce the risks associated with cybersecurity, there are inherent limitations in any cybersecurity risk management systems or business continuity plans, including the possibility that certain risks have not been identified and that cyber-attacks may be highly sophisticated. There can be no assurance that the programs, plans and systems in place will prevent a cyber-attack or otherwise prevent cyber losses.

In addition, federal, state and foreign governments and agencies have adopted and could in the future adopt regulations covering issues such as user privacy. If the Fund’s and/or its services providers’ or portfolio companies’ privacy or data security measures fail to comply with current or future laws and regulations, they may be subject to additional litigation, regulatory investigations or other liabilities that could result in financial loss, litigation, regulatory investigations and penalties, and other liabilities that could damage their reputation and adversely impact the Fund’s and/or its service providers’ or portfolio companies’ performance and financial condition.

MeToo Movement. The #MeToo, “Time’s Up” and related social movements have focused attention on issues relating to gender equality in the workplace and raised awareness of the obligation to prevent sexual harassment and other forms of sexual misconduct in the workplace. Recently, companies have lost executives and faced major lawsuits and fines due to allegations of sexual harassment, gender discrimination and other misconduct, including negligence or misconduct in handling such allegations. There is no guarantee that the Fund’s portfolio companies will not experience negative fallout stemming from allegations of sexual harassment, gender discrimination and other misconduct resulting from the actions and/or inactions of such companies, their employees, and/or affiliates.
    
Brexit Risk. The risk of investing in portfolio companies based out of or related to Europe may be heightened due to the 2016 referendum in which the United Kingdom (“UK”) voted to exit the European Union (“EU”), commonly referred to as “Brexit.” On March 29, 2017, the UK formally notified the European Council of its intention to withdraw from the EU and triggered the two-year period set out

11



for withdrawal discussions in the Treaty on European Union. After several extensions of the period for withdrawal negotiations, the UK and EU agreed to terms on a withdrawal agreement, which was approved by the UK Parliament on January 22, 2020. The UK formally left the EU on January 31, 2020 and, pursuant to the terms of the withdrawal agreement, is now in a “transition period” through December 31, 2020 to allow the parties time to negotiate and implement new agreements on trade and other areas of cooperation. While the UK will remain in the EU’s single market and customs union during the transition period, the long-term nature of the relationship between the UK and the EU remains uncertain and the timetable as to when any agreement will be reached is unclear.

Therefore, the ultimate effects of Brexit will depend on the agreements the UK negotiates to retain access to EU markets beyond the transitional period. Brexit has created legal and tax uncertainty, which may last for years to come. While it is not possible to determine the precise impact that the outcome of negotiations regarding the UK-EU relationship may have on the Fund during this period and beyond, the impact on the UK and European economies and the broader global economy could be significant, including increased volatility and illiquidity, and potentially lower economic growth, on markets in the UK, Europe and globally, thereby adversely affecting the value of the Fund’s investments. In addition, if other countries were to exit the EU or abandon the use of the euro as a currency, the value of investments tied to those countries or the euro could decline significantly and unpredictably.

Climate Change, Natural Disaster and Public Health Crises Risk. Climate change and related legislation, regulation and accords, both domestic and international, intended to control the impact of climate change may produce direct or indirect adverse consequences to the Fund’s investments, significantly affecting their value. Extreme weather patterns or natural disasters, such as the Tohoku earthquake and resulting tsunami in Japan in 2011, the Alaska earthquake in 2018, major hurricanes in the United States in 2017 and 2018, or the threat thereof, could also adversely impact Fund portfolio companies’ facilities, operations, and services, as well as certain industries, or group of industries, and regions related to the Fund’s investments. Additionally, public health crises, such as the recent outbreak of coronavirus emanating from China, could result in travel restrictions and shipping and labor disruptions, which may adversely affect Fund portfolio companies’ facilities, operations and services.

LIBOR Phase-Out Risk. Many financial instruments, including the Fund’s credit facility and certain of its debt investments, utilize or are permitted to utilize a floating interest rate based on the London Interbank Offered Rate, or “LIBOR,” which is the offered rate for short-term Eurodollar deposits between major international banks. Additionally, the Fund has derivative instruments that hedge by converting floating LIBOR based interest rates into fixed rates. On July 27, 2017, the head of the UK’s Financial Conduct Authority announced its intention to phase out the use of LIBOR by the end of 2021. There is thus uncertainty regarding what interest rate benchmark(s) will replace LIBOR in the debt capital markets, and the effect of a transition away from LIBOR on the Fund cannot yet be determined. Management continues to evaluate the Fund’s LIBOR exposure risks, including but not limited to the potential impact on the cost of credit, the Fund’s derivative instruments, the Fund’s holdings, and the extent to which the Fund’s debt investment instruments allow for the utilization of alternative rate(s) in the absence of LIBOR.
INVESTMENT RISKS

International Investments. The Fund could invest up to, but not more than, 30% of its total assets in foreign based companies. Foreign investments are subject to most of the same risks as domestic investments, as well as the political, economic and other uncertainties associated with foreign activities, including the risk of war and political unrest, the impact of laws and policies of foreign governments and the United States affecting foreign investment, and the possibility of being subject to the jurisdiction of foreign courts in connection with legal disputes or the inability to subject foreign persons to the jurisdiction of courts in the United States. Furthermore, there may be practical and local law impediments to cost-effective recovery against collateral located in a foreign country. Moreover, it is possible that taxes may be required to be withheld by the foreign company on dividend and interest payments received by the Fund with respect to such foreign investments. Although capital gains derived by the Fund with respect to such investments in such foreign company may often be exempt from non-U.S. income or withholding taxes, the treatment of capital gains varies among jurisdictions. If the income from such foreign investments is subject to non-U.S. income or withholding taxes, the Fund will attempt to negotiate offsetting gross-up payments from the foreign-based company. No assurances, however, can be given that the Fund would be able to negotiate such offsetting payments.
Foreign Currency and Exchange Rate Risks. Fund assets and income may be denominated in various currencies. Contributions and distributions, however, will be denominated in U.S. dollars. As a result, the return of the Fund on any investment may be adversely affected by fluctuations in currency exchange rates, any future imposed devaluations of local currencies, inflationary pressures, and the success of the investment itself. In addition, the Fund may incur costs related to conversions between various currencies. As of December 31, 2019, all Fund assets and income, as well as contributions and distributions, are denominated in U.S. dollars.
Accounting and Disclosure Standards. Accounting, auditing, financial, and other reporting standards, practices, and disclosure requirements in countries in which the Fund may invest are not necessarily equivalent to those required under United States Generally Accepted Accounting Principles (“U.S. GAAP”). Accordingly, less information may be available to investors.
Credit Risks. Most of the companies with which the Fund will enter into financing transactions will not have achieved profitability, may experience substantial fluctuations in their operating results or, in many cases, will not have significant operating revenues. The ability of any borrower to meet its obligations to the Fund, therefore, will depend to a significant extent on the willingness of such borrower’s venture capital equity investors or outside investors to provide additional equity financing, which in turn will depend on the borrower’s success in meeting its business plan, the market climate for venture capital investments generally, among other factors. The companies to which the Fund will provide financing will frequently be engaged in the development of new products or technologies, and the success of these efforts, or the ability of the companies to successfully manufacture or market products or technologies developed, cannot be assured.

12



These companies frequently face intense competition, including competition from companies with greater resources, and may face risks of product or technological obsolescence, non-acceptance in the market, or rapidly changing regulatory environments, any of which could adversely affect their prospects. The success of such companies often depends on the management talents and efforts of one person or a small group of persons whose death, disability, resignation or other form of departure would adversely affect the company.
Remedies Upon Default. In the event of a default on a portfolio loan, the available remedies to the Fund would include legal action against the borrower and foreclosure or repossession of collateral given by the borrower. However, the Fund could experience significant delays in exercising its rights as a secured lender and might incur substantial costs in taking possession of and liquidating its collateral and in taking other steps to protect its investment. The Fund generally will require that it have a first priority security interest in any equipment of a borrower financed with the proceeds of the Fund’s loans, although that security interest may extend to the borrower’s other assets in which another lender might have a senior or parity security interest. It is anticipated that the Fund will make loans to a borrower that has one or more other secured lenders. In such circumstances, the Fund may share all or a portion of its collateral with the other lender(s) and will enter into intercreditor agreements governing the respective rights of the Fund and such other lender(s), which could limit the Fund’s flexibility in pursuing its remedies as a secured creditor, and reduce the proceeds realized from foreclosing or taking possession of the collateral. In the case of growth capital or working capital loans (where the loan proceeds can be used by the company for general corporate purposes), the Fund will typically receive either a broader lien on substantially all of the borrower’s assets, including its intellectual property, or a lien on substantially all of the borrower’s assets, excluding intellectual property, and a negative pledge on such intellectual property.
As noted above, the Fund may utilize certain of its funds in investments that involve the financing of equipment assets. Equipment assets are often subject to rapid depreciation or obsolescence such that it is likely that the value of the assets underlying a loan to finance such assets will depreciate during the term of the loan transaction below the amount of the borrower’s obligations. In addition, although borrowers will be required under the transaction documents to provide customary insurance for the assets underlying a loan and will be prohibited from disposing of the assets without the Fund’s consent, compliance with these covenants cannot be assured and, in the event of non‑compliance, the assets could become unavailable to the Fund due to destruction, theft, sale or other circumstances. Realization of value from intellectual property collateral can also be time consuming and present special challenges, given the often unique nature and limited market for such assets. The Fund’s ability to obtain payment beyond the collateral underlying the loan from the borrower might be limited by bankruptcy or similar laws affecting creditors’ rights. In limited instances where the Fund takes security interests in a borrower’s assets located in a foreign country, there may be practical and local law impediments to cost-effective recovery against such collateral. Therefore, there can be no assurance that the Fund would ultimately collect the full amount owed on a defaulted loan.
Emerging Company Risks. The possibility that the companies in which the Fund invests will not be able to commercialize their technology or product concept presents significant risk. Additionally, although some of such companies may already have a commercially successful product or product line at the time of investment, technology products and services often have a more limited market or life span than products in other industries. Thus, the ultimate success of these companies may depend on their ability to continually innovate in increasingly competitive markets. Most of the companies in which the Fund invests will require substantial additional equity financing to satisfy their continuing growth and working capital requirements. Each round of venture financing is typically intended to provide a company with enough capital to reach the next stage of development. The circumstances or market conditions under which such companies will seek additional capital is unpredictable. It is possible that certain companies will not be able to raise additional financing or may be able to do so only at a price or on terms which are unfavorable to the Fund.
Privately-Held Company Risks. The Fund invests primarily in privately-held companies. Generally, very little public information exists about these companies and the Fund is required to rely on the ability of the Manager to obtain adequate information to evaluate the potential returns from investing in these companies. Moreover, these companies typically depend upon the management talents and efforts of a small group of individuals and the loss of one or more of these individuals could have a significant impact on the investment returns from a particular company. Also, these companies frequently have less diverse product lines and smaller market presence than larger companies. They are thus generally more vulnerable to economic downturns and may experience substantial variations in operating results.
Due Diligence Risks. Before making investments, the Manager conducts a limited amount of due diligence that it deems reasonable and appropriate based on the facts and circumstances applicable to each investment. When conducting due diligence and making an assessment regarding an investment, the Manager will be required to rely on resources available to it, including information provided by the target of the investment and, in some circumstances, third party investigations. The due diligence process may at times be subjective with respect to newly organized companies for which only limited information is available. Accordingly, there can be no assurance that the due diligence investigation that the Manager will carry out with respect to any investment opportunity will reveal or highlight all relevant facts that may be necessary or helpful in evaluating such investment opportunity. Further, there can be no assurance that such an investigation will result in an investment being successful.
Financial Market Risk. The ability of the Fund to provide an acceptable return may be adversely affected by economic factors to which the marketplace is subject. Additionally, market turmoil could have a deleterious effect on the Company’s investors which could impede the ability to provide capital to the Fund. This could impair the Fund’s ability to honor commitments to lend, pay expenses of the Fund, or repay the Fund’s loans. The volatility in the global financial markets, which reached unprecedented levels during 2008 and 2009, and continued for some period thereafter (albeit to a lesser extent), may recur in the future. This and other types of market turmoil could have a material adverse effect on the Fund’s business and operations. The tightening of the credit markets could impair the Fund’s ability to either

13



acquire or utilize leverage to maximize the return it achieves on investments. The Fund’s predecessors (Venture Lending & Leasing I, Inc., Venture Lending & Leasing II, Inc., Venture Lending & Leasing III, Inc., Venture Lending & Leasing IV, Inc., Venture Lending & Leasing VI, Inc., Venture Lending & Leasing VII, Inc., and to a lesser extent, Venture Lending & Leasing V, Inc.), utilized leverage to increase returns to investors. If the Fund is unable to utilize leverage to the same extent as its predecessors, or unable to utilize leverage at all, there could be a material difference in the Fund’s return as compared to these funds.
It is possible that market conditions could decrease the demand for venture loans, especially where the U.S. and global economic conditions deteriorated and remained weak for an extended period of time. Furthermore, market conditions could also adversely impact either or both the ability of the Fund’s borrowers to meet their obligations to the Fund and the value of the Fund’s direct investments in companies. Most of the companies in which the Fund will invest will not have achieved profitability and will require substantial equity financing to satisfy their continuing growth and working capital requirements. An economic downturn could decrease the demand for such borrower’s products and technology, thereby impairing such borrower’s financial condition and its ability to raise additional equity financing from outside investors. Should these events occur, there could be an increase in borrower defaults under their obligations to the Fund, or a decrease in the value of the Fund’s direct equity investments.
Other U.S. and Global Economic Risks. In addition to the crisis in the financial markets discussed above, the ability of the Fund to provide an acceptable return may be adversely affected by other economic and business factors to which the U.S. market place is subject. These factors, which generally are beyond the control of the Manager, include: general economic conditions, such as inflation and fluctuations in general business conditions; the impact of terrorist attacks within or against the United States or other countries where investments are made; the effects of strikes, labor disputes and domestic and foreign political unrest; and uncertainty in the U.S. economy.
Changes to U.S. Trade Policy May Have a Negative Effect on the Global Economy and/or the Fund’s Portfolio Companies and, in Turn, Harm the Fund. Significant changes to U.S. trade policy, including changes to current legislation and trade agreements and the imposition of tariffs have been discussed by the current U.S. presidential administration and certain members of Congress. Recently, the administration has imposed tariffs on a range of goods imported into the U.S., and a few countries have retaliated with tariffs against the United States. These retaliatory actions could trigger extended “trade wars” between the U.S. and its trading partners, resulting in additional barriers to the international market, inclusive of customers, vendors, and potential investors. Under these circumstances, the cost of goods for some portfolio companies could increase, resulting in lower consumer demand for their goods and reduced cash flows. While it is unknown whether and to what extent new legislation will be enacted into law, the enactment or amendment of trade legislation and/or renegotiation of trade agreements may impose additional compliance costs on portfolio companies, restrict their ability to participate in international markets and otherwise disrupt their current operations.
Special Risk Considerations Relating to China. The Fund may invest in portfolio companies that are based in China, have significant operations in China or are otherwise connected to China. Markets in China can be volatile due to uncertain social, economic, regulatory and political factors, in addition to the effects of public health crises, such as the recent outbreak of coronavirus emanating from China. See the discussion herein under the caption “Climate Change, Natural Disaster and Public Health Crises Risk.” The severity and duration of any adverse economic conditions may be driven by governmental or quasi-governmental policies; in particular the imposition of sanctions by outside governments could severely disrupt the Chinese economy and the value of securities tied to it. For example, Fund portfolio companies may be significantly impacted by the ongoing trade dispute between the United States and China that have resulted in the imposition of tariffs by both countries on certain goods entering their respective markets. Among other things, such disputes could prompt a portfolio company to reduce its operations in China and/or suffer of downward pricing pressure. Additionally, a portfolio company that relies on Chinese investors could experience challenges in securing additional capital investments. In January 2020, the United States and China signed an agreement representing the first phase of a broader trade agreement between the two countries. Among other things, the agreement stipulates that both countries will reduce existing tariffs on certain imports and obligates China to increase its purchases of goods and services in the United States. However, it is unclear whether the countries will honor the terms of the phase one agreement, which could result in the imposition of additional tariffs and other retaliatory actions. Therefore, whether the factors identified above that could impact Fund portfolio companies are mitigated or exacerbated remains uncertain and will depend, in part, on their ability to fully implement the terms of the phase one deal, as well as the final outcome of ongoing negotiations between the United States and China to resolve their trade dispute through a comprehensive agreement.
Speculative Nature of Warrants and Equity Investments. The value of the warrants that the Fund generally will receive and distribute to its shareholder in connection with its financing investments is dependent on the value of the equity securities for which the warrants can be exercised. The value of such warrants, direct equity investments, and equities received upon conversion of debt instruments is dependent primarily on the success of the company’s business strategy and the growth of its earnings, but also depends on general economic and equity market conditions. The prospects for achieving consistent profitability, in the case of many companies in which the Fund invests, are speculative. The warrants, equity securities for which the warrants can be exercised, direct equity investments, and equities received upon conversion of debt instruments generally will be restricted securities that cannot readily be sold for some period of time. If the value of the equity securities underlying a warrant does not increase above the exercise price during the life of the warrant, the Fund may permit the warrant to expire unexercised and the warrant would then have no value.
Illiquidity of Investments. Substantially all of the Fund’s portfolio investments (other than short-term investments) will consist of securities that, at the time of acquisition, are subject to restrictions on sale and for which no ready market will exist. Restricted securities cannot be sold publicly without prior agreement with the issuer to register the securities under the 1933 Act, or by selling such securities under Rule 144 or other provisions of the 1933 Act which permit only limited sales under specified conditions. Venture loans and equity investments are privately negotiated transactions, and there is no established trading market in which such loans and equity investments can be sold. Convertible and subordinated debt investments may also be privately negotiated transactions. In the case of warrants or equity

14



securities, the Fund generally will realize the value of such securities only if the issuer is able to make an initial public offering of its shares or enters into a business combination with another company which purchases the Fund’s warrants or equity securities or exchanges them for publicly-traded securities of the acquirer. The feasibility of such transactions depends upon the entity’s financial results as well as general economic and equity market conditions. In the past, crises in the financial markets have dramatically reduced the volume of initial public offerings and mergers and acquisitions in the market place. If such a crisis recurs, the Fund’s ability to realize liquidity through its investments would likely be impaired. Furthermore, even if the restricted warrants or equity securities owned become publicly-traded, the Fund’s ability to sell such securities may be limited by the lack (or limited nature) of a trading market for such securities. If the Fund holds material nonpublic information regarding the issuer of the securities, the Fund’s ability to sell such securities may also be limited by insider trading laws. When restricted securities are sold to the public, the Fund, under certain circumstances, may be deemed an “underwriter” or a controlling person with respect thereto for the purposes of the 1933 Act, and be subject to liabilities as such under that Act.
Because of the illiquidity of the Fund’s investments, most of its assets will be carried at fair value as determined by the Manager in accordance with the Fund’s policy, as approved by the Fund’s Board of Directors. This value will not necessarily reflect the amount ultimately realized upon a sale of the assets.
Non-Diversified Status. The Fund is classified as a “non-diversified” investment company under the 1940 Act, but the Fund may, from time to time, act as a diversified investment company within the meaning of Section 5(b)(1) of the 1940 Act. The Fund elected to be treated as a RIC under the Code and operates in a manner to qualify for the tax treatment applicable to RICs, including the diversification requirement. Nevertheless, the Fund’s assets may be subject to a greater risk of loss than if its investments were more widely diversified.
CONFLICTS OF INTEREST

Transactions with Venture Lending & Leasing VII, Inc. (“Fund VII”). The Manager also serves as the investment manager for Fund VII. The Fund’s Board of Directors determined that so long as Fund VII had capital available to invest in loan transactions with final maturities earlier than December 31, 2022 (the date on which Fund VII will be dissolved), the Fund would invest in each portfolio company in which Fund VII invested (“Investments”). Generally, the amount of each Investment was allocated 50% to the Fund and 50% to Fund VII, or such other allocations as were determined by the respective fund boards, so long as the Fund had capital available to invest. Effective June 30, 2017, Fund VII was no longer permitted to enter new commitments to borrowers; however, Fund VII was permitted to fund existing commitments, in which the Fund might also be invested. Fund VII’s last commitment expired on July 31, 2018. The ability of the Fund to co-invest with Fund VII, and other clients advised by the Manager, is subject to the conditions (“Conditions”) with which the Funds are currently complying while seeking certain exemptive relief from the SEC from the provisions of Sections 17(d) and 57 of the 1940 Act and Rule 17d-1 thereunder. To the extent that clients, other than Fund VII, advised by the Manager (but in which the Manager has no proprietary interest) invest in opportunities available to the Fund, the Manager will allocate such opportunities among the Fund and such other clients in a manner deemed fair and equitable considering all of the circumstances in accordance with the Conditions.
Transactions with Venture Lending & Leasing IX, Inc. (“Fund IX”). The Manager also serves as the investment manager for Fund IX. The Fund’s Board of Directors determined that so long as Fund IX has capital available to invest in loan transactions with final maturities earlier than December 31, 2028 (the date on which Fund IX will be dissolved), the Fund may invest in each portfolio company in which Fund IX invests. Generally, the amount of each Investment will be allocated 50% to the Fund and 50% to Fund IX, or such other allocations as may be determined by the respective fund boards, so long as the Fund has capital available to invest. The ability of the Fund to co-invest with Fund IX, and other clients advised by the Manager, is subject to the Conditions described above. The Manager has exercised, and the Board of Directors ratified, its discretion to extend the Fund’s investment period for two additional quarters after September 30, 2019, thereby allowing the Fund to make new commitments through March 31, 2020 and to fund commitments through March 31, 2021, the end of the Fund’s investment period. To the extent that clients, other than Fund IX, advised by the Manager (but in which the Manager has no proprietary interest) invest in opportunities available to the Fund, the Manager will allocate such opportunities among the Fund and such other clients in a manner deemed fair and equitable considering all of the circumstances in accordance with the Conditions.
Intercreditor Agreements. In all transactions in which the Fund and other funds managed by the Manager invest, or those in which another lender(s) has either invested or may later invest (or in the event a successor fund is raised, in which the Fund and the successor fund invest), it is expected that the Fund and other funds managed by the Manager (or the successor fund as the case may be), and/or the other lender(s) will enter into an intercreditor agreement pursuant to which the Fund and other funds managed by the Manager (or the successor fund), and/or the other lender(s), along with any predecessor funds which still have a balance outstanding, will cooperate in pursuing their remedies following a default by the common borrower. Generally, under such intercreditor agreements, each party would agree that its security interest would be treated in parity with the security interest of the other party, regardless of which security interest would have priority under applicable law. Accordingly, proceeds realized from the sale of any collateral or the exercise of any other creditor’s rights will be allocated between the Fund and, other funds managed by the Manager, and any predecessor funds as described above, pro rata in accordance with the amounts of their respective investments. An exception to the foregoing arrangement would occur in situations where, for example, one of the lenders financed specific items of equipment collateral; in that case, usually the lender who financed the specific assets will have a senior lien on that asset, and the other lenders will have a junior priority lien (even though they may ratably share liens of equal priority on other assets of the common borrower). As a result of such intercreditor agreements, the Fund may have less flexibility in pursuing its remedies following a default than it would have had had there been no intercreditor agreement, and the Fund may realize fewer proceeds. In addition, because the Fund and, other funds managed by the Manager (or the successor fund) invest at the same time in the same borrower, such borrower would be required to service two loans rather than one. Any additional administrative costs or burdens resulting therefrom may make the Fund a less attractive lender and may make it more difficult for the Fund to acquire such loans.

15



Valuation. The Manager is responsible for valuing the Fund’s assets and liabilities, subject to oversight by the Fund’s Board of Directors, and has an inherent conflict in performing this function such that it has an incentive to increase the value of the assets for its performance record and to increase the Management Fee that it receives. The Fund does not intend to engage an independent valuation agent to value its assets and therefore is entirely reliant upon the Manager and its delegates for valuing the assets.
Effect of Borrowings. During the first two years of the Fund’s investment operations, the Management Fee was calculated with reference to the committed equity capital of the Company, regardless of when or if all of such capital was called. As of August 12, 2017, the Management Fee is computed and paid quarterly, at an annual rate of 2.5% of the total value of the Fund’s assets (including amounts derived from borrowed funds) as of the last day of each fiscal quarter. Therefore, decisions by the Manager to cause the Fund to borrow additional funds may increase the quarterly fees payable to the Manager. The Fund’s overall borrowing limits, however, are set by the Fund’s Board of Directors in light of its fiduciary obligations.
Indemnification and Exculpation. The organizational documents of the Fund provide for indemnification of directors, officers, employees, advisory board members and agents (including the Manager) of the Fund, generally to the full extent permitted by applicable state law and the 1940 Act, including the advance of expenses and reasonable counsel fees. The charter of the Fund also contains a provision eliminating personal liability of a Fund director or officer to the Fund or its stockholder for money damages, subject to specified exceptions. In addition, the Fund has entered into an indemnification with its directors and officers. A successful claim for such indemnification, including payment of any expenses and counsel fees, would reduce the Fund’s assets by the amounts paid. Furthermore, Fund assets are used to obtain insurance policies that generally protect the Fund’s directors and officers from personal liability of actions taken in their roles as the Fund’s directors and officers.
Disinterested Directors and Advisory Board Members. The members of the Fund’s Board of Directors will overlap with the members of the Company’s advisory board, and the members of the Company’s advisory board are the same as, or a subset of, the disinterested directors of the Fund. Although the Manager expects that, given the Company’s 100% ownership of the Fund, the interests of the two entities will not diverge, it is conceivable that a conflict of interest could exist between the Fund and the Company. In addition, as compensation for services, the disinterested directors will receive an annual fee of $30,000 (plus $1,000 per meeting attended in person and an additional $10,000 for the chair of the Audit Committee). Any future changes to the compensation to be paid to the disinterested directors will be determined by the Nominating and Corporate Governance Committee of the Fund’s Board of Directors. Upon the liquidation of the Fund, the disinterested advisory board members will receive an annual fee in an amount determined by the Member (it is currently anticipated that such annual amount shall be $15,000). The disinterested directors and advisory board members will also be reimbursed for certain expenses. The payment of such fees may limit the objectivity and independence of the disinterested directors and the advisory board members on behalf of the members.
Personal Trading. The Manager has a code of ethics that contains personal securities trading procedures that apply to its “access persons.” Access persons are required to report if they have an investment in a company in which the Fund is considering making an investment. Pre-approval is required before an access person may buy or sell securities in an initial public offering, private placement, or any security listed on a “restricted list” maintained by the Manager.
Interests in Potential Portfolio Companies. The Manager may recommend that the Fund invest in companies in which a principal or employee has a prior personal investment or for which a principal or employee may serve as a director or advisor. The Manager also may recommend that the Fund invest in companies in which venture capital funds, private equity funds or other institutional investors (“Unaffiliated Funds”) also have made investments, where one or more principals or employees of the Manager may have made an investment in, or served as an advisor to, an investing Unaffiliated Fund. Such a relationship presents potential conflicts of interest by providing the principal or employee with an incentive to influence the Manager’s decision to recommend an investment in the company in question. There is also a potential conflict of interest in that such principal or employee could use information acquired through association with the Manager to influence or benefit Unaffiliated Funds’ investment decisions. The Manager addresses these potential conflicts through its policies and procedures that are designed to insulate its investment decision-making process and its research from these incentives. For example, the policies require that principals with a prior direct investment in a company be recused from the investment decision-making process with respect to that company.
Principals that serve as advisors to Unaffiliated Funds may make investment recommendations to these Unaffiliated Funds, which may be the same investment that the Fund has made or may make. The Manager’s policies and procedures require such principals to arrange for any such investment opportunity to be first offered to the Fund (or a predecessor fund) and for such investment opportunity to only subsequently be offered to an Unaffiliated Fund once declined by the Fund (or a predecessor fund).
ITEM 1B.  
UNRESOLVED STAFF COMMENTS
Not applicable.

16



ITEM 2.
PROPERTIES
All of the Fund’s office space is provided by the Manager. The executive offices are located at 104 La Mesa Drive, Suite 102, Portola Valley, CA 94028.
ITEM 3.
LEGAL PROCEEDINGS
The Fund may become party to certain lawsuits from time to time in the normal course of business. While the outcome of any legal proceedings cannot now be predicted with certainty, the Fund does not expect any such proceedings will have a material effect upon the Fund’s financial condition or results of operation. Management is not aware of any pending legal proceedings involving the Fund. The Fund is not a party to any material legal proceedings.
ITEM 4.
MINE SAFETY DISCLOSURES
Not applicable.


17



PART II.
ITEM 5.
MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
The Fund’s common stock is not listed on any securities exchange, and all holders of the Fund’s common stock are subject to agreements significantly restricting the transferability of their shares.
The number of holders of record of the Fund’s common stock at March 16, 2020 was 1.
The Fund has a policy of distributing securities as acquired. The Fund values these securities at fair value at the time of acquisition in accordance with the Fund’s policy on valuation detailed in Note 2 to the financial statements included in this filing. In addition, some expenses of the Company may be paid by the Fund and will be deemed as distributions to the Company. The Fund has established a policy of declaring dividends on a quarterly basis to the extent that taxable income of the Fund less applicable reserves exceeds warrant distributions and deemed distributions. As of December 31, 2019, the Fund had distributed $178.2 million to date to its sole shareholder, of which $114.3 million were in cash.

(Intentionally left blank)

18



ITEM 6.        SELECTED FINANCIAL DATA
The following table summarizes certain financial data and should be read in conjunction with the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the financial statements and notes thereto included elsewhere in this Form 10-K. The selected financial data set forth below have been derived from the audited financial statements.
 
For the Year Ended December 31, 2019
 
For the Year Ended December 31, 2018
 
For the Year Ended December 31, 2017
 
For the Year Ended December 31, 2016
 
For the Period Ended December 31, 2015*
Statements of Operations Data:
 
 
 
 
 
 
 
 
 
Investment income:
 
 
 
 
 
 
 
 
 
Interest on loans
$
65,256,443

 
$
71,143,194

 
$
35,937,318

 
$
11,603,019

 
$
611,757

Other interest and other income
296,214

 
274,879

 
235,096

 
144,326

 
13,167

Total investment income
65,552,657

 
71,418,073

 
36,172,414

 
11,747,345

 
624,924

Expenses:
 
 
 
 
 
 
 
 
 
Management fees
9,705,516

 
10,774,959

 
9,579,408

 
10,590,625

 
4,098,427

Organizational costs

 

 

 

 
181,096

Interest expense
9,997,464

 
10,163,068

 
4,903,598

 
1,529,710

 

Banking and professional fees
546,063

 
462,756

 
305,161

 
251,495

 
83,388

Other operating expenses
294,752

 
186,508

 
453,791

 
121,261

 
50,502

Total expenses
20,543,795

 
21,587,291

 
15,241,958

 
12,493,091

 
4,413,413

Net investment income (loss)
45,008,862

 
49,830,782

 
20,930,456

 
(745,746
)
 
(3,788,489
)
 
 
 
 
 
 
 
 
 
 
Net realized loss from loans
(14,223,082
)
 
(14,285,388
)
 
(4,852,881
)
 

 

Net realized gain (loss) from derivative instruments
85,453

 
(334,834
)
 

 

 

Net change in unrealized loss from loans
(759,677
)
 
(2,058,044
)
 
(954,960
)
 
(3,315,913
)
 

Net change in unrealized gain (loss) from derivative instruments
(963,331
)
 
608,294

 
(52,189
)
 
60,043

 

Net realized and change in unrealized loss from loans and derivative instruments
(15,860,637
)
 
(16,069,972
)
 
(5,860,030
)
 
(3,255,870
)
 

Net increase (decrease) in net assets resulting from operations
$
29,148,225

 
$
33,760,810

 
$
15,070,426

 
$
(4,001,616
)
 
$
(3,788,489
)
 
 
 
 
 
 
 
 
 
 
Amounts per common share:
 
 
 
 
 
 
 
 
 
Net increase (decrease) in net assets resulting from operations per share
$
291.48

 
$
337.61

 
$
150.70

 
$
(40.02
)
 
$
(37.88
)
Weighted-average shares outstanding
100,000

 
100,000

 
100,000

 
100,000

 
100,000

 
 
 
 
 
 
 
 
 
 
 
As of December 31,
 
 
 
2019
 
2018
 
2017
 
2016
 
2015
Statements of Assets and Liabilities Data:
 
 
 
 
 
 
 
 
 
Loans
$
371,955,824

 
$
398,980,531

 
$
310,710,678

 
$
125,550,657

 
$
26,231,626

Net assets
$
206,585,164

 
$
216,543,951

 
$
164,831,060

 
$
81,071,642

 
$
32,058,748

* From August 12, 2015, commencement of the Fund’s operations, through December 31, 2015.

19



ITEM 7.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Overview

The Fund is 100% owned by the Company. The Fund’s shares of common stock, at $0.001 par value, were sold to its sole shareholder, the Company, under a stock purchase agreement. The Fund has issued 100,000 of the Fund’s 10,000,000 authorized shares. The Company may make additional capital contributions to the Fund.
The Fund provides financing and advisory services to a variety of carefully selected Venture-Backed Companies primarily throughout the United States, with a focus on growth oriented companies. The Fund’s portfolio consists of companies in the communications, information services, media, technology (including software and technology-enabled business services), biotechnology, and medical devices industry sectors, among others. The Fund’s capital is generally used by its portfolio companies to finance acquisitions of fixed assets and working capital. On August 31, 2015, the Company completed its first closing of capital contributions. On September 1, 2015, the Fund made its first investment and became a non-diversified, closed-end investment company that elected to be treated as a BDC under the 1940 Act. While the Fund intends to operate as a non-diversified investment company within the meaning of Section 5(b)(2) of the 1940 Act, from time to time the Fund may act as a diversified investment company within the meaning of Section 5(b)(1) of the 1940 Act.
The Fund elected to be treated for federal income tax purposes as a RIC under the Code with the filing of its federal corporate income tax return for 2016. Pursuant to this election, the Fund generally will not have to pay corporate-level taxes on any income distributed to its shareholder as dividends, allowing the Company to substantially reduce or eliminate its corporate-level tax liability.

The Fund will seek to meet the ongoing requirements, including the diversification requirements, to qualify as a RIC under the Code. If the Fund fails to meet these requirements, it will be taxed as an ordinary corporation on its taxable income for that year (even if that income is distributed to the Company) and all distributions out of its earnings and profits will be taxable to the members of the Company as ordinary income; thus, such income will be subject to a double layer of tax. There is no assurance that the Fund will meet the ongoing requirements to qualify as a RIC for tax purposes.

