Venture Lending & Leasing VIII, Inc. - FORM 10-Q - August 12, 2021

Attached files

file filename
EX-32.2 - VLL8INC 10-Q 06.30.2021 EX-32.2 - Venture Lending & Leasing VIII, Inc.vll810q063021ex322.htm
EX-32.1 - VLL8INC 10-Q 06.30.2021 EX-32.1 - Venture Lending & Leasing VIII, Inc.vll810q063021ex321.htm
EX-31.2 - VLL8INC 10-Q 06.30.2021 EX-31.2 - Venture Lending & Leasing VIII, Inc.vll810q063021ex312.htm
EX-31.1 - VLL8INC 10-Q 06.30.2021 EX-31.1 - Venture Lending & Leasing VIII, Inc.vll810q063021ex311.htm

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

FORM 10-Q

[X]QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2021

[  ]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)
Maryland47-3919702
(State or other jurisdiction of incorporation or organization)(I.R.S. Employer Identification No.)
104 La Mesa Drive, Suite 102, Portola Valley, CA94028
(Address of principal executive offices)(Zip Code)

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

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

Indicate by check mark whether the registrant (1) 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 (2) 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 whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes [ ]  No [x]

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date:
ClassOutstanding as of August 12, 2021
Common Stock, $0.001 par value100,000



VENTURE LENDING & LEASING VIII, INC.
INDEX
PART I — FINANCIAL INFORMATION
Item 1.Financial Statements
Condensed Statements of Assets and Liabilities (Unaudited)
As of June 30, 2021 and December 31, 2020
Condensed Statements of Operations (Unaudited)
For the three and six months ended June 30, 2021 and 2020
Condensed Statements of Changes in Net Assets (Unaudited)
For the three and six months ended June 30, 2021 and 2020
Condensed Statements of Cash Flows (Unaudited)
For the six months ended June 30, 2021 and 2020
Condensed Schedules of Investments (Unaudited)
As of June 30, 2021 and December 31, 2020
Condensed Schedules of Derivative Instruments (Unaudited)
As of June 30, 2021 and December 31, 2020
Notes to Condensed Financial Statements (Unaudited)
Item 2.Management’s Discussion and Analysis of Financial Condition and Results of Operations
Item 3.Quantitative and Qualitative Disclosures About Market Risk
Item 4.Controls and Procedures
PART II — OTHER INFORMATION
Item 1.Legal Proceedings
Item 1A.Risk Factors
Item 2.Unregistered Sales of Equity Securities and Use of Proceeds
Item 3.Defaults Upon Senior Securities
Item 4.Mine Safety Disclosures
Item 5.Other Information
Item 6.Exhibits
SIGNATURES


PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

VENTURE LENDING & LEASING VIII, INC.

CONDENSED STATEMENTS OF ASSETS AND LIABILITIES (UNAUDITED)
AS OF JUNE 30, 2021 AND DECEMBER 31, 2020

 June 30, 2021December 31, 2020
ASSETS
Loans, at estimated fair value
   (cost of $211,959,559 and $288,221,039)$194,333,211 $264,629,798 
Cash and cash equivalents4,862,822 8,751,396 
Dividend and interest receivables2,380,766 3,241,010 
Other assets1,436,644 1,633,669 
Total assets203,013,443 278,255,873 
  
LIABILITIES
Borrowings under debt facility87,500,000 115,500,000 
Accrued management fees1,268,834 1,739,099 
Derivative liability41,351 61,242 
Accounts payable and other accrued liabilities627,583 1,221,648 
Total liabilities89,437,768 118,521,989 
  
NET ASSETS$113,575,675 $159,733,884 
  
Analysis of Net Assets: 
  
Capital paid in on shares of capital stock$352,075,000 $352,075,000 
Total distributable losses(238,499,325)(192,341,116)
Net assets (equivalent to $1,135.76 and $1,597.34 per share based on 100,000 shares of capital stock outstanding - See Note 5 and Note 11)$113,575,675 $159,733,884 
Commitments & Contingent Liabilities:
Unexpired unfunded commitments (See Note 10)$5,125,000 $22,325,000 









See notes to condensed financial statements (unaudited).
3

VENTURE LENDING & LEASING VIII, INC.

CONDENSED STATEMENTS OF OPERATIONS (UNAUDITED)
FOR THE THREE MONTHS ENDED JUNE 30, 2021 AND 2020

 For the Three Months Ended June 30, 2021For the Three Months Ended June 30, 2020  For the Six Months Ended June 30, 2021 For the Six Months Ended June 30, 2020
 
INVESTMENT INCOME:
Interest on loans$9,336,918 $13,346,400 $19,060,569 $29,036,496 
Other interest and other income318 12,808 811 529,960 
Total investment income9,337,236 13,359,208 19,061,380 29,566,456 
 