The Fund’s investment objective is to achieve superior risk-adjusted investment returns and it seeks to achieve that objective by providing debt financing to portfolio companies, most of which are private. The Fund generally receives warrants to acquire equity securities in connection with its portfolio investments and generally distributes these warrants to its shareholder upon receipt, or soon thereafter. The Fund also has guidelines for the percentages of total assets that are invested in different types of assets.

The portfolio investments of the Fund primarily consist of debt financing to Venture-Backed Companies in the technology sector. The borrower’s ability to repay its loans may be adversely impacted by several factors, and as a result, the loan may not be fully repaid. Furthermore, the Fund’s security interest in any collateral over the borrower’s assets may be insufficient to make up any shortfall in payments.
Critical Accounting Policies, Practices and Estimates
Critical Accounting Policies and Practices are those accounting policies and practices that are both the most important to the portrayal of the Fund’s net assets and results of operations and require the most difficult, subjective or complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain. Critical accounting estimates are accounting estimates where the nature of the estimates is material due to the levels of subjectivity and judgment necessary to account for highly uncertain matters or the susceptibility of such matters to change and the impact of the estimates on net assets or operating performance is material.

In evaluating the most critical accounting policies and estimates, the Manager has identified the estimation of fair value of the Fund’s loan investments as the most critical of the accounting policies and accounting estimates applied to the Fund’s reporting of net assets or operating performance. In accordance with U.S. GAAP, the Fund defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date; that is, an exit price. The exit price assumes the asset or liability was exchanged in an orderly transaction; it was not a forced liquidation or distressed sale. There is no readily available market price or secondary market for the loans made by the Fund to borrowers, hence the Manager determines fair value based on a hypothetical market and the estimates are subject to high levels of judgment and uncertainty. The Fund’s loan investments are considered Level 3 fair value measurements in the fair value hierarchy due to the lack of observability over many of the important inputs used in determining fair value.

Critical judgments and inputs in determining the fair value of a loan include the estimated timing and amount of future cash flows and probability of future payments, based on the assessment of payment history, available cash and “burn rate,” revenues, net income or loss, operating results, financial strength of borrower, prospects for the borrower’s raising future equity rounds, likelihood of sale or acquisition of the borrower, length of expected holding period of the loan, collateral position, the timing and amount of liquidation of collateral for loans that are experiencing significant credit deterioration and, as a result, collection becomes collateral-dependent, as well as an evaluation of the general interest rate environment. Management has evaluated these factors and has concluded that the effect of a deterioration in the quality of the underlying collateral, increase in the size of the loan, increase in the estimated time to recovery, and increase in the hypothetical market coupon rate would have the effect of decreasing the fair value of loan investments.

20



The risk profile of a loan changes when events occur that impact the credit analysis of the borrower and the loan. Such changes result in the fair value being adjusted from par value of the individual loan. Where the risk profile is consistent with the original underwriting, the par value of the loan often approximates fair value.

The actual value of the loans may differ from Management’s estimates, which would affect net change in net assets resulting from operations as well as assets.
Results of Operations – For the Years Ended December 31, 2019 and 2018
The Fund commenced operations on August 12, 2015. For the most recent discussion on the results of operations for the year ended December 31, 2017, refer to the management discussion and analysis on the annual report, Form 10-K, filed on March 14, 2019.
Total investment income for the years ended December 31, 2019 and 2018 was $65.6 million and $71.4 million, respectively, which primarily consisted of interest on the venture loans outstanding. The remaining income consisted of interest and dividends on the temporary investment of cash, and other income from commitment fees and warrants. The average outstanding balance of performing loans calculated using the month-end balances was $373.5 million and $394.7 million for the years ended December 31, 2019 and 2018, respectively. For the years ended December 31, 2019 and 2018, the average outstanding balance of all loans calculated on a monthly basis was $381.9 million and $399.0 million, respectively. The weighted-average interest rate on performing loans was 17.46% and 18.03% for years ended December 31, 2019 and 2018, respectively. For the years ended December 31, 2019 and 2018, the weighted-average interest rate on all loans was 17.09% and 17.83%, respectively. Interest is calculated using the effective interest method, and rates earned by the Fund will fluctuate based on many factors including early payoffs, volatility of values ascribed to warrants, and new loans funded during the year. Total investment income for 2019 decreased due to fewer loans with very large balances being paid off early, as well as a decline interest income on the early payoffs due to the smaller size of the balances of the loans as compared to the prior year. Furthermore, the early payoffs in 2018 and 2019 have lead to a decline in the overall size of the portfolio, which also contributed to the decline in investment income.
Expenses for the years ended December 31, 2019 and 2018 were $20.5 million and $21.6 million, respectively.
Management fees for the Fund were $9.7 million and $10.8 million for the years ended December 31, 2019 and 2018, respectively. Until August 11, 2017, management fees were calculated as 2.5% of the committed equity capital of the Company. Starting on August 12, 2017, management fees were calculated as 2.5% of the Fund’s total assets. Management fees were lower in 2019 due primarily to declines in the loan portfolio and other assets.

Interest expense for the years ended December 31, 2019 and 2018 were $10.0 million and $10.2 million, respectively. Interest expense was comprised of amounts related to interest on debt amounts drawn down, unused credit line fees and amounts amortized from deferred fees incurred in conjunction with the loan facility. Interest expense decreased slightly because of a decrease in the average outstanding debt from $191.3 million in 2018 to $179.8 million in 2019, but was partially offset by the increase in the interest rates from 5.31% in 2018 to 5.56% in 2019.

Banking and professional fees for the years ended December 31, 2019 and 2018 were $0.5 million and $0.5 million, respectively. The banking and professional fees were comprised of legal, audit, banking and other professional fees. The fees were largely unchanged which was commensurate with the Fund’s investment activity reaching a steady state.
Other operating expenses were $0.3 million and $0.2 million for the years ended December 31, 2019 and 2018, respectively. These expenses included director fees, custody fees, tax fees and other expenses related to the operations of the Fund. The increase in 2019 was mainly attributable to the increase in the directors fee effective in Q4 2018 taking full effect in 2019, an increase in the insurance premium for the directors and officers policy and an increase in withholdings for foreign taxes.

Net investment income for the years ended December 31, 2019 and 2018 was $45.0 million and $49.8 million, respectively.
Net realized loss from loans was $14.2 million and $14.3 million for the years ended December 31, 2019 and 2018, respectively. Loan losses decreased slightly in 2019 as unrecoverable loan balances written off were slightly lower than the prior year.
Net realized gain (loss) from derivative instruments was $0.1 million and $(0.3) million for the years ended December 31, 2019 and 2018, respectively. The gain in 2019 was due to the rising interest rate environment in the first half of the year, which lead to the receipt of interest payments from the derivative instrument, but was offset by interest payments in the final quarter of the year as interest rates started to decline.
Net change in unrealized loss from loans was $0.8 million and $2.1 million for the years ended December 31, 2019 and 2018, respectively. The net change in unrealized loss consisted of fair value adjustments to loans and the reversal of fair value adjustments previously taken against loans written off.
Net change in unrealized gain (loss) from derivative instruments was $(1.0) million and 0.6 million for the years ended December 31, 2019 and 2018, respectively. The net change in unrealized gain and loss from derivative instruments consisted of fair market value adjustments to the derivative interest rate cap or swap. The decrease in 2019 was primarily due to the change in expectations of LIBOR interest rates during the year as well as the realized portion paid during 2019.

21



Net increase in net assets resulting from operations for the years ended December 31, 2019 and 2018 was $29.1 million and $33.8 million, respectively. On a per share basis, the net increase in net assets resulting from operations was $291.48 and $337.61 for the years ended December 31, 2019 and 2018, respectively.
Liquidity and Capital Resources -- December 31, 2019 and 2018
For the most recent discussion on the liquidity and capital resources for the year ended December 31, 2017, refer to the management discussion and analysis on the annual report, Form 10-K, filed on March 14, 2019.
The Fund is owned entirely by the Company. The Company is expected, but not required, to make further contributions to the capital of the Fund to the extent of the Company’s members’ capital commitment to the Company and excess cash balances of the Company. Total capital contributed to the Fund was $314.6 million and $297.6 million as of December 31, 2019 and 2018, respectively. As of both December 31, 2019 and 2018, the Company had subscriptions for capital in the amount of $423.6 million, of which $372.8 million and $347.4 million had been called and received, respectively. As of December 31, 2019, $50.8 million of capital remains uncalled. The Manager has exercised, and the Board of Directors ratified, its discretion to extend the Fund’s investment period and the uncalled capital expiration date to March 31, 2021. The Company has made $104.2 million in recallable distributions to its investors, as permitted under its operating agreement between the Company’s managing member and members of the Company.

The change in cash held by the Fund for the years ended December 31, 2019 and 2018 were as follows:
 
For the Year Ended December 31, 2019
 
For the Year Ended December 31, 2018
Net cash provided by (used in) operating activities
$
36,845,814

 
$
(71,414,509
)
Net cash provided by (used in) financing activities
(43,664,547
)
 
82,923,153

Net increase (decrease) in cash and cash equivalents
$
(6,818,733
)
 
$
11,508,644


As of December 31, 2019 and 2018, 6.1% and 9.0%, respectively, of the Fund’s net assets consisted of cash and cash equivalents.

On April 5, 2016, the Fund established a secured, syndicated revolving loan facility in an initial amount of up to $150.0 million (the “Loan Agreement”) led by Wells Fargo, N.A. and MUFG Union Bank, N.A. On September 11, 2017, the Loan Agreement was amended (the “Amended Loan Agreement”) and the borrowing availability thereunder increased the size of the facility to $280.0 million. All of the assets of the Fund collateralize borrowings by the Fund. The Fund pays interest on its borrowings and a fee on the unused portion of the facility. The facility terminates on September 11, 2020, but can be accelerated in the event of default, such as failure by the Fund to make timely interest or principal payments. As of December 31, 2019, $179.0 million was outstanding under the facility.
For the years ended December 31, 2019 and 2018, the Fund invested its assets in venture loans. Amounts disbursed under the Fund’s loan commitments were $170.0 million and $275.2 million for the years ended December 31, 2019 and 2018, respectively. Net loan amounts outstanding after amortization and valuation adjustments decreased by $27.0 million for the year ended December 31, 2019. Unexpired unfunded commitments totaled $78.0 million as of December 31, 2019.
As of
Cumulative Amount Disbursed
Principal Reductions and Fair Market Adjustments
Balance Outstanding – Fair Value
Unexpired
Unfunded Commitments
December 31, 2019
$840.3 million
$468.3 million
$372.0 million
$78.0 million
December 31, 2018
$670.3 million
$271.3 million
$399.0 million
$64.9 million
The following tables show the unexpired unfunded commitments by portfolio company as of December 31, 2019 and 2018.
Borrower
Industry
Unexpired Unfunded Commitment as of December 31, 2019
Expiration Date
Ablacon, Inc.
Medical Devices
$
2,500,000

01/31/2020
Ainsly, Inc.
Internet
1,500,000

01/31/2020
AirVine Scientific, Inc.
Wireless
125,000

03/31/2020
Apollo Flight Research Inc.
Other Technology
250,000

01/31/2020
ArborMetrix, Inc.
Software
750,000

04/30/2020
Beanfields, PBC
Other Technology
625,000

06/30/2020
BWI Industries, Inc.
Other Technology
2,000,000

07/31/2020

22



Borrower
Industry
Unexpired Unfunded Commitment as of December 31, 2019
Expiration Date
Callisto Media, Inc.
Technology Services
10,000,000

12/31/2020
Canary Technologies Corp.
Software
250,000

09/30/2020
Cesium, Inc.
Internet
375,000

03/31/2020
Cloudleaf, Inc.
Software
1,500,000

10/15/2020
DOSH Holdings, Inc.
Other Technology
3,750,000

01/15/2020
eXo Imaging, Inc.
Medical Devices
6,000,000

11/30/2020
GoForward, Inc.
Other Healthcare
6,250,000

07/01/2020
Hello Heart Inc.
Other Healthcare
1,750,000

08/31/2020
HumanAPI, Inc.
Other Healthcare
500,000

01/31/2020
Kids on 45th, Inc.
Internet
500,000

01/31/2020
Klar Holdings Limited
Technology Services
250,000

03/31/2020
Lifit, Inc.
Technology Services
500,000

01/30/2020
Lucideus, Inc.
Software
500,000

07/15/2020
Lukla, Inc.
Internet
750,000

01/31/2021
Marley Spoon, Inc.
Internet
3,750,000

07/31/2020
Medable, Inc.
Software
2,000,000

07/31/2020
Merchbar, Inc.
Internet
250,000

01/30/2020
Noteleaf, Inc.
Other Technology
1,000,000

01/31/2020
OneLocal, Inc.
Internet
1,000,000

07/31/2020
Owl Cameras, Inc.
Software
3,000,000

01/01/2020
Parallel Wireless, Inc.
Wireless
6,500,000

03/31/2020
Percepto, Inc.
Other Technology
1,000,000

05/31/2020
Pitzi, Ltd.
Other Technology
2,500,000

11/30/2020
Quartzy, Inc.
Biotechnology
2,250,000

10/15/2020
Solugen, Inc.
Technology Services
1,250,000

01/31/2020
Stay Alfred, Inc.
Internet
7,500,000

06/30/2020
Stitch Labs, Inc.
Software
750,000

01/31/2020
The Safe and Fair Food Company LLC
Other Technology
1,250,000

01/31/2020
Trendalytics Innovation Labs, Inc.
Software
450,000

01/31/2020
Visual Supply Company
Internet
2,500,000

03/31/2020
Voodoo Manufacturing, Inc.
Other Technology
375,000

02/28/2020
Total
 
$
77,950,000

 

Borrower
Industry
Unexpired Unfunded Commitment as of December 31, 2018
Expiration Date
Aclima, Inc.
Other Technology
$
875,000

05/31/2019
Antheia, Inc.
Biotechnology
1,500,000

12/31/2019
Blockdaemon, Inc.
Software
250,000

01/31/2019
Brightside Benefit, Inc.
Other Technology
1,000,000

05/31/2019
Callisto Media, Inc.
Technology Services
3,000,000

03/31/2019
Caredox, Inc.
Other Healthcare
625,000

04/30/2019
CytoVale, Inc.
Medical Devices
1,125,000

02/28/2019
Discover Echo, Inc.
Other Healthcare
1,000,000

02/28/2019

23



Borrower
Industry
Unexpired Unfunded Commitment as of December 31, 2018
Expiration Date
Emerald Cloud Lab, Inc.
Other Healthcare
6,556,001

03/30/2019
Figure 1, Inc.
Internet
1,000,000

04/01/2019
Fitplan, Inc.
Other Technology
250,000

01/31/2019
FLYR, Inc.
Internet
1,500,000

07/31/2019
Hometap Equity Partners, LLC
Other Technology
2,000,000

03/31/2019
Invoice2Go, Inc.
Software
4,000,000

12/31/2019
Ipolipo, Inc.
Software
750,000

07/31/2019
Karamba Security Ltd.
Security
8,500,000

03/31/2019
Keyo AI Inc.
Technology Services
500,000

01/31/2019
Kogniz, Inc.
Other Technology
375,000

04/30/2019
Linden Research Inc.
Internet
5,000,000

01/15/2019
Metricly, Inc.
Software
500,000

04/30/2019
NeuMoDx Molecular, Inc.
Medical Devices
6,500,000

09/30/2019
OrderGroove, Inc.
Software
2,500,000

09/30/2019
Osix Corporation
Internet
150,000

07/31/2019
Plethora, Inc.
Other Technology
500,000

01/31/2019
PlushCare, Inc.
Software
750,000

07/31/2019
RadiAction Ltd.
Medical Devices
1,000,000

01/30/2019
Relimetrics, Inc.
Technology Services
375,000

04/15/2019
Robin Care, Inc.
Other Healthcare
500,000

01/31/2019
Skillshare, Inc.
Software
2,000,000

04/30/2019
SkyKick, Inc.
Other Technology
2,500,000

02/28/2019
SnapRoute, Inc,
Enterprise Networking
1,500,000

02/28/2019
Stitch Labs, Inc.
Software
1,500,000

07/31/2019
Therapydia, Inc.
Other Healthcare
300,000

01/31/2019
Venuetize, LLC
Software
500,000

09/30/2019
Virtuix Holdings, Inc.
Other Technology
250,000

07/31/2019
Workspot, Inc.
Software
1,000,000

01/31/2019
Zeel Networks, Inc.
Technology Services
2,750,000

03/31/2019
Total
 
$
64,881,001

 
Because venture loans are privately negotiated transactions, investments in these assets are relatively illiquid. It is the Management’s experience that not all unexpired unfunded commitments will be used by borrowers. Many credit agreements contain provisions which are milestone dependent and not all borrowers will achieve these milestones. Additionally, the Fund’s credit agreements contain provisions that give relief from funding obligations in the event the borrower has a materially adverse change in its financial condition. Therefore, the unexpired unfunded commitments do not necessarily reflect future cash requirements or future investments for the Fund.
The Fund seeks to maintain the requirements to qualify for the special pass-through status available to RICs under the Code, and thus to be relieved of federal income tax on that part of its net investment income and realized capital gains that it distributes to its shareholder. To qualify as a RIC, the Fund must distribute to its shareholder for each taxable year at least 90% of its investment company taxable income (consisting generally of net investment income and net short-term capital gain) (the “Distribution Requirement”). To the extent that the terms of the Fund’s venture loans provide for the receipt by the Fund of additional interest at the end of the loan term or provide for the receipt by the Fund of a purchase price for the asset at the end of the loan term (“residual income”), the Fund would be required to accrue such residual income over the life of the loan, and to include such accrued undistributed income in its gross income for each taxable year even if it receives no portion of such residual income in that year. Thus, in order to meet the Distribution Requirement and avoid payment of income taxes or an excise tax on undistributed income, the Fund may be required in a particular year to distribute as a dividend an amount in excess of the total amount of income it actually receives. Those distributions will be made from the Fund’s cash assets, from amounts received through amortization of loans or from borrowed funds.

24



As of December 31, 2019, the Fund had cash reserves of $12.6 million and approximately $185.0 million in scheduled loan receivable payments over the next year. Additionally, the Fund has access to uncalled capital of $50.8 million as a liquidity source and a borrowing base that grows as it funds additional commitments, as well as $104.2 million in recallable distributions made by the Company to its investors. These amounts are sufficient to meet the current commitment backlog and operational expenses of the Fund over the next year. The Fund regularly evaluates potential future liquidity resources and demands before making additional future commitments.
ITEM 7A.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Fund’s business activities contain various elements of risk, of which Management considers interest rate and credit risk to be the principal types of risks. Because the Fund considers the management of risk essential to conducting its business and to maintaining profitability, the Fund’s risk management procedures are designed to identify and analyze the Fund’s risks, to set appropriate policies and limits and to continually monitor these risks and limits by means of reliable administrative and information systems and other policies and programs.
The Fund manages its market risk by maintaining a portfolio that is diverse by industry, size of investment, stage of development, and borrower. The Fund has limited exposure to public market price fluctuations as the Fund primarily invests in private business enterprises and distributes all equity investments upon receipt to the Company.
The Fund’s investments are subject to market risk based on several factors, including, but not limited to, the borrower’s credit history, available cash, support of the borrower’s underlying investors, available liquidity, “burn rate,” revenue income, security interest, secondary markets for collateral, the size of the loan, term of the loan and the ability to exit via initial public offering or merger and acquisition.
The Fund’s exposure to interest rate sensitivity is regularly monitored and analyzed by measuring the characteristics of assets and liabilities. The Fund utilizes various methods to assess interest rate risk in terms of the potential effect on interest income net of interest expense, the value of net assets and the value at risk in an effort to ensure that the Fund is insulated from any significant adverse effects from changes in interest rates. At December 31, 2019, the outstanding debt balance was $179.0 million at a weighted-average floating interest rate of 1.78%, for which the Fund had interest rate swaps in place with a weighted-average fixed interest rate of 2.11% on $192.0 million of the notional principal amount, leaving the Fund with exposure to interest rate changes on the over-hedged balance.

Because all of the Fund’s loans impose a fixed interest rate upon funding, changes in short-term interest rates will not directly affect interest income associated with the loan portfolio as of December 31, 2019. However, those changes could have the potential to change the Fund’s ability to originate loan commitments, acquire and renew bank facilities, and engage in other investment activities. Further, changes in short-term interest rates could also affect interest rate expense, realized gain from investments and interest on the Fund’s short-term investments.

Based on the Fund’s Statements of Assets and Liabilities as of December 31, 2019, the following table shows the approximate annualized increase (decrease) in components of net assets resulting from operations of hypothetical base rate changes in interest rates, assuming no changes in investments, borrowings, cash balances and interest rate swap derivatives.  
Effect of Interest Rate Change By
Other Interest and Other Income (Loss)
Gain (Loss) from Derivative Instruments
Interest Income (Expense)
Total Income (Loss)
(0.50)%
$(62,848)
$(960,000)
$895,000
$(127,848)
1%
$125,696
$1,920,000
$(1,790,000)
$255,696
2%
$251,393
$3,840,000
$(3,580,000)
$511,393
3%
$377,089
$5,760,000
$(5,370,000)
$767,089
4%
$502,785
$7,680,000
$(7,160,000)
$1,022,785
5%
$628,481
$9,600,000
$(8,950,000)
$1,278,481
Additionally, a change in the interest rate may affect the value of the interest rate swaps and effect Net change in unrealized gain (loss) from derivative instruments. The amount of any such effect will be contingent upon market expectations for future interest rate changes. Any increases in expected future rates will increase the value of the interest rate swap while any rate decreases will decrease the value.

Although Management believes that the foregoing analysis is indicative of the Fund’s sensitivity to interest rate changes, it does not take into consideration potential changes in the credit market, credit quality, size and composition of the assets in the portfolio. It also does not assume any new fundings to borrowers, repayments from borrowers or defaults on borrowings. Accordingly, no assurances can be given that actual results would not differ materially from the table above.
    

25



Because the Fund currently borrows, its net investment income is highly dependent upon the difference between the rate at which it borrows and the rate at which it invests the amounts borrowed. Accordingly, there can be no assurance that a significant change in market interest rates will not have a material adverse effect on the Fund’s investment activities and net investment income. The Fund’s exposure to movement in short-term interest rates stems from the Fund borrowing at a floating interest rate but then making loans with a fixed rate at the time the loans are extended. The Fund, therefore, attempts to limit its interest rate risk by acquiring interest rate swaps to hedge its interest rate exposure.

The Fund is not sensitive to changes in foreign currency exchange rates, commodity prices and other market rates or prices.
ITEM 8.
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Quarterly Results
This information has been derived from unaudited financial statements that, in the opinion of Management, include all normal recurring adjustments necessary for a fair presentation of such information. The operating results for any quarter are not necessarily indicative of results for any future year. The format of the statements has been modified, thus certain numbers have been combined in order to fit the format of the statements. Prior to commencing operations on August 12, 2015, the Fund had no operations other than the sale to the Company of 100,000 shares of common stock, $0.001 par value for $25,000 in July 2015. This issuance of stock was a requirement to apply for a finance lender’s license from the California Commissioner of Corporations, which was obtained on August 20, 2015.
The Fund’s financial statements, together with the Report of Independent Registered Public Accounting Firm, are included elsewhere in this Annual Report on Form 10-K.
December 31, 2019 (Unaudited):
 
Quarterly Information for the Three Months Ended
 
March 31, 2019
 
June 30, 2019
 
September 30, 2019
 
December 31, 2019
Investment Income:
 
 
 
 
 
 
 
Interest on loans
$
15,463,294

 
$
20,484,930

 
$
14,550,348

 
$
14,757,871

Other interest and other income
75,012

 
130,725

 
58,471

 
32,006

Total investment income
15,538,306

 
20,615,655

 
14,608,819

 
14,789,877

Expenses:
 
 
 
 
 
 
 
Management fees
2,514,805

 
2,424,015

 
2,330,573

 
2,436,123

Interest expense
2,740,819

 
2,639,095

 
2,357,972

 
2,259,578

Banking and professional fees
161,257

 
157,637

 
35,669

 
191,500

Other operating expenses
54,990

 
39,871

 
102,191

 
97,700

Total expenses
5,471,871

 
5,260,618

 
4,826,405

 
4,984,901

Net investment income
10,066,435

 
15,355,037

 
9,782,414

 
9,804,976

 
 
 
 
 
 
 
 
Net realized gain (loss) from loans
4,125

 
(485,466
)
 
(6,502,951
)
 
(7,238,790
)
Net realized gain (loss) from derivative instruments
76,102

 
70,865

 
70,408

 
(131,922
)
Net change in unrealized gain (loss) from loans
(384,483
)
 
(2,205,184
)
 
(451,245
)
 
2,281,235

Net change in unrealized gain (loss) from derivative instruments
(323,193
)
 
(699,692
)
 
(67,233
)
 
126,787

Net realized and change in unrealized loss from loans and derivative instruments
(627,449
)
 
(3,319,477
)
 
(6,951,021
)
 
(4,962,690
)
Net increase in net assets resulting from operations
$
9,438,986

 
$
12,035,560

 
$
2,831,393

 
$
4,842,286

 
 
 
 
 
 
 
 
Amounts per common share:
 
 
 
 
 
 
 
Net increase in net assets resulting from operations per share
$
94.39

 
$
120.36

 
$
28.31

 
$
48.42

Weighted-average shares outstanding
100,000

 
100,000

 
100,000

 
100,000

 


26



December 31, 2018 (Unaudited):
 
Quarterly Information for the Three Months Ended
 
March 31, 2018
 
June 30, 2018
 
September 30, 2018
 
December 31, 2018
Investment Income:
 
 
 
 
 
 
 
Interest on loans
$
12,859,715

 
$
16,803,971

 
$
23,765,229

 
$
17,714,279

Other interest and other income
32,996

 
71,859

 
63,457

 
106,567

Total investment income
12,892,711

 
16,875,830

 
23,828,686

 
17,820,846

Expenses:
 
 
 
 
 
 
 
Management fees
2,640,912

 
2,790,764

 
2,687,159

 
2,656,124

Interest expense
1,966,437

 
2,631,617

 
2,712,386

 
2,852,628

Banking and professional fees
65,683

 
71,515

 
104,762

 
220,796

Other operating expenses
35,057

 
34,121

 
47,075

 
70,255

Total expenses
4,708,089

 
5,528,017

 
5,551,382

 
5,799,803

Net investment income
8,184,622

 
11,347,813

 
18,277,304

 
12,021,043

 
 
 
 
 
 
 
 
Net realized loss from loans
(287,627
)
 
(1,295,529
)
 
(283,511
)
 
(12,418,721
)
Net realized gain (loss) from derivative instruments

 
(329,824
)
 
(30,328
)
 
25,318

Net change in unrealized gain (loss) from loans
(1,522,123
)
 
294,654

 
(6,570,644
)
 
5,740,069

Net change in unrealized gain (loss) from derivative instruments
563,850

 
402,149

 
243,806

 
(601,511
)
Net realized and change in unrealized loss from loans and derivative instruments
(1,245,900
)
 
(928,550
)
 
(6,640,677
)
 
(7,254,845
)
Net increase in net assets resulting from operations
$
6,938,722

 
$
10,419,263

 
$
11,636,627

 
$
4,766,198

 
 
 
 
 
 
 
 
Amounts per common share:

 
 
 

 
 
Net increase in net assets resulting from operations per share
$
69.39

 
$
104.19

 
$
116.37

 
$
47.66

Weighted-average shares outstanding
100,000

 
100,000

 
100,000

 
100,000


ITEM 9.        CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE
Not applicable.
ITEM 9A.
CONTROLS AND PROCEDURES
Disclosure Controls and Procedures

At the end of the period covered by this report, the Fund carried out an evaluation under the supervision and with the participation of its Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of the Fund’s disclosure controls and procedures pursuant to Rules 13a-15(b) and 15d-15(b) of the Exchange Act. Based upon this evaluation, the Chief Executive Officer and Chief Financial Officer have concluded that the Fund’s disclosure controls and procedures were effective as of the end of the period in ensuring that information required to be disclosed was recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and in providing reasonable assurance that information required to be disclosed by the Fund in such reports is accumulated and communicated to the Fund’s management, including its Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosures.

27



Management’s Annual Report on Internal Control over Financial Reporting
Pursuant to Rules 13a-15d and 15d-15(d) of the Exchange Act, the Fund’s management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act. Under the supervision of and with the participation of the Fund’s management, including its Chief Executive Officer and Chief Financial Officer, the Fund conducted an evaluation of the effectiveness of its internal control over financial reporting based on the Committee of Sponsoring Organizations of the Treadway Commission 2013 (“COSO 2013”) updated Internal Control - Integrated Framework. Based on its evaluation under the COSO 2013 Internal Control - Integrated Framework, the Fund’s management concluded that its internal control over financial reporting was effective as of December 31, 2019.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements and even when determined to be effective, can only provide reasonable assurance with respect to financial statement preparation and presentation. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
This report of management on internal control over financial reporting shall not be deemed to be filed for purposes of Section 18 of the Exchange Act or otherwise subject to the liabilities of that section.
Changes in Internal Controls
There have not been any changes in the Fund’s internal control over financial reporting identified in connection with the evaluation required by Rules 13a-15(d) and 15d-15(d) of the Exchange Act that occurred during the Fund’s fiscal quarter ended December 31, 2019 that has materially affected, or is reasonably likely to materially affect, the Fund’s internal control over financial reporting.
ITEM 9B.
OTHER INFORMATION
Custodial Agreement

On December 11, 2019, the Fund entered into a Custodial Agreement (the “Agreement”) with Wells Fargo Bank, National Association (the “Custodian”).  Pursuant to the Agreement, the Custodian shall maintain custody of certain loan agreements and other related items, as well as certificated securities, and shall hold, release, and transfer thereof on the Fund's behalf.  The Custodian may, at any time, resign by giving a written notice of its resignation to the Fund at least ninety (90) days prior to the date of resignation.  The Fund may remove the Custodian at any time by giving the Custodian at least sixty (60) days’ prior written notice. 

The foregoing description of the material terms of the Agreement is qualified in its entirety by reference to the full text of the Agreement, which is filed herewith as Exhibit 10.3 and is incorporated herein by reference.




28



PART III.
ITEM 10.
DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
The list of executive officers and biographical information appears in Part I, Item 1 of this Form 10-K.
The information required by this item concerning the directors of the Fund, the structure of its Board of Directors and Section 16(a) compliance will be contained in the Fund’s Proxy Statement filed in connection with the Annual Meeting of Shareholders to be held on May 13, 2020 (“Proxy Statement”) under the captions “Proposal 1 -- To Elect Five Directors of the Fund” and “Section 16(a) Beneficial Ownership Reporting Compliance” and is incorporated herein by reference.
The Fund has adopted a Code of Ethics that is applicable to all of its officers. A free copy of the Code of Ethics may be requested by contacting the Chief Financial Officer of the Fund at 104 La Mesa Drive, Suite 102, Portola Valley, CA 94028.  
ITEM 11.
EXECUTIVE COMPENSATION
The information required by this item will be contained in the Fund’s Proxy Statement under the caption “Proposal 1 -- To Elect Five Directors of the Fund” and is incorporated herein by reference.
ITEM 12.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
The information required by this item will be contained in the Fund’s Proxy Statement under the caption “Annex A -- Beneficial Ownership of Fund Shares” and is incorporated herein by reference.
ITEM 13.    CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
The information required by this item will be contained in the Fund’s Proxy Statement under the captions: “Other Information -- Managers” and is incorporated herein by reference.
ITEM 14.    PRINCIPAL ACCOUNTANT FEES AND SERVICES
The information required by this item will be contained in the Fund’s Proxy Statement under the captions: “Other Information - Independent Registered Public Accounting Firm.”


29



PART IV.
ITEM 15.
EXHIBITS, FINANCIAL STATEMENT SCHEDULES
1.     Index to Financial Statements and Financial Statement Schedules
Report of Independent Registered Public Accounting Firm    
Statements of Assets and Liabilities as of December 31, 2019 and 2018
Statements of Operations for the years ended December 31, 2019, 2018 and 2017
Statements of Changes in Net Assets for the years ended December 31, 2019, 2018 and 2017
Statements of Cash Flows for the years ended December 31, 2019, 2018 and 2017
Schedules of Investments as of December 31, 2019 and 2018
Schedules of Open Swap Contracts as of December 31, 2019 and 2018
Notes to Financial Statements 
No schedules are required because the required information is not present or not present in amounts sufficient to require submission of the schedule, or because the required information is included in the financial statements and the notes thereto.
2.    Exhibits
Exhibit    
Exhibit Title
 
 
3(i)

 
 
3(ii)
 
 
4.1
 
 
4.2
 
 
10.1
 
 
10.2
 
 
10.3
 
 
31.1
 
 
31.2
 
 
32.1
 
 
32.2

30



ITEM 16.    FORM 10-K SUMMARY
None.


31



Signatures
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
VENTURE LENDING & LEASING VIII, INC.
(Registrant)
By:
/S/Maurice C. Werdegar
By:
/S/Judy N. Bornstein
 
Maurice C. Werdegar
 
Judy N. Bornstein
 
Chief Executive Officer
 
Chief Financial Officer
 
(Principal Executive Officer)
 
(Principal Financial Officer)
 
Date:  
March 16, 2020
 
Date:
March 16, 2020
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
 
NAME
TITLE
DATE
 
 
 
 
 
 
By:
/S/ Ronald W. Swenson
Chairman & Director
March 16, 2020
 
 
Ronald W. Swenson
 
 
 
 
 
 
 
 
By:
/S/ Maurice C. Werdegar
CEO & Director
March 16, 2020
 
 
Maurice C. Werdegar
 
 
 
 
 
 
 
 
By:
/S/ Spiro Constantine Lazarakis
Director
March 16, 2020
 
 
Spiro Constantine Lazarakis
 
 
 
 
 
 
 
 
By:
/S/ William Russell Miller
Director
March 16, 2020
 
 
William Russell Miller
 
 
 
 
 
 
 
 
By:
/S/ Arthur C. Spinner
Director
March 16, 2020
 
 
Arthur C. Spinner
 
 
 


32




REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the shareholder and the Board of Directors of Venture Lending & Leasing VIII, Inc.

Opinion on the Financial Statements and Financial Highlights

We have audited the accompanying statements of assets and liabilities of Venture Lending & Leasing VIII, Inc. (the "Fund"), including the schedules of investments, as of December 31, 2019 and 2018, and the related statements of operations, changes in net assets and cash flows for each of the three years in the period ended December 31, 2019, and financial highlights (presented in Note 12) for each of the four years in the period ended December 31, 2019, and for the period from August 12, 2015 (inception) to December 31, 2015, and the related notes. In our opinion, the financial statements and financial highlights present fairly, in all material respects, the financial position of the Fund as of December 31, 2019 and 2018, and the results of its operations, changes in net assets, cash flows and financial highlights for each of the three years in the period ended December 31, 2019, in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

These financial statements and financial highlights are the responsibility of the Fund's management. Our responsibility is to express an opinion on the Fund's financial statements and financial highlights based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Fund in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement, whether due to error or fraud. The Fund is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Fund’s internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements and financial highlights, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements and financial highlights. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements and financial highlights. Our procedures included confirmation of loans owned as of December 31, 2019 and 2018, by correspondence with the borrowers; when replies were not received, we performed other auditing procedures. We believe that our audits provide a reasonable basis for our opinion.