EXPENSES:
Management fees1,268,834 2,223,779 2,817,627 4,559,205 
Interest expense868,907 1,547,167 1,834,893 3,589,177 
Banking and professional fees684,422 134,243 803,596 253,297 
Other operating expenses29,368 27,565 59,803 95,755 
Total expenses2,851,531 3,932,754 5,515,919 8,497,434 
Net investment income6,485,705 9,426,454 13,545,461 21,069,022 
 
Net realized loss from loans(1,734,408)(546,608)(1,843,279)(981,486)
Net realized loss from derivative instruments(13,249)(349,050)(25,271)(555,589)
Net change in unrealized gain (loss) from loans2,677,914 638,199 5,964,893 (13,205,864)
Net change in unrealized gain (loss) from derivative instruments7,210 267,029 19,891 (6,239)
Net realized and change in unrealized gain (loss) from loans and derivative instruments937,467 9,570 4,116,234 (14,749,178)
Net increase in net assets resulting from operations$7,423,172 $9,436,024 $17,661,695 $6,319,844 
Amounts per common share:
Net increase in net assets resulting from operations per share$74.23 $94.36 $176.62 $63.20 
Weighted average shares outstanding100,000 100,000 100,000 100,000 






See notes to condensed financial statements (unaudited).
4

VENTURE LENDING & LEASING VIII, INC.

CONDENSED STATEMENTS OF CHANGES IN NET ASSETS (UNAUDITED)
FOR THE THREE MONTHS ENDED JUNE 30, 2021 AND 2020

    
Common stock
 SharesPar valueAdditional paid-in capitalTotal distributable earnings (loss)Net assets
Balance at March 31, 2020100,000 $100 $345,074,900 $(145,584,629)$199,490,371 
Net increase in net assets resulting from operations— — — 9,436,024 9,436,024 
Distributions to shareholder— — — (9,676,577)(9,676,577)
Balance at June 30, 2020100,000 $100 $345,074,900 $(145,825,182)$199,249,818 
 
Balance at March 31, 2021100,000 $100 $352,074,900 $(215,743,231)$136,331,769 
Net increase in net assets resulting from operations— — — 7,423,172 7,423,172 
Distributions to shareholder— — — (30,179,266)(30,179,266)
Balance at June 30, 2021100,000 $100 $352,074,900 $(238,499,325)$113,575,675 
Balance at December 31, 2019100,000 $100 $314,574,900 $(107,989,836)$206,585,164 
Net increase in net assets resulting from operations— — — 6,319,844 6,319,844 
Distributions to shareholder— — — (44,155,190)(44,155,190)
Contributions from shareholder— — 30,500,000 — 30,500,000 
Balance at June 30, 2020100,000 $100 $345,074,900 $(145,825,182)$199,249,818 
 
Balance at December 31, 2020100,000 $100 $352,074,900 $(192,341,116)$159,733,884 
Net increase in net assets resulting from operations— — — 17,661,695 17,661,695 
Distributions to shareholder— — — (63,819,904)(63,819,904)
Balance at June 30, 2021100,000 $100 $352,074,900 $(238,499,325)$113,575,675 


See notes to condensed financial statements (unaudited).
5

VENTURE LENDING & LEASING VIII, INC.

CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED)
FOR THE SIX MONTHS ENDED JUNE 30, 2021 AND 2020
For the Six Months EndedFor the Six Months Ended
 Ended June 30, 2021
Ended June 30, 2020 (a)
CASH FLOWS FROM OPERATING ACTIVITIES: 
Net increase in net assets resulting from operations$17,661,695 $6,319,844 
Adjustments to reconcile net increase in net assets resulting from operations to net cash provided by operating activities: 
Net realized loss from loans1,843,279 981,486 
Net realized loss from derivative instruments25,271 555,589 
Net change in unrealized (gain) loss from loans(5,964,893)13,205,864 
Net change in unrealized (gain) loss from derivative instruments(19,891)6,239 
Amortization of deferred costs related to borrowing facility
273,623 295,984 
Net decrease in dividend and interest receivables860,244 400,336 
Net increase in other assets(76,598)(462,819)
Net decrease in accounts payable, other accrued liabilities and accrued management fees(1,064,330)(645,798)
Origination of loans(1,500,000)(74,716,667)
Principal payments on loans70,078,236 77,582,166 
Accretion of discount on loans3,726,073 5,529,565 
Proceeds from sale of loan1,425,000 — 
Acquisition of equity securities(31,012)(4,561,308)
Net cash provided by operating activities87,236,697 24,490,481 
CASH FLOWS FROM FINANCING ACTIVITIES: 
Cash distributions to shareholder(63,100,000)(38,500,000)
Contributions from shareholder— 30,500,000 
Borrowings under debt facility27,500,000 46,000,000 
Repayments of borrowings under debt facility(55,500,000)(72,000,000)
Payments made for derivative instruments(25,271)(555,589)
Net cash used in financing activities(91,125,271)(34,555,589)
Net decrease in cash and cash equivalents(3,888,574)(10,065,108)
CASH AND CASH EQUIVALENTS: 
Beginning of period8,751,396 12,569,629 
End of period$4,862,822 $2,504,521 
SUPPLEMENTAL DISCLOSURES: 
CASH PAID DURING THE PERIOD:   
Interest - Debt facility$1,666,338 $3,342,601 
NON-CASH OPERATING AND FINANCING ACTIVITIES:   
Distributions of equity securities to shareholder$719,904 $5,655,190 
Receipt of equity securities as repayment of loans$688,892 $1,093,882 
(a) Certain prior period information has been disclosed to conform to current presentation

See notes to condensed financial statements (unaudited).
6

VENTURE LENDING & LEASING VIII, INC.

CONDENSED SCHEDULE OF INVESTMENTS (UNAUDITED)
AS OF JUNE 30, 2021


IndustryBorrowerPercent of Net Assets (a)CollateralInterest Rate
(b)		End of Term Payment (c)PrincipalCostFair ValueFinal Maturity Date
Biotechnology
Antheia, Inc.Senior Secured11.5%$ 939,949$ 917,303$ 917,30312/1/2022
Antheia, Inc.Senior Secured11.5%940,885932,617932,61712/1/2022
Antheia, Inc. Subtotal1,880,8341,849,9201,849,920
Driver Bioengineering, Inc.Senior Secured11.0%282,066257,064257,0644/1/2023
Driver Bioengineering, Inc.Senior Secured11.0%711,721700,130700,1306/1/2023
Driver Bioengineering, Inc. Subtotal993,787957,194957,194
Orpheus Therapeutics, Inc.Senior Secured18.0%178,510174,288-*
Quartzy, Inc.Senior Secured12.0%603,986552,096552,0968/1/2023
Quartzy, Inc.Senior Secured12.0%1,112,4861,090,6321,090,6325/1/2024
Quartzy, Inc.Senior Secured12.0%1,112,8911,088,8621,088,8627/1/2024
Quartzy, Inc. Subtotal2,829,3632,731,5902,731,590
Biotechnology Total4.9%$ 5,882,494$ 5,712,992$ 5,538,704
Computers & Storage
Canary Connect, Inc.Senior Secured12.8%$ 1,809,417$ 1,772,777$ 1,772,7773/1/2023
Fetch Robotics, Inc.Senior Secured12.0%1,484,5281,456,9321,456,9326/1/2024
Fetch Robotics, Inc.Senior Secured12.0%7,413,9457,159,1537,159,1536/1/2024
Fetch Robotics, Inc. Subtotal8,898,4738,616,0858,616,085
Computers & Storage Total9.1%$ 10,707,890$ 10,388,862$ 10,388,862
Internet
Ainsly, Inc. ** ^Senior Secured12.5%$ 225,844$ 204,259$ 204,2599/1/2023
Ainsly, Inc. ** ^Senior Secured12.5%374,853359,748359,7488/1/2022
Ainsly, Inc. ** ^Senior Secured12.5%124,960124,960124,9608/1/2022
Ainsly, Inc. ** ^ Subtotal725,657688,967688,967
Bombfell, Inc.Senior Secured18.0%597,384274,705-*
Daily Muse, Inc.Senior Secured11.0%3,699,2673,680,0723,680,0727/1/2023
FLYR, Inc.Senior Secured11.7%1,651,9471,590,5651,590,5651/1/2022
Lenddo International ** ^Senior Secured18.0%795,048544,70319,966*
Merchbar, Inc.Senior Secured11.8%361,007348,035348,0353/1/2023
MyPizza Technologies, Inc.Senior Secured11.5%2,470,1892,442,9132,442,9132/1/2024
MyPizza Technologies, Inc.Senior Secured11.5%4,939,6964,820,6864,820,68612/1/2023
MyPizza Technologies, Inc. Subtotal7,409,8857,263,5997,263,599
Nimble Rx, Inc.Senior Secured12.0%1,200,7421,164,9641,164,96411/1/2023
Nimble Rx, Inc.Senior Secured12.0%864,395805,875805,8752/1/2023
Nimble Rx, Inc. Subtotal2,065,1371,970,8391,970,839
OneLocal, Inc. ** ^Senior Secured12.3%844,634778,132778,1323/1/2023
Osix CorporationSenior Secured12.3%22,26621,44621,44612/1/2021
7