/s/ Deloitte & Touche LLP

March 16, 2020

San Francisco, California

We have served as the auditor of one or more Venture Lending & Leasing investment companies since 2001.






33



VENTURE LENDING & LEASING VIII, INC.
Statements of Assets and Liabilities
As of December 31, 2019 and 2018
 
December 31, 2019
 
December 31, 2018
ASSETS:
 
 
 
Loans, at estimated fair value
 
 
 
   (cost of $379,044,418 and $405,309,448)
$
371,955,824

 
$
398,980,531

Derivative asset - interest rate swap

 
616,148

Cash and cash equivalents
12,569,629

 
19,388,362

Dividend and interest receivables
4,702,811

 
4,756,032

Other assets
551,337

 
1,238,782

Total assets
389,779,601

 
424,979,855

 
 
 
 
LIABILITIES:
 
 
 
Borrowings under debt facility
179,000,000

 
203,000,000

Accrued management fees
2,436,123

 
2,656,124

Derivative liability - interest rate swap
347,183

 

Accounts payable and other accrued liabilities
1,411,131

 
2,779,780

Total liabilities
183,194,437

 
208,435,904

 
 
 
 
NET ASSETS:
$
206,585,164

 
$
216,543,951

 
 
 
 
Analysis of Net Assets:
 
 
 
 
 
 
 
Capital paid in on shares of capital stock
$
314,575,000

 
$
297,575,000

Total distributable losses
(107,989,836
)
 
(81,031,049
)
Net assets (equivalent to $2,065.85 and $2,165.44 per share based on 100,000 shares of capital stock outstanding - See Note 5 and Note 12)
$
206,585,164

 
$
216,543,951

 
 
 
 
Commitments & Contingent Liabilities:
 
 
 
Unexpired unfunded commitments (See Note 11)
$
77,950,000

 
$
64,881,001



















See notes to financial statements

34



VENTURE LENDING & LEASING VIII, INC.
Statements of Operations
For the Years Ended December 31, 2019, 2018 and 2017
 
For the Year Ended
 
For the Year Ended
 
For the Year Ended
 
December 31, 2019
 
December 31, 2018
 
December 31, 2017
INVESTMENT INCOME:
 
 
 
 
 
Interest on loans
$
65,256,443

 
$
71,143,194

 
$
35,937,318

Other interest and other income
296,214

 
274,879

 
235,096

Total investment income
65,552,657

 
71,418,073

 
36,172,414

 
 
 
 
 
 
EXPENSES:
 
 
 
 
 
Management fees
9,705,516

 
10,774,959

 
9,579,408

Interest expense
9,997,464

 
10,163,068

 
4,903,598

Banking and professional fees
546,063

 
462,756

 
305,161

Other operating expenses
294,752

 
186,508

 
453,791

Total expenses
20,543,795

 
21,587,291

 
15,241,958

Net investment income
45,008,862

 
49,830,782

 
20,930,456

 
 
 
 
 
 
Net realized loss from loans
(14,223,082
)
 
(14,285,388
)
 
(4,852,881
)
Net realized gain (loss) from derivative instruments
85,453

 
(334,834
)
 

Net change in unrealized loss from loans
(759,677
)
 
(2,058,044
)
 
(954,960
)
Net change in unrealized gain (loss) from derivative instruments
(963,331
)
 
608,294

 
(52,189
)
Net realized and change in unrealized loss from loans and derivative instruments
(15,860,637
)
 
(16,069,972
)
 
(5,860,030
)
Net increase in net assets resulting from operations
$
29,148,225

 
$
33,760,810

 
$
15,070,426

 
 
 
 
 
 
Amounts per common share:
 
 
 
 
 
Net increase in net assets resulting from operations per share
$
291.48

 
$
337.61

 
$
150.70

Weighted-average shares outstanding
100,000

 
100,000

 
100,000

















See notes to financial statements

35



VENTURE LENDING & LEASING VIII, INC.
Statements of Changes in Net Assets
For the Years Ended December 31, 2019, 2018 and 2017
 
Common Stock
 
 
 
 
 
 
 
Shares
Par Value
 
Additional Paid-in Capital
 
Total Distributable Earnings (Loss)
 
Net Assets
Balance at December 31, 2016
100,000
$
100

 
$
97,924,900

 
$
(16,853,358
)
 
$
81,071,642

Net increase in net assets resulting from operations

 

 
15,070,426

 
15,070,426

Contributions by shareholder

 
115,150,000

 

 
115,150,000

Distributions to shareholder

 

 
(46,461,008
)
 
(46,461,008
)
Balance December 31, 2017
100,000
$
100

 
$
213,074,900

 
$
(48,243,940
)
 
$
164,831,060

Net increase in net assets resulting from operations

 

 
33,760,810

 
33,760,810

Contributions by shareholder

 
84,500,000

 

 
84,500,000

Distributions to shareholder

 

 
(66,547,919
)
 
(66,547,919
)
Balance December 31, 2018
100,000
$
100

 
$
297,574,900

 
$
(81,031,049
)
 
$
216,543,951

Net increase in net assets resulting from operations

 

 
29,148,225

 
29,148,225

Contributions by shareholder

 
17,000,000

 

 
17,000,000

Distributions to shareholder

 

 
(56,107,012
)
 
(56,107,012
)
Balance December 31, 2019
100,000
$
100

 
$
314,574,900

 
$
(107,989,836
)
 
$
206,585,164














See notes to financial statements

36



VENTURE LENDING & LEASING VIII, INC.
Statements of Cash Flows
For the Years Ended December 31, 2019, 2018 and 2017
 
For the Year Ended
 
For the Year Ended
 
For the Year Ended
 
December 31, 2019
 
December 31, 2018
 
December 31, 2017
CASH FLOWS FROM OPERATING ACTIVITIES:
 
 
 
 
 
Net increase in net assets resulting from operations
$
29,148,225

 
$
33,760,810

 
$
15,070,426

Adjustments to reconcile net increase in net assets resulting from operations to net cash provided by (used in) operating activities:
 
 
 
 
 
Net realized loss from loans
14,223,082

 
14,285,388

 
4,852,881

Net realized (gain) loss from derivative instruments
(85,453
)
 
334,834

 

Net change in unrealized loss from loans
759,677

 
2,058,044

 
954,960

Net change in unrealized (gain) loss from derivative instruments
963,331

 
(608,294
)
 
52,189

Amortization of deferred costs related to borrowing facility and interest rate cap agreement
552,504

 
625,846

 
446,689

Net (increase) decrease in dividend and interest receivables
53,221

 
(1,037,696
)
 
(2,285,102
)
Net (increase) decrease in other assets
134,941

 
792,606

 
(828,816
)
Net increase (decrease) in accounts payable, other accrued liabilities and accrued management fees
(1,588,650
)
 
1,535,156

 
58,687

Origination of loans
(169,975,000
)
 
(275,189,805
)
 
(252,392,500
)
Principal payments on loans
173,958,930

 
167,664,117

 
60,865,452

Acquisition of equity securities
(11,298,994
)
 
(15,635,515
)
 
(16,401,822
)
Net cash provided by (used in) operating activities
36,845,814

 
(71,414,509
)
 
(189,606,956
)
 
 
 
 
 
 
CASH FLOWS FROM FINANCING ACTIVITIES:
 
 
 
 
 
Cash distributions to shareholder
(36,750,000
)
 
(48,000,000
)
 
(29,500,000
)
Contributions from shareholder
17,000,000

 
84,500,000

 
115,150,000

Borrowings under debt facility
48,500,000

 
90,500,000

 
151,850,000

Repayments of borrowings under debt facility
(72,500,000
)
 
(44,000,000
)
 
(48,350,000
)
Payments made for interest rate cap

 

 
(320,900
)
Payments made for interest rate swap
(142,635
)
 
(102,165
)
 

Payment received from interest rate swap
228,088

 
25,318

 

Payments of bank facility fees and costs

 

 
(1,164,159
)
Net cash provided by (used in) financing activities
(43,664,547
)
 
82,923,153

 
187,664,941

Net increase (decrease) in cash and cash equivalents
(6,818,733
)
 
11,508,644

 
(1,942,015
)
 
 
 
 
 
 
CASH AND CASH EQUIVALENTS:
 
 
 
 
 
Beginning of year
19,388,362

 
7,879,718

 
9,821,733

End of year
$
12,569,629

 
$
19,388,362

 
$
7,879,718

 
 
 
 
 
 
SUPPLEMENTAL DISCLOSURES:
 
 
 
 
 
CASH PAID DURING THE YEAR:
 
 
 
 
 
Interest - Debt facility
$
11,499,187

 
$
8,128,818

 
$
3,845,893

NON-CASH OPERATING AND FINANCING ACTIVITIES:
 
 
 
 
 
Distributions of equity securities to shareholder
$
19,357,012

 
$
18,547,918

 
$
16,961,008

Receipt of equity securities as repayment of loans
$
8,058,018

 
$
2,912,403

 
$
559,186



See notes to financial statements

37



VENTURE LENDING & LEASING VIII, INC.
Schedule of Investments
As of December 31, 2019
        
Industry
Borrower
 
Percent of Net Assets (a)
 
Collateral
 
Interest Rate
(b)
 
End of Term Payment
(c)
 
Principal
 
Cost
 
Fair Value
 
Maturity Date
Biotechnology
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Antheia, Inc.
 
 
 
Senior Secured
 
11.5%
 
 
 
$
1,483,639

 
$
1,408,221

 
$
1,408,221

 
12/1/2022
 
Antheia, Inc.
 
 
 
Senior Secured
 
11.5%
 
 
 
1,485,034

 
1,457,222

 
1,457,222

 
12/1/2022
 
Antheia, Inc. Subtotal
 
 
 
 
 
 
 
 
 
2,968,673

 
2,865,443

 
2,865,443

 
 
 
Orpheus Therapeutics, Inc.
 
 
 
Senior Secured
 
18.0%
 
 
 
178,510

 
174,288

 

 
*
 
Quartzy, Inc.
 
 
 
Senior Secured
 
12.0%
 
 
 
742,489

 
624,980

 
624,980

 
8/1/2023
Biotechnology Total
 
 
1.7
%
 
 
 
 
 
 
 
$
3,889,672

 
$
3,664,711

 
$
3,490,423

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Computers & Storage
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Canary Connect, Inc.
 
 
 
Senior Secured
 
12.8%
 
 
 
$
577,487

 
$
509,119

 
$
509,119

 
12/1/2020
 
Canary Connect, Inc.
 
 
 
Senior Secured
 
12.8%
 
 
 
2,472,801

 
2,370,284

 
2,370,284

 
3/1/2023
 
Canary Connect, Inc. Subtotal
 
 
 
 
 
 
 
 
 
3,050,288

 
2,879,403

 
2,879,403

 
 
 
Rigetti & Co., Inc.
 
 
 
Senior Secured
 
9.0%
 
2.8%
 
194,537

 
194,122

 
194,122

 
1/1/2020
Computers & Storage Total
 
 
1.5
%
 
 
 
 
 
 
 
$
3,244,825

 
$
3,073,525

 
$
3,073,525

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Enterprise Networking
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
SnapRoute, Inc.
 
 
 
Senior Secured
 
18.0%
 
 
 
$
2,556,019

 
$
112,500

 
$
112,500

 
*
Enterprise Networking Total
 
%
 
 
 
 
 
 
 
$
2,556,019

 
$
112,500

 
$
112,500

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Internet
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Ainsly, Inc. ** ^
 
 
 
Senior Secured
 
12.5%
 
 
 
$
247,301

 
$
247,301

 
$
247,301

 
8/1/2022
 
Ainsly, Inc. ** ^
 
 
 
Senior Secured
 
12.5%
 
 
 
741,853

 
677,056

 
677,056

 
8/1/2022
 
Ainsly, Inc. ** ^ Subtotal
 
 
 
 
 
 
 
 
 
989,154

 
924,357

 
924,357

 
 
 
Amino Payments, Inc.
 
 
 
Senior Secured
 
10.8%
 
 
 
981,305

 
921,304

 
921,304

 
3/1/2022
 
Bombfell, Inc.
 
 
 
Senior Secured
 
11.0%
 
 
 
656,522

 
647,811

 
647,811

 
10/1/2021
 
Cesium, Inc.
 
 
 
Senior Secured
 
10.3%
 
 
 
247,773

 
228,311

 
228,311

 
1/1/2023
 
Cesium, Inc.
 
 
 
Senior Secured
 
10.3%
 
 
 
123,007

 
120,175

 
120,175

 
1/1/2023
 
Cesium, Inc. Subtotal
 
 
 
 
 
 
 
 
 
370,780

 
348,486

 
348,486

 
 
 
Clearsurance, Inc.
 
 
 
Senior Secured
 
10.5%
 
 
 
720,282

 
711,977

 
711,977

 
9/1/2021
 
Clearsurance, Inc.
 
 
 
Senior Secured
 
10.0%
 
 
 
526,436

 
512,822

 
512,822

 
3/1/2021
 
Clearsurance, Inc. Subtotal
 
 
 
 
 
 
 
 
 
1,246,718

 
1,224,799

 
1,224,799

 
 
 
Daily Muse, Inc.
 
 
 
Senior Secured
 
11.0%
 
 
 
2,086,312

 
2,065,303

 
2,065,303

 
12/1/2021
 
Daily Muse, Inc.
 
 
 
Senior Secured
 
11.0%
 
 
 
2,085,902

 
2,019,749

 
2,019,749

 
12/1/2021
 
Daily Muse, Inc. Subtotal
 
 
 
 
 
 
 
 
 
4,172,214

 
4,085,052

 
4,085,052

 
 
 
FindShadow, PBC
 
 
 
Senior Secured
 
11.5%
 
 
 
582,658

 
552,638

 
552,638

 
4/1/2022
 
FLYR, Inc.
 
 
 
Senior Secured
 
11.5%
 
 
 
1,082,930

 
1,014,161

 
1,014,161

 
9/1/2021
 
FLYR, Inc.
 
 
 
Senior Secured
 
11.8%
 
 
 
2,110,021

 
2,075,718

 
2,075,718

 
1/1/2022
 
FLYR, Inc. Subtotal
 
 
 
 
 
 
 
 
 
3,192,951

 
3,089,879

 
3,089,879

 
 
 
iZENEtech, Inc. ** ^
 
 
 
Senior Secured
 
11.0%
 
 
 
2,269,997

 
2,207,408

 
2,207,408

 
1/1/2021
 
iZENEtech, Inc. ** ^
 
 
 
Senior Secured
 
11.0%
 
 
 
3,073,836

 
3,037,773

 
3,037,773

 
6/1/2021
 
iZENEtech, Inc. ** ^ Subtotal
 
 
 
 
 
 
 
 
 
5,343,833

 
5,245,181

 
5,245,181

 
 
 
Lenddo International ** ^
 
 
 
Senior Secured
 
12.0%
 
 
 
930,483

 
900,030

 
900,030

 
1/1/2021
 
Linden Research Inc.
 
 
 
Senior Secured
 
12.0%
 
 
 
2,472,688

 
2,376,994

 
2,376,994

 
6/1/2022
 
Linden Research Inc.
 
 
 
Senior Secured
 
12.0%
 
 
 
2,474,661

 
2,474,661

 
2,474,661

 
6/1/2022
 
Linden Research Inc.
 
 
 
Senior Secured
 
11.0%
 
 
 
902,820

 
888,448

 
888,448

 
3/1/2022
 
Linden Research Inc.
 
 
 
Senior Secured
 
11.0%
 
 
 
4,324,395

 
4,151,813

 
4,151,813

 
9/1/2021
 
Linden Research Inc. Subtotal
 
 
 
 
 
 
 
 
 
10,174,564

 
9,891,916

 
9,891,916

 
 
 
Lukla, Inc.
 
 
 
Senior Secured
 
12.5%
 
 
 
494,770

 
411,213

 
411,213

 
12/1/2022
 
Marley Spoon, Inc. **^
 
 
 
Senior Secured
 
12.0%
 
2.5%
 
3,712,354

 
2,605,484

 
2,605,484

 
5/1/2023

38



Industry
Borrower
 
Percent of Net Assets (a)
 
Collateral
 
Interest Rate
(b)
 
End of Term Payment
(c)
 
Principal
 
Cost
 
Fair Value
 
Maturity Date
 
Masse, Inc.
 
 
 
Senior Secured
 
11.5%
 
 
 
371,266

 
340,411

 
340,411

 
10/1/2022
 
Masse, Inc.
 
 
 
Senior Secured
 
11.5%
 
 
 
371,367

 
362,237

 
362,237

 
1/1/2023
 
Masse, Inc. Subtotal
 
 
 
 
 
 
 
 
 
742,633

 
702,648

 
702,648

 
 
 
Merchbar, Inc.
 
 
 
Senior Secured
 
11.8%
 
 
 
494,959

 
458,681

 
458,681

 
3/1/2023
 
MyPizza Technologies, Inc.
 
 
 
Senior Secured
 
11.5%
 
 
 
4,949,181

 
4,687,371

 
4,687,371

 
12/1/2022
 
MyPizza Technologies, Inc.
 
 
 
Senior Secured
 
11.5%
 
 
 
2,474,878

 
2,419,067

 
2,419,067

 
2/1/2023
 
MyPizza Technologies, Inc. Subtotal
 
 
 
 
 
 
 
 
 
7,424,059

 
7,106,438

 
7,106,438

 
 
 
Nimble Rx, Inc.
 
 
 
Senior Secured
 
12.0%
 
 
 
1,237,263

 
1,068,622

 
1,068,622

 
2/1/2023
 
Osix Corporation
 
 
 
Senior Secured
 
12.3%
 
 
 
81,469

 
71,706

 
71,706

 
12/1/2021
 
Protecht, Inc.
 
 
 
Senior Secured
 
12.5%
 
 
 
814,144

 
782,670

 
782,670

 
12/1/2021
 
Relay Network, LLC
 
 
 
Senior Secured
 
8.0%
 
4.4%
 
355,319

 
350,310

 
350,310

 
9/1/2020
 
Relay Network, LLC
 
 
 
Senior Secured
 
8.0%
 
4.4%
 
355,349

 
353,403

 
353,403

 
9/1/2020
 
Relay Network, LLC Subtotal
 
 
 
 
 
 
 
 
 
710,668

 
703,713

 
703,713

 
 
 
Serface Care, Inc.
 
 
 
Senior Secured
 
12.3%
 
 
 
218,620

 
213,640

 
161,632

 
2/1/2022
 
Serface Care, Inc.
 
 
 
Senior Secured
 
12.3%
 
 
 
655,700

 
617,093

 
466,871

 
2/1/2022
 
Serface Care, Inc. Subtotal
 
 
 
 
 
 
 
 
 
874,320

 
830,733

 
628,503

 
 
 
Spot.IM, Ltd. ** ^
 
 
 
Senior Secured
 
11.8%
 
 
 
46,419

 
45,732

 
45,732

 
5/1/2020
 
Spot.IM, Ltd. ** ^
 
 
 
Senior Secured
 
12.5%
 
 
 
46,752

 
46,415

 
46,415

 
5/1/2020
 
Spot.IM, Ltd. ** ^ Subtotal
 
 
 
 
 
 
 
 
 
93,171

 
92,147

 
92,147

 
 
 
SpotOn Computing, Inc.
 
 
 
Senior Secured
 
18.0%
 
 
 
1,893,528

 
1,853,788

 
944,730

 
*
 
Stay Alfred, Inc.
 
 
 
Senior Secured
 
11.8%
 
 
 
5,249,888

 
5,109,248

 
5,109,248

 
12/1/2021
 
Stay Alfred, Inc.
 
 
 
Senior Secured
 
12.0%
 
 
 
4,948,899

 
4,567,733

 
4,567,733

 
7/1/2023
 
Stay Alfred, Inc. Subtotal
 
 
 
 
 
 
 
 
 
10,198,787

 
9,676,981

 
9,676,981

 
 
 
Tango Card, Inc.
 
 
 
Senior Secured
 
12.0%
 
 
 
595,825

 
591,279

 
591,279

 
11/1/2020
 
Thrive Market, Inc.
 
 
 
Senior Secured
 
12.3%
 
 
 
6,444,148

 
6,285,233

 
6,285,233

 
4/1/2022
 
Verishop, Inc.
 
 
 
Senior Secured
 
12.0%
 
 
 
2,470,833

 
2,419,085

 
2,419,085

 
12/1/2023
 
Verishop, Inc.
 
 
 
Senior Secured
 
12.0%
 
 
 
2,474,370

 
2,315,633

 
2,315,633

 
12/1/2023
 
Verishop, Inc. Subtotal
 
 
 
 
 
 
 
 
 
4,945,203

 
4,734,718

 
4,734,718

 
 
Internet Total
 
 
31.3
%
 
 
 
 
 
 
 
$
69,398,483

 
$
65,807,507

 
$
64,696,219

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Medical Devices
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Ablacon, Inc.
 
 
 
Senior Secured
 
11.0%
 
 
 
$
2,476,651

 
$
2,318,784

 
$
2,318,784

 
3/1/2023
 
Anutra Medical, Inc.
 
 
 
Senior Secured
 
12.0%
 
 
 
247,474

 
234,112

 
234,112

 
10/1/2022
 
CytoVale, Inc.
 
 
 
Senior Secured
 
12.0%
 
 
 
469,059

 
461,375

 
461,375

 
7/1/2022
 
CytoVale, Inc.
 
 
 
Senior Secured
 
12.0%
 
 
 
570,096

 
561,077

 
561,077

 
6/1/2022
 
CytoVale, Inc.
 
 
 
Senior Secured
 
12.0%
 
 
 
520,387

 
491,789

 
491,789

 
3/1/2022
 
CytoVale, Inc. Subtotal
 
 
 
 
 
 
 
 
 
1,559,542

 
1,514,241

 
1,514,241

 
 
 
Medrobotics Corporation, Inc.
 
 
 
Senior Secured
 
12.0%
 
 
 
9,879,965

 
8,717,603

 
8,717,603

 
6/1/2021
 
NeuMoDx Molecular, Inc.
 
 
 
Senior Secured
 
12.0%
 
 
 
2,969,338

 
2,893,992

 
2,893,992

 
4/1/2023
 
NeuMoDx Molecular, Inc.
 
 
 
Senior Secured
 
12.0%
 
 
 
3,459,382

 
3,247,068

 
3,247,068

 
4/1/2023
 
NeuMoDx Molecular, Inc.
 
 
 
Senior Secured
 
12.0%
 
 
 
3,462,834

 
3,402,907

 
3,402,907

 
4/1/2023
 
NeuMoDx Molecular, Inc. Subtotal
 
 
 
 
 
 
 
 
 
9,891,554

 
9,543,967

 
9,543,967

 
 
 
RadiAction Ltd. ** ^
 
 
 
Senior Secured
 
11.5%
 
 
 
752,784

 
722,644

 
722,644

 
10/1/2021
 
RadiAction Ltd. ** ^
 
 
 
Senior Secured
 
11.5%
 
 
 
932,119

 
917,074

 
917,074

 
4/1/2022
 
RadiAction Ltd. ** ^ Subtotal
 
 
 
 
 
 
 
 
 
1,684,903

 
1,639,718

 
1,639,718

 
 
 
Renovia, Inc.
 
 
 
Senior Secured
 
10.5%
 
 
 
7,221,453

 
7,130,316

 
7,130,316

 
3/1/2022
 
Renovia, Inc.
 
 
 
Senior Secured
 
10.5%
 
 
 
1,250,163

 
1,173,718

 
1,173,718

 
6/1/2021
 
Renovia, Inc.
 
 
 
Senior Secured
 
11.0%
 
 
 
394,841

 
392,580

 
392,580

 
11/1/2020
 
Renovia, Inc.
 
 
 
Senior Secured
 
11.0%
 
 
 
220,276

 
217,530

 
217,530

 
6/1/2020
 
Renovia, Inc. Subtotal
 
 
 
 
 
 
 
 
 
9,086,733

 
8,914,144

 
8,914,144

 
 
Medical Devices Total
 
 
15.9
%
 
 
 
 
 
 
 
$
34,826,822

 
$
32,882,569

 
$
32,882,569

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Other Healthcare
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
4G Clinical LLC
 
 
 
Senior Secured
 
11.0%
 
 
 
$
255,880

 
$
252,650

 
$
252,650

 
7/1/2020
 
Caredox, Inc.
 
 
 
Senior Secured
 
11.8%
 
 
 
941,631

 
909,177

 
909,177

 
10/1/2021

39



Industry
Borrower
 
Percent of Net Assets (a)
 
Collateral
 
Interest Rate
(b)
 
End of Term Payment
(c)
 
Principal
 
Cost
 
Fair Value
 
Maturity Date
 
Clover Health Investments Corporation
 
 
 
Senior Secured
 
11.3%
 
 
 
9,417,408

 
9,417,408

 
9,417,408

 
10/1/2022
 
Clover Health Investments Corporation
 
 
 
Senior Secured
 
11.0%
 
 
 
14,722,192

 
14,722,192

 
14,722,192

 
3/1/2022
 
Clover Health Investments Corporation Subtotal
 
 
 
 
 
 
 
 
 
24,139,600

 
24,139,600

 
24,139,600

 
 
 
Discover Echo, Inc.
 
 
 
Senior Secured
 
11.0%
 
 
 
321,838

 
310,782

 
310,782

 
12/1/2020
 
Emerald Cloud Lab, Inc.
 
 
 
Senior Secured
 
11.8%
 
 
 
1,989,609

 
1,845,817

 
1,845,817

 
12/1/2021
 
GoForward, Inc.
 
 
 
Senior Secured
 
11.5%
 
 
 
6,188,651

 
5,511,946

 
5,511,946

 
9/1/2023
 
Hello Heart Inc.
 
 
 
Senior Secured
 
10.8%
 
 
 
657,496

 
634,941

 
634,941

 
7/1/2021
 
Hello Heart Inc.
 
 
 
Senior Secured
 
10.8%
 
 
 
1,127,717

 
1,112,932

 
1,112,932

 
10/1/2021
 
Hello Heart Inc.
 
 
 
Senior Secured
 
11.0%
 
 
 
1,238,420

 
1,152,819

 
1,152,819

 
4/1/2023
 
Hello Heart Inc. Subtotal
 
 
 
 
 
 
 
 
 
3,023,633

 
2,900,692

 
2,900,692

 
 
 
HumanAPI, Inc.
 
 
 
Senior Secured
 
11.8%
 
 
 
1,484,721

 
1,392,560

 
1,392,560

 
10/1/2022
 
HumanAPI, Inc.
 
 
 
Senior Secured
 
11.8%
 
 
 
495,054

 
485,090

 
485,090

 
1/1/2023
 
HumanAPI, Inc. Subtotal
 
 
 
 
 
 
 
 
 
1,979,775

 
1,877,650

 
1,877,650

 
 
 
MD Revolution, Inc.
 
 
 
Senior Secured
 
12.5%
 
 
 
139,624

 
138,801

 
138,801

 
3/1/2020
 
mPharma Data, Inc. ** ^
 
 
 
Senior Secured
 
10.0%
 
 
 
135,340

 
133,045

 
133,045

 
11/1/2020
 
mPharma Data, Inc. ** ^
 
 
 
Senior Secured
 
10.0%
 
 
 
181,549

 
180,264

 
180,264

 
3/1/2021
 
mPharma Data, Inc. ** ^
 
 
 
Senior Secured
 
10.0%
 
 
 
2,156,367

 
2,111,258

 
2,111,258

 
11/1/2021
 
mPharma Data, Inc. ** ^ Subtotal
 
 
 
 
 
 
 
 
 
2,473,256

 
2,424,567

 
2,424,567

 
 
 
Myolex, Inc.
 
 
 
Senior Secured
 
18.0%
 
 
 
762,531

 
726,537

 
238,967

 
*
 
Naked Biome, Inc.
 
 
 
Senior Secured
 
12.0%
 
 
 
651,850

 
635,826

 
453,520

 
3/1/2021
 
Robin Care, Inc.
 
 
 
Senior Secured
 
11.5%
 
 
 
816,636

 
777,359

 
777,359

 
7/1/2021
 
Sparta Software Corporation
 
 
 
Senior Secured
 
11.5%
 
2.2%
 
483,127

 
465,420

 
465,420

 
5/1/2022
 
Sparta Software Corporation
 
 
 
Senior Secured
 
10.0%
 
2.5%
 
42,282

 
41,691

 
41,691

 
6/1/2020
 
Sparta Software Corporation Subtotal
 
 
 
 
 
 
 
 
 
525,409

 
507,111

 
507,111

 
 
 
Therapydia, Inc.
 
 
 
Senior Secured
 
11.5%
 
 
 
268,581

 
250,097

 
250,097

 
8/1/2022
 
Therapydia, Inc.
 
 
 
Senior Secured
 
11.5%
 
 
 
296,807

 
290,255

 
290,255

 
12/1/2022
 
Therapydia, Inc.
 
 
 
Senior Secured
 
12.0%
 
1.7%
 
124,078

 
114,084

 
114,084

 
3/1/2023
 
Therapydia, Inc.
 
 
 
Senior Secured
 
11.5%
 
 
 
296,837

 
289,983

 
289,983

 
1/1/2023
 
Therapydia, Inc.
 
 
 
Senior Secured
 
12.5%
 
1.7%
 
123,953

 
123,953

 
123,953

 
6/1/2023
 
Therapydia, Inc. Subtotal
 
 
 
 
 
 
 
 
 
1,110,256

 
1,068,372

 
1,068,372

 
 
 
Zillion Group, Inc.
 
 
 
Senior Secured
 
12.0%
 
 
 
431,509

 
428,038

 
189,940

 
12/1/2020
 
Zillion Group, Inc.
 
 
 
Senior Secured
 
12.0%
 
 
 
257,943

 
253,831

 
112,636

 
7/1/2020
 
Zillion Group, Inc. Subtotal
 
 
 
 
 
 
 
 
 
689,452

 
681,869

 
302,576

 
 
Other Healthcare Total
 
 
21.1
%
 
 
 
 
 
 
 
$
46,009,631

 
$
44,708,756

 
$
43,659,587

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Other Technology
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
8i Corporation
 
 
 
Senior Secured
 
11.8%
 
 
 
$
1,191,490

 
$
1,173,344

 
$
1,173,344

 
12/1/2020
 
Abiquo Group, Inc. ** ^
 
 
 
Senior Secured
 
12.0%
 
 
 
330,055

 
316,725

 
316,725

 
7/1/2021
 
Aclima, Inc.
 
 
 
Senior Secured
 
12.0%
 
 
 
2,487,792

 
2,434,107

 
2,434,107

 
*
 
Antitoxin Technologies Inc. ** ^
 
 
 
Senior Secured
 
11.5%
 
 
 
495,198

 
458,025

 
458,025

 
9/1/2022
 
Apollo Flight Research Inc.
 
 
 
Senior Secured
 
11.0%
 
 
 
495,063

 
474,151

 
474,151

 
6/1/2022
 
AvantStay, Inc.
 
 
 
Senior Secured
 
11.0%
 
 
 
990,006

 
950,647

 
950,647

 
6/1/2022
 
Beanfields, PBC
 
 
 
Senior Secured
 
12.5%
 
 
 
865,388

 
811,782

 
811,782

 
3/1/2023
 
BloomLife, Inc.
 
 
 
Senior Secured
 
12.0%
 
 
 
44,885

 
44,433

 
44,433

 
4/1/2020
 
Brightside Benefit, Inc.
 
 
 
Senior Secured
 
12.4%
 
 
 
989,026

 
970,529

 
970,529

 
3/1/2023
 
Brightside Benefit, Inc.
 
 
 
Senior Secured
 
12.1%
 
 
 
689,624

 
649,139

 
649,139

 
9/1/2022
 
Brightside Benefit, Inc. Subtotal
 
 
 
 
 
 
 
 
 
1,678,650

 
1,619,668

 
1,619,668

 
 
 
BW Industries, Inc.
 
 
 
Senior Secured
 
11.8%
 
 
 
1,979,819

 
1,757,319

 
1,757,319

 
5/1/2023
 
BW Industries, Inc.
 
 
 
Senior Secured
 
11.8%
 
 
 
1,979,730

 
1,927,230

 
1,927,230

 
6/1/2023
 
BW Industries, Inc. Subtotal
 
 
 
 
 
 
 
 
 
3,959,549

 
3,684,549

 
3,684,549

 
 
 
Consumer Physics, Inc. ** ^
 
 
 
Senior Secured
 
11.0%
 
 
 
822,854

 
787,630

 
729,155

 
1/1/2022
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

40



Industry
Borrower
 
Percent of Net Assets (a)
 
Collateral
 
Interest Rate
(b)
 
End of Term Payment
(c)
 
Principal
 
Cost
 
Fair Value
 
Maturity Date
 
DOSH Holdings, Inc.
 
 
 
Senior Secured
 
11.0%
 
 
 
1,237,779

 
1,218,953

 
1,218,953

 
6/1/2022
 
DOSH Holdings, Inc.
 
 
 
Senior Secured
 
11.0%
 
 
 
4,949,699

 
4,743,973

 
4,743,973

 
6/1/2022
 
DOSH Holdings, Inc. Subtotal
 
 
 
 
 
 
 
 
 
6,187,478

 
5,962,926

 
5,962,926

 
 
 
Eguana Technologies, Inc. ** ^
 
 
 
Senior Secured
 
12.5%
 
 
 
1,926,928

 
1,881,900

 
1,881,900

 
2/1/2022
 
ESM Group International , Inc.
 
 
 
Senior Secured
 
12.0%
 
 
 
445,808

 
417,698

 
417,698

 
12/1/2021
 
Fitplan, Inc. ** ^
 
 
 
Senior Secured
 
12.5%
 
 
 
225,795

 
225,795

 
225,795

 
3/1/2022
 
Fitplan, Inc. ** ^
 
 
 
Senior Secured
 
12.5%
 
 
 
677,222

 
647,498

 
647,498

 
3/1/2022
 
Fitplan, Inc. ** ^
 
 
 
Senior Secured
 
12.5%
 
 
 
451,727

 
437,617

 
437,617

 
3/1/2022
 
Fitplan, Inc. ** ^ Subtotal
 
 
 
 
 
 
 
 
 
1,354,744

 
1,310,910

 
1,310,910

 
 
 
Flo Water, Inc.
 
 
 
Senior Secured
 
11.5%
 
 
 
64,052

 
62,946

 
62,946

 
5/1/2020
 
Flo Water, Inc.
 