IndustryBorrowerPercent of Net Assets (a)CollateralInterest Rate
(b)		End of Term Payment (c)PrincipalCostFair ValueFinal Maturity Date
RenoFi, Inc.Senior Secured12.0%203,667200,240200,2406/1/2023
RenoFi, Inc.Senior Secured12.0%203,556193,064193,0646/1/2023
RenoFi, Inc. Subtotal407,223393,304393,304
Residently USA, LLC ** ^Senior Secured12.0%691,812638,290638,2902/1/2023
Residently USA, LLC ** ^Senior Secured12.0%371,056371,056371,05612/1/2023
Residently USA, LLC ** ^ Subtotal1,062,8681,009,3461,009,346
Serface Care, Inc.Senior Secured12.3%961,139510,15947,617*
Shadow, PBCSenior Secured11.5%351,852335,701335,70110/1/2022
Stay Alfred, Inc.Senior Secured18.0%10,337,9678,252,3311,518,081*
Verishop, Inc.Senior Secured12.0%2,118,2072,042,2462,042,24612/1/2023
Verishop, Inc.Senior Secured12.0%2,119,0082,093,9292,093,92912/1/2023
Verishop, Inc. Subtotal4,237,2154,136,1754,136,175
Internet Total21.0%$ 35,530,496$ 31,798,079$ 23,801,845
Medical Devices
Ablacon, Inc.Senior Secured11.0%$ 1,802,657$ 1,781,800$ 1,781,8003/1/2023
Ablacon, Inc.Senior Secured11.0%1,801,9931,746,0791,746,0793/1/2023
Ablacon, Inc. Subtotal3,604,6503,527,8793,527,879
Anutra Medical, Inc.Senior Secured12.0%141,074137,525137,52510/1/2022
CytoVale, Inc.Senior Secured12.0%429,534412,130412,13010/1/2023
CytoVale, Inc.Senior Secured12.0%189,207185,283185,2833/1/2022
CytoVale, Inc.Senior Secured12.0%214,429212,834212,8347/1/2022
CytoVale, Inc.Senior Secured12.0%248,627246,915246,9156/1/2022
CytoVale, Inc.Senior Secured12.0%442,914436,281436,28111/1/2023
CytoVale, Inc. Subtotal1,524,7111,493,4431,493,443
eXo Imaging, Inc.Senior Secured11.8%1,806,9731,775,0231,775,0239/1/2023
eXo Imaging, Inc.Senior Secured11.8%1,805,3601,704,5941,704,5949/1/2023
eXo Imaging, Inc. Subtotal3,612,3333,479,6173,479,617
Medrobotics Corporation, Inc.Senior Secured18.0%10,000,0008,793,5643,275,463*
RadiAction Ltd. ** ^Senior Secured11.5%148,874147,510147,51010/1/2021
RadiAction Ltd. ** ^Senior Secured11.5%361,799359,502359,5024/1/2022
RadiAction Ltd. ** ^ Subtotal510,673507,012507,012
Renovia, Inc.Senior Secured10.5%6,938,1596,148,8446,148,8441/1/2023
Medical Devices Total16.4%$ 26,331,600$ 24,087,884$ 18,569,783
Other Healthcare
Emerald Cloud Lab, Inc.Senior Secured11.8%$ 541,834$ 530,119$ 530,11912/1/2021
GoForward, Inc.Senior Secured11.5%3,093,2093,020,3243,020,3246/1/2024
GoForward, Inc.Senior Secured11.5%5,637,8085,320,4065,320,4069/1/2023
GoForward, Inc. Subtotal8,731,0178,340,7308,340,730
Hello Heart Inc.Senior Secured11.0%720,865711,581711,58111/1/2023
Hello Heart Inc.Senior Secured11.0%751,999743,792743,7924/1/2023
Hello Heart Inc.Senior Secured10.8%37,45237,31837,3187/1/2021
Hello Heart Inc.Senior Secured10.8%221,832221,177221,17710/1/2021
Hello Heart Inc.Senior Secured11.0%939,734907,828907,8284/1/2023
Hello Heart Inc. Subtotal2,671,8822,621,6962,621,696
HumanAPI, Inc.Senior Secured11.8%1,239,4091,191,2191,191,2197/1/2023
8

IndustryBorrowerPercent of Net Assets (a)CollateralInterest Rate
(b)		End of Term Payment (c)PrincipalCostFair ValueFinal Maturity Date
mPharma Data, Inc. ** ^Senior Secured10.0%504,399501,664501,66411/1/2021
Myolex, Inc.Senior Secured18.0%762,531726,537211,873*
Robin Care, Inc.Senior Secured11.5%319,275303,300303,3006/1/2022
SchoolCare, Inc.Senior Secured11.8%627,896621,255621,2557/1/2022
Sparta Software CorporationSenior Secured11.5%2.2%206,958203,705203,7055/1/2022
Therapydia, Inc.Senior Secured11.5%169,276167,187167,1871/1/2023
Therapydia, Inc.Senior Secured11.5%127,635123,414123,4148/1/2022
Therapydia, Inc.Senior Secured12.5%1.7%88,46688,46688,4666/1/2023
Therapydia, Inc.Senior Secured11.5%161,111159,216159,21612/1/2022
Therapydia, Inc.Senior Secured12.0%1.7%78,81575,29875,2983/1/2023
Therapydia, Inc. Subtotal625,303613,581613,581
Other Healthcare Total13.3%$ 16,230,504$ 15,653,806$ 15,139,142
Other Technology
Abiquo Group, Inc. ** ^Senior Secured12.0%$ 54,713$ 53,294$ 34,471*
Aclima, Inc.Senior Secured11.9%455,267429,417429,4174/1/2022
Aclima, Inc.Senior Secured12.0%1,864,6351,683,4351,683,43510/1/2023
Aclima, Inc. Subtotal2,319,9022,112,8522,112,852
Antitoxin Technologies Inc. ** ^Senior Secured11.5%265,206255,986255,9869/1/2022
ATeam Army, Inc.Senior Secured12.0%942,037905,973905,9734/1/2023
Beanfields, PBCSenior Secured12.5%1,143,2221,110,1411,110,1413/1/2023
Benson Hill Bio, Inc.Senior Secured12.5%9,650,0469,121,7999,121,7995/1/2024
Brightside Benefit, Inc.Senior Secured12.1%341,906331,949331,9499/1/2022
Brightside Benefit, Inc.Senior Secured12.4%620,533614,282614,2823/1/2023
Brightside Benefit, Inc. Subtotal962,439946,231946,231
BW Industries, Inc.Senior Secured11.8%1,499,8811,479,2881,479,2886/1/2023
BW Industries, Inc.Senior Secured11.8%1,444,3661,358,6911,358,6915/1/2023
BW Industries, Inc. Subtotal2,944,2472,837,9792,837,979
Consumer Physics, Inc. ** ^Senior Secured11.0%261,581258,862258,86212/1/2021
Eguana Technologies, Inc. ** ^Senior Secured12.5%388,205378,682378,6822/1/2022
Finiks, Inc.Senior Secured2.7%667,5005,07139,875*
Fitplan, Inc. ** ^Senior Secured12.5%1,217,7651,008,5451,008,545*
Flo Water, Inc.Senior Secured11.8%1,695,0841,626,5261,626,52612/1/2023
Heartwork, Inc.Senior Secured18.0%379,462371,98120,443*
Higher Ground Education, Inc.Senior Secured12.5%1,524,4911,474,7501,474,7501/1/2023
Higher Ground Education, Inc.Senior Secured12.5%402,908397,622397,6228/1/2023
Higher Ground Education, Inc.Senior Secured12.5%361,802357,475357,4755/1/2023
Higher Ground Education, Inc.Senior Secured12.5%1,043,3751,031,5741,031,5744/1/2023
Higher Ground Education, Inc. Subtotal3,332,5763,261,4213,261,421
Hint, Inc.Senior Secured12.0%4,457,3214,114,6284,114,6286/1/2023
Hint, Inc.Senior Secured11.0%186,928185,042185,0428/1/2021
Hint, Inc.Senior Secured11.0%93,83793,83793,8377/1/2021
Hint, Inc. Subtotal4,738,0864,393,5074,393,507
Jiko Group, Inc.Senior Secured12.0%2,851,1032,752,8892,752,8896/1/2023
Lambda School, Inc.Senior Secured11.3%2,182,6822,182,6822,182,6828/1/2023
Lambda School, Inc.Senior Secured11.3%4,216,0704,047,2184,047,2187/1/2023
Lambda School, Inc. Subtotal6,398,7526,229,9006,229,900
9

IndustryBorrowerPercent of Net Assets (a)CollateralInterest Rate
(b)		End of Term Payment (c)PrincipalCostFair ValueFinal Maturity Date
Make School, Inc.Senior Secured11.3%197,77692,29185,966*
Merlin Labs, Inc.Senior Secured11.0%214,412210,439210,4396/1/2022
Merlin Labs, Inc.Senior Secured11.0%164,576162,816162,8161/1/2023
Merlin Labs, Inc. Subtotal378,988373,255373,255
Neuehouse, LLCSenior Secured12.0%1,750,0001,292,7651,742,318*
NewGlobe Schools, Inc. ** ^Senior Secured12.5%1,998,2051,959,1251,959,1258/1/2022
NewGlobe Schools, Inc. ** ^Senior Secured12.5%3,057,4812,956,6352,956,6358/1/2023
NewGlobe Schools, Inc. ** ^ Subtotal5,055,6864,915,7604,915,760
Northern Quinoa Production Corporation ** ^Senior Secured10.7%4,650,3054,506,8144,506,81412/1/2022
Noteleaf, Inc.Senior Secured18.0%2,277,1241,920,971788,192*
Opya, Inc.Senior Secured12.0%1,021,073998,416998,41611/1/2023
Ozy Media, Inc.Senior Secured12.8%2,037,0081,978,4311,978,4316/1/2023
Percepto, Inc.Senior Secured12.2%1,270,4681,224,1151,224,1154/1/2023
Pitzi, Ltd. ** ^Senior Secured12.0%1,413,8651,377,1711,377,1714/1/2024
Plant Prefab, Inc.Senior Secured11.0%686,216665,116665,1168/1/2022
Platform Science, Inc.Senior Secured12.0%366,688358,720358,7202/1/2022
Plenty Unlimited, Inc.Senior Secured9.0%11.7%542,935539,950539,9509/1/2021
Plethora, Inc.Senior Secured11.2%1,965,6291,888,5601,888,5607/1/2022
Romaine Empire, Inc.Senior Secured12.3%4,878,5914,697,9364,697,9369/1/2023
Saltbox, Inc.Senior Secured12.3%349,182338,897338,8976/1/2023
SMS OPCO LLCSenior Secured8.0%35,37516,62516,625*
Sustainable Living Partners, LLCSenior Secured12.5%3,749,0923,411,7153,411,7158/1/2023
UniEnergy Technologies LLCSenior Secured12.3%1,351,2341,328,852893,858*
Veev Group, Inc.Senior Secured12.5%3,054,8493,015,3523,015,3526/1/2023
Veev Group, Inc.Senior Secured12.5%223,117220,774220,77412/1/2021
Veev Group, Inc.Senior Secured12.5%1,018,068941,227941,2276/1/2023
Veev Group, Inc. Subtotal4,296,0344,177,3534,177,353
Velo Holdings LimitedSenior Secured12.0%2,471,7202,103,9451,508,083*
Welcome Tech, Inc.Senior Secured10.5%371,492357,187357,1875/1/2022
Wheels Labs, Inc.Senior Secured12.5%2,595,3082,499,3502,499,3508/1/2022
Wine Plum, Inc.Senior Secured12.5%532,794520,739520,7399/1/2022
Other Technology Total68.0%$ 84,456,509$ 79,216,573$ 77,160,609
Security
Axonius, Inc.Senior Secured12.0%$ 56,378$ 56,045$ 56,0459/1/2021
Karamba Security Ltd. ** ^Senior Secured12.0%646,645623,426623,4266/1/2022
Nok Nok Labs, Inc.Senior Secured12.5%371,118367,866367,8666/1/2022
Safetrust Holdings, Inc.Senior Secured12.5%64,43858,12558,1258/1/2021
Security Total1.0%$ 1,138,579$ 1,105,462$ 1,105,462
Semiconductors & Equipment
ETA Compute, Inc.Senior Secured12.0%$ 279,096$ 276,653$ 276,65311/1/2021
Semiconductors & Equipment Total0.2%$ 279,096$ 276,653$ 276,653
10