 
 
Senior Secured
 
11.4%
 
 
 
548,207

 
533,916

 
533,916

 
5/1/2021
 
Flo Water, Inc. Subtotal
 
 
 
 
 
 
 
 
 
612,259

 
596,862

 
596,862

 
 
 
Gap Year Global, Inc.
 
 
 
Senior Secured
 
18.0%
 
 
 
90,768

 
86,359

 

 
*
 
Heartwork, Inc.
 
 
 
Senior Secured
 
18.0%
 
 
 
379,462

 
371,981

 
73,494

 
*
 
Higher Ground Education, Inc.
 
 
 
Senior Secured
 
12.5%
 
 
 
2,471,753

 
2,313,925

 
2,313,925

 
1/1/2023
 
Higher Ground Education, Inc.
 
 
 
Senior Secured
 
12.5%
 
 
 
494,598

 
483,148

 
483,148

 
5/1/2023
 
Higher Ground Education, Inc.
 
 
 
Senior Secured
 
12.5%
 
 
 
494,718

 
482,359

 
482,359

 
8/1/2023
 
Higher Ground Education, Inc.
 
 
 
Senior Secured
 
12.5%
 
 
 
1,483,595

 
1,450,927

 
1,450,927

 
4/1/2023
 
Higher Ground Education, Inc. Subtotal
 
 
 
 
 
 
 
 
 
4,944,664

 
4,730,359

 
4,730,359

 
 
 
Hint, Inc.
 
 
 
Senior Secured
 
11.0%
 
 
 
1,321,439

 
1,277,918

 
1,277,918

 
3/1/2021
 
Hint, Inc.
 
 
 
Senior Secured
 
11.0%
 
 
 
1,724,265

 
1,610,424

 
1,610,424

 
8/1/2021
 
Hint, Inc.
 
 
 
Senior Secured
 
11.0%
 
 
 
1,644,377

 
1,644,377

 
1,644,377

 
7/1/2021
 
Hint, Inc. Subtotal
 
 
 
 
 
 
 
 
 
4,690,081

 
4,532,719

 
4,532,719

 
 
 
June Life, Inc.
 
 
 
Senior Secured
 
11.8%
 
 
 
129,682

 
128,895

 
128,895

 
3/1/2020
 
June Life, Inc.
 
 
 
Senior Secured
 
11.8%
 
 
 
129,691

 
129,319

 
129,319

 
3/1/2020
 
June Life, Inc. Subtotal
 
 
 
 
 
 
 
 
 
259,373

 
258,214

 
258,214

 
 
 
Kobo360, Inc. ** ^
 
 
 
Senior Secured
 
11.3%
 
 
 
188,120

 
188,120

 
188,120

 
9/1/2020
 
Kobo360, Inc. ** ^
 
 
 
Senior Secured
 
11.3%
 
 
 
127,168

 
125,342

 
125,342

 
6/1/2020
 
Kobo360, Inc. ** ^ Subtotal
 
 
 
 
 
 
 
 
 
315,288

 
313,462

 
313,462

 
 
 
Kogniz, Inc.
 
 
 
Senior Secured
 
12.8%
 
 
 
271,626

 
225,274

 
225,274

 
9/1/2021
 
LanzaTech New Zealand Ltd.
 
 
 
Senior Secured
 
13.0%
 
 
 
355,735

 
351,225

 
351,225

 
3/1/2020
 
LanzaTech New Zealand Ltd.
 
 
 
Senior Secured
 
13.0%
 
 
 
1,033,301

 
1,027,200

 
1,027,200

 
9/1/2020
 
LanzaTech New Zealand Ltd.
 
 
 
Senior Secured
 
13.3%
 
 
 
1,336,381

 
1,328,045

 
1,328,045

 
3/1/2021
 
LanzaTech New Zealand Ltd. Subtotal
 
 
 
 
 
 
 
 
 
2,725,417

 
2,706,470

 
2,706,470

 
 
 
Make School, Inc.
 
 
 
Senior Secured
 
11.3%
 
 
 
690,328

 
667,484

 
667,484

 
8/1/2021
 
Neuehouse, LLC
 
 
 
Senior Secured
 
12.0%
 
 
 
1,750,000

 
1,297,265

 
1,297,265

 
*
 
Nevada Nanotech Systems, Inc.
 
 
 
Senior Secured
 
12.0%
 
 
 
628,788

 
595,193

 
595,193

 
6/1/2021
 
NewGlobe Schools, Inc.
 
 
 
Senior Secured
 
12.5%
 
 
 
3,954,583

 
3,784,146

 
3,784,146

 
8/1/2022
 
Northern Quinoa Production Corporation ** ^
 
 
 
Senior Secured
 
12.0%
 
 
 
6,904,047

 
6,577,787

 
6,577,787

 
5/1/2022
 
Noteleaf, Inc.
 
 
 
Senior Secured
 
11.0%
 
 
 
489,249

 
485,228

 
485,228

 
9/1/2020
 
Noteleaf, Inc.
 
 
 
Senior Secured
 
12.5%
 
 
 
1,483,247

 
1,404,471

 
1,404,471

 
4/1/2023
 
Noteleaf, Inc. Subtotal
 
 
 
 
 
 
 
 
 
1,972,496

 
1,889,699

 
1,889,699

 
 
 
Opya, Inc.
 
 
 
Senior Secured
 
12.0%
 
 
 
989,594

 
936,064

 
936,064

 
1/1/2023
 
Opya, Inc.
 
 
 
Senior Secured
 
12.0%
 
 
 
260,121

 
251,996

 
251,996

 
4/1/2021
 
Opya, Inc. Subtotal
 
 
 
 
 
 
 
 
 
1,249,715

 
1,188,060

 
1,188,060

 
 
 
PDQ Enterprises LLC **
 
 
 
Senior Secured
 
11.0%
 
 
 
1,597,950

 
1,583,889

 
1,583,890

 
2/1/2021
 
Percepto Robotics, Ltd. ** ^
 
 
 
Senior Secured
 
12.5%
 
 
 
220,862

 
217,253

 
217,253

 
8/1/2020
 
Percepto Robotics, Ltd. ** ^
 
 
 
Senior Secured
 
12.5%
 
 
 
129,824

 
128,631

 
128,631

 
12/1/2020
 
Percepto Robotics, Ltd. ** ^ Subtotal
 
 
 
 
 
 
 
 
 
350,686

 
345,884

 
345,884

 
 
 
Percepto, Inc.
 
 
 
Senior Secured
 
11.8%
 
 
 
1,485,000

 
1,390,197

 
1,390,197

 
11/1/2022
 
Pitzi, Ltd. ** ^
 
 
 
Senior Secured
 
12.0%
 
 
 
494,932

 
337,890

 
337,890

 
11/1/2023
 
PLAE, Inc.
 
 
 
Senior Secured
 
9.0%
 
3.2%
 
621,378

 
613,950

 
365,026

 
12/1/2020
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

41



Industry
Borrower
 
Percent of Net Assets (a)
 
Collateral
 
Interest Rate
(b)
 
End of Term Payment
(c)
 
Principal
 
Cost
 
Fair Value
 
Maturity Date
 
Plant Prefab, Inc.
 
 
 
Senior Secured
 
11.0%
 
 
 
436,815

 
429,152

 
429,152

 
2/1/2022
 
Plant Prefab, Inc.
 
 
 
Senior Secured
 
11.0%
 
 
 
436,736

 
408,403

 
408,403

 
2/1/2022
 
Plant Prefab, Inc.
 
 
 
Senior Secured
 
11.0%
 
 
 
495,230

 
485,444

 
485,444

 
8/1/2022
 
Plant Prefab, Inc. Subtotal
 
 
 
 
 
 
 
 
 
1,368,781

 
1,322,999

 
1,322,999

 
 
 
Platform Science, Inc.
 
 
 
Senior Secured
 
12.0%
 
 
 
1,092,405

 
1,025,274

 
1,025,274

 
2/1/2022
 
Plenty Unlimited, Inc.
 
 
 
Senior Secured
 
9.0%
 
9.4%
 
720,381

 
715,351

 
715,351

 
3/1/2021
 
Plenty Unlimited, Inc.
 
 
 
Senior Secured
 
9.0%
 
11.7%
 
669,055

 
657,374

 
657,374

 
1/1/2021
 
Plenty Unlimited, Inc.
 
 
 
Senior Secured
 
9.0%
 
11.7%
 
2,129,724

 
2,074,807

 
2,074,807

 
9/1/2021
 
Plenty Unlimited, Inc. Subtotal
 
 
 
 
 
 
 
 
 
3,519,160

 
3,447,532

 
3,447,532

 
 
 
Plethora, Inc.
 
 
 
Senior Secured
 
11.2%
 
 
 
2,666,486

 
2,426,198

 
2,426,198

 
3/1/2022
 
Redaptive, Inc.
 
 
 
Senior Secured
 
12.0%
 
 
 
4,947,392

 
4,702,878

 
4,702,878

 
12/1/2022
 
Romaine Empire, Inc.
 
 
 
Senior Secured
 
12.3%
 
3.6%
 
2,984,037

 
2,923,783

 
2,923,783

 
2/1/2023
 
Romaine Empire, Inc.
 
 
 
Senior Secured
 
11.0%
 
4.1%
 
2,989,549

 
2,821,203

 
2,821,203

 
2/1/2023
 
Romaine Empire, Inc. Subtotal
 
 
 
 
 
 
 
 
 
5,973,586

 
5,744,986

 
5,744,986

 
 
 
Saber es Poder, Inc.
 
 
 
Senior Secured
 
10.5%
 
 
 
240,399

 
241,229

 
241,229

 
5/1/2022
 
Saber es Poder, Inc.
 
 
 
Senior Secured
 
10.5%
 
 
 
451,402

 
431,977

 
431,977

 
3/1/2022
 
Saber es Poder, Inc. Subtotal
 
 
 
 
 
 
 
 
 
691,801

 
673,206

 
673,206

 
 
 
Saltbox, Inc.
 
 
 
Senior Secured
 
12.3%
 
 
 
494,667

 
468,114

 
468,114

 
6/1/2023
 
SkyKick, Inc.
 
 
 
Senior Secured
 
10.5%
 
 
 
179,654

 
178,576

 
178,576

 
10/1/2020
 
SkyKick, Inc.
 
 
 
Senior Secured
 
10.5%
 
 
 
196,798

 
195,475

 
195,475

 
11/1/2020
 
SkyKick, Inc.
 
 
 
Senior Secured
 
10.5%
 
 
 
329,036

 
325,320

 
325,320

 
6/1/2020
 
SkyKick, Inc.
 
 
 
Senior Secured
 
11.0%
 
 
 
4,949,290

 
4,766,396

 
4,766,396

 
6/1/2022
 
SkyKick, Inc. Subtotal
 
 
 
 
 
 
 
 
 
5,654,778

 
5,465,767

 
5,465,767

 
 
 
Strong Arm Technologies, Inc.
 
 
 
Senior Secured
 
12.0%
 
 
 
671,229

 
652,092

 
652,092

 
5/1/2021
 
Sustainable Living Partners, LLC
 
 
 
Senior Secured
 
12.5%
 
 
 
4,947,179

 
4,164,487

 
4,164,487

 
8/1/2023
 
TAE Technologies, Inc.
 
 
 
Senior Secured
 
12.5%
 
 
 
5,320,565

 
5,205,605

 
5,205,605

 
3/1/2021
 
TAE Technologies, Inc.
 
 
 
Senior Secured
 
12.5%
 
 
 
1,411,739

 
1,397,787

 
1,397,787

 
4/1/2021
 
TAE Technologies, Inc. Subtotal
 
 
 
 
 
 
 
 
 
6,732,304

 
6,603,392

 
6,603,392

 
 
 
Terramera, Inc. ** ^
 
 
 
Senior Secured
 
12.0%
 
 
 
520,302

 
514,091

 
514,091

 
4/1/2021
 
Terramera, Inc. ** ^
 
 
 
Senior Secured
 
12.0%
 
 
 
1,040,372

 
1,001,921

 
1,001,921

 
4/1/2021
 
Terramera, Inc. ** ^ Subtotal
 
 
 
 
 
 
 
 
 
1,560,674

 
1,516,012

 
1,516,012

 
 
 
Theatro Labs, Inc.
 
 
 
Senior Secured
 
12.0%
 
 
 
1,343,387

 
1,308,538

 
1,308,538

 
8/1/2022
 
Thras.io, Inc.
 
 
 
Senior Secured
 
12.0%
 
47.3%
 
457,896

 
457,896

 
457,896

 
7/1/2024
 
Thras.io, Inc.
 
 
 
Senior Secured
 
12.0%
 
47.4%
 
281,514

 
250,101

 
250,101

 
4/1/2024
 
Thras.io, Inc.
 
 
 
Senior Secured
 
12.0%
 
45.1%
 
368,336

 
368,336

 
368,336

 
6/1/2024
 
Thras.io, Inc.
 
 
 
Senior Secured
 
12.0%
 
45.1%
 
276,852

 
276,852

 
276,852

 
6/1/2024
 
Thras.io, Inc.
 
 
 
Senior Secured
 
12.0%
 
45.1%
 
186,943

 
186,943

 
186,943

 
4/1/2024
 
Thras.io, Inc.
 
 
 
Senior Secured
 
12.0%
 
47.3%
 
91,070

 
91,070

 
91,070

 
8/1/2024
 
Thras.io, Inc.
 
 
 
Senior Secured
 
12.0%
 
45.1%
 
185,880

 
185,880

 
185,880

 
5/1/2024
 
Thras.io, Inc. Subtotal
 
 
 
 
 
 
 
 
 
1,848,491

 
1,817,078

 
1,817,078

 
 
 
UniEnergy Technologies LLC
 
 
 
Senior Secured
 
12.3%
 
 
 
2,622,584

 
2,355,691

 
1,933,768

 
12/1/2020
 
Veev Group, Inc.
 
 
 
Senior Secured
 
12.5%
 
 
 
814,961

 
785,872

 
785,872

 
12/1/2021
 
Velo Holdings Limited
 
 
 
Senior Secured
 
12.0%
 
 
 
2,473,359

 
2,326,791

 
2,326,791

 
6/1/2022
 
Virtuix Holdings, Inc.
 
 
 
Senior Secured
 
12.3%
 
 
 
232,911

 
228,261

 
228,261

 
4/1/2022
 
Virtuix Holdings, Inc.
 
 
 
Senior Secured
 
11.0%
 
 
 
191,811

 
189,767

 
189,767

 
7/1/2020
 
Virtuix Holdings, Inc. Subtotal
 
 
 
 
 
 
 
 
 
424,722

 
418,028

 
418,028

 
 
 
Voodoo Manufacturing, Inc.
 
 
 
Senior Secured
 
12.0%
 
 
 
338,714

 
314,676

 
314,676

 
3/1/2022
 
Wheels Labs, Inc.
 
 
 
Senior Secured
 
12.5%
 
 
 
4,448,446

 
4,301,016

 
4,301,016

 
8/1/2022
 
Wine Plum, Inc.
 
 
 
Senior Secured
 
12.5%
 
 
 
989,226

 
940,635

 
940,635

 
9/1/2022
Other Technology Total
 
 
52.3
%
 
 
 
 
 
 
 
$
114,889,061

 
$
109,202,901

 
$
108,088,734

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Security
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Axonius, Inc.
 
 
 
Senior Secured
 
12.0%
 
 
 
$
361,483

 
$
350,280

 
$
350,280

 
9/1/2021
 
Karamba Security Ltd. ** ^
 
 
 
Senior Secured
 
12.0%
 
 
 
1,220,509

 
1,075,646

 
1,075,646

 
12/1/2021
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

42



Industry
Borrower
 
Percent of Net Assets (a)
 
Collateral
 
Interest Rate
(b)
 
End of Term Payment
(c)
 
Principal
 
Cost
 
Fair Value
 
Maturity Date
 
Nok Nok Labs, Inc.
 
 
 
Senior Secured
 
12.5%
 
 
 
848,037

 
831,014

 
831,014

 
6/1/2022
 
Nok Nok Labs, Inc.
 
 
 
Senior Secured
 
12.5%
 
 
 
278,668

 
262,884

 
262,884

 
12/1/2020
 
Nok Nok Labs, Inc. Subtotal
 
 
 
 
 
 
 
 
 
1,126,705

 
1,093,898

 
1,093,898

 
 
 
Safetrust Holdings, Inc.
 
 
 
Senior Secured
 
12.5%
 
 
 
314,927

 
295,554

 
295,554

 
6/1/2021
Security Total
 
 
1.4
%
 
 
 
 
 
 
 
$
3,023,624

 
$
2,815,378

 
$
2,815,378

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Semiconductors & Equipment
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
ETA Compute, Inc.
 
 
 
Senior Secured
 
12.0%
 
 
 
$
1,176,312

 
$
1,137,034

 
$
1,137,034

 
11/1/2021
 
ETA Compute, Inc.
 
 
 
Senior Secured
 
10.5%
 
 
 
72,471

 
72,179

 
72,179

 
8/1/2020
 
ETA Compute, Inc. Subtotal
 
 
 
 
 
 
 
 
 
1,248,783

 
1,209,213

 
1,209,213

 
 
 
Innophase, Inc.
 
 
 
Senior Secured
 
11.8%
 
 
 
1,884,639

 
1,862,313

 
1,862,313

 
6/1/2021
 
Innophase, Inc.
 
 
 
Senior Secured
 
11.8%
 
 
 
4,394,928

 
4,289,442

 
4,289,442

 
6/1/2021
 
Innophase, Inc. Subtotal
 
 
 
 
 
 
 
 
 
6,279,567

 
6,151,755

 
6,151,755

 
 
Semiconductors & Equipment Total
 
3.6
%
 
 
 
 
 
 
 
$
7,528,350

 
$
7,360,968

 
$
7,360,968

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Software
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Alkanza Inc.
 
 
 
Senior Secured
 
18.0%
 
 
 
$
677,531

 
$
317,479

 
$
160,154

 
*
 
Aptible, Inc.
 
 
 
Senior Secured
 
11.8%
 
 
 
114,677

 
113,163

 
113,163

 
2/1/2021
 
ArborMetrix, Inc.
 
 
 
Senior Secured
 
12.5%
 
 
 
1,484,138

 
1,392,854

 
1,392,854

 
6/1/2023
 
ArborMetrix, Inc.
 
 
 
Senior Secured
 
11.5%
 
 
 
911,698

 
911,697

 
911,698

 
6/1/2022
 
ArborMetrix, Inc.
 
 
 
Senior Secured
 
11.5%
 
 
 
3,189,498

 
3,075,942

 
3,075,942

 
6/1/2022
 
ArborMetrix, Inc. Subtotal
 
 
 
 
 
 
 
 
 
5,585,334

 
5,380,493

 
5,380,494

 
 
 
Blockdaemon, Inc.
 
 
 
Senior Secured
 
11.3%
 
 
 
247,542

 
238,275

 
238,275

 
6/1/2022
 
Blockdaemon, Inc.
 
 
 
Senior Secured
 
11.3%
 
 
 
172,574

 
160,081

 
160,081

 
8/1/2021
 
Blockdaemon, Inc. Subtotal
 
 
 
 
 
 
 
 
 
420,116

 
398,356

 
398,356

 
 
 
Bloomboard, Inc.
 
 
 
Senior Secured
 
11.5%
 
 
 
2,501,330

 
1,726,360

 
1,609,258

 
*
 
BlueCart, Inc.
 
 
 
Senior Secured
 
12.5%
 
 
 
17,613

 
17,561

 
17,561

 
1/1/2020
 
BlueCart, Inc.
 
 
 
Senior Secured
 
12.8%
 
 
 
8,832

 
8,821

 
8,821

 
1/1/2020
 
BlueCart, Inc. Subtotal
 
 
 
 
 
 
 
 
 
26,445

 
26,382

 
26,382

 
 
 
Canary Technologies Corporation
 
 
 
Senior Secured
 
11.5%
 
 
 
247,445

 
227,240

 
227,240

 
6/1/2023
 
Censia Inc.
 
 
 
Senior Secured
 
11.0%
 
 
 
990,325

 
929,044

 
929,044

 
10/1/2022
 
Cloudleaf, Inc.
 
 
 
Senior Secured
 
12.0%
 
 
 
666,338

 
644,009

 
644,009

 
9/1/2021
 
Cloudleaf, Inc.
 
 
 
Senior Secured
 
12.0%
 
 
 
1,484,964

 
1,348,759

 
1,348,759

 
8/1/2023
 
Cloudleaf, Inc. Subtotal
 
 
 
 
 
 
 
 
 
2,151,302

 
1,992,768

 
1,992,768

 
 
 
DealPath, Inc.
 
 
 
Senior Secured
 
11.0%
 
 
 
931,379

 
917,163

 
917,163

 
5/1/2021
 
DemystData Limited
 
 
 
Senior Secured
 
11.8%
 
 
 
128,725

 
128,085

 
128,085

 
7/1/2020
 
DemystData Limited
 
 
 
Senior Secured
 
11.8%
 
 
 
185,689

 
182,801

 
182,801

 
5/1/2020
 
DemystData Limited Subtotal
 
 
 
 
 
 
 
 
 
314,414

 
310,886

 
310,886

 
 
 
Drift Marketplace, Inc.
 
 
 
Senior Secured
 
11.0%
 
 
 
21,052

 
21,008

 
21,008

 
3/1/2020
 
Drift Marketplace, Inc.
 
 
 
Senior Secured
 
11.0%
 
 
 
27,932

 
27,877

 
27,877

 
3/1/2020
 
Drift Marketplace, Inc.
 
 
 
Senior Secured
 
11.0%
 
 
 
20,949

 
20,782

 
20,782

 
3/1/2020
 
Drift Marketplace, Inc. Subtotal
 
 
 
 
 
 
 
 
 
69,933

 
69,667

 
69,667

 
 
 
Dynamics, Inc.
 
 
 
Senior Secured
 
12.5%
 
 
 
5,196,946

 
4,670,012

 
4,670,012

 
8/1/2021
 
Eskalera, Inc.
 
 
 
Senior Secured
 
10.5%
 
 
 
991,021

 
946,027

 
946,027

 
3/1/2023
 
Estify, Inc.
 
 
 
Senior Secured
 
18.0%
 
 
 
842,819

 
818,731

 
261,969

 
*
 
Fortress IQ, Inc.
 
 
 
Senior Secured
 
11.3%
 
 
 
502,728

 
486,738

 
486,738

 
11/1/2021
 
Gearbox Software, LLC
 
 
 
Senior Secured
 
11.0%
 
 
 
790,132

 
787,238

 
787,238

 
11/1/2020
 
Gearbox Software, LLC
 
 
 
Senior Secured
 
11.0%
 
 
 
977,945

 
952,724

 
952,724

 
9/1/2020
 
Gearbox Software, LLC
 
 
 
Senior Secured
 
11.0%
 
 
 
1,322,592

 
1,317,050

 
1,317,050

 
3/1/2021
 
Gearbox Software, LLC Subtotal
 
 
 
 
 
 
 
 
 
3,090,669

 
3,057,012

 
3,057,012

 
 
 
GoFormz, Inc.
 
 
 
Senior Secured
 
12.0%
 
 
 
716,482

 
683,705

 
683,705

 
11/1/2020
 
ICX Media, Inc.
 
 
 
Senior Secured
 
12.5%
 
 
 
480,312

 
446,415

 
446,415

 
5/1/2022
 
Interana, Inc.
 
 
 
Senior Secured
 
11.3%
 
 
 
1,880,980

 
1,838,925

 
1,838,925

 
6/1/2021
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

43



Industry
Borrower
 
Percent of Net Assets (a)
 
Collateral
 
Interest Rate
(b)
 
End of Term Payment
(c)
 
Principal
 
Cost
 
Fair Value
 
Maturity Date
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Invoice2Go, Inc.
 
 
 
Senior Secured
 
11.8%
 
 
 
909,506

 
909,506

 
909,506

 
4/1/2021
 
Invoice2Go, Inc.
 
 
 
Senior Secured
 
11.8%
 
 
 
909,416

 
893,275

 
893,275

 
4/1/2021
 
Invoice2Go, Inc.
 
 
 
Senior Secured
 
12.0%
 
 
 
989,381

 
973,707

 
973,707

 
11/1/2022
 
Invoice2Go, Inc.
 
 
 
Senior Secured
 
12.0%
 
 
 
988,333

 
938,608

 
938,608

 
6/1/2023
 
Invoice2Go, Inc.
 
 
 
Senior Secured
 
11.8%
 
 
 
221,827

 
217,619

 
217,619

 
6/1/2020
 
Invoice2Go, Inc.
 
 
 
Senior Secured
 
11.8%
 
 
 
779,652

 
779,652

 
779,652

 
4/1/2021
 
Invoice2Go, Inc.
 
 
 
Senior Secured
 
12.0%
 
 
 
989,796

 
971,709

 
971,709

 
3/1/2023
 
Invoice2Go, Inc.
 
 
 
Senior Secured
 
12.0%
 
 
 
902,694

 
811,358

 
811,358

 
3/1/2022
 
Invoice2Go, Inc.
 
 
 
Senior Secured
 
12.0%
 
 
 
988,950

 
975,628

 
975,628

 
7/1/2022
 
Invoice2Go, Inc. Subtotal
 
 
 
 
 
 
 
 
 
7,679,555

 
7,471,062

 
7,471,062

 
 
 
Ipolipo, Inc.
 
 
 
Senior Secured
 
12.0%
 
 
 
2,181,071

 
2,058,286

 
2,058,286

 
6/1/2022
 
JethroData, Inc. ** ^
 
 
 
Senior Secured
 
18.0%
 
 
 
704,868

 
681,877

 
327,328

 
*
 
Loft, Inc.
 
 
 
Senior Secured
 
11.8%
 
 
 
499,368

 
482,126

 
482,126

 
9/1/2021
 
Lucideus, Inc.
 
 
 
Senior Secured
 
12.0%
 
 
 
494,988

 
448,935

 
448,935

 
2/1/2023
 
Medable, Inc.
 
 
 
Senior Secured
 
12.0%
 
 
 
989,897

 
968,703

 
968,703

 
2/1/2023
 
Medable, Inc.
 
 
 
Senior Secured
 
12.0%
 
 
 
1,979,560

 
1,815,140

 
1,815,140

 
2/1/2023
 
Medable, Inc. Subtotal
 
 
 
 
 
 
 
 
 
2,969,457

 
2,783,843

 
2,783,843

 
 
 
Metarail, Inc.
 
 
 
Senior Secured
 
12.0%
 
 
 
672,294

 
649,249

 
285,595

 
6/1/2022
 
Metawave Corporation
 
 
 
Senior Secured
 
12.0%
 
 
 
937,979

 
906,739

 
906,739

 
7/1/2022
 
Migo Money, Inc. ** ^
 
 
 
Senior Secured
 
12.3%
 
 
 
610,858

 
574,762

 
574,762

 
12/1/2021
 
Migo Money, Inc. ** ^
 
 
 
Senior Secured
 
12.5%
 
 
 
451,529

 
451,529

 
451,529

 
3/1/2022
 
Migo Money, Inc. ** ^
 
 
 
Senior Secured
 
12.0%
 
 
 
129,034

 
126,786

 
126,786

 
7/1/2020
 
Migo Money, Inc. ** ^ Subtotal
 
 
 
 
 
 
 
 
 
1,191,421

 
1,153,077

 
1,153,077

 
 
 
OrderGroove, Inc.
 
 
 
Senior Secured
 
12.0%
 
 
 
1,236,848

 
1,214,197

 
1,214,197

 
6/1/2023
 
OrderGroove, Inc.
 
 
 
Senior Secured
 
12.0%
 
 
 
2,472,099

 
2,352,429

 
2,352,429

 
6/1/2023
 
OrderGroove, Inc.
 
 
 
Senior Secured
 
12.0%
 
 
 
1,237,123

 
1,212,501

 
1,212,501

 
6/1/2023
 
OrderGroove, Inc. Subtotal
 
 
 
 
 
 
 
 
 
4,946,070

 
4,779,127

 
4,779,127

 
 
 
Owl Cameras, Inc.
 
 
 
Senior Secured
 
18.0%
 
 
 
3,461,552

 
2,866,672

 
2,322,293

 
*
 
PlushCare, Inc.
 
 
 
Senior Secured
 
11.8%
 
 
 
721,024

 
706,066

 
706,066

 
5/1/2022
 
PlushCare, Inc.
 
 
 
Senior Secured
 
11.8%
 
 
 
960,569

 
917,175

 
917,175

 
5/1/2022
 
PlushCare, Inc. Subtotal
 
 
 
 
 
 
 
 
 
1,681,593

 
1,623,241

 
1,623,241

 
 
 
PrivCo Holdings, Inc.
 
 
 
Senior Secured
 
12.0%
 
 
 
249,311

 
241,418

 
241,418

 
2/1/2021
 
Ready Education Inc. ** ^
 
 
 
Senior Secured
 
11.5%
 
 
 
180,541

 
180,541

 
180,541

 
9/1/2021
 
Ready Education Inc. ** ^
 
 
 
Senior Secured
 
11.5%
 
 
 
349,214

 
349,214

 
349,214

 
9/1/2021
 
Ready Education Inc. ** ^ Subtotal
 
 
 
 
 
 
 
 
 
529,755

 
529,755

 
529,755

 
 
 
Resilio, Inc.
 
 
 
Senior Secured
 
12.8%
 
 
 
133,441

 
116,663

 
116,663

 
3/1/2021
 
Resilio, Inc.
 
 
 
Senior Secured
 
12.8%
 
 
 
149,688

 
149,688

 
149,688

 
5/1/2021
 
Resilio, Inc. Subtotal
 
 
 
 
 
 
 
 
 
283,129

 
266,351

 
266,351

 
 
 
Splitwise, Inc.
 
 
 
Senior Secured
 
12.3%
 
 
 
494,768

 
467,646

 
467,646

 
12/1/2022
 
Stitch Labs, Inc.
 
 
 
Senior Secured
 
12.0%
 
 
 
1,310,480

 
1,234,947

 
1,234,947

 
2/1/2022
 
Stitch Labs, Inc.
 
 
 
Senior Secured
 
12.3%
 
 
 
741,828

 
728,702

 
728,702

 
6/1/2022
 
Stitch Labs, Inc. Subtotal
 
 
 
 
 
 
 
 
 
2,052,308

 
1,963,649

 
1,963,649

 
 
 
Swivel, Inc.
 
 
 
Senior Secured
 
12.0%
 
 
 
240,927

 
224,342

 
224,342

 
8/1/2022
 
Swivel, Inc.
 
 
 
Senior Secured
 
12.0%
 
 
 
247,319

 
247,319

 
247,319

 
10/1/2022
 
Swivel, Inc. Subtotal
 
 
 
 
 
 
 
 
 
488,246

 
471,661

 
471,661

 
 
 
Swrve, Inc.
 
 
 
Senior Secured
 
11.8%
 
 
 
726,455

 
715,263

 
715,263

 
11/1/2020
 
Talla, Inc.
 
 
 
Senior Secured
 
12.5%
 
 
 
480,218

 
448,442

 
448,442

 
5/1/2022
 
The/Studio Technologies, Inc.
 
 
 
Senior Secured
 
11.0%
 
 
 
165,210

 
161,987

 
161,987

 
6/1/2020
 
Trendalytics Innovation Labs, Inc.
 
 
 
Senior Secured
 
12.8%
 
 
 
296,547

 
267,283

 
267,283

 
6/1/2022
 
Truthset, Inc.
 
 
 
Senior Secured
 
10.5%
 
 
 
371,630

 
337,302

 
337,302

 
2/1/2023
 
Truthset, Inc.
 
 
 
Senior Secured
 
10.5%
 
 
 
371,714

 
371,714

 
371,714

 
5/1/2023
 
Truthset, Inc. Subtotal
 
 
 
 
 
 
 
 
 
743,344

 
709,016

 
709,016

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

44



Industry
Borrower
 
Percent of Net Assets (a)
 
Collateral
 
Interest Rate
(b)
 
End of Term Payment
(c)
 
Principal
 
Cost
 
Fair Value
 
Maturity Date
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
VenueNext, Inc.
 
 
 
Senior Secured
 
11.0%
 
 
 
276,785

 
272,729

 
272,729

 
5/1/2020
 
VenueNext, Inc.
 
 
 
Senior Secured
 
11.3%
 
 
 
1,128,399

 
1,114,885

 
1,114,885

 
10/1/2021
 
VenueNext, Inc.
 
 
 
Senior Secured
 
11.3%
 
 
 
987,863

 
983,492

 
983,492

 
7/1/2021
 
VenueNext, Inc. Subtotal
 
 
 
 
 
 
 
 
 
2,393,047

 
2,371,106

 
2,371,106

 
 
 
Venuetize, LLC
 
 
 
Senior Secured
 
12.3%
 
 
 
214,880

 
195,955

 
195,955

 
4/1/2022
 
Vuemix, Inc.
 
 
 
Senior Secured
 
11.3%
 
 
 
98,925

 
97,130

 
97,130

 
11/1/2020
 
Workspot, Inc.
 
 
 
Senior Secured
 
12.0%
 
 
 
742,204

 
684,512

 
684,512

 
8/1/2022
 
Workspot, Inc.
 
 
 
Senior Secured
 
12.0%
 
 
 
742,358

 
721,400

 
721,400

 
10/1/2022
 
Workspot, Inc.
 
 
 
Senior Secured
 
12.0%
 
 
 
166,673

 
162,904

 
162,904

 
6/1/2020
 
Workspot, Inc.
 
 
 
Senior Secured
 
12.0%
 
 
 
542,190

 
510,896

 
510,896

 
9/1/2021
 
Workspot, Inc.
 
 
 
Senior Secured
 
12.0%
 
 
 
323,670

 
320,329

 
320,329

 
12/1/2020
 
Workspot, Inc. Subtotal
 
 
 
 
 
 
 
 
 
2,517,095

 
2,400,041

 
2,400,041

 
 
 
Xeeva, Inc.
 
 
 
Senior Secured
 
12.0%
 
 
 
636,722

 
634,250

 
634,250

 
7/1/2020
Software Total
 
 
29.6
%
 
 
 
 
 
 
 
$
67,522,364

 
$
63,201,753

 
$
61,107,983

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Technology Services
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
AirHelp, Inc.
 
 
 
Senior Secured
 
10.0%
 
 
 
$
224,210

 
$
222,872

 
$
222,872

 
10/1/2020
 
AirHelp, Inc.
 
 
 
Senior Secured
 
10.0%
 
 
 
158,653

 
158,004

 
158,004

 
7/1/2020
 
AirHelp, Inc.
 
 
 
Senior Secured
 
10.0%
 
 
 
228,495

 
226,378

 
226,378

 
5/1/2020
 
AirHelp, Inc. Subtotal
 
 
 
 
 
 
 
 
 
611,358

 
607,254

 
607,254

 
 
 
Akademos, Inc.
 