IndustryBorrowerPercent of Net Assets (a)CollateralInterest Rate
(b)		End of Term Payment (c)PrincipalCostFair ValueFinal Maturity Date
Software
ArborMetrix, Inc.Senior Secured11.5%$ 396,230$ 396,230$ 396,2306/1/2022
ArborMetrix, Inc.Senior Secured11.5%1,386,2881,364,6661,364,6666/1/2022
ArborMetrix, Inc.Senior Secured12.5%624,913611,033611,0339/1/2023
ArborMetrix, Inc.Senior Secured12.5%1,248,8501,208,6521,208,6529/1/2023
ArborMetrix, Inc. Subtotal3,656,2813,580,5813,580,581
Blockdaemon, Inc.Senior Secured11.3%107,397105,635105,6356/1/2022
Blockdaemon, Inc.Senior Secured11.3%18,74218,53418,5348/1/2021
Blockdaemon, Inc. Subtotal126,139124,169124,169
Bloomboard, Inc.Senior Secured11.5%2,542,0241,079,3871,079,387*
Canary Technologies Corp.Senior Secured11.5%203,365194,798194,7986/1/2023
Censia Inc.Senior Secured11.0%561,550545,385545,38510/1/2022
Cloudleaf, Inc.Senior Secured12.0%103,924103,259103,2599/1/2021
Cloudleaf, Inc.Senior Secured12.0%742,063730,057730,0579/1/2024
Cloudleaf, Inc.Senior Secured12.0%1,207,9591,148,9251,148,9258/1/2023
Cloudleaf, Inc. Subtotal2,053,9461,982,2411,982,241
Dynamics, Inc.Senior Secured12.5%1,138,7291,114,1761,114,1762/1/2022
Eskalera, Inc.Senior Secured10.5%719,873704,093704,0933/1/2023
Estify, Inc.Senior Secured18.0%842,819689,038120,688*
Fortress IQ, Inc.Senior Secured11.3%118,646117,660117,66011/1/2021
ICX Media, Inc.Senior Secured12.5%762,829771,141712,644*
Invoice2Go, Inc.Senior Secured12.0%464,912462,146462,1467/1/2022
Invoice2Go, Inc.Senior Secured12.0%328,210315,405315,4053/1/2022
Invoice2Go, Inc.Senior Secured12.0%988,839953,577953,5776/1/2024
Invoice2Go, Inc.Senior Secured12.0%919,266778,831778,8313/1/2024
Invoice2Go, Inc.Senior Secured12.0%596,278591,885591,88511/1/2022
Invoice2Go, Inc.Senior Secured12.0%813,940793,016793,0166/1/2023
Invoice2Go, Inc.Senior Secured12.0%722,518716,139716,1393/1/2023
Invoice2Go, Inc. Subtotal4,833,9634,610,9994,610,999
Ipolipo, Inc.Senior Secured12.0%920,610859,933859,9339/1/2022
Medable, Inc.Senior Secured12.0%691,581684,481684,4812/1/2023
Medable, Inc.Senior Secured12.0%1,382,9851,326,8781,326,8782/1/2023
Medable, Inc. Subtotal2,074,5662,011,3592,011,359
Metarail, Inc.Senior Secured12.0%709,588700,656405,912*
Metawave CorporationSenior Secured12.0%428,795422,268422,2687/1/2022
Migo Money, Inc. ** ^Senior Secured12.3%166,944164,009164,00912/1/2021
Migo Money, Inc. ** ^Senior Secured12.5%164,744164,744164,7443/1/2022
Migo Money, Inc. ** ^ Subtotal331,688328,753328,753
OrderGroove, Inc.Senior Secured12.0%4,663,5294,405,7954,405,7954/1/2024
Safe Securities Inc.Senior Secured12.0%345,821330,057330,0572/1/2023
Splitwise, Inc.Senior Secured12.3%314,526306,316306,31612/1/2022
Swivel, Inc.Senior Secured12.0%114,888111,082111,0828/1/2022
Swivel, Inc.Senior Secured12.0%130,034130,034130,03410/1/2022
Swivel, Inc. Subtotal244,922241,116241,116
11