 
 
Junior Secured
 
13.5%
 
1.5%
 
310,059

 
296,533

 
296,533

 
8/1/2020
 
Blazent, Inc.
 
 
 
Senior Secured
 
12.0%
 
 
 
1,554,190

 
1,176,871

 
519,570

 
*
 
Blue Technologies Limited ** ^
 
 
 
Senior Secured
 
11.0%
 
 
 
73,765

 
73,282

 
73,282

 
4/1/2020
 
Callisto Media, Inc.
 
 
 
Senior Secured
 
10.0%
 
 
 
867,752

 
863,859

 
863,859

 
6/1/2020
 
Callisto Media, Inc.
 
 
 
Senior Secured
 
10.0%
 
 
 
2,973,269

 
2,919,744

 
2,919,744

 
9/1/2022
 
Callisto Media, Inc.
 
 
 
Senior Secured
 
10.0%
 
 
 
514,237

 
512,656

 
512,656

 
9/1/2020
 
Callisto Media, Inc.
 
 
 
Senior Secured
 
10.0%
 
 
 
677,238

 
674,538

 
674,538

 
12/1/2020
 
Callisto Media, Inc.
 
 
 
Senior Secured
 
10.0%
 
 
 
836,205

 
832,109

 
832,109

 
3/1/2021
 
Callisto Media, Inc.
 
 
 
Senior Secured
 
10.0%
 
 
 
2,971,195

 
2,839,762

 
2,839,762

 
12/1/2021
 
Callisto Media, Inc.
 
 
 
Senior Secured
 
10.0%
 
 
 
2,971,910

 
2,934,804

 
2,934,804

 
3/1/2022
 
Callisto Media, Inc.
 
 
 
Senior Secured
 
10.3%
 
 
 
2,475,086

 
2,171,160

 
2,171,160

 
6/1/2023
 
Callisto Media, Inc.
 
 
 
Senior Secured
 
10.0%
 
 
 
2,972,615

 
2,929,981

 
2,929,981

 
6/1/2022
 
Callisto Media, Inc. Subtotal
 
 
 
 
 
 
 
 
 
17,259,507

 
16,678,613

 
16,678,613

 
 
 
CloudIQ Ltd. ** ^
 
 
 
Senior Secured
 
12.0%
 
 
 
431,489

 
409,763

 
409,763

 
12/1/2020
 
CloudIQ Ltd. ** ^
 
 
 
Senior Secured
 
12.0%
 
 
 
564,266

 
564,266

 
564,266

 
4/1/2021
 
CloudIQ Ltd. ** ^
 
 
 
Senior Secured
 
12.0%
 
 
 
465,206

 
465,206

 
465,206

 
1/1/2021
 
CloudIQ Ltd. ** ^ Subtotal
 
 
 
 
 
 
 
 
 
1,460,961

 
1,439,235

 
1,439,235

 
 
 
Dolly, Inc.
 
 
 
Senior Secured
 
12.0%
 
 
 
610,970

 
597,981

 
597,981

 
5/1/2021
 
Keyo AI Inc.
 
 
 
Senior Secured
 
10.0%
 
 
 
436,352

 
414,912

 
414,912

 
2/1/2022
 
Klar Holdings Limited ** ^
 
 
 
Senior Secured
 
12.5%
 
 
 
247,346

 
192,549

 
192,549

 
10/1/2022
 
Leap Services, Inc.
 
 
 
Senior Secured
 
12.0%
 
 
 
494,731

 
471,508

 
471,508

 
6/1/2022
 
Liftit, Inc. ** ^
 
 
 
Senior Secured
 
12.0%
 
 
 
494,791

 
484,576

 
484,576

 
10/1/2022
 
Liftit, Inc. ** ^
 
 
 
Senior Secured
 
12.0%
 
 
 
494,641

 
457,564

 
457,564

 
8/1/2022
 
Liftit, Inc. ** ^ Subtotal
 
 
 
 
 
 
 
 
 
989,432

 
942,140

 
942,140

 
 
 
Loansnap Holdings Inc. **
 
 
 
Senior Secured
 
11.0%
 
 
 
2,723,258

 
2,610,640

 
2,610,640

 
6/1/2022
 
PayJoy, Inc. **
 
 
 
Senior Secured
 
10.0%
 
 
 
687,580

 
665,991

 
665,991

 
8/1/2021
 
Relimetrics, Inc.
 
 
 
Senior Secured
 
11.3%
 
 
 
316,328

 
303,649

 
303,649

 
1/1/2022
 
Riffyn, Inc.
 
 
 
Senior Secured
 
11.5%
 
 
 
313,787

 
310,118

 
310,118

 
6/1/2021
 
Riffyn, Inc.
 
 
 
Senior Secured
 
11.5%
 
 
 
530,315

 
517,038

 
517,038

 
3/1/2021
 
Riffyn, Inc. Subtotal
 
 
 
 
 
 
 
 
 
844,102

 
827,156

 
827,156

 
 
 
Solugen, Inc.
 
 
 
Senior Secured
 
11.0%
 
 
 
2,476,420

 
2,284,875

 
2,284,875

 
1/1/2023
 
Solugen, Inc.
 
 
 
Senior Secured
 
11.0%
 
 
 
1,238,440

 
1,213,420

 
1,213,420

 
1/1/2023
 
Solugen, Inc. Subtotal
 
 
 
 
 
 
 
 
 
3,714,860

 
3,498,295

 
3,498,295

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

45



Industry
Borrower
 
Percent of Net Assets (a)
 
Collateral
 
Interest Rate
(b)
 
End of Term Payment
(c)
 
Principal
 
Cost
 
Fair Value
 
Maturity Date
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Thrive Financial, Inc. **
 
 
 
Senior Secured
 
11.5%
 
 
 
990,014

 
930,252

 
930,252

 
10/1/2022
 
TrueFacet, Inc.
 
 
 
Senior Secured
 
18.0%
 
 
 
946,610

 
893,580

 
4,969

 
*
 
Zeel Networks, Inc.
 
 
 
Senior Secured
 
11.0%
 
 
 
2,694,235

 
2,595,529

 
2,595,529

 
3/1/2022
Technology Services Total
 
 
16.3
%
 
 
 
 
 
 
 
$
36,965,658

 
$
35,215,970

 
$
33,670,058

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Wireless
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
AirVine Scientific, Inc.
 
 
 
Senior Secured
 
12.0%
 
 
 
$
123,714

 
$
115,226

 
$
115,226

 
9/1/2022
 
Juvo Mobile, Inc. **
 
 
 
Senior Secured
 
11.0%
 
 
 
37,413

 
37,350

 
37,350

 
2/1/2020
 
Juvo Mobile, Inc. **
 
 
 
Senior Secured
 
11.0%
 
 
 
18,792

 
18,773

 
18,773

 
1/1/2020
 
Juvo Mobile, Inc. ** Subtotal
 
 
 
 
 
 
 
 
 
56,205

 
56,123

 
56,123

 
 
 
Nextivity, Inc.
 
 
 
Senior Secured
 
12.0%
 
 
 
808,783

 
808,783

 
808,783

 
6/1/2021
 
Nextivity, Inc.
 
 
 
Senior Secured
 
12.0%
 
 
 
2,964,747

 
2,964,591

 
2,964,591

 
6/1/2021
 
Nextivity, Inc. Subtotal
 
 
 
 
 
 
 
 
 
3,773,530

 
3,773,374

 
3,773,374

 
 
 
Parallel Wireless, Inc.
 
 
 
Senior Secured
 
11.8%
 
 
 
6,410,893

 
5,992,157

 
5,992,157

 
6/1/2023
 
Parallel Wireless, Inc.
 
 
 
Senior Secured
 
11.8%
 
 
 
543,960

 
541,246

 
541,246

 
10/1/2020
 
Parallel Wireless, Inc.
 
 
 
Senior Secured
 
11.8%
 
 
 
522,646

 
519,754

 
519,754

 
4/1/2020
 
Parallel Wireless, Inc. Subtotal
 
 
 
 
 
 
 
 
 
7,477,499

 
7,053,157

 
7,053,157

 
 
Wireless Total
 
 
5.3
%
 
 
 
 
 
 
 
$
11,430,948

 
$
10,997,880

 
$
10,997,880

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Grand Total
 
180.0
%
 
 
 
 
 
 
 
$
401,285,457

 
$
379,044,418

 
$
371,955,824

 
 

* As of December 31, 2019, loans with a cost basis of $15.5 million and a fair value of $10.3 million were classified as non-accrual. These loans have been accelerated from their original maturity and are due in their entirety. During the period for which these loans have been on non-accrual status, no interest income has been recognized.

** Indicates assets that the Fund deems “non-qualifying assets.” As of December 31, 2019, 10.2% of the Fund’s total assets represented non-qualifying assets. Under Section 55(a) of the 1940 Act, the Fund is prohibited from acquiring any additional non-qualifying assets unless, at the time of acquisition, certain specified qualifying assets (e.g., securities issued by an “eligible portfolio company,” as defined in Section 2(a)(46)) represent at least 70% of its total assets. As part of this calculation, the numerator consists of the value of the Fund’s investments in all eligible portfolio companies and the denominator consists of total assets less those assets described in Section 55(a)(7) of the 1940 Act.

^ Entity is not domiciled in the United States and does not have its principal place of business in the United States.

(a) The percentage of net assets that each industry group represents is shown with the industry totals (the sum of the percentages does not equal 100% because the percentages are based on net assets as opposed to total loans).

(b) The interest rate is the designated annual interest rate exclusive of any original issue discount, fees or end of term payment.

(c) The end of term payments are contractually due on the maturity date and are in addition to the interest rate shown. End of term payments are the percentage of the final payment divided by the original loan amount and are amortized over the full term of the loan.

As of December 31, 2019, all loans were made to non-affiliates.















See notes to financial statements

46




VENTURE LENDING & LEASING VIII, INC.
Schedule of Investments
As of December 31, 2018

    
Industry
Borrower
 
Percent of Net Assets (a)
 
Collateral
 
Interest Rate
(b)
 
End of Term Payment
(c)
 
Principal
 
Cost
 
Fair Value
 
Maturity Date
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Biotechnology
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Antheia, Inc.
 
 
 
Senior Secured
 
11.5%
 
 
 
$
1,485,403

 
$
1,376,139

 
$
1,376,139

 
12/1/2022
 
Orpheus Therapeutics, Inc.
 
 
 
Senior Secured
 
18.0%
 
 
 
178,510

 
174,288

 

 
*
 
Phylagen, Inc.
 
 
 
Senior Secured
 
12.0%
 
 
 
59,449

 
58,346

 
58,346

 
7/1/2019
 
Phylagen, Inc.
 
 
 
Senior Secured
 
12.0%
 
 
 
122,508

 
121,178

 
121,178

 
3/1/2020
 
Phylagen, Inc. Subtotal
 
 
 
 
 
 
 
 
 
181,957

 
179,524

 
179,524

 
 
Biotechnology Total
 
 
0.7%
 
 
 
 
 
 
 
$
1,845,870

 
$
1,729,951

 
$
1,555,663

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Computers and Storage
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Canary Connect, Inc.
 
 
 
Senior Secured
 
12.8%
 
 
 
$
1,085,881

 
$
861,061

 
$
861,061

 
12/1/2020
 
HyperGrid, Inc.
 
 
 
Senior Secured
 
11.5%
 
 
 
537,952

 
528,364

 
528,364

 
12/1/2019
 
Rigetti & Co., Inc.
 
 
 
Senior Secured
 
9.0%
 
2.8%
 
48,635

 
48,504

 
48,504

 
1/1/2019
 
Rigetti & Co., Inc.
 
 
 
Senior Secured
 
9.0%
 
2.8%
 
1,432,659

 
1,410,884

 
1,410,884

 
1/1/2020
 
Rigetti & Co., Inc. Subtotal
 
 
 
 
 
 
 
 
 
1,481,294

 
1,459,388

 
1,459,388

 
 
Computers and Storage Total
 
 
1.3%
 
 
 
 
 
 
 
$
3,105,127

 
$
2,848,813

 
$
2,848,813

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Enterprise Networking
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
SnapRoute, Inc.
 
 
 
Senior Secured
 
11.0%
 
 
 
$
3,466,659

 
$
3,266,067

 
$
3,266,067

 
11/1/2021
Enterprise Networking Total
 
 
1.5%
 
 
 
 
 
 
 
$
3,466,659

 
$
3,266,067

 
$
3,266,067

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Internet
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Amino Payments, Inc.
 
 
 
Senior Secured
 
9.0%
 
5.2%
 
$
256,492

 
$
246,252

 
$
246,252

 
3/1/2021
 
Amino Payments, Inc.
 
 
 
Senior Secured
 
9.0%
 
4.4%
 
254,592

 
251,329

 
251,329

 
3/1/2021
 
Amino Payments, Inc.
 
 
 
Senior Secured
 
9.0%
 
4.1%
 
126,953

 
125,274

 
125,274

 
3/1/2021
 
Amino Payments, Inc.
 
 
 
Senior Secured
 
9.0%
 
4.8%
 
625,521

 
597,770

 
597,770

 
12/1/2021
 
Amino Payments, Inc. Subtotal
 
 
 
 
 
 
 
 
 
1,263,558

 
1,220,625

 
1,220,625

 
 
 
Apartment List, Inc.
 
 
 
Senior Secured
 
11.0%
 
 
 
506,854

 
497,685

 
497,685

 
11/1/2019
 
Bitfinder, Inc.
 
 
 
Senior Secured
 
10.5%
 
 
 
360,053

 
351,451

 
351,451

 
9/1/2020
 
Bombfell, Inc.
 
 
 
Senior Secured
 
11.0%
 
 
 
465,802

 
460,263

 
460,263

 
4/1/2021
 
Bombfell, Inc.
 
 
 
Senior Secured
 
11.0%
 
 
 
421,445

 
405,621

 
405,621

 
1/1/2021
 
Bombfell, Inc. Subtotal
 
 
 
 
 
 
 
 
 
887,247

 
865,884

 
865,884

 
 
 
CapLinked, Inc.
 
 
 
Senior Secured
 
12.8%
 
 
 
9,565

 
9,550

 
9,550

 
1/1/2019
 
Clearsurance, Inc.
 
 
 
Senior Secured
 
10.0%
 
 
 
902,861

 
863,204

 
863,204

 
3/1/2021
 
Clearsurance, Inc.
 
 
 
Senior Secured
 
10.5%
 
 
 
991,088

 
972,512

 
972,512

 
9/1/2021
 
Clearsurance, Inc. Subtotal
 
 
 
 
 
 
 
 
 
1,893,949

 
1,835,716

 
1,835,716

 
 
 
Daily Muse, Inc.
 
 
 
Senior Secured
 
11.0%
 
 
 
2,969,554

 
2,834,169

 
2,834,169

 
12/1/2021
 
Daily Muse, Inc.
 
 
 
Senior Secured
 
11.0%
 
 
 
2,970,137

 
2,926,846

 
2,926,846

 
12/1/2021
 
Daily Muse, Inc. Subtotal
 
 
 
 
 
 
 
 
 
5,939,691

 
5,761,015

 
5,761,015

 
 
 
Darby Smart, Inc.
 
 
 
Senior Secured
 
12.0%
 
 
 
1,409,885

 
1,358,924

 
1,358,924

 
2/1/2021
 
DreamCloud Holdings, LLC
 
 
 
Senior Secured
 
11.8%
 
 
 
471,111

 
438,773

 
438,773

 
6/1/2020
 
DreamCloud Holdings, LLC
 
 
 
Senior Secured
 
11.8%
 
 
 
172,846

 
163,907

 
163,907

 
8/1/2020
 
DreamCloud Holdings, LLC
 
 
 
Senior Secured
 
11.5%
 
 
 
2,531,906

 
2,334,083

 
2,334,083

 
1/1/2021
 
DreamCloud Holdings, LLC
 
 
 
Senior Secured
 
12.0%
 
 
 
4,948,333

 
4,232,618

 
4,232,618

 
12/1/2021
 
DreamCloud Holdings, LLC Subtotal
 
 
 
 
 
 
 
 
 
8,124,196

 
7,169,381

 
7,169,381

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

47



Industry
Borrower
 
Percent of Net Assets (a)
 
Collateral
 
Interest Rate
(b)
 
End of Term Payment
(c)
 
Principal
 
Cost
 
Fair Value
 
Maturity Date
 
Figure 1, Inc.** ^
 
 
 
Senior Secured
 
10.5%
 
 
 
990,613

 
901,337

 
901,337

 
6/1/2021
 
Figure 1, Inc.** ^
 
 
 
Senior Secured
 
10.5%
 
 
 
991,171

 
968,299

 
968,299

 
12/1/2021
 
Figure 1, Inc.** ^ Subtotal
 
 
 
 
 
 
 
 
 
1,981,784

 
1,869,636

 
1,869,636

 
 
 
FLYR, Inc.
 
 
 
Senior Secured
 
11.5%
 
 
 
1,485,061

 
1,335,150

 
1,335,150

 
9/1/2021
 
FLYR, Inc.
 
 
 
Senior Secured
 
11.8%
 
 
 
2,475,512

 
2,409,562

 
2,409,562

 
1/1/2022
 
FLYR, Inc. Subtotal
 
 
 
 
 
 
 
 
 
3,960,573

 
3,744,712

 
3,744,712

 
 
 
Honk Technologies, Inc.
 
 
 
Senior Secured
 
11.5%
 
 
 
645,595

 
633,385

 
633,385

 
12/1/2019
 
Honk Technologies, Inc.
 
 
 
Senior Secured
 
11.5%
 
 
 
595,641

 
589,925

 
589,925

 
5/1/2020
 
Honk Technologies, Inc. Subtotal
 
 
 
 
 
 
 
 
 
1,241,236

 
1,223,310

 
1,223,310

 
 
 
iZENEtech, Inc.** ^
 
 
 
Senior Secured
 
11.0%
 
 
 
4,139,342

 
3,934,544

 
3,934,544

 
1/1/2021
 
iZENEtech, Inc.** ^
 
 
 
Senior Secured
 
11.0%
 
 
 
4,859,809

 
4,768,966

 
4,768,966

 
6/1/2021
 
iZENEtech, Inc.** ^ Subtotal
 
 
 
 
 
 
 
 
 
8,999,151

 
8,703,510

 
8,703,510

 
 
 
Lenddo International** ^
 
 
 
Senior Secured
 
12.0%
 
 
 
1,688,859

 
1,590,138

 
1,590,138

 
1/1/2021
 
Linden Research Inc.
 
 
 
Senior Secured
 
11.0%
 
 
 
5,940,274

 
5,559,519

 
5,559,519

 
9/1/2021
 
Linden Research Inc.
 
 
 
Senior Secured
 
11.0%
 
 
 
986,861

 
961,345

 
961,345

 
3/1/2022
 
Linden Research Inc. Subtotal
 
 
 
 
 
 
 
 
 
6,927,135

 
6,520,864

 
6,520,864

 
 
 
MassDrop, Inc.
 
 
 
Senior Secured
 
10.5%
 
 
 
7,429,293

 
6,804,769

 
6,804,769

 
1/1/2022
 
Osix Corporation
 
 
 
Senior Secured
 
12.3%
 
 
 
98,605

 
80,379

 
80,379

 
12/1/2021
 
Playstudios, Inc.
 
 
 
Senior Secured
 
10.0%
 
 
 
963,077

 
936,909

 
936,909

 
3/1/2021
 
Protecht, Inc.
 
 
 
Senior Secured
 
12.5%
 
 
 
988,684

 
926,867

 
926,867

 
12/1/2021
 
Radius Intelligence, Inc.
 
 
 
Senior Secured
 
8.0%
 
9.2%
 
7,421,159

 
7,126,941

 
6,151,429

 
10/1/2021
 
Relay Network, LLC
 
 
 
Senior Secured
 
8.0%
 
4.4%
 
732,924

 
711,759

 
711,759

 
9/1/2020
 
Relay Network, LLC
 
 
 
Senior Secured
 
8.0%
 
4.4%
 
733,049

 
724,776

 
724,776

 
9/1/2020
 
Relay Network, LLC Subtotal
 
 
 
 
 
 
 
 
 
1,465,973

 
1,436,535

 
1,436,535

 
 
 
Spot.IM, Ltd.** ^
 
 
 
Senior Secured
 
12.5%
 
 
 
216,500

 
208,266

 
208,266

 
12/1/2019
 
Spot.IM, Ltd.** ^
 
 
 
Senior Secured
 
12.5%
 
 
 
149,520

 
146,386

 
146,386

 
5/1/2020
 
Spot.IM, Ltd.** ^
 
 
 
Senior Secured
 
11.8%
 
 
 
149,016

 
142,655

 
142,655

 
5/1/2020
 
Spot.IM, Ltd.** ^ Subtotal
 
 
 
 
 
 
 
 
 
515,036

 
497,307

 
497,307

 
 
 
SpotOn Computing, Inc.
 
 
 
Senior Secured
 
11.5%
 
 
 
1,483,837

 
1,418,912

 
1,418,912

 
10/1/2020
 
SpotOn Computing, Inc.
 
 
 
Senior Secured
 
12.0%
 
 
 
494,584

 
483,541

 
483,541

 
3/1/2021
 
SpotOn Computing, Inc. Subtotal
 
 
 
 
 
 
 
 
 
1,978,421

 
1,902,453

 
1,902,453

 
 
 
Stay alfred, Inc.
 
 
 
Senior Secured
 
11.8%
 
 
 
6,925,151

 
6,640,584

 
6,640,584

 
12/1/2021
 
Super Home, Inc.
 
 
 
Senior Secured
 
11.3%
 
 
 
27,989

 
27,681

 
27,681

 
3/1/2019
 
Tango Card, Inc.
 
 
 
Senior Secured
 
12.0%
 
 
 
1,175,591

 
1,158,103

 
1,158,103

 
11/1/2020
 
Thrive Market, Inc.
 
 
 
Senior Secured
 
12.0%
 
 
 
1,514,559

 
1,493,078

 
1,493,078

 
9/1/2019
 
Thrive Market, Inc.
 
 
 
Senior Secured
 
12.0%
 
 
 
757,323

 
753,587

 
753,587

 
9/1/2019
 
Thrive Market, Inc.
 
 
 
Senior Secured
 
12.3%
 
 
 
7,420,042

 
7,134,488

 
7,134,488

 
4/1/2022
 
Thrive Market, Inc. Subtotal
 
 
 
 
 
 
 
 
 
9,691,924

 
9,381,153

 
9,381,153

 
 
 
Traackr, Inc.
 
 
 
Senior Secured
 
11.8%
 
 
 
18,941

 
18,860

 
18,860

 
1/1/2019
 
Traackr, Inc.
 
 
 
Senior Secured
 
11.8%
 
 
 
37,334

 
37,179

 
37,179

 
4/1/2019
 
Traackr, Inc. Subtotal
 
 
 
 
 
 
 
 
 
56,275

 
56,039

 
56,039

 
 
Internet Total
 
 
36.4%
 
 
 
 
 
 
 
$
83,930,914

 
$
79,698,121

 
$
78,722,609

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Medical Devices
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Anutra Medical, Inc.
 
 
 
Senior Secured
 
10.0%
 
 
 
$
163,765

 
$
159,169

 
$
159,169

 
12/1/2019
 
CytoVale, Inc.
 
 
 
Senior Secured
 
12.0%
 
 
 
618,631

 
566,206

 
566,206

 
3/1/2022
 
Medrobotics Corporation, Inc.
 
 
 
Senior Secured
 
12.0%
 
 
 
9,893,475

 
8,990,046

 
8,990,046

 
6/1/2021
 
NeuMoDx Molecular, Inc.
 
 
 
Senior Secured
 
12.0%
 
 
 
3,463,954

 
3,168,810

 
3,168,810

 
4/1/2023
 
RadiAction Ltd.** ^
 
 
 
Senior Secured
 
11.5%
 
 
 
990,042

 
926,176

 
926,176

 
10/1/2021
 
Renovia, Inc.
 
 
 
Senior Secured
 
11.0%
 
 
 
626,245

 
605,734

 
605,734

 
6/1/2020
 
Renovia, Inc.
 
 
 
Senior Secured
 
11.0%
 
 
 
782,699

 
773,934

 
773,934

 
11/1/2020
 
Renovia, Inc.
 
 
 
Senior Secured
 
10.5%
 
 
 
1,981,091

 
1,791,904

 
1,791,904

 
6/1/2021
 
Renovia, Inc.
 
 
 
Senior Secured
 
10.5%
 
 
 
7,871,667

 
7,706,905

 
7,706,905

 
3/1/2022
 
Renovia, Inc. Subtotal
 
 
 
 
 
 
 
 
 
11,261,702

 
10,878,477

 
10,878,477

 
 
Medical Devices Total
 
 
11.4%
 
 
 
 
 
 
 
$
26,391,569

 
$
24,688,884

 
$
24,688,884

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

48



Industry
Borrower
 
Percent of Net Assets (a)
 
Collateral
 
Interest Rate
(b)
 
End of Term Payment
(c)
 
Principal
 
Cost
 
Fair Value
 
Maturity Date
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Other Healthcare
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
4G Clinical, LLC
 
 
 
Senior Secured
 
11.0%
 
 
 
$
658,240

 
$
638,103

 
$
638,103

 
7/1/2020
 
Call9, Inc.
 
 
 
Senior Secured
 
9.0%
 
3.6%
 
848,846

 
769,574

 
769,574

 
1/1/2021
 
Call9, Inc.
 
 
 
Senior Secured
 
9.0%
 
3.7%
 
424,710

 
418,710

 
418,710

 
1/1/2021
 
Call9, Inc.
 
 
 
Senior Secured
 
9.0%
 
3.7%
 
424,800

 
418,435

 
418,435

 
1/1/2021
 
Call9, Inc.
 
 
 
Senior Secured
 
9.0%
 
3.7%
 
439,294

 
431,092

 
431,092

 
2/1/2021
 
Call9, Inc.
 
 
 
Senior Secured
 
9.0%
 
3.7%
 
453,372

 
445,006

 
445,006

 
3/1/2021
 
Call9, Inc. Subtotal
 
 
 
 
 
 
 
 
 
2,591,022

 
2,482,817

 
2,482,817

 
 
 
Caredox, Inc.
 
 
 
Senior Secured
 
11.3%
 
 
 
28,241

 
28,158

 
28,158

 
1/1/2019
 
Caredox, Inc.
 
 
 
Senior Secured
 
11.8%
 
 
 
1,237,487

 
1,168,686

 
1,168,686

 
10/1/2021
 
Caredox, Inc. Subtotal
 
 
 
 
 
 
 
 
 
1,265,728

 
1,196,844

 
1,196,844

 
 
 
Clover Health Investment Corporation
 
 
 
Senior Secured
 
11.3%
 
 
 
9,894,125

 
9,894,125

 
9,894,125

 
10/1/2022
 
Clover Health Investment Corporation
 
 
 
Senior Secured
 
11.0%
 
 
 
18,462,733

 
18,462,733

 
18,462,733

 
3/1/2022
 
Clover Health Investment Corporation Subtotal
 
 
 
 
 
 
 
 
 
28,356,858

 
28,356,858

 
28,356,858

 
 
 
Discover Echo, Inc.
 
 
 
Senior Secured
 
11.0%
 
 
 
610,296

 
571,549

 
571,549

 
12/1/2020
 
Driver, Inc.
 
 
 
Senior Secured
 
18.0%
 
 
 
200,000

 
200,000

 
34,907

 
*
 
Emerald Cloud Lab, Inc.
 
 
 
Senior Secured
 
11.8%
 
 
 
2,398,539

 
2,119,373

 
2,119,373

 
12/1/2021
 
Hello Doctor, Ltd.** ^
 
 
 
Senior Secured
 
12.5%
 
 
 
19,830

 
19,492

 
19,492

 
3/1/2019
 
Hello Heart Inc.
 
 
 
Senior Secured
 
10.8%
 
 
 
990,310

 
936,256

 
936,256

 
7/1/2021
 
Hello Heart Inc.
 
 
 
Senior Secured
 
10.8%
 
 
 
1,486,442

 
1,454,661

 
1,454,661

 
10/1/2021
 
Hello Heart Inc. Subtotal
 
 
 
 
 
 
 
 
 
2,476,752

 
2,390,917

 
2,390,917

 
 
 
Lean Labs, Inc.
 
 
 
Senior Secured
 
12.0%
 
 
 
43,111

 
42,446

 
42,446

 
4/1/2019
 
MD Revolution, Inc.
 
 
 
Senior Secured
 
12.5%
 
 
 
656,438

 
641,456

 
641,456

 
3/1/2020
 
mPharma Data, Inc.** ^
 
 
 
Senior Secured
 
10.0%
 
 
 
269,554

 
260,665

 
260,665

 
11/1/2020
 
mPharma Data, Inc.** ^
 
 
 
Senior Secured
 
10.0%
 
 
 
311,364

 
307,587

 
307,587

 
3/1/2021
 
mPharma Data, Inc.** ^
 
 
 
Senior Secured
 
10.0%
 
 
 
2,973,381

 
2,877,982

 
2,877,982

 
11/1/2021
 
mPharma Data, Inc.** ^ Subtotal
 
 
 
 
 
 
 
 
 
3,554,299

 
3,446,234

 
3,446,234

 
 
 
Myolex, Inc.
 
 
 
Senior Secured
 
18.0%
 
 
 
762,531

 
726,537

 
238,967

 
*
 
Naked Biome, Inc.
 
 
 
Senior Secured
 
12.0%
 
 
 
903,219

 
866,120

 
866,120

 
3/1/2021
 
Project Healthy Living, Inc.
 
 
 
Senior Secured
 
11.0%
 
 
 
268,417

 
262,570

 
262,570

 
9/1/2019
 
Robin Care, Inc.
 
 
 
Senior Secured
 
11.5%
 
 
 
989,483

 
948,592

 
948,592

 
7/1/2021
 
Sparta Software Corporation
 
 
 
Senior Secured
 
10.0%
 
2.5%
 
112,015

 
108,064

 
108,064

 
6/1/2020
 
Therapydia, Inc.
 
 
 
Senior Secured
 
11.5%
 
 
 
296,988

 
266,404

 
266,404

 
8/1/2022
 
Therapydia, Inc.
 
 
 
Senior Secured
 
11.5%
 
 
 
297,029

 
287,234

 
287,234

 
12/1/2022
 
Therapydia, Inc. Subtotal
 
 
 
 
 
 
 
 
 
594,017

 
553,638

 
553,638

 
 
 
Trio Health Advisory Group, Inc.
 
 
 
Senior Secured
 
11.5%
 
 
 
75,208

 
74,744

 
74,744

 
2/1/2019
 
Wellist, Inc.
 
 
 
Senior Secured
 
12.3%
 
 
 
22,599

 
22,260

 
22,260

 
3/1/2019
 
Wellist, Inc.
 
 
 
Senior Secured
 
12.3%
 
 
 
86,406

 
85,410

 
85,410

 
12/1/2019
 
Wellist, Inc. Subtotal
 
 
 
 
 
 
 
 
 
109,005

 
107,670

 
107,670

 
 
 
Zillion Group, Inc.
 
 
 
Senior Secured
 
12.0%
 
 
 
660,404

 
635,016

 
481,706

 
7/1/2020
 
Zillion Group, Inc.
 
 
 
Senior Secured
 
12.0%
 
 
 
814,451

 
802,169

 
608,503

 
12/1/2020
 
Zillion Group, Inc. Subtotal
 
 
 
 
 
 
 
 
 
1,474,855

 
1,437,185

 
1,090,209

 
 
Other Healthcare Total
 
 
21.3%
 
 
 
 
 
 
 
$
48,119,863

 
$
47,191,209

 
$
46,191,570

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Other Technology
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
8i Corporation
 
 
 
Senior Secured
 
11.8%
 
 
 
$
2,251,497

 
$
2,187,461

 
$
2,187,461

 
12/1/2020
 
Abiquo Group, Inc.** ^
 
 
 
Senior Secured
 
12.0%
 
 
 
421,970

 
410,047

 
410,047

 
1/1/2021
 
Aclima, Inc.
 
 
 
Senior Secured
 
11.0%
 
0.5%
 
2,109,845

 
1,987,764

 
1,987,764

 
7/1/2021
 
BloomLife, Inc.
 
 
 
Senior Secured
 
12.0%
 
 
 
169,302

 
163,710

 
163,710

 
4/1/2020
 
Brightside Benefit, Inc.
 
 
 
Senior Secured
 
12.1%
 
 
 
742,419

 
676,970

 
676,970

 
9/1/2022
 
CommunityCo, LLC
 
 
 
Senior Secured
 
12.0%
 
 
 
33,846

 
33,266

 
33,266

 
3/1/2019
 
Consumer Physics, Inc.** ^
 
 
 
Senior Secured
 
11.0%
 
 
 
1,089,914

 
1,062,742

 
908,852

 
8/1/2019
 
Dragonfly Vert, Inc.
 
 
 
Senior Secured
 
12.5%
 
 
 
984,722

 
928,746

 
928,746

 
12/1/2021

49



Industry
Borrower
 
Percent of Net Assets (a)
 
Collateral
 
Interest Rate
(b)
 
End of Term Payment
(c)
 
Principal
 
Cost
 
Fair Value
 
Maturity Date
 
Eguana Technologies, Inc.** ^
 
 
 
Senior Secured
 
12.5%
 
 
 
1,222,461

 
1,127,469

 
1,127,469

 
12/1/2020
 
Eguana Technologies, Inc.** ^
 
 
 
Senior Secured
 
12.5%
 
 
 
741,911

 
725,764

 
725,764

 
8/1/2021
 
Eguana Technologies, Inc.** ^
 
 
 
Senior Secured
 
12.5%
 
 
 
742,103

 
721,933

 
721,933

 
10/1/2021
 
Eguana Technologies, Inc.** ^ Subtotal
 
 
 
 
 
 
 
 
 
2,706,475

 
2,575,166

 
2,575,166

 
 
 
Ensyn Corporation
 
 
 
Senior Secured
 
12.3%
 
 
 
573,230

 
565,857

 
565,857

 
6/1/2019
 
Ensyn Corporation
 
 
 
Senior Secured
 
12.3%
 
 
 
1,024,930

 
1,017,212

 
1,017,212

 
11/1/2019
 
Ensyn Corporation Subtotal
 
 
 
 
 
 
 
 
 
1,598,160

 
1,583,069

 
1,583,069

 
 
 
ESM Group International, Inc.
 
 
 
Senior Secured
 
12.0%
 
 
 
494,894

 
441,937

 
441,937

 
12/1/2021
 
ETN Media, Inc.
 
 
 
Senior Secured
 
11.5%
 
 
 
211,603

 
206,043

 
173,058

 
7/1/2020
 
ETN Media, Inc.
 
 
 
Senior Secured
 
11.5%
 
 
 
211,748

 
209,434

 
175,906

 
7/1/2020
 
ETN Media, Inc. Subtotal
 
 
 
 
 
 
 
 
 
423,351

 
415,477

 
348,964

 
 
 
Fitplan, Inc.** ^
 
 
 
Senior Secured
 
12.5%
 
 
 
742,195

 
689,277

 
689,277

 
3/1/2022
 
Flo Water, Inc.
 
 
 
Senior Secured
 
11.5%
 
 
 
205,832

 
195,612

 
195,612

 
5/1/2020
 
Flo Water, Inc.
 
 
 
Senior Secured
 
11.4%
 
 
 
885,620

 
848,315

 
848,315

 
5/1/2021
 
Flo Water, Inc. Subtotal
 
 
 
 
 
 
 
 
 
1,091,452

 
1,043,927

 
1,043,927

 
 
 
Gap Year Global, Inc.
 
 
 
Senior Secured
 
18.0%
 
 
 
90,768

 
86,359

 

 
*
 
Greats Brand, Inc.
 
 
 
Senior Secured
 
11.0%
 
 
 
63,960

 
61,945

 
61,945

 
7/1/2019
 
Greats Brand, Inc.
 
 
 
Senior Secured
 
11.0%
 
 
 
107,205

 
106,216

 
106,216

 
12/1/2019
 
Greats Brand, Inc.
 
 
 
Senior Secured
 
10.0%
 
 
 
1,442,360

 
1,384,267

 
1,384,267

 
5/1/2021
 
Greats Brand, Inc.
 
 
 
Senior Secured
 
10.0%
 
 
 
1,486,238

 
1,463,690

 
1,463,690

 
8/1/2021
 
Greats Brand, Inc. Subtotal
 
 
 
 
 
 
 
 
 
3,099,763

 
3,016,118

 
3,016,118

 
 
 
Heartwork, Inc.
 
 
 
Senior Secured
 
11.0%
 
 
 
465,983

 
436,474

 
281,506

 
9/1/2020
 
Hint, Inc.
 
 
 
Senior Secured
 
11.0%
 
 
 
2,255,803

 
2,130,280

 
2,130,280

 
3/1/2021
 
Hint, Inc.
 
 
 
Senior Secured
 
11.0%
 
 
 
2,474,151

 
2,474,151

 
2,474,151

 
7/1/2021
 
Hint, Inc.
 
 
 
Senior Secured
 
11.0%
 
 
 
2,475,778

 
2,217,362

 
2,217,362

 
8/1/2021
 
Hint, Inc. Subtotal
 
 
 
 
 
 
 
 
 
7,205,732

 
6,821,793

 
6,821,793

 
 
 
Impossible Aerospace Corporation
 
 
 
Senior Secured
 
12.0%
 
 
 
345,963

 
334,448

 
334,448

 
8/1/2020
 
Impossible Aerospace Corporation
 
 
 
Senior Secured
 
12.3%
 
 
 
211,129

 
207,899

 
207,899

 
1/1/2021
 
Impossible Aerospace Corporation Subtotal
 
 
 
 
 
 
 
 
 
557,092

 
542,347

 
542,347

 
 
 
June Life, Inc.
 
 
 
Senior Secured
 
11.8%
 
 
 
611,965

 
597,587

 
597,587

 
3/1/2020
 
June Life, Inc.
 
 
 
Senior Secured
 
11.8%
 
 
 
612,139

 
605,287

 
605,287

 
3/1/2020
 
June Life, Inc. Subtotal
 
 
 
 
 
 
 
 
 
1,224,104

 
1,202,874

 
1,202,874

 
 
 
Kobo360 Inc.** ^
 
 
 
Senior Secured
 
11.3%
 
 
 
247,553

 
235,597

 
235,597

 
6/1/2020
 
Kobo360 Inc.** ^
 
 
 
Senior Secured
 
11.3%
 
 
 
247,607

 
247,607

 
247,607

 
9/1/2020
 
Kobo360 Inc.** ^ Subtotal
 
 
 
 
 
 
 
 
 
495,160

 
483,204

 
483,204

 
 
 
Kogniz, Inc.
 
 
 
Senior Secured
 
12.8%
 
 
 
370,935

 
274,751

 
274,751

 
9/1/2021
 
LanzaTech New Zealand Ltd.
 
 
 
Senior Secured
 
13.0%
 
 
 
1,669,064

 
1,588,287

 
1,588,287

 
3/1/2020
 
LanzaTech New Zealand Ltd.
 
 
 
Senior Secured
 
13.0%
 
 
 
2,264,030

 
2,235,397

 
2,235,397

 
9/1/2020
 
LanzaTech New Zealand Ltd.
 
 
 
Senior Secured
 
13.3%
 
 
 
2,257,809

 
2,233,790

 
2,233,790

 
3/1/2021
 
LanzaTech New Zealand Ltd. Subtotal
 
 
 
 
 
 
 
 
 
6,190,903

 
6,057,474

 
6,057,474

 
 
 
Loftium, Inc.
 
 
 
Senior Secured
 
11.5%
 
 
 
587,828

 
554,806

 
554,806

 
11/1/2020
 
Loftium, Inc.
 
 
 
Senior Secured
 
12.3%
 
 
 
247,422

 
242,046

 
242,046

 
8/1/2021
 
Loftium, Inc. Subtotal
 
 
 
 
 
 
 
 
 
835,250

 
796,852

 
796,852

 
 
 
Make School, Inc.
 
 
 
Senior Secured
 
11.3%
 
 
 
990,265

 
937,821

 
937,821

 
8/1/2021
 
Neuehouse, LLC
 
 
 
Senior Secured
 
12.0%
 
 
 
1,750,000

 
1,323,215

 
1,323,215

 
*
 
Nevada Nanotech Systems, Inc.
 
 
 
Senior Secured
 
12.0%
 
 
 
989,590

 
906,963

 
906,963

 
6/1/2021
 
North American Robotics Corporation
 
 
 
Senior Secured
 
11.0%
 
 
 
148,588

 
138,385

 
138,385

 
5/1/2020
 
North American Robotics Corporation
 
 
 
Senior Secured
 
11.0%
 
 
 
172,473

 
170,186

 
170,186

 
8/1/2020
 
North American Robotics Corporation Subtotal
 
 
 
 
 
 
 
 
 
321,061

 
308,571

 
308,571

 
 
 
Northern Quinoa Production Corporation** ^
 
 
 
Senior Secured
 
12.0%
 
 
 
7,911,533

 
7,595,867

 
7,595,867

 
11/1/2021
 
Noteleaf, Inc.
 
 
 
Senior Secured
 
11.0%
 
 
 
1,081,842

 
1,062,771

 
1,062,771

 
9/1/2020

50



Industry
Borrower
 
Percent of Net Assets (a)
 
Collateral
 
Interest Rate
(b)
 
End of Term Payment
(c)
 
Principal
 
Cost
 
Fair Value
 
Maturity Date
 
Opya, Inc.
 
 
 
Senior Secured
 
12.0%
 
 
 
429,764

 
407,656

 
407,656

 
4/1/2021
 
PDQ Enterprises LLC**
 
 
 
Senior Secured
 
11.0%
 
 
 
2,814,193

 
2,770,652

 
2,770,652

 
2/1/2021
 
Percepto Robotics, Ltd.** ^
 
 
 
Senior Secured
 
12.5%
 
 
 
519,650

 
500,525

 
500,525

 
8/1/2020
 
Percepto Robotics, Ltd.** ^
 
 
 
Senior Secured
 
12.5%
 
 
 
244,467

 
240,262

 
240,262

 
12/1/2020
 
Percepto Robotics, Ltd.** ^ Subtotal
 
 
 
 
 
 
 
 
 
764,117

 
740,787

 
740,787

 
 
 
PLAE, Inc.
 
 
 
Senior Secured
 
9.0%
 
3.2%
 
1,135,076

 
1,110,298

 
1,110,298

 
12/1/2020
 
Planet Labs, Inc.
 
 
 
Senior Secured
 
11.0%
 
 
 
12,362,729

 
11,937,236

 
11,937,236

 
11/1/2021
 
Planet Labs, Inc.
 
 
 
Senior Secured
 
11.0%
 
 
 
12,375,336

 
12,375,336

 
12,375,336

 
8/1/2022
 
Planet Labs, Inc. Subtotal
 
 
 
 
 
 
 
 
 
24,738,065

 
24,312,572

 
24,312,572

 
 
 
Plenty Unlimited, Inc.
 
 
 
Senior Secured
 
9.0%
 
11.7%
 
1,120,932

 
1,087,343

 
1,087,343

 
1/1/2021
 
Plenty Unlimited, Inc.
 
 
 
Senior Secured
 
9.0%
 
9.4%
 
1,166,482

 
1,153,018

 
1,153,018

 
3/1/2021
 
Plenty Unlimited, Inc.
 
 
 
Senior Secured
 
9.0%
 
11.7%
 
3,040,235

 
2,925,880

 
2,925,880

 
9/1/2021
 
Plenty Unlimited, Inc. Subtotal
 
 
 
 
 
 
 
 
 
5,327,649

 
5,166,241

 
5,166,241

 
 
 
Plethora, Inc.
 
 
 
Senior Secured
 
9.0%
 
4.3%
 
225,218

 
223,515

 
223,515

 
3/1/2019
 
Plethora, Inc.
 
 
 
Senior Secured
 
9.0%
 
4.3%
 
149,605

 
149,118

 
149,118

 
3/1/2019
 
Plethora, Inc.
 
 
 
Senior Secured
 
9.0%
 
4.4%
 
888,735

 
851,940

 
851,940

 
2/1/2021
 
Plethora, Inc.
 
 
 
Senior Secured
 
9.0%
 
5.1%
 
910,868

 
897,450

 
897,450

 
8/1/2021
 
Plethora, Inc.
 
 
 
Senior Secured
 
9.5%
 
4.3%
 
500,151

 
462,878

 
462,878

 
6/1/2021
 
Plethora, Inc.
 
 
 
Senior Secured
 
9.5%
 
4.3%
 
248,860

 
244,096

 
244,096

 
9/1/2021
 
Plethora, Inc.
 
 
 
Senior Secured
 
9.5%
 
4.3%
 
496,863

 
486,908

 
486,908

 
10/1/2021
 
Plethora, Inc. Subtotal
 
 
 
 
 
 
 
 
 
3,420,300

 
3,315,905

 
3,315,905

 
 
 
Rosco & Benedetto Co, Inc.
 
 
 
Senior Secured
 
11.0%
 
 
 
122,323

 
119,832

 
119,832

 
9/1/2019
 
Scoot Networks, Inc.
 
 
 
Senior Secured
 
12.8%
 
 
 
879,262

 
818,310

 
818,310

 
3/1/2021
 
Showroom, Inc.
 
 
 
Senior Secured
 
12.0%
 
 
 
1,068,037

 
1,003,835

 
1,003,835

 
3/1/2020
 
SkyKick, Inc.
 
 
 
Senior Secured
 
10.5%
 
 
 
937,688

 
909,812

 
909,812

 
6/1/2020
 
SkyKick, Inc.
 
 
 
Senior Secured
 
10.5%
 
 
 
375,566

 
370,957

 
370,957

 
10/1/2020
 
SkyKick, Inc.
 
 
 
Senior Secured
 
10.5%
 
 
 
391,035

 
385,892

 
385,892

 
11/1/2020
 
SkyKick, Inc.
 
 
 
Senior Secured
 
11.0%
 
 
 
4,952,637

 
4,660,147

 
4,660,147

 
6/1/2022
 
SkyKick, Inc. Subtotal
 
 
 
 
 
 
 
 
 
6,656,926

 
6,326,808

 
6,326,808

 
 
 
Strong Arm Technologies, Inc.
 
 
 
Senior Secured
 
12.0%
 
 
 
1,081,134

 
1,031,438

 
1,031,438

 
5/1/2021
 
TAE Technologies, Inc.
 
 
 
Senior Secured
 
12.5%
 
 
 
9,019,608

 
8,689,345

 
8,689,345

 
3/1/2021
 
TAE Technologies, Inc.
 
 
 
Senior Secured
 
12.5%
 
 
 
2,327,066

 
2,288,844

 
2,288,844

 
4/1/2021
 
TAE Technologies, Inc. Subtotal
 
 
 
 
 
 
 
 
 
11,346,674

 
10,978,189

 
10,978,189

 
 
 
Terramera, Inc.** ^
 
 
 
Senior Secured
 
12.0%
 
 
 
1,718,872

 
1,614,526

 
1,614,526

 
4/1/2021
 
Terramera, Inc.** ^
 
 
 
Senior Secured
 
12.0%
 
 
 
859,628

 
842,573

 
842,573

 
4/1/2021
 
Terramera, Inc.** ^ Subtotal
 
 
 
 
 
 
 
 
 
2,578,500

 
2,457,099

 
2,457,099

 
 
 
Theatro Labs, Inc.
 
 
 
Senior Secured
 
12.0%
 
 
 
1,484,478

 
1,426,311

 
1,426,311

 
8/1/2022
 
UniEnergy Technologies, LLC
 
 
 
Senior Secured
 
12.3%
 
 
 
4,944,241

 
4,641,397

 
4,641,397

 
12/1/2020
 
Virtuix Holdings, Inc.
 
 
 
Senior Secured
 
11.0%
 
 
 
493,447

 
480,680

 
480,680

 
7/1/2020
 
Virtuix Holdings, Inc.
 
 
 
Senior Secured
 
12.3%
 
 
 
247,423

 
239,317

 
239,317

 
4/1/2022
 
Virtuix Holdings, Inc. Subtotal
 
 
 
 
 
 
 
 
 
740,870

 
719,997

 
719,997

 
 
 
Wine Plum, Inc.
 
 
 
Senior Secured
 
11.0%
 
 
 
325,940

 
321,469

 
321,469

 
9/1/2019
 
Wine Plum, Inc.
 
 
 
Senior Secured
 
11.0%
 
 
 
163,078

 
162,089

 
162,089

 
9/1/2019
 
Wine Plum, Inc.
 
 
 
Senior Secured
 
11.0%
 
 
 
163,116

 
161,937

 
161,937

 
9/1/2019
 
Wine Plum, Inc. Subtotal
 
 
 
 
 
 
 
 
 
652,134

 
645,495

 
645,495

 
 
Other Technology Total
 
 
52.5%
 
 
 
 
 
 
 
$
118,623,766

 
$
114,045,835

 
$
113,584,105

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Security
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Axonius, Inc.
 
 
 
Senior Secured
 
12.0%
 
 
 
$
494,882

 
$
470,235

 
$
470,235

 
9/1/2021
 
Karamba Security Ltd.** ^
 
 
 
Senior Secured
 
12.0%
 
 
 
1,483,746

 
1,206,347

 
1,206,347

 
12/1/2021
 
Nok Nok Labs, Inc.
 
 
 
Senior Secured
 
12.5%
 
 
 
524,603

 
470,577

 
470,577

 
12/1/2020
 
Nok Nok Labs, Inc.
 
 
 
Senior Secured
 
12.5%
 
 
 
988,949

 
959,222

 
959,222

 
6/1/2022
 
Nok Nok Labs, Inc. Subtotal
 
 
 
 
 
 
 
 
 
1,513,552

 
1,429,799

 
1,429,799

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

51



Industry
Borrower
 
Percent of Net Assets (a)
 
Collateral
 
Interest Rate
(b)
 
End of Term Payment
(c)
 
Principal
 
Cost
 
Fair Value
 
Maturity Date
 
Safetrust Holdings, Inc.
 
 
 
Senior Secured
 
12.5%
 
 
 
494,508

 
447,173

 
447,173

 
6/1/2021
 
ThinAir Labs, Inc.
 
 
 
Senior Secured
 
18.0%
 
 
 
1,128,607

 
1,105,396

 

 
*
Security Total
 
 
1.6%
 
 
 
 
 
 
 
$
5,115,295

 
$
4,658,950

 
$
3,553,554

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Semiconductors and Equipment
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
ETA Compute, Inc.
 
 
 
Senior Secured
 
10.3%
 
 
 
$
89,662

 
$
88,268

 
$
88,268

 
10/1/2019
 
ETA Compute, Inc.
 
 
 
Senior Secured
 
10.5%
 
 
 
172,132

 
170,545

 
170,545

 
8/1/2020
 
ETA Compute, Inc.
 
 
 
Senior Secured
 
12.0%
 
 
 
1,484,845

 
1,404,604

 
1,404,604

 
11/1/2021
 
ETA Compute, Inc. Subtotal
 
 
 
 
 
 
 
 
 
1,746,639

 
1,663,417

 
1,663,417

 
 
 
Innophase, Inc.
 
 
 
Senior Secured
 
11.8%
 
 
 
6,924,661

 
6,661,554

 
6,661,554

 
6/1/2021
 
Innophase, Inc.
 
 
 
Senior Secured
 
11.8%
 
 
 
2,969,442

 
2,913,473

 
2,913,473

 
6/1/2021
 
Innophase, Inc. Subtotal
 
 
 
 
 
 
 
 
 
9,894,103

 
9,575,027

 
9,575,027

 
 
Semiconductors and Equipment Total
 
 
5.2%
 
 
 
 
 
 
 
$
11,640,742

 
$
11,238,444

 
$
11,238,444

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Software
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Apptimize, Inc.
 
 
 
Senior Secured
 
10.5%
 
 
 
$
55,593

 
$
55,467

 
$
55,467

 
3/1/2019
 
Aptible, Inc.
 
 
 
Senior Secured
 
11.8%
 
 
 
201,258

 
196,606

 
196,606

 
2/1/2021
 
ArborMetrix, Inc.
 
 
 
Senior Secured
 
11.5%
 
 
 
990,207

 
990,207

 
990,207

 
6/1/2022
 
ArborMetrix, Inc.
 
 
 
Senior Secured
 
11.5%
 
 
 
3,463,958

 
3,270,319

 
3,270,319

 
6/1/2022
 
ArborMetrix, Inc. Subtotal
 
 
 
 
 
 
 
 
 
4,454,165

 
4,260,526

 
4,260,526

 
 
 
Blockdaemon, Inc.
 
 
 
Senior Secured
 
11.3%
 
 
 
247,555

 
219,310

 
219,310

 
8/1/2021
 
Bloomboard, Inc.
 
 
 
Senior Secured
 
18.0%
 
 
 
2,017,197

 
2,001,360

 
751,755

 
*
 
BlueCart, Inc.
 
 
 
Senior Secured
 
12.5%
 
 
 
215,283

 
211,017

 
211,017

 
1/1/2020
 
BlueCart, Inc.
 
 
 
Senior Secured
 
12.8%
 
 
 
107,832

 
106,891

 
106,891

 
1/1/2020
 
BlueCart, Inc. Subtotal
 
 
 
 
 
 
 
 
 
323,115

 
317,908

 
317,908

 
 
 
Bricksolve, Inc.
 
 
 
Senior Secured
 
11.0%
 
 
 
990,129

 
957,296

 
957,296

 
1/7/2019
 
Cloudleaf, Inc.
 
 
 
Senior Secured
 
12.0%
 
 
 
989,055

 
939,488

 
939,488

 
9/1/2021
 
DealPath, Inc.
 
 
 
Senior Secured
 
11.0%
 
 
 
1,415,432

 
1,378,302

 
1,378,302

 
5/1/2021
 
DemystData Limited
 
 
 
Senior Secured
 
11.8%
 
 
 
596,110

 
569,404

 
569,404

 
5/1/2020
 
DemystData Limited
 
 
 
Senior Secured
 
11.8%
 
 
 
329,961

 
325,960

 
325,960

 
7/1/2020
 
DemystData Limited Subtotal
 
 
 
 
 
 
 
 
 
926,071

 
895,364

 
895,364

 
 
 
Drift Marketplace, Inc.
 
 
 
Senior Secured
 
11.0%
 
 
 
99,217

 
96,154

 
96,154

 
3/1/2020
 
Drift Marketplace, Inc.
 
 
 
Senior Secured
 
11.0%
 
 
 
132,298

 
131,274

 
131,274

 
3/1/2020
 
Drift Marketplace, Inc.
 
 
 
Senior Secured
 
11.0%
 
 
 
99,469

 
98,666

 
98,666

 
3/1/2020
 
Drift Marketplace, Inc. Subtotal
 
 
 
 
 
 
 
 
 
330,984

 
326,094

 
326,094

 
 
 
Dynamics, Inc.
 
 
 
Senior Secured
 
12.5%
 
 
 
7,420,031

 
6,251,460

 
6,251,460

 
8/1/2021
 
Estify, Inc.
 
 
 
Senior Secured
 
11.5%
 
 
 
842,819

 
825,560

 
825,560

 
11/1/2020
 
Fortress IQ, Inc.
 
 
 
Senior Secured
 
11.3%
 
 
 
725,192

 
691,617

 
691,617

 
11/1/2021
 
Gearbox Software, LLC
 
 
 
Senior Secured
 
11.0%
 
 
 
2,162,999

 
2,044,974

 
2,044,974

 
9/1/2020
 
Gearbox Software, LLC
 
 
 
Senior Secured
 
11.0%
 
 
 
1,566,288

 
1,555,055

 
1,555,055

 
11/1/2020
 
Gearbox Software, LLC
 
 
 
Senior Secured
 
11.0%
 
 
 
2,257,770

 
2,241,559

 
2,241,559

 
3/1/2021
 
Gearbox Software, LLC Subtotal
 
 
 
 
 
 
 
 
 
5,987,057

 
5,841,588

 
5,841,588

 
 
 
GoFormz, Inc.
 
 
 
Senior Secured
 
12.0%
 
 
 
979,727

 
944,903

 
944,903

 
11/1/2020
 
HealthPrize Technologies, LLC
 
 
 
Senior Secured
 
12.0%
 
 
 
107,920

 
105,559

 
105,559

 
12/1/2019
 
Highfive Technologies, Inc.
 
 
 
Senior Secured
 
11.5%
 
 
 
3,956,592

 
3,823,051

 
3,823,051

 
10/1/2021
 
IntelinAir, Inc.
 
 
 
Senior Secured
 
11.5%
 
 
 
27,659

 
26,308

 
26,308

 
6/1/2019
 
IntelinAir, Inc.
 
 
 
Senior Secured
 
11.5%
 
 
 
27,660

 
27,660

 
27,660

 
6/1/2019
 
IntelinAir, Inc. Subtotal
 
 
 
 
 
 
 
 
 
55,319

 
53,968

 
53,968

 
 
 
Interana, Inc.
 
 
 
Senior Secured
 
11.3%
 
 
 
2,970,465

 
2,865,164

 
2,865,164

 
6/1/2021
 
Interset Software, Inc.** ^
 
 
 
Senior Secured
 
9.0%
 
4.5%
 
448,295

 
443,235

 
443,235

 
10/1/2019
 
Interset Software, Inc.** ^
 
 
 
Senior Secured
 
9.0%
 
4.5%
 
551,146

 
538,064

 
538,064

 
10/1/2020
 
Interset Software, Inc.** ^
 
 
 
Senior Secured
 
9.0%
 
4.5%
 
1,980,668

 
1,902,100

 
1,902,100

 
4/1/2022
 
Interset Software, Inc.** ^ Subtotal
 
 
 
 
 
 
 
 
 
2,980,109

 
2,883,399

 
2,883,399

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

52



Industry
Borrower
 
Percent of Net Assets (a)
 
Collateral
 
Interest Rate
(b)
 
End of Term Payment
(c)
 
Principal
 
Cost
 
Fair Value
 
Maturity Date
 
Invoice2Go, Inc.
 
 
 
Senior Secured
 
11.8%
 
 
 
628,200

 
597,161

 
597,161

 
6/1/2020
 
Invoice2Go, Inc.
 
 
 
Senior Secured
 
11.8%
 
 
 
1,503,796

 
1,459,544

 
1,459,544

 
4/1/2021
 
Invoice2Go, Inc.
 
 
 
Senior Secured
 
11.8%
 
 
 
1,504,063

 
1,504,063

 
1,504,063

 
4/1/2021
 
Invoice2Go, Inc.
 
 
 
Senior Secured
 
11.8%
 
 
 
1,289,405

 
1,289,405

 
1,289,405

 
4/1/2021
 
Invoice2Go, Inc.
 
 
 
Senior Secured
 
12.0%
 
 
 
989,788

 
829,825

 
829,825

 
3/1/2022
 
Invoice2Go, Inc. Subtotal
 
 
 
 
 
 
 
 
 
5,915,252

 
5,679,998

 
5,679,998

 
 
 
Ipolipo, Inc.
 
 
 
Senior Secured
 
12.0%
 
 
 
2,453,333

 
2,323,285

 
2,323,285

 
12/1/2021
 
JethroData, Inc.** ^
 
 
 
Senior Secured
 
11.0%
 
 
 
879,868

 
856,877

 
410,091

 
*
 
Libre Wireless Technologies, Inc.
 
 
 
Senior Secured
 
12.0%
 
 
 
232,701

 
225,633

 
225,633

 
1/23/2019
 
Loft, Inc.
 
 
 
Senior Secured
 
11.8%
 
 
 
742,055

 
703,737

 
703,737

 
9/1/2021
 
Metarail, Inc.
 
 
 
Senior Secured
 
12.0%
 
 
 
709,600

 
662,513

 
662,513

 
10/1/2021
 
Metricly, Inc.
 
 
 
Senior Secured
 
12.3%
 
 
 
494,715

 
450,708

 
450,708

 
11/1/2021
 
Mines.io, Inc.** ^
 
 
 
Senior Secured
 
12.0%
 
 
 
330,361

 
316,502

 
316,502

 
7/1/2020
 
Mines.io, Inc.** ^
 
 
 
Senior Secured
 
12.3%
 
 
 
742,179

 
671,683

 
671,683

 
12/1/2021
 
Mines.io, Inc.** ^
 
 
 
Senior Secured
 
12.5%
 
 
 
494,618

 
494,618

 
494,618

 
3/1/2022
 
Mines.io, Inc.** ^ Subtotal
 
 
 
 
 
 
 
 
 
1,567,158

 
1,482,803

 
1,482,803

 
 
 
Mintigo, Inc.** ^
 
 
 
Senior Secured
 
10.0%
 
 
 
298,378

 
289,605

 
289,605

 
4/1/2020
 
Mintigo, Inc.** ^
 
 
 
Senior Secured
 
10.0%
 
 
 
350,038

 
346,830

 
346,830

 
7/1/2020
 
Mintigo, Inc.** ^
 
 
 
Senior Secured
 
10.0%
 
 
 
435,345

 
430,085

 
430,085

 
7/1/2021
 
Mintigo, Inc.** ^ Subtotal
 
 
 
 
 
 
 
 
 
1,083,761

 
1,066,520

 
1,066,520

 
 
 
Oohlala Mobile, Inc.** ^
 
 
 
Senior Secured
 
11.5%
 
 
 
247,581

 
247,581

 
247,581

 
9/1/2021
 
Oohlala Mobile, Inc.** ^
 
 
 
Senior Secured
 
11.5%
 
 
 
469,136

 
469,136

 
469,136

 
9/1/2021
 
Oohlala Mobile, Inc.** ^ Subtotal
 
 
 
 
 
 
 
 
 
716,717

 
716,717

 
716,717

 
 
 
OrderGroove, Inc.
 
 
 
Senior Secured
 
12.0%
 
 
 
2,474,167

 
2,311,992

 
2,311,992

 
6/1/2023
 
PlushCare, Inc.
 
 
 
Senior Secured
 
11.8%
 
 
 
990,205

 
917,120

 
917,120

 
5/1/2022
 
PowerInbox, Inc.** ^
 
 
 
Senior Secured
 
11.0%
 
 
 
234,838

 
230,952

 
230,952

 
6/1/2020
 
PrivCo Holdings, Inc.
 
 
 
Senior Secured
 
12.0%
 
 
 
437,037

 
413,042

 
413,042

 
2/1/2021
 
Resilio, Inc.
 
 
 
Senior Secured
 
12.8%
 
 
 
225,964

 
180,310

 
180,310

 
3/1/2021
 
Resilio, Inc.
 
 
 
Senior Secured
 
12.8%
 
 
 
240,276

 
240,276

 
240,276

 
5/1/2021
 
Resilio, Inc. Subtotal
 
 
 
 
 
 
 
 
 
466,240

 
420,586

 
420,586

 
 
 
Securly, Inc.
 
 
 
Senior Secured
 
11.5%
 
 
 
203,439

 
185,408

 
185,408

 
12/1/2020
 
Securly, Inc.
 
 
 
Senior Secured
 
11.5%
 
 
 
610,513

 
600,223

 
600,223

 
12/1/2020
 
Securly, Inc. Subtotal
 
 
 
 
 
 
 
 
 
813,952

 
785,631

 
785,631

 
 
 
Skillshare, Inc.
 
 
 
Senior Secured
 
12.0%
 
 
 
1,978,640

 
1,862,640

 
1,862,640

 
6/1/2021
 
Stitch Labs, Inc.
 
 
 
Senior Secured
 
12.0%
 
 
 
1,484,916

 
1,346,447

 
1,346,447

 
2/1/2022
 
Swrve, Inc.
 
 
 
Senior Secured
 
11.8%
 
 
 
1,424,472

 
1,381,998

 
1,381,998

 
11/1/2020
 
The/Studio Technologies, Inc.
 
 
 
Senior Secured
 
11.0%
 
 
 
469,694

 
445,810

 
445,810

 
6/1/2020
 
Unmetric, Inc.
 
 
 
Senior Secured
 
11.5%
 
 
 
186,526

 
179,841

 
179,841

 
2/1/2020
 
VenueNext, Inc.
 
 
 
Senior Secured
 
11.0%
 
 
 
891,554

 
853,816

 
853,816

 
5/1/2020
 
VenueNext, Inc.
 
 
 
Senior Secured
 
11.3%
 
 
 
1,484,792

 
1,474,224

 
1,474,224

 
7/1/2021
 
VenueNext, Inc.
 
 
 
Senior Secured
 
11.3%
 
 
 
1,485,153

 
1,456,180

 
1,456,180

 
10/1/2021
 
VenueNext, Inc. Subtotal
 
 
 
 
 
 
 
 
 
3,861,499

 
3,784,220

 
3,784,220

 
 
 
Venuetize, LLC
 
 
 
Senior Secured
 
12.3%
 
 
 
247,416

 
214,060

 
214,060

 
4/1/2022
 
Vuemix, Inc.
 
 
 
Senior Secured
 
11.3%
 
 
 
195,818

 
188,931

 
188,931

 
11/1/2020
 
Workspot, Inc.
 
 
 
Senior Secured
 
12.0%
 
 
 
56,659

 
56,124

 
56,124

 
2/1/2019
 
Workspot, Inc.
 
 
 
Senior Secured
 
12.0%
 
 
 
471,601

 
443,949

 
443,949

 
6/1/2020
 
Workspot, Inc.
 
 
 
Senior Secured
 
12.0%
 
 
 
610,905

 
599,099

 
599,099

 
12/1/2020
 
Workspot, Inc.
 
 
 
Senior Secured
 
12.0%
 
 
 
742,276

 
674,121

 
674,121

 
9/1/2021
 
Workspot, Inc. Subtotal
 
 
 
 
 
 
 
 
 
1,881,441

 
1,773,293

 
1,773,293

 
 
 
Xeeva, Inc.
 
 
 
Senior Secured
 
12.0%
 
 
 
1,599,279

 
1,584,229

 
1,584,229

 
7/1/2020
 
Zoomdata, Inc.
 
 
 
Senior Secured
 
11.0%
 
 
 
3,959,817

 
3,815,227

 
3,815,227

 
10/1/2021
 
Zoomdata, Inc.
 
 
 
Senior Secured
 
11.5%
 
 
 
736,105

 
699,299

 
699,299

 
3/1/2022
 
Zoomdata, Inc. Subtotal
 
 
 
 
 
 
 
 
 
4,695,922

 
4,514,526

 
4,514,526

 
 
Software Total
 
 
32.6%
 
 
 
 
 
 
 
$
76,213,007

 
$
72,358,099

 
$
70,661,708

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

53



Industry
Borrower
 
Percent of Net Assets (a)
 
Collateral
 
Interest Rate
(b)
 
End of Term Payment
(c)
 
Principal
 
Cost
 
Fair Value
 
Maturity Date
Technology Services
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
AirHelp, Inc.
 
 
 
Senior Secured
 
10.0%
 
 
 
$
739,708

 
$
719,727

 
$
719,727

 
5/1/2020
 
AirHelp, Inc.
 
 
 
Senior Secured
 
10.0%
 
 
 
410,079

 
405,975

 
405,975

 
7/1/2020
 
AirHelp, Inc.
 
 
 
Senior Secured
 
10.0%
 
 
 
469,819

 
464,081

 
464,081

 
10/1/2020
 
AirHelp, Inc. Subtotal
 
 
 
 
 
 
 
 
 
1,619,606

 
1,589,783

 
1,589,783

 
 
 
Akademos, Inc.
 
 
 
Junior Secured
 
13.5%
 
1.5%
 
704,351

 
638,122

 
638,122

 
8/1/2020
 
Blazent, Inc.
 
 
 
Senior Secured
 
12.0%
 
 
 
2,213,823

 
2,053,644

 
1,787,994

 
*
 
Blue Technologies Limited** ^
 
 
 
Senior Secured
 
11.0%
 
 
 
674,934

 
660,668

 
660,668

 
4/1/2020
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Callisto Media, Inc.
 
 
 
Senior Secured
 
10.0%
 
 
 
2,478,096

 
2,448,577

 
2,448,577

 
6/1/2020
 
Callisto Media, Inc.
 
 
 
Senior Secured
 
10.0%
 
 
 
991,300

 
983,910

 
983,910

 
9/1/2020
 
Callisto Media, Inc.
 
 
 
Senior Secured
 
10.0%
 
 
 
991,359

 
982,309

 
982,309

 
12/1/2020
 
Callisto Media, Inc.
 
 
 
Senior Secured
 
10.0%
 
 
 
991,416

 
980,731

 
980,731

 
3/1/2021
 
Callisto Media, Inc.
 
 
 
Senior Secured
 
10.0%
 
 
 
2,973,925

 
2,755,865

 
2,755,865

 
12/1/2021
 
Callisto Media, Inc.
 
 
 
Senior Secured
 
10.0%
 
 
 
2,974,561

 
2,916,595

 
2,916,595

 
3/1/2022
 
Callisto Media, Inc.
 
 
 
Senior Secured
 
10.0%
 
 
 
2,974,168

 
2,912,738

 
2,912,738

 
6/1/2022
 
Callisto Media, Inc. Subtotal
 
 
 
 
 
 
 
 
 
14,374,825

 
13,980,725

 
13,980,725

 
 
 
CloudIQ Ltd.** ^
 
 
 
Senior Secured
 
12.0%
 
 
 
814,413

 
739,496

 
739,496

 
12/1/2020
 
CloudIQ Ltd.** ^
 
 
 
Senior Secured
 
12.0%
 
 
 
844,365

 
844,365

 
844,365

 
1/1/2021
 
CloudIQ Ltd.** ^
 
 
 
Senior Secured
 
12.0%
 
 
 
932,264

 
932,264

 
932,264

 
4/1/2021
 
CloudIQ Ltd.** ^ Subtotal
 
 
 
 
 
 
 
 
 
2,591,042

 
2,516,125

 
2,516,125

 
 
 
Dolly, Inc.
 