IndustryBorrowerPercent of Net Assets (a)CollateralInterest Rate
(b)		End of Term Payment (c)PrincipalCostFair ValueFinal Maturity Date
Truthset, Inc.Senior Secured10.5%258,206246,617246,6172/1/2023
Truthset, Inc.Senior Secured10.5%293,199293,199293,1995/1/2023
Truthset, Inc. Subtotal551,405539,816539,816
Workspot, Inc.Senior Secured12.0%84,56183,61683,6169/1/2021
Workspot, Inc.Senior Secured12.0%373,895360,558360,5588/1/2022
Workspot, Inc.Senior Secured12.0%423,182417,665417,66510/1/2022
Workspot, Inc. Subtotal881,638861,839861,839
Software Total22.5%$ 29,027,252$ 26,521,576$ 25,599,985
Technology Services
Blazent, Inc.Senior Secured12.0%$ 1,184,109$ 539,025$ 290,189*
CloudIQ Ltd. ** ^Senior Secured12.0%595,619582,063570,64712/1/2021
Klar Holdings Limited ** ^Senior Secured12.5%141,371125,825125,82510/1/2022
Klar Holdings Limited ** ^Senior Secured14.2%4.0%214,980205,796205,7967/1/2023
Klar Holdings Limited ** ^ Subtotal356,351331,621331,621
Liftit, Inc. ** ^Senior Secured12.0%249,180240,618240,6188/1/2022
Liftit, Inc. ** ^Senior Secured12.0%282,054279,371279,37110/1/2022
Liftit, Inc. ** ^ Subtotal531,234519,989519,989
Loansnap Holdings Inc. **Senior Secured11.0%1,722,4641,651,9491,651,94912/1/2022
PayJoy, Inc. **Senior Secured10.0%74,00673,65973,6598/1/2021
Relimetrics, Inc.Senior Secured11.3%96,13194,88794,8871/1/2022
Zeel Networks, Inc.Senior Secured11.0%2,504,1272,461,8552,276,6016/1/2023
Technology Services Total5.1%$ 7,064,041$ 6,255,048$ 5,809,542
Wireless
AirVine Scientific, Inc.Senior Secured12.0%$ 66,490$ 65,568$ 65,5689/1/2022
AirVine Scientific, Inc.Senior Secured12.0%66,44464,33364,3339/1/2022
AirVine Scientific, Inc. Subtotal132,934129,901129,901
Parallel Wireless, Inc.Senior Secured11.8%5,288,7735,113,5285,113,5286/1/2023
Parallel Wireless, Inc.Senior Secured11.8%2,838,1472,803,1332,803,1338/1/2023
Parallel Wireless, Inc.Senior Secured11.8%2,933,7092,896,0622,896,0629/1/2023
Parallel Wireless, Inc. Subtotal11,060,62910,812,72310,812,723
Wireless Total9.6%$ 11,193,563$ 10,942,624$ 10,942,624
Grand Total171.1%$ 227,842,024$ 211,959,559$ 194,333,211


* As of June 30, 2021, loans with a cost basis of $31.2 million and a fair value of $13.8 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 June 30, 2021, 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 fair 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.
12


(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 June 30, 2021, all loans were made to non-affiliates.










See notes to condensed financial statements (unaudited).
13

VENTURE LENDING & LEASING VIII, INC.