 
 
Senior Secured
 
12.0%
 
 
 
659,639

 
641,672

 
345,572

 
12/1/2020
 
Freckle Education, Inc.
 
 
 
Senior Secured
 
10.0%
 
 
 
743,374

 
700,005

 
700,005

 
1/1/2022
 
Freckle Education, Inc.
 
 
 
Senior Secured
 
10.0%
 
 
 
495,654

 
487,274

 
487,274

 
1/1/2022
 
Freckle Education, Inc. Subtotal
 
 
 
 
 
 
 
 
 
1,239,028

 
1,187,279

 
1,187,279

 
 
 
FSA Store, Inc.
 
 
 
Senior Secured
 
10.0%
 
 
 
1,733,072

 
1,662,701

 
1,662,701

 
12/1/2020
 
Keyo AI Inc.
 
 
 
Senior Secured
 
10.0%
 
 
 
495,800

 
455,925

 
455,925

 
2/1/2022
 
PayJoy, Inc.**
 
 
 
Senior Secured
 
12.0%
 
 
 
37,420

 
37,045

 
37,045

 
4/1/2019
 
PayJoy, Inc.**
 
 
 
Senior Secured
 
12.0%
 
 
 
73,378

 
73,026

 
73,026

 
8/1/2019
 
PayJoy, Inc.**
 
 
 
Senior Secured
 
10.0%
 
 
 
991,020

 
941,035

 
941,035

 
8/1/2021
 
PayJoy, Inc.** Subtotal
 
 
 
 
 
 
 
 
 
1,101,818

 
1,051,106

 
1,051,106

 
 
 
Relimetrics, Inc.
 
 
 
Senior Secured
 
11.3%
 
 
 
371,450

 
347,197

 
347,197

 
1/1/2022
 
Riffyn, Inc.
 
 
 
Senior Secured
 
11.5%
 
 
 
903,197

 
864,874

 
864,874

 
3/1/2021
 
Riffyn, Inc.
 
 
 
Senior Secured
 
11.5%
 
 
 
494,969

 
485,756

 
485,756

 
6/1/2021
 
Riffyn, Inc. Subtotal
 
 
 
 
 
 
 
 
 
1,398,166

 
1,350,630

 
1,350,630

 
 
 
Sixup PBC, Inc.**
 
 
 
Senior Secured
 
12.0%
 
 
 
138,941

 
137,308

 
137,308

 
6/1/2019
 
SocialChorus, Inc.
 
 
 
Senior Secured
 
12.0%
 
 
 
1,483,366

 
1,423,001

 
1,423,001

 
1/1/2021
 
SocialChorus, Inc.
 
 
 
Senior Secured
 
12.0%
 
 
 
988,950

 
974,019

 
974,019

 
1/1/2021
 
SocialChorus, Inc. Subtotal
 
 
 
 
 
 
 
 
 
2,472,316

 
2,397,020

 
2,397,020

 
 
 
TrueFacet, Inc.
 
 
 
Senior Secured
 
10.5%
 
 
 
475,650

 
465,480

 
281,611

 
8/1/2020
 
TrueFacet, Inc.
 
 
 
Senior Secured
 
11.0%
 
 
 
207,942

 
205,781

 
124,495

 
3/1/2021
 
TrueFacet, Inc.
 
 
 
Senior Secured
 
11.3%
 
 
 
228,041

 
225,453

 
136,397

 
6/1/2021
 
TrueFacet, Inc. Subtotal
 
 
 
 
 
 
 
 
 
911,633

 
896,714

 
542,503

 
 
 
Zeel Networks, Inc.
 
 
 
Senior Secured
 
11.0%
 
 
 
635,468

 
620,548

 
620,548

 
8/1/2020
 
Zeel Networks, Inc.
 
 
 
Senior Secured
 
11.0%
 
 
 
317,744

 
315,135

 
315,135

 
8/1/2020
 
Zeel Networks, Inc.
 
 
 
Senior Secured
 
11.0%
 
 
 
317,776

 
314,761

 
314,761

 
8/1/2020
 
Zeel Networks, Inc.
 
 
 
Senior Secured
 
11.0%
 
 
 
1,238,318

 
1,139,829

 
1,139,829

 
3/1/2022
 
Zeel Networks, Inc. Subtotal
 
 
 
 
 
 
 
 
 
2,509,306

 
2,390,273

 
2,390,273

 
 
Technology Services Total
 
 
15.3%
 
 
 
 
 
 
 
$
35,209,750

 
$
33,956,892

 
$
33,040,931

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Wireless
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Juvo Mobile, Inc.**
 
 
 
Senior Secured
 
11.0%
 
 
 
$
163,085

 
$
159,967

 
$
159,967

 
9/1/2019
 
Juvo Mobile, Inc.**
 
 
 
Senior Secured
 
11.0%
 
 
 
231,371

 
229,785

 
229,785

 
1/1/2020
 
Juvo Mobile, Inc.**
 
 
 
Senior Secured
 
11.0%
 
 
 
248,068

 
246,012

 
246,012

 
2/1/2020
 
Juvo Mobile, Inc.** Subtotal
 
 
 
 
 
 
 
 
 
642,524

 
635,764

 
635,764

 
 

54



Industry
Borrower
 
Percent of Net Assets (a)
 
Collateral
 
Interest Rate
(b)
 
End of Term Payment
(c)
 
Principal
 
Cost
 
Fair Value
 
Maturity Date
 
Nextivity, Inc.
 
 
 
Senior Secured
 
12.0%
 
 
 
4,664,416

 
4,664,024

 
4,664,024

 
6/1/2021
 
Nextivity, Inc.
 
 
 
Senior Secured
 
12.0%
 
 
 
1,272,655

 
1,272,655

 
1,272,655

 
6/1/2021
 
Nextivity, Inc. Subtotal
 
 
 
 
 
 
 
 
 
5,937,071

 
5,936,679

 
5,936,679

 
 
 
Parallel Wireless, Inc.
 
 
 
Senior Secured
 
11.8%
 
 
 
1,973,157

 
1,937,081

 
1,937,081

 
4/1/2020
 
Parallel Wireless, Inc.
 
 
 
Senior Secured
 
11.8%
 
 
 
1,130,176

 
1,118,659

 
1,118,659

 
10/1/2020
 
Parallel Wireless, Inc. Subtotal
 
 
 
 
 
 
 
 
 
3,103,333

 
3,055,740

 
3,055,740

 
 
Wireless Total
 
 
4.4%
 
 
 
 
 
 
 
$
9,682,928

 
$
9,628,183

 
$
9,628,183

 
 
Grand Total
 
 
184.2%
 
 
 
 
 
 
 
$
423,345,490

 
$
405,309,448

 
$
398,980,531

 
 
* As of December 31, 2018, loans with a cost basis of $8.5 million and a fair value of $4.5 million were classified as non-accrual. These loans have been accelerated from their original maturity and are due in their entirety. During the period for which these loans have been on non-accrual status, no interest income has been recognized.

** Indicates assets that the Fund deems “non-qualifying assets.” As of December 31, 2018, 11.6% of the Fund’s total assets represented non-qualifying assets. Under Section 55(a) of the 1940 Act, the Fund is prohibited from acquiring any additional non-qualifying assets unless, at the time of acquisition, certain specified qualifying assets (e.g., securities issued by an “eligible portfolio company,” as defined in Section 2(a)(46)) represent at least 70% of its total assets. As part of this calculation, the numerator consists of the value of the Fund’s investments in all eligible portfolio companies and the denominator consists of total assets less those assets described in Section 55(a)(7) of the 1940 Act.

^ Entity is not domiciled in the United States and does not have its principal place of business in the United States.

(a) The percentage of net assets that each industry group represents is shown with the industry totals (the sum of the percentages does not equal 100% because the percentages are based on net assets as opposed to total loans).

(b) The interest rate is the designated annual interest rate exclusive of any original issue discount, fees or end of term payment.

(c) The end of term payments are contractually due on the maturity date and are in addition to the interest rate shown. End of term payments are the percentage of the final payment divided by the original loan amount and are amortized over the full term of the loan.

As of December 31, 2018, all loans were made to non-affiliates.
See notes to financial statements

55



VENTURE LENDING & LEASING VIII, INC.
Schedules of Open Swap Contracts
As of December 31, 2019 and 2018

 
 
 
 
 
 
AS OF DECEMBER 31, 2019
Description and terms of payments to be received from another party
 
Description and terms of payments to be paid to another party
 
Counterparty
 
Maturity Date (a)
 
Notional Amount
 
Value
 
Upfront payments / receipts
 
Unrealized appreciation / (depreciation) (b)
Cancellable Interest Rate Swap - Floating interest rate USD-LIBOR-BBA
 
Fixed interest rate 2.200%, to be paid monthly
 
MUFG Union Bank, N.A.
 
9/11/2020
 
$
102,000,000

 
$
(120,233
)
 
$

 
$
(120,233
)
Floating interest rate greater of USD-LIBOR-BBA or 0.00%, to be received monthly
 
Fixed interest rate 2.005%, to be paid monthly
 
MUFG Union Bank, N.A.
 
9/11/2020
 
90,000,000

 
(226,950
)
 

 
(226,950
)
Total
 
 
 
 
 
 
 
$
192,000,000

 
$
(347,183
)
 
$

 
$
(347,183
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
AS OF DECEMBER 31, 2018
Description and terms of payments to be received from another party
 
Description and terms of payments to be paid to another party
 
Counterparty
 
Maturity Date (a)
 
Notional Amount
 
Value
 
Upfront payments / receipts
 
Unrealized appreciation / (depreciation) (b)
Cancellable Interest Rate Swap - Floating interest rate USD-LIBOR-BBA
 
Fixed interest rate 2.200%, to be paid monthly
 
MUFG Union Bank, N.A.
 
9/11/2020
 
$
102,000,000

 
$
616,148

 
$

 
$
616,148

Total
 
 
 
 
 
 
 
$
102,000,000

 
$
616,148

 
$

 
$
616,148


(a) The Floating interest rate USD-LIBOR-BBA interest rate swap includes an option for the Fund to terminate the swap early on March 31, 2020.
(b) The unrealized appreciation/depreciation was determined using prices or valuation based on observable inputs other than quoted price in active markets for identical assets and liabilities. See “Note 3. Fair Value Disclosures” for more information.

56



VENTURE LENDING & LEASING VIII, INC.
Notes to Financial Statements
 
1. ORGANIZATION AND OPERATIONS OF THE FUND
    
Venture Lending & Leasing VIII, Inc. (the “Fund”) was incorporated in Maryland on May 6, 2015, as a non-diversified, closed-end management investment company electing status as a business development company (“BDC”) under the Investment Company Act of 1940, as amended (the “1940 Act”) and is managed by Westech Investment Advisors, LLC (the “Manager” or “Management”). The Fund will be dissolved on December 31, 2025 unless the Board of Directors (the “Board”) opts to elect early dissolution. One hundred percent of the stock of the Fund is held by Venture Lending & Leasing VIII, LLC (the “Company”). Prior to commencing operations on August 12, 2015, the Fund had no operations other than the sale to the Company of 100,000 shares of common stock, $0.001 par value for $25,000 in July 2015. This issuance of stock was a requirement to apply for a finance lender’s license from the California Commissioner of Corporations, which was obtained on August 20, 2015.

The Fund’s investment objective is to achieve superior risk-adjusted investment returns and it seeks to achieve that objective by providing debt financing to portfolio companies, most of which are private. The Fund generally receives warrants to acquire equity securities in connection with its portfolio investments and generally distributes these warrants to its shareholder upon receipt, or soon thereafter. The Fund also has guidelines for the percentages of total assets that are invested in different types of assets. The portfolio investments of the Fund primarily consist of debt financing to early and expansion stage venture capital-backed technology companies.  
2.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Accounting
The preparation of financial statements in conformity with United States Generally Accepted Accounting Principles (“U.S. GAAP”) requires Management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. As an investment company, the Fund follows accounting and reporting guidance as set forth in Topic 946 (“Financial Services – Investment Companies”) of the Financial Accounting Standards Board’s (“FASB”) Accounting Standards Codification, as amended (“ASC”). Certain prior year amounts have been reclassified and/or disclosed to conform to the current year presentation.
Cash and Cash Equivalents
Cash and cash equivalents consist of cash on hand and money market mutual funds with maturities of 90 days or less. Money market mutual funds held as cash equivalents are valued at their most recently traded net asset value. Within cash and cash equivalents, as of December 31, 2019, the Fund held 12,569,629 units in the Blackrock Treasury Trust Institutional Fund valued at $1 per unit at a yield of 1.6%, which represented 6.08% of the net assets of the Fund.
Interest Income
Interest income on loans is recognized on an accrual basis using the effective interest method including amounts resulting from the amortization of equity securities included as additional compensation as part of the loan agreements. Additionally, fees received as part of the transaction are added to the loan discount and amortized over the life of the loan.
Realized Gains and Losses from Loans
Realized gains and losses on sale of loans are computed using the difference between the amortized cost and the sales proceeds. Realized losses on write-offs are recognized when management determines a loan is uncollectible.
Investment Valuation
The Fund accounts for loans at fair value in accordance with the valuation methods below. All valuations are determined under the direction of the Manager, in accordance with the valuation methods.
As of December 31, 2019 and 2018, the financial statements included nonmarketable investments of $372.0 million and $399.0 million, respectively, (or 95.4% and 93.9% of the total assets, respectively), with the fair values determined by the Manager in the absence of readily determinable market values. Because of the inherent uncertainty of these valuations, estimated fair values of such investments may differ significantly from the values that would have been used had a ready market for the securities existed, and the differences could be material. Below is the information used by the Manager in making these estimates.
    

57



Loans
The Fund defines fair value as the price that would be received to sell an asset or paid to lower a liability in an orderly transaction between market participants at the measurement date. Because there is no readily available market price and no secondary market for substantially all of the debt investments made by the Fund in its borrowing portfolio companies, Management determines fair value based on hypothetical markets, and on several factors related to each borrower, including, but not limited to, the borrower’s payment history, available cash and “burn rate,” revenues, net income or loss, the likelihood that the borrower will be able to secure additional financing in the future, and an evaluation of the general interest rate environment. The amount of any valuation adjustment considers the estimated amount and timing of cash payments of principal and interest from the borrower and/or liquidation analysis and is determined based upon a credit analysis of the borrower and an analysis of the expected recovery from the borrower, including consideration of factors such as the nature and quality of the Fund’s security interests in collateral, the estimated value of the Fund’s collateral, the size of the loan, and the estimated time that will elapse before the Fund achieves a recovery. Management has evaluated these factors and has concluded that, the effect of deterioration in the quality of the underlying collateral, increase in size of the loan, increase in the estimated time to recovery and increase in the hypothetical market coupon rate would have the effect of lowering the value of the current portfolio of loans.

Non-Accrual Loans

The Fund’s policy is to classify a loan as non-accrual when the portfolio company is delinquent for three consecutive months on its monthly loan payment, or, in the opinion of Management, either ceases or drastically curtails its operations and Management deems that it is unlikely that the loan will return to performing status. When a loan is placed on non-accrual status, all interest previously accrued but not collected is reversed for the quarter in which the loan was placed on non-accrual status. Any uncollected interest related to quarters prior to when the loan was placed on non-accrual status is added to the principal balance, and the aggregate balance of the principal and interest is evaluated in accordance with the policy for valuation of loans in determining Management’s best estimate of fair value. Interest received by the Fund on non-accrual loans will be recognized as interest income if and when the proceeds received exceed the book value of the respective loan.

If a borrower of a non-accrual loan resumes making regular payments and Management believes that such borrower has regained the ability to service the loan on a sustainable basis, the loan is reclassified back to accrual or performing status. Interest that would have been accrued during the time a loan was classified as non-accrual will be added back to the remaining payment schedule causing a change in the effective interest rate.

As of December 31, 2019 and 2018, loans with a cost basis of $15.5 million and $8.5 million and a fair value of $10.3 million and $4.5 million were classified as non-accrual, respectively.
Warrants and Equity Securities

Warrants and equity securities received in connection with loan transactions are measured at a fair value at the time of acquisition. Warrants are valued based on a modified Black-Scholes option pricing model which considers, among several factors, the underlying stock value, expected term, volatility, and risk-free interest rate. It is anticipated that such securities will be distributed by the Fund to the Company simultaneously with, or shortly following, their acquisition.

The underlying asset value is estimated based on information available, including information regarding recent rounds of funding of the portfolio company, or the publicly-quoted stock price at the end of the financial reporting period for warrants for comparable publicly-quoted securities.

Volatility, or the amount of uncertainty or risk about the size of the changes in the warrant price, is based on an index of publicly traded companies grouped by industry and which are similar in nature to the underlying portfolio companies issuing the warrant (“Industry Index”). The volatility assumption for each Industry Index is based on the average volatility for individual public companies within the portfolio company’s industry for a period of time approximating the expected life of the warrants. A hypothetical increase in the volatility of the warrants used in the modified Black-Scholes option pricing model would have the effect of increasing the value of the warrants.

The remaining expected lives of warrants are based on historical experience of the average life of the warrants, as warrants are often exercised in the event of acquisitions, mergers, or initial public offerings, and terminated due to events such as bankruptcies, restructuring activities, or additional financings. These events cause the expected term to be less than the remaining contractual term of the warrants. As of December 31, 2019 and 2018, the Fund assumed the average duration of a warrant was 4.0 and 3.5 years, respectively. The effect of a hypothetical increase in the estimated initial term of the warrants used in the modified Black-Scholes option pricing model would have the effect of increasing the value of the warrants. However, the estimated initial term of the warrants is one factor, of many, used in the valuation of warrants, and by itself does not have a significant impact on the result of operations.

The risk-free interest rate is derived from the constant maturity tables issued by the U.S. Treasury Department. The effect of a hypothetical increase in the estimated risk-free rate used in the modified Black-Scholes option pricing model would have the effect of increasing the value of the warrants.


58



The Fund engages an independent valuation company to provide valuation assistance with respect to the warrants received as part of loan consideration, including an evaluation of the Fund’s valuation methodology and the reasonableness of the assumptions used from the perspective of a market participant. The independent valuation company also calculates several of the inputs used, such as volatility and risk-free rate.

Other Assets and Liabilities
    
Other assets include costs incurred in conjunction with borrowings under the Fund’s debt facility and are stated at initial cost. These costs are amortized over the term of the facility.

The fair values of other assets and accrued liabilities are estimated at their carrying values because of the short-term nature of these assets and liabilities.

The carrying value of the borrowings under the debt facility approximates their fair value based on the borrowing rates available to the Fund.

Commitment Fees
Unearned income and commitment fees on loans are recognized using the effective-interest method over the term of the loan. Commitment fees are carried as liabilities when received for commitments upon which no draws have been made. When the first draw is made, the fee is treated as unearned income and is recognized as described above. If a draw is never made, the forfeited commitment fee, less any applicable legal costs, becomes recognized as other income after the commitment expires.
Deferred Bank Fees
The deferred bank fees and costs associated with the debt facility are included in Other assets in the Statements of Assets and Liabilities and are being amortized over the estimated life of the facility, which currently matures on September 11, 2020. The amortization of these costs is recorded as Interest expense in the Statements of Operations.
Interest Rate Cap Agreement
The Fund had entered into an interest rate cap agreement which was primarily valued on the basis of the future expected interest rates on the remaining notional principal balance (see Note 8). This methodology was comparable to what a prospective acquirer would use in determining the amount they would pay on the measurement date. Valuation pricing models utilized to fair value the caps consider inputs such as forward rates, anticipated interest rate volatility relating to the reference rate, as well as time value and other factors underlying cap instruments. The Fund is a party to a master netting arrangement with MUFG Union Bank, N.A., however, the Fund has elected not to offset assets and liabilities under these arrangements for financial statement presentation purposes. The contract was recorded at gross fair value in either Derivative asset -interest cap or Derivative Liability - interest rate cap in the Statements of Assets and Liabilities, depending on whether the value of the contract is in favor of the Fund or the counterparty. Subsequent changes in fair value were recorded in the Net change in unrealized gain (loss) from derivative instruments in the Statements of Operations and the quarterly interest received on the interest rate cap contracts, if any, were recorded in Net realized gain (loss) from derivative instruments in the Statements of Operations. The interest rate cap agreement was canceled in April 2018 and the value was rolled over into an interest rate swap agreement effective March 30, 2018. Since inception through their cancellation, no interest was received on the interest rate cap contracts.
Interest Rate Swap Agreement
The Fund entered into an interest rate swap agreement to manage the Fund’s exposure to changes in interest rates on its expected borrowings under its debt facility, as the Fund originates fixed rate loans (see Note 9). The Fund entered into two types of swap transactions. The cancellable interest rate swap is primarily valued on the basis of quotes obtained from banks, brokers and dealers and adjusted for counterparty risk and the optionality to terminate the swap early. The interest rate swap and floor transaction is also valued on the basis of quotes obtained from banks, brokers and dealers and adjusted for the counterparty risk and the interest rate floor. The valuation of both swap transactions also considers the future expected interest rates on the notional principal balances remaining which is comparable to what a prospective acquirer would pay on the measurement date. Valuation pricing models consider inputs such as forward rates, anticipated interest rate volatility relating to the reference rate, as well as time value and other factors underlying swap instruments. The Fund is a party to a master netting arrangement with MUFG Union Bank, N.A., however, the Fund has elected not to offset assets and liabilities under these arrangements for financial statement presentation purposes. The transactions are recorded at gross fair value in either Derivative asset - interest rate swap or Derivative liability - interest rate swap in the Statements of Assets and Liabilities, depending on whether the value of the transaction is in favor of the Fund or the counterparty. The changes in fair value are recorded in Net change in unrealized gain (loss) from derivative instruments in the Statements of Operations and the quarterly interest received or paid on the interest rate swap contract, if any, are recorded in Net realized gain (loss) from derivative instruments in the Statements of Operations. Both the cancellable interest rate swap and the interest rate swap and floor transactions are contractually scheduled to terminate on September 11, 2020. The Fund has the option with the cancellable interest rate swap transaction to terminate the swap early on March 31, 2020.


59



Recent Accounting Pronouncements
In August 2018, the Financial Accounting Standards Board (“FASB”) issued ASU 2018-13, “Fair Value Measurement (Topic 820) - Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement.” The ASU modifies the disclosure requirement on fair value measurements in Topic 820, Fair Value Measurement, by eliminating, modifying, and adding to those requirements. ASU 2018-13 also modifies the disclosure objective paragraphs of Topic 820 to eliminate (1) “at a minimum” from the phrase “an entity shall disclose at a minimum” and (2) other similar “open ended” disclosure requirements to promote appropriate exercise of discretion by entities when considering fair value measurement disclosures and to clarify that materiality is an appropriate consideration of entities and their auditors when evaluating disclosure requirements. ASU 2018-13 is effective for fiscal years beginning after December 15, 2019, including interim periods therein. The Fund elected to adopt the amendments of ASU 2018-13 during the fiscal year ended December 31, 2019. ASU 2018-13 did not have a material impact on the Fund’s financial statements.

In July 2019, the Financial Accounting Standards Board (“FASB”) issued ASU 2019-07, “Codification Updates to SEC Sections-Amendments to SEC Paragraphs Pursuant to SEC Final Rule Releases No. 33-10532, Disclosure Update and Simplification, and Nos. 33-10231 and 33-10442, Investment Company Reporting Modernization, and Miscellaneous Updates (SEC Update).” The ASU amends various paragraphs pursuant to the issuance of the Securities Exchange and Commission (“SEC”) Final Rule Releases No. 33-10532, Disclosure Update and Simplification, and Nos. 33-10231 and 33-10442, Investment Company Reporting Modernization. One of the disclosure amendments required the Funds to comply to a standardized, enhanced disclosure about derivatives. ASU 2019-07 is effective upon issuance. The Fund elected to adopt the specified amendment within ASU 2019-07 during the quarter ended September 30, 2019 on a prospective basis. ASU 2019-07 did not have a material impact on the Fund’s financial statements.
3. FAIR VALUE DISCLOSURES
The Fund provides asset-based financing primarily to start-up and emerging growth Venture-Backed Companies pursuant to commitments whereby the Fund agrees to finance assets and provide working or growth capital up to a specified amount for the term of the commitment, upon the terms and subject to the conditions specified by such commitment. Even though these loans are generally secured by the assets of the borrowers, the Fund in most cases is subject to the credit risk of such companies. As of December 31, 2019 and 2018, the Fund’s investments in loans were primarily to companies based within the United States and were diversified among borrowers in the industry segments shown in the Schedules of Investments. All loans are senior to unsecured creditors and other secured creditors, unless as indicated in the Schedules of Investments.
The Fund defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date; that is, an exit price. The exit price assumes the asset or liability was exchanged in an orderly transaction; it was not a forced liquidation or distressed sale. Because there is no readily available market price and no secondary market for substantially all of the debt investments made by the Fund to borrowing portfolio companies, Management determines fair value (or estimated exit value) based on a hypothetical market, and several factors related to each borrower.

Loan balances in the Schedules of Investments are listed by borrower. Typically, a borrower’s balance will be composed of several loans drawn under a commitment made by the Fund with the interest rate on each loan fixed at the time each loan is funded. Each loan drawn under a commitment has a different maturity date and amount.
For the year ended December 31, 2019, the weighted-average interest rate on performing loans was 17.46%, which was inclusive of both cash and non-cash interest income. For the same period, the weighted-average interest rate on the cash portion of the interest income was 13.99%. For the year ended December 31, 2018, the weighted-average interest rate on performing loans was 18.03%. This rate was inclusive of both cash and non-cash interest income. For the same period, the weighted-average interest rate on the cash portion of the interest income was 14.59%.
For the year ended December 31, 2019, the weighted-average interest rate on all loans was 17.09%, which was inclusive of both cash and non-cash interest income. For the same period, the weighted-average interest rate on the cash portion of the interest income was 13.69%. For the year ended December 31, 2018, the weighted-average interest rate on all loans was 17.83%. This rate was inclusive of both cash and non-cash interest income. For the same period, the weighted-average interest rate on the cash portion of the interest income was 14.43%.
Interest is calculated using the effective interest method, and rates earned by the Fund will fluctuate based on many factors including early payoffs, volatility of values ascribed to warrants and new loans funded during the year.
The risk profile of a loan changes when events occur that impact the credit analysis of the borrower and loan as discussed in the Fund’s loan accounting policy. Such changes result in the fair value adjustments made to the individual loans, which in accordance with U.S. GAAP, would be based on the price that would be received to sell an asset or paid to settle a liability in an orderly transaction between market participants at the measurement date. Where the risk profile is consistent with the original underwriting, which is primarily the case for this loan portfolio, the cost basis of the loan often approximates fair value.

All loans as of December 31, 2019 and 2018 were pledged as collateral for the debt facility, and the Fund’s borrowings are generally collateralized by all assets of the Fund. As of December 31, 2019 and 2018, the Fund had unexpired unfunded commitments to borrowers of $78.0 million and $64.9 million, respectively.

60



Valuation Hierarchy
Under the FASB ASC Topic 820 (“Fair Value Measurement”), the Fund categorizes its fair value measurements according to a three-level hierarchy. The hierarchy prioritizes the inputs used by the Fund’s valuation techniques. A level is assigned to each fair value measurement based on the lowest level input that is significant to the fair value measurement in its entirety.
The three levels of the fair value hierarchy are defined as follows:
Level 1
Unadjusted quoted prices for identical assets or liabilities in active markets that are accessible at the measurement date.
Level 2
Prices or valuations based on observable inputs other than quoted prices in active markets for identical assets and liabilities.
Level 3
Prices or valuations that require inputs that are both significant to the fair value measurement and unobservable.
Transfers of investments between levels of the fair value hierarchy are recorded on the actual date of the event or change in circumstances that caused the transfer. There were no transfers in and out of Level 1, 2 or 3 during the years ended December 31, 2019 and 2018.
The Fund’s cash equivalents were valued at the traded net asset value of the money market fund. As a result, these measurements were classified as Level 1. The Fund’s interest rate cap and swap were based on quotes from the market makers that derive fair values from market data, and therefore, were classified as Level 2. The Fund’s borrowings under the debt facility were also classified as Level 2, because the borrowings were based on rates that are observable at commonly quoted intervals, which are Level 2 inputs. The Fund’s loan transactions were individually negotiated and unique, and because there is little to no market in which these assets trade, the inputs for these assets, which were valued using estimated exit values, were classified as Level 3.  
The following tables provide quantitative information about the Fund’s Level 3 fair value measurements of the Fund’s investments by industry as of December 31, 2019 and 2018. In addition to the techniques and inputs noted in the tables below, the Fund may also use other valuation techniques and methodologies when determining its fair value measurements.
Investment Type - Level 3
 
 
 
 
 
 
 
 
Debt Investments
 
Fair Values at
December 31, 2019
 
Valuation Techniques / Methodologies
 
Unobservable Inputs
 
Weighted-Averages (a)             Amounts and Ranges
 
 
 
 
 
 
 
 
 
Biotechnology
 
$
3,490,423

 
Hypothetical market analysis
 
Hypothetical market coupon rate
 
15% (14% - 21%)
 
 
 
 
Income approach
 
Expected amount and timing of cash flow payments

Discount rate
 
$0 *



0%
 
 
 
 
 
 
 
 
 
Computers and Storage
 
3,073,525

 
Hypothetical market analysis
 
Hypothetical market coupon rate
 
19% *
 
 
 
 
 
 
 
 
 
Enterprise Networking
 
112,500

 
Income approach
 
Expected amount and timing of cash flow payments

Discount rate
 
$112,500 *



0%
 
 
 
 
 
 
 
 
 
Internet
 
64,696,219

 
Hypothetical market analysis
 
Hypothetical market coupon rate
 
15% (13% - 31%)
 
 
 
 
Income approach
 
Expected amount and timing of cash flow payments

Discount rate
 
$1,880,549
($999,905 - $2,466,418)


3%
 
 
 
 
 
 
 
 
 
Medical Devices
 
32,882,569

 
Hypothetical market analysis
 
Hypothetical market coupon rate
 
18% (13% - 38%)
 
 
 
 
Income approach
 
Expected amount and timing of cash flow payments

Discount rate
 
$10,529,931 *



3%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

61



Investment Type - Level 3
 
 
 
 
 
 
 
 
Debt Investments
 
Fair Values at
December 31, 2019
 
Valuation Techniques / Methodologies
 
Unobservable Inputs
 
Weighted-Averages (a)             Amounts and Ranges
Other Healthcare
 
43,659,587

 
Hypothetical market analysis
 
Hypothetical market coupon rate
 
15% (12% - 19%)
 
 
 
 
Income approach
 
Expected amount and timing of cash flow payments

Discount rate
 
$813,663
($703,323 - $1,130,989)


2%
(2% - 3%)
 
 
 
 
 
 
 
 
 
Other Technology
 
108,088,734

 
Hypothetical market analysis
 
Hypothetical market coupon rate
 
16% (12% - 35%)
 
 
 
 
Income approach
 
Expected amount and timing of cash flow payments

Discount rate
 
$2,324,058
($0 - $2,844,003)


3%
(0% - 3%)
 
 
 
 
 
 
 
 
 
Security
 
2,815,378

 
Hypothetical market analysis
 
Hypothetical market coupon rate
 
20% (16% - 25%)
 
 
 
 
 
 
 
 
 
Semiconductors and Equipment
 
7,360,968

 
Hypothetical market analysis
 
Hypothetical market coupon rate
 
15% (14% - 15%)
 
 
 
 
 
 
 
 
 
Software
 
61,107,983

 
Hypothetical market analysis
 
Hypothetical market coupon rate
 
16% (13% - 26%)
 
 
 
 
Income approach
 
Expected amount and timing of cash flow payments

Discount rate
 
$2,463,985
($517,921 - $2,978,760)


2%
(2% - 3%)
 
 
 
 
 
 
 
 
 
Technology Services
 
33,670,058

 
Hypothetical market analysis
 
Hypothetical market coupon rate
 
13% (12% - 30%)
 
 
 
 
Income approach
 
Expected amount and timing of cash flow payments

Discount rate
 
$1,597,464
($100,000 - $1,682,635)


2%
 
 
 
 
 
 
 
 
 
Wireless
 
10,997,880

 
Hypothetical market analysis
 
Hypothetical market coupon rate
 
14% (12% - 17%)
 
 
 
 
 
 
 
 
 
Total Debt Investments
 
$
371,955,824

 
 
 
 
 
 
(a) The weighted-average hypothetical market coupon rates were calculated using the relative fair value of the loans.
* There is only one loan within the industry.

Investment Type - Level 3 (b)
 
 
 
 
 
 
 
 
Debt Investments
 
Fair Values at
December 31, 2018
 
Valuation Techniques / Methodologies
 
Unobservable Inputs
 
Weighted-Averages (a) / Amounts and Ranges
 
 
 
 
 
 
 
 
 
Biotechnology
 
$
1,555,663

 
Hypothetical market analysis
 
Hypothetical market coupon rate
 
15%
 
 
 
 
Income approach
 
Expected amount and timing of cash flow payments

Discount rate
 
$0 *



0%
 
 
 
 
 
 
 
 
 
Computers and Storage
 
2,848,813

 
Hypothetical market analysis
 
Hypothetical market coupon rate
 
21% (14% - 37%)
 
 
 
 
 
 
 
 
 

62



Investment Type - Level 3 (b)
 
 
 
 
 
 
 
 
Debt Investments
 
Fair Values at
December 31, 2018
 
Valuation Techniques / Methodologies
 
Unobservable Inputs
 
Weighted-Averages (a) / Amounts and Ranges
Enterprise Networking
 
3,266,067

 
Hypothetical market analysis
 
Hypothetical market coupon rate
 
15% *
 
 
 
 
 
 
 
 
 
Internet
 
78,722,609

 
Hypothetical market analysis
 
Hypothetical market coupon rate
 
15% (13% - 25%)
 
 
 
 
Income approach
 
Expected amount and timing of cash flow payments

Discount rate
 
$9,329,138 *



4%
 
 
 
 
 
 
 
 
 
Medical Devices
 
24,688,884

 
Hypothetical market analysis
 
Hypothetical market coupon rate
 
16% (13% - 20%)
 
 
 
 
Income approach
 
Expected amount and timing of cash flow payments

Discount rate
 
$11,800,605 *



4%
 
 
 
 
 
 
 
 
 
Other Healthcare
 
46,191,570

 
Hypothetical market analysis
 
Hypothetical market coupon rate
 
14% (12% - 28%)
 
 
 
 
Income approach
 
Expected amount and timing of cash flow payments

Discount rate
 
$1,483,038
($190,000 - $1,648,552)


4%
 
 
 
 
 
 
 
 
 
Other Technology
 
113,584,105

 
Hypothetical market analysis
 
Hypothetical market coupon rate
 
15% (12% - 35%)
 
 
 
 
Income approach
 
Expected amount and timing of cash flow payments

Discount rate
 
$1,759,513
($0 - $2,787,929)


4%
(0% - 4%)
 
 
 
 
 
 
 
 
 
Security
 
3,553,554

 
Hypothetical market analysis
 
Hypothetical market coupon rate
 
20% (16% - 25%)
 
 
 
 
Income approach
 
Expected amount and timing of cash flow payments

Discount rate
 
$0 *



0%

 
 
 
 
 
 
 
 
 
Semiconductors and Equipment
 
11,238,444

 
Hypothetical market analysis
 
Hypothetical market coupon rate
 
15% (14% - 15%)
 
 
 
 
 
 
 
 
 
Software
 
70,661,708

 
Hypothetical market analysis
 
Hypothetical market coupon rate
 
16% (12% - 26%)
 
 
 
 
Income approach
 
Expected amount and timing of cash flow payments

Discount rate
 
$1,335,503
($0 - $3,253,760)


2%
(0% - 4%)
 
 
 
 
 
 
 
 
 
Technology Services
 
33,040,931

 
Hypothetical market analysis
 
Hypothetical market coupon rate
 
13% (12% - 26%)
 
 
 
 
Income approach
 
Expected amount and timing of cash flow payments

Discount rate
 
$1,960,795
($751,771 - $2,459,113)


4%
 
 
 
 
 
 
 
 
 
Wireless
 
9,628,183

 
Hypothetical market analysis
 
Hypothetical market coupon rate
 
13% (12% - 14%)
 
 
 
 
 
 
 
 
 
Total Debt Investments
 
$
398,980,531

 
 
 
 
 
 

63



(a) The weighted-average hypothetical market coupon rates were calculated using the relative fair value of the loans.
(b) Certain prior year information has been disclosed to conform to current presentation.
* There is only one loan within the industry.

The following tables present the balances of assets and liabilities as of December 31, 2019 and 2018 measured at fair value on a recurring basis:
As of December 31, 2019
 
 
 
 
 
 
 
ASSETS:
Level 1
 
Level 2
 
Level 3
 
Total
Loans†
$

 
$

 
$
371,955,824

 
$
371,955,824

Cash equivalents
12,569,629

 

 

 
12,569,629

Total assets
$
12,569,629

 
$

 
$
371,955,824

 
$
384,525,453

 
 
 
 
 
 
 
 
LIABILITIES:
Level 1
 
Level 2
 
Level 3
 
Total
Borrowings under debt facility
$

 
$
179,000,000

 
$

 
$
179,000,000

Derivative liability - interest rate swap

 
347,183

 

 
347,183

           Total liabilities
$

 
$
179,347,183

 
$

 
$
179,347,183

As of December 31, 2018
 
 
 
 
 
 
 
ASSETS:
Level 1
 
Level 2
 
Level 3
 
Total
Loans†
$

 
$

 
$
398,980,531

 
$
398,980,531

     Derivative asset - interest rate swap

 
616,148

 

 
616,148

Cash equivalents
19,388,362

 

 

 
19,388,362

Total assets
$
19,388,362

 
$
616,148

 
$
398,980,531

 
$
418,985,041

 
 
 
 
 
 
 
 
LIABILITIES:
Level 1
 
Level 2
 
Level 3
 
Total
     Borrowings under debt facility
$

 
$
203,000,000

 
$

 
$
203,000,000

           Total liabilities
$

 
$
203,000,000

 
$

 
$
203,000,000

† For a detailed listing of borrowers comprising this amount, please refer to the Schedules of Investments.
The following tables provide a summary of changes in Level 3 assets measured at fair value on a recurring basis:
 
For the Year Ended December 31, 2019
 
Loans
 
Warrants
 
Stock
 
Convertible Note
Beginning balance
$
398,980,531

 
$

 
$

 
$

Acquisitions and originations
169,975,000

 
12,130,394

 
2,915,865

 
4,310,753

Principal reductions and amortization of discounts
(182,016,948
)
 

 

 

Distributions to shareholder

 
(12,130,394
)
 
(2,915,865
)
 
(4,310,753
)
Net change in unrealized loss from loans
(759,677
)
 

 

 

Net realized loss from loans
(14,223,082
)
 

 

 

Ending balance
$
371,955,824

 
$

 
$

 
$

Net change in unrealized loss from loans relating to loans still held at December 31, 2019
$
(3,072,191
)
 
 
 
 
 
 

64



    
 
For the Year Ended December 31, 2018
 
Loans
 
Warrants
 
Stock
Beginning balance
$
310,710,678

 
$

 
$

Acquisitions and originations
275,189,805

 
16,402,384

 
2,145,534

Principal reductions and amortization of discounts
(170,576,520
)
 

 

Distributions to shareholder

 
(16,402,384
)
 
(2,145,534
)
Net change in unrealized loss from loans
(2,058,044
)
 
$

 

Net realized loss from loans
(14,285,388
)
 
$

 

Ending balance
$
398,980,531

 
$

 
$

Net change in unrealized loss from loans relating to loans still held at December 31, 2018
$
(5,257,681
)
 
 
 
 
4. EARNINGS PER SHARE
Basic earnings per share are computed by dividing net increase (decrease) in net assets resulting from operations by the weighted-average common shares outstanding. Diluted earnings (loss) per share are computed by dividing net increase (decrease) in net assets resulting from operations by the weighted-average common shares outstanding, including the dilutive effects of potential common shares (e.g. stock options). The Fund has no instruments that would be potential common shares; thus, reported basic and diluted earnings (loss) per share are the same.
5.  CAPITAL STOCK
As of both December 31, 2019 and 2018, there were 10,000,000 shares of $0.001 par value common stock authorized, and 100,000 shares issued and outstanding. Total committed capital of the Company, as of both December 31, 2019 and 2018, was $423.6 million. Total contributed capital to the Company through December 31, 2019 and 2018 was $372.8 million and $347.4 million, respectively, of which $314.6 million and $297.6 million were contributed to the Fund, respectively.
The chart below shows the distributions of the Fund for the years ended December 31, 2019, 2018 and 2017.
 
For the Year Ended
 
For the Year Ended
 
For the Year Ended
 
December 31, 2019
 
December 31, 2018
 
December 31, 2017
Cash distributions
$
36,750,000

 
$
48,000,000

 
29,500,000

Distributions of equity securities and convertible notes
19,357,012

 
18,547,918

 
16,961,008

Total distributions to shareholder
$
56,107,012

 
$
66,547,918

 
46,461,008

6. DEBT FACILITY
On April 5, 2016, the Fund established a secured, syndicated revolving loan facility in an initial amount of up to $150.0 million (the “Loan Agreement”) led by Wells Fargo, N.A. and MUFG Union Bank, N.A. On September 11, 2017, the Loan Agreement was amended (the “Amended Loan Agreement”) and the borrowing availability thereunder increased the size of the facility to $280.0 million. An additional $75.0 million is potentially available to the Fund, subject to further negotiation and credit approval, through an accordion provision contained in the Amended Loan Agreement. All of the assets of the Fund collateralize borrowings by the Fund. Loans under the facility may be, at the option of the Fund, a Reference Rate Loan, a LIBOR Loan or a LIBOR Market Index Rate Loan. As of December 31, 2019, the Fund’s outstanding borrowings were entirely based on the LIBOR rate. The facility terminates on September 11, 2020, but can be accelerated in the event of default, such as failure by the Fund to make timely interest or principal payments.

Borrowings under the facility are collateralized by receivables from loans to portfolio companies advanced by the Fund with assignment of such receivables to the financial institution, plus all of the other assets of the Fund. The Fund pays interest on its borrowings and a fee on the unused portion of the facility. Under the Amended Loan Agreement, interest is charged to the Fund based on its borrowings, pursuant to the election of the Fund, at an annual rate of either (i) Reference Rate plus 1.75%, (ii) LIBOR plus 2.75% or (iii) LIBOR Market

65



Index Rate plus 2.75%. When the Fund is using 50% or more of the maximum amount available under the Amended Loan Agreement, the applicable commitment fee is 0.25% of the unused portion of the loan facility; otherwise, the applicable commitment fee is 0.50% of the unused portion. The Fund pays the unused credit line fee quarterly. As of December 31, 2019 and 2018, $179.0 million and $203.0 million, respectively, were outstanding under the facility.
    
As of December 31, 2019, the LIBOR rate was as follows:
                
1-Month LIBOR
1.7625%
3-Month LIBOR
1.9084%

Bank fees and other costs of $2.2 million incurred in connection with the acquisition of the facility have been capitalized and are amortized to interest expense on a straight-line basis over the expected life of the facility. As of December 31, 2019 and 2018, the unamortized fees and costs were $0.4 million and $1.0 million, respectively. The unamortized fees and costs are amortized over the expected life of the facility, which is expected to terminate on September 11, 2020.

The facility is revolving and as such does not have a specified repayment schedule, although advances are secured by the assets of the Fund and thus repayments will be required as assets decline. The facility contains various covenants including financial covenants related to: (i) minimum debt service coverage ratio, (ii) interest coverage ratio, (iii) maximum loan loss reserves and (iv) unfunded commitment ratio. There are also various restrictive covenants, including limitations on: (i) the incurrence of liens, (ii) consolidations, mergers and asset sales and (iii) capital expenditures. As of December 31, 2019 and 2018, Management believes that the Fund was in compliance with these covenants.

The following is the summary of the outstanding facility draws as of December 31, 2019:
 
Amount
Maturity Date
All-In Interest Rate**
LIBOR Loan
$
118,500,000

January 22, 2020 *
4.53%
LIBOR Market Index Rate Loans
60,500,000

September 11, 2020
Variable based on 1-month LIBOR rate
Total Outstanding
$
179,000,000

 
 
*Following the maturity date, Management elected to roll over the LIBOR loan with no material changes in loan terms and covenants.
** Inclusive of 2.75% applicable LIBOR margin plus LIBOR rate.
The following is the summary of the outstanding facility draws as of December 31, 2018:
 
Amount
Maturity Date
All-In Interest Rate††
LIBOR Loan
$
203,000,000

January 7, 2019
5.16%
Total Outstanding
$
203,000,000

 
 
††Inclusive of 2.75% applicable LIBOR margin plus LIBOR rate.
7. MANAGEMENT AND RELATED PARTIES
Management
As compensation for its services to the Fund, for the two-year period that commenced with the first capital closing, which took place on August 8, 2015, the Manager received a management fee (“Management Fee”) computed and paid at the end of each quarter at an annual rate of 2.5% of the Company’s committed equity capital (regardless of when or if the capital was called) as of the last day of each fiscal quarter. Following this two-year period, starting on August 12, 2017, Management Fees are calculated and paid at the end of each quarter at an annual rate of 2.5% of the Fund’s total assets (including amounts derived from borrowed funds) as of the last day of each quarter.  Management Fees of $9.7 million, $10.8 million and $9.6 million were recognized as expenses for the years ended December 31, 2019, 2018 and 2017, respectively.
Related Parties
Certain officers and directors of the Fund also serve as officers and directors of the Manager. The Articles of Incorporation of the Fund provide for indemnification of directors, officers, employees and agents (including the Manager) of the Fund to the full extent permitted by applicable state law and the 1940 Act, including the advance of expenses and reasonable counsel fees. The Articles of Incorporation of the Fund also contain a provision eliminating personal liability of a Fund director or officer to the Fund or its shareholder for monetary damages for certain breaches of their duty of care. For this reason, the Fund has acquired a directors and officers insurance policy.

66



Transactions with Venture Lending & Leasing VII, Inc. (“Fund VII”)  
The Manager also serves as the investment manager for Fund VII. The Fund’s Board of Directors determined that so long as Fund VII had capital available to invest in loan transactions with final maturities earlier than December 31, 2022 (the date on which Fund VII will be dissolved), the Fund would invest in each portfolio company in which Fund VII invested (“Investments”). Generally, the amount of each Investment was allocated 50% to the Fund and 50% to Fund VII, or such other allocations as were determined by the respective fund boards, so long as the Fund had capital available to invest. Effective June 30, 2017, Fund VII was no longer permitted to enter new commitments to borrowers; however, Fund VII was permitted to fund existing commitments, in which the Fund might also be invested. Fund VII’s last commitment expired on July 31, 2018. The ability of the Fund to co-invest with Fund VII, and other clients advised by the Manager, is subject to the conditions (“Conditions”) with which the Funds are currently complying while seeking certain exemptive relief from the SEC from the provisions of Sections 17(d) and 57 of the 1940 Act and Rule 17d-1 thereunder. To the extent that clients, other than Fund VII, advised by the Manager (but in which the Manager has no proprietary interest) invest in opportunities available to the Fund, the Manager will allocate such opportunities among the Fund and such other clients in a manner deemed fair and equitable considering all of the circumstances in accordance with the Conditions.

Transactions with Venture Lending & Leasing IX, Inc. (“Fund IX”)

The Manager also serves as the investment manager for Fund IX. The Fund’s Board of Directors determined that so long as Fund IX has capital available to invest in loan transactions with final maturities earlier than December 31, 2028 (the date on which Fund IX will be dissolved), the Fund may invest in each portfolio company in which Fund IX invests. Generally, the amount of each Investment will be allocated 50% to the Fund and 50% to Fund IX, or such other allocations as may be determined by the respective fund boards, so long as the Fund has capital available to invest. The ability of the Fund to co-invest with Fund IX, and other clients advised by the Manager, is subject to the Conditions described above. The Manager has exercised, and the Board of Directors ratified, its discretion to extend the Fund’s investment period for two additional quarters after September 30, 2019, thereby allowing the Fund to make new commitments through March 31, 2020 and to fund commitments through March 31, 2021, the end of the Fund’s investment period. To the extent that clients, other than Fund IX, advised by the Manager (but in which the Manager has no proprietary interest) invest in opportunities available to the Fund, the Manager will allocate such opportunities among the Fund and such other clients in a manner deemed fair and equitable considering all of the circumstances in accordance with the Conditions.
Intercreditor Agreements  
In all transactions in which the Fund and other funds managed by the Manager invest, or those in which another lender(s) has either invested or may later invest (or in the event a successor fund is raised, in which the Fund and the successor fund invest), it is expected that the Fund and other funds managed by the Manager (or the successor fund as the case may be), and/or the other lender(s) will enter into an intercreditor agreement pursuant to which the Fund and other funds managed by the Manager (or the successor fund), and/or the other lender(s), along with any predecessor funds which still have a balance outstanding, will cooperate in pursuing their remedies following a default by the common borrower. Generally, under such intercreditor agreements, each party would agree that its security interest would be treated in parity with the security interest of the other party, regardless of which security interest would have priority under applicable law. Accordingly, proceeds realized from the sale of any collateral or the exercise of any other creditor’s rights will be allocated between the Fund and, other funds managed by the Manager, and any predecessor funds as described above, pro rata in accordance with the amounts of their respective investments. An exception to the foregoing arrangement would occur in situations where, for example, one of the lenders financed specific items of equipment collateral; in that case, usually the lender who financed the specific assets will have a senior lien on that asset, and the other lenders will have a junior priority lien (even though they may ratably share liens of equal priority on other assets of the common borrower). As a result of such intercreditor agreements, the Fund may have less flexibility in pursuing its remedies following a default than it would have had had there been no intercreditor agreement, and the Fund may realize fewer proceeds. In addition, because the Fund and, other funds managed by the Manager (or the successor fund) invest at the same time in the same borrower, such borrower would be required to service two loans rather than one. Any additional administrative costs or burdens resulting therefrom may make the Fund a less attractive lender and may make it more difficult for the Fund to acquire such loans.
8. INTEREST RATE CAP AGREEMENT
In September 2016, the Fund had entered into an interest rate cap agreement with MUFG Union Bank, N.A. to cap floating interest rates at 2.00%. The purpose of the interest rate cap agreement was to protect the Fund against rising interest rates, as the Fund originates loans with fixed interest rates. The Fund adjusted the notional principal amount through the addition of contracts as the outstanding balance under the debt facility increased. On April 12, 2018, Management elected to convert all of the Fund’s existing interest rate cap contracts with notional amounts totaling $87.0 million into a cancellable interest rate swap agreement with a notional amount of $102.0 million with an effective date of March 30, 2018. As of December 31, 2019 and 2018, the Fund had no interest rate cap contracts as all the caps were terminated as of March 30, 2018 and converted to the cancellable interest rate swap agreement. The average notional amount of the caps was zero and $21.8 million for the years ended December 31, 2019 and 2018, respectively.

The Fund paid initial costs of $0.4 million for the cap agreement, which were amortized on a straight-line basis until the cap was terminated as of March 30, 2018.
    

67



For the years ended December 31, 2019, 2018 and 2017, the interest rate caps had the following effect on the Fund’s Statements of Operations:
Derivative
 
Location on Statements of Operations
 
For the Year Ended December 31, 2019
 
For the Year Ended December 31, 2018
 
For the Year Ended December 31, 2017
Interest rate cap agreement
 
Net realized gain (loss) from derivative instruments
 
$

 
$
571,704

 
$

 
Net change in unrealized gain (loss) from derivative instruments
 
$

 
$
(7,854
)
 
$
(52,189
)
9. INTEREST RATE SWAP AGREEMENT
On April 12, 2018, the Fund entered into an interest rate swap agreement with MUFG Union Bank , N.A. to manage the Fund's exposure to changes in interest rates on its expected borrowings under its debt facility which do not match the fixed rate loans it originates. The initial swap transaction under this agreement was a cancellable interest rate swap with a notional amount of $102.0 million. On June 14, 2019, the Fund entered into an interest rates swap and floor transaction with MUFG Union Bank, N.A. The addition of the floor further helps to align the swap with the terms of the variable rate index of the debt facility. The Fund may adjust the notional principal amount in order to remain in compliance with the hedging requirements of the Fund’s debt facility. As of December 31, 2019, the Fund had two interest rate swap transactions with an aggregate notional principal amount of $192.0 million.
The cancellable interest rate swap transaction with MUFG Union Bank, N.A. was converted from the interest rate caps, which were canceled in April 2018. Upon the conversion of the interest rate caps into the cancellable interest rate swap, the initial costs associated with the cap agreements were transferred to the swap. However, the total cost of $0.8 million was immediately recognized as a realized loss since the purchase value of the interest rate caps was used to reduce the fixed rate percentage of the interest rate swap agreement.
As of December 31, 2019 and 2018, the fair value of the Fund’s interest rate swaps were as follows:
 
 
December 31, 2019
 
December 31, 2018
Derivatives:
 
Location on Statements of Assets and Liabilities
 
Fair Value
 
Location on Statements of Assets and Liabilities
 
Fair Value
Interest rate swap agreement
 
Derivative liability - interest rate swap
 
347,183

 
Derivative asset - interest rate swap
 
616,148

The Fund pays a weighted-average fixed rate of 2.11% and receives from the counterparty a floating rate based upon an 1-Month LIBOR rate. Payments are made monthly. The payments and both interest rate swap transactions are expected to terminate on September 11, 2020. The cancellable swap transaction includes an option for the Fund to terminate the swap early on March 31, 2020. Payments to or from the counterparty are recorded to Net realized gain (loss) from derivative instruments. As of December 31, 2019, the 1-Month LIBOR rate was 1.7625%.
For the years ended December 31, 2019, 2018 and 2017, the interest rate swaps had the following effect on the Fund’s Statements of Operations:
Derivatives:
 
Location on Statements of Operations
 
For the Year Ended December 31, 2019
 
For the Year Ended December 31, 2018
 
For the Year Ended December 31, 2017
Interest rate swap agreement
 
Net realized gain (loss) from derivative instruments
 
$
85,453

 
$
(906,538
)
 
$

 
Net change in unrealized gain (loss) from derivative instruments
 
$
(963,331
)
 
$
616,148

 
$

10. TAX STATUS
The Fund has elected to be treated as a regulated investment company (“RIC”) under Subchapter M of the Internal Revenue Code of 1986 (the “Code”) and operates in a manner so as to qualify for the tax treatment applicable to RICs. Failing to maintain at least 70% of total assets in “qualifying assets” will result in the loss of BDC status, resulting in losing its favorable tax treatment as a RIC. As of December

68



31, 2019, the Fund has met the BDC and RIC requirements. The Fund elected to be treated for federal income tax purposes as a RIC under the Code with the filing of its federal corporate income tax return for 2016.

In order to qualify for favorable tax treatment as a RIC, the Fund is required to distribute annually to its shareholder at least 90% of its investment company taxable income, as defined by the Code. To avoid federal excise taxes, the Fund must distribute annually at least 98% of its ordinary income and 98.2% of net capital gains from the current year and any undistributed ordinary income and net capital gains from the preceding years. The Fund, at its discretion, may carry forward taxable income in excess of calendar year distributions and pay a 4% excise tax on this income. If the Fund chooses to do so, all other things being equal, this would increase expenses and reduce the amount available to be distributed to its shareholder. The Fund will accrue excise tax on estimated undistributed taxable income as required.

Below are tables summarizing the cost of investments for federal income tax purposes and the appreciation and depreciation of the investments reported on the Schedules of Investments and Statements of Assets and Liabilities.
    
As of December 31, 2019:
Asset
Cost
Unrealized Appreciation
Unrealized Depreciation
Net Appreciation (Depreciation)
Loans
$
379,044,418

$

$
(7,088,594
)
$
(7,088,594
)
Total
$
379,044,418

$

$
(7,088,594
)
$
(7,088,594
)
    
Derivative, liability
Cost
Unrealized Appreciation
Unrealized Depreciation
Net Appreciation (Depreciation)
Derivative liability - interest rate swap
$

$

$
(347,183
)
$
(347,183
)
Total
$

$

$
(347,183
)
$
(347,183
)

As of December 31, 2018:
Asset
Cost
Unrealized Appreciation
Unrealized Depreciation
Net Appreciation (Depreciation)
Loans
$
405,309,448

$

$
(6,328,917
)
$
(6,328,917
)
Total
$
405,309,448

$

$
(6,328,917
)
$
(6,328,917
)
    
Derivative, asset
Cost
Unrealized Appreciation
Unrealized Depreciation
Net Appreciation (Depreciation)
Derivative asset - interest rate swap
$

$
616,148

$

$
616,148

Total
$

$
616,148

$

$
616,148


Dividends from net investment income and distributions from net realized capital gains are determined in accordance with U.S. federal income tax regulations, which may differ from those amounts determined in accordance with U.S. GAAP. These book/tax differences are either temporary or permanent in nature. To the extent these differences are permanent, they are charged or credited to paid-in-capital or accumulated net realized gain (loss), as appropriate, in the period that the differences arise. Temporary and permanent differences are primarily attributable to differences in the tax treatment of certain loans and the tax characterization of income and non-deductible expenses. These differences are generally determined in conjunction with the preparation of the Fund’s annual RIC tax return.

Book and tax basis differences relating to shareholder dividends and distributions and other permanent book and tax differences are reclassified among the Fund’s capital accounts. As of December 31, 2019 and 2018, there were no book reclassification of dividends and distributions, and other permanent book and tax differences, among the Fund’s capital accounts. In addition, the character of income and gains to be distributed is determined in accordance with income tax regulations that may differ from U.S. GAAP. For income tax purposes, the distributions paid to the Parent are reported as ordinary income, return of capital, or a combination thereof. As of December 31, 2019, the tax character of distributions paid was ordinary income in the amount of $30.9 million and return of capital of $25.2 million. As of December 31, 2018, the distributions paid was ordinary income of $35.2 million and return of capital of $31.3 million.
    
    

69



As of December 31, 2019 and 2018, the components of distributable losses on a tax basis were as follows:
    
 
December 31, 2019
December 31, 2018
Accumulated capital losses
$
(33,610,732
)
$
(19,473,103
)
Other temporary differences
(4,499,485
)
(4,510,089
)
Distributions in excess of net investment income
(62,443,841
)
(51,335,087
)
Net unrealized depreciation
(7,435,778
)
(5,712,770
)
Components of distributable losses
$
(107,989,836
)
$
(81,031,049
)


As of December 31, 2019, the Fund had no undistributed earnings. Additionally, for the year ended December 31, 2019, distributions were made in excess of distributable earnings by $25.3 million. The Fund may pay distributions in excess of its taxable net investment income. This excess would be a tax-free return of capital in the period and reduce the shareholder’s tax basis in its shares.

The Fund’s tax returns remain open for examination by the federal government for a period of three years and California tax authorities for a period of four years from when they are filed. As of December 31, 2019, the Fund had no uncertain tax positions and no capital loss carryforwards.
11. UNEXPIRED UNFUNDED COMMITMENTS
As of December 31, 2019 and 2018, the Fund’s unexpired unfunded commitments to borrowers totaled $78.0 million and $64.9 million, respectively. Because venture loans are privately negotiated transactions, investments in these assets are relatively illiquid. It is the Manager’s experience that not all unexpired unfunded commitments will be used by the borrowers. Many credit agreements contain provisions which are milestone dependent and not all borrowers will achieve these milestones. Additionally, the Fund’s credit agreements contain provisions that give relief from funding obligations in the event the borrower has a material adverse change to its financial condition. Therefore, the unexpired unfunded commitments do not necessarily reflect future cash requirements or future investments for the Fund.

The tables below are the Fund’s unexpired unfunded commitments as of December 31, 2019 and 2018.
    

70




    
Borrower
Industry
Unexpired Unfunded Commitment as of December 31, 2019
Expiration Date
Ablacon, Inc.
Medical Devices
$
2,500,000

01/31/2020
Ainsly, Inc.
Internet
1,500,000

01/31/2020
AirVine Scientific, Inc.
Wireless
125,000

03/31/2020
Apollo Flight Research Inc.
Other Technology
250,000

01/31/2020
ArborMetrix, Inc.
Software
750,000

04/30/2020
Beanfields, PBC
Other Technology
625,000

06/30/2020
BWI Industries, Inc.
Other Technology
2,000,000

07/31/2020
Callisto Media, Inc.
Technology Services
10,000,000

12/31/2020
Canary Technologies Corp.
Software
250,000

09/30/2020
Cesium, Inc.
Internet
375,000

03/31/2020
Cloudleaf, Inc.
Software
1,500,000

10/15/2020
DOSH Holdings, Inc.
Other Technology
3,750,000

01/15/2020
eXo Imaging, Inc.
Medical Devices
6,000,000

11/30/2020
GoForward, Inc.
Other Healthcare
6,250,000

07/01/2020
Hello Heart Inc.
Other Healthcare
1,750,000

08/31/2020
HumanAPI, Inc.
Other Healthcare
500,000

01/31/2020
Kids on 45th, Inc.
Internet
500,000

01/31/2020
Klar Holdings Limited
Technology Services
250,000

03/31/2020
Lifit, Inc.
Technology Services
500,000

01/30/2020
Lucideus, Inc.
Software
500,000

07/15/2020
Lukla, Inc.
Internet
750,000

01/31/2021
Marley Spoon, Inc.
Internet
3,750,000

07/31/2020
Medable, Inc.
Software
2,000,000

07/31/2020
Merchbar, Inc.
Internet
250,000

01/30/2020
Noteleaf, Inc.
Other Technology
1,000,000

01/31/2020
OneLocal, Inc.
Internet
1,000,000

07/31/2020
Owl Cameras, Inc.
Software
3,000,000

01/01/2020
Parallel Wireless, Inc.
Wireless
6,500,000

03/31/2020
Percepto, Inc.
Other Technology
1,000,000

05/31/2020
Pitzi, Ltd.
Other Technology
2,500,000

11/30/2020
Quartzy, Inc.
Biotechnology
2,250,000

10/15/2020
Solugen, Inc.
Technology Services
1,250,000

01/31/2020
Stay Alfred, Inc.
Internet
7,500,000

06/30/2020
Stitch Labs, Inc.
Software
750,000

01/31/2020
The Safe and Fair Food Company LLC
Other Technology
1,250,000

01/31/2020
Trendalytics Innovation Labs, Inc.
Software
450,000

01/31/2020
Visual Supply Company
Internet
2,500,000

03/31/2020
Voodoo Manufacturing, Inc.
Other Technology
375,000

02/28/2020
Total
 
$
77,950,000

 

    

71




    
Borrower
Industry
Unexpired Unfunded Commitment as of December 31, 2018
Expiration Date
Aclima, Inc.
Other Technology
$
875,000

05/31/2019
Antheia, Inc.
Biotechnology
1,500,000

12/31/2019
Blockdaemon, Inc.
Software
250,000

01/31/2019
Brightside Benefit, Inc.
Other Technology
1,000,000

05/31/2019
Callisto Media, Inc.
Technology Services
3,000,000

03/31/2019
Caredox, Inc.
Other Healthcare
625,000

04/30/2019
CytoVale, Inc.
Medical Devices
1,125,000

02/28/2019
Discover Echo, Inc.
Other Healthcare
1,000,000

02/28/2019
Emerald Cloud Lab, Inc.
Other Healthcare
6,556,001

03/30/2019
Figure 1, Inc.
Internet
1,000,000

04/01/2019
Fitplan, Inc.
Other Technology
250,000

01/31/2019
FLYR, Inc.
Internet
1,500,000

07/31/2019
Hometap Equity Partners LLC
Other Technology
2,000,000

03/31/2019
Invoice2Go, Inc.
Software
4,000,000

12/31/2019
Ipolipo, Inc.
Software
750,000

07/31/2019
Karamba Security Ltd.
Security
8,500,000

03/31/2019
Keyo AI Inc
Technology Services
500,000

01/31/2019
Kogniz, Inc.
Other Technology
375,000

04/30/2019
Linden Research Inc.
Internet
5,000,000

01/15/2019
Metricly, Inc.
Software
500,000

04/30/2019
NeuMoDx Molecular, Inc.
Medical Devices
6,500,000

09/30/2019
OrderGroove, Inc.
Software
2,500,000

09/30/2019
Osix Corp.
Internet
150,000

07/31/2019
Plethora, Inc
Other Technology
500,000

01/31/2019
PlushCare, Inc.
Software
750,000

07/31/2019
RadiAction Ltd.
Medical Devices
1,000,000

01/30/2019
Relimetrics, Inc.
Technology Services
375,000

04/15/2019
Robin Care, Inc.
Other Healthcare
500,000

01/31/2019
Skillshare, Inc.
Software
2,000,000

04/30/2019
SkyKick, Inc.
Other Technology
2,500,000

02/28/2019
SnapRoute, Inc,
Enterprise Networking
1,500,000

02/28/2019
Stitch Labs, Inc.
Software
1,500,000

07/31/2019
Therapydia, Inc.
Other Healthcare
300,000

01/31/2019
Venuetize, LLC
Software
500,000

09/30/2019
Virtuix Holdings, Inc.
Other Technology
250,000

07/31/2019
Workspot, Inc.
Software
1,000,000

01/31/2019
Zeel Networks, Inc.
Technology Services
2,750,000

03/31/2019
Total
 
$
64,881,001

 


12. FINANCIAL HIGHLIGHTS

U.S. GAAP requires disclosure of financial highlights of the Fund for the years ended December 31, 2019, 2018, 2017, 2016 and the period ended December 31, 2015.

72



The total rate of return is defined as the return based on the change in value during the period of a theoretical investment made at the beginning of the period. The total rate of return assumes a constant rate of return for the Fund during the period reported and weights each cash flow by the amount of time held in the Fund. This required methodology differs from an internal rate of return.
The ratios of expenses and net investment income (loss) to average net assets for the period from August 12, 2015, commencement of the Fund’s operations, through December 2015, are not annualized and are computed based upon the aggregate weighted-average net assets of the Fund for the period. The annualizing of these ratios would not be meaningful given the short duration of this period. For the years ended December 31, 2019, 2018, 2017 and 2016, the ratios of expenses and net investment income (loss) to average net assets are annualized and are computed based upon the weighted-average net assets of the Fund for the periods presented. Net investment income (loss) is inclusive of all investment income (losses) net of expenses and excludes realized or unrealized gains and losses.
    
Beginning and ending net asset values per share are based on the beginning and ending number of shares outstanding. Other per share information was calculated based upon the aggregate weighted-average net assets of the Fund for the periods presented.

The financial highlights presented below are for the years ended December 31, 2019, 2018, 2017, 2016 and the period ended December 31, 2015:
 
For the Year Ended
 
For the Year Ended
 
For the Year Ended
 
For the Year Ended
 
For the Period Ended
 
December 31, 2019
 
December 31, 2018
 
December 31, 2017
 
December 31, 2016
 
December 31, 2015*
 
 
 
 
 
 
 
 
 
 
Total return
14.36
%
 
15.85
%
 
10.79
%
 
(6.80
)%
 
(29.86
)%
 
 
 
 
 
 
 
 
 
 
Per share amounts:
 
 
 
 
 
 
 
 
 
Net asset value, beginning of year/period
$
2,165.44

 
$
1,648.31

 
$
810.72

 
$
320.59

 
$
0.25

 
 
 
 
 
 
 
 
 
 
Net investment income (loss)
450.09

 
498.31

 
209.30

 
(7.46
)
 
(37.88
)
Net realized and change in unrealized loss from loans and derivative instruments
(158.61
)
 
(160.70
)
 
(58.60
)
 
(32.56
)
 

Net increase (decrease) in net assets resulting from operations
291.48

 
337.61

 
150.70

 
(40.02
)
 
(37.88
)
 
 
 
 
 
 
 
 
 
 
Distributions to shareholder
(561.07
)
 
(665.48
)
 
(464.61
)
 
(68.85
)
 
(21.78
)
Contributions from shareholder
170.00

 
845.00

 
1,151.50

 
599.00

 
380.00

Net asset value, end of year/period
$
2,065.85

 
$
2,165.44

 
$
1,648.31

 
$
810.72

 
$
320.59

 
 
 
 
 
 
 
 
 
 
Net assets, end of year/period
$
206,585,164

 
$
216,543,951

 
$
164,831,060

 
$
81,071,642

 
$
32,058,748

 
 
 
 
 
 
 
 
 
 
Ratios to average net assets:
 
 
 
 
 
 
 
 
 
Expenses
9.72
%
 
9.57
%
 
11.02
%
 
20.48
 %
 
23.60
 %
Net investment income (loss)
21.31
%
 
22.09
%
 
15.13
%
 
(1.22
)%
 
(20.26
)%
Portfolio turn-over rate
0.60
%
 
0%

 
0%

 
0%

 
0%

Average debt outstanding**
$
179,807,692

 
$
191,269,231

 
$
103,207,692

 
$
35,111,111

 
$

* From August 12, 2015, commencement of the Fund’s operations, through December 31, 2015.
** For the periods through which debt was outstanding.
13. SUBSEQUENT EVENTS
The Fund evaluated subsequent events through the date the financial statements were issued and determined that no additional subsequent events had occurred that would require accrual or disclosure in the financial statements.

73