CONDENSED SCHEDULE OF INVESTMENTS (UNAUDITED)
AS OF DECEMBER 31, 2020


IndustryBorrowerPercent of Net Assets (a)CollateralInterest Rate
 (b)		End of Term Payment
 (c)		PrincipalCostFair ValueFinal Maturity Date
Biotechnology
Antheia, Inc.Senior Secured11.5%$ 1,220,291$ 1,206,345$ 1,206,34512/1/2022
Antheia, Inc.Senior Secured11.5%1,219,0761,181,0031,181,00312/1/2022
Antheia, Inc. Subtotal2,439,3672,387,3482,387,348
Driver Bioengineering, Inc.Senior Secured11.0%349,663311,553311,5534/1/2023
Driver Bioengineering, Inc.Senior Secured11.0%866,600849,310849,3106/1/2023
Driver Bioengineering, Inc. Subtotal1,216,2631,160,8631,160,863
Orpheus Therapeutics, Inc.Senior Secured18.0%178,510174,288-*
Quartzy, Inc.Senior Secured12.0%1,113,5931,083,7821,083,7827/1/2024
Quartzy, Inc.Senior Secured12.0%1,113,2111,085,4901,085,4905/1/2024
Quartzy, Inc.Senior Secured12.0%722,540648,418648,4188/1/2023
Quartzy, Inc. Subtotal2,949,3442,817,6902,817,690
Biotechnology Total4.0%$ 6,783,484$ 6,540,189$ 6,365,901
Computers & Storage
Canary Connect, Inc.Senior Secured12.8%$ 2,256,808$ 2,199,490$ 2,199,4903/1/2023
Fetch Robotics, Inc.Senior Secured12.0%7,418,9327,104,6567,104,6566/1/2024
Computers & Storage Total5.8%$ 9,675,740$ 9,304,146$ 9,304,146
Internet
Ainsly, Inc. ** ^Senior Secured12.5%$ 247,340$ 217,309$ 217,3099/1/2023
Ainsly, Inc. ** ^Senior Secured12.5%173,207173,207173,2078/1/2022
Ainsly, Inc. ** ^Senior Secured12.5%519,587490,896490,8968/1/2022
Ainsly, Inc. ** ^ Subtotal940,134881,412881,412
Amino Payments, Inc.Senior Secured10.8%830,084794,625669,630*
Bombfell, Inc.Senior Secured11.0%597,384297,2053,748*
Cesium, Inc.Senior Secured10.3%105,348103,881103,8811/1/2023
Cesium, Inc.Senior Secured10.3%210,624200,481200,4811/1/2023
Cesium, Inc. Subtotal315,972304,362304,362
Clearsurance, Inc.Senior Secured10.3%745,288731,486731,4869/1/2021
Daily Muse, Inc.Senior Secured11.0%3,699,2673,668,2023,668,2021/1/2022
FLYR, Inc.Senior Secured11.7%2,054,1161,979,2191,278,5511/1/2022
iZENEtech, Inc. ** ^Senior Secured11.0%1,081,1921,076,4081,076,4086/1/2021
iZENEtech, Inc. ** ^Senior Secured11.0%184,334183,583183,5831/1/2021
iZENEtech, Inc. ** ^ Subtotal1,265,5261,259,9911,259,991
Lenddo International ** ^Senior Secured18.0%795,048544,70319,966*
Lukla, Inc.Senior Secured12.5%247,208237,422237,4226/1/2023
Lukla, Inc.Senior Secured12.5%407,447363,868363,86812/1/2022
Lukla, Inc. Subtotal654,655601,290601,290
14

IndustryBorrowerPercent of Net Assets (a)CollateralInterest Rate
 (b)		End of Term Payment
 (c)		PrincipalCostFair ValueFinal Maturity Date
Masse, Inc.Senior Secured18.0%304,001144,00810,000*
Merchbar, Inc.Senior Secured11.8%451,293430,995430,9953/1/2023
MyPizza Technologies, Inc.Senior Secured11.5%4,943,0404,784,0404,784,04012/1/2023
MyPizza Technologies, Inc.Senior Secured11.5%2,471,8422,436,4442,436,4442/1/2024
MyPizza Technologies, Inc. Subtotal7,414,8827,220,4847,220,484
Nimble Rx, Inc.Senior Secured12.0%1,236,9491,188,3811,188,38111/1/2023
Nimble Rx, Inc.Senior Secured12.0%1,091,906999,055999,0552/1/2023
Nimble Rx, Inc. Subtotal2,328,8552,187,4362,187,436
OneLocal, Inc. ** ^Senior Secured12.3%301,162295,353295,3533/1/2023
OneLocal, Inc. ** ^Senior Secured12.3%301,150296,454296,4543/1/2023
OneLocal, Inc. ** ^Senior Secured12.3%301,078281,207281,2073/1/2023
OneLocal, Inc. ** ^ Subtotal903,390873,014873,014
Osix CorporationSenior Secured12.3%43,21440,35140,35112/1/2021
RenoFi, Inc.Senior Secured12.0%247,292231,778231,7786/1/2023
RenoFi, Inc.Senior Secured12.0%247,427242,330242,3306/1/2023
RenoFi, Inc. Subtotal494,719474,108474,108
Residently USA, LLC ** ^Senior Secured12.0%873,899789,139789,1392/1/2023
Residently USA, LLC ** ^Senior Secured12.0%371,000371,000371,00012/1/2023
Residently USA, LLC ** ^ Subtotal1,244,8991,160,1391,160,139
Serface Care, Inc.Senior Secured12.3%961,139566,91221,201*
Shadow, PBCSenior Secured11.5%470,556441,930441,93010/1/2022
SpotOn Computing, Inc.Senior Secured18.0%1,893,5281,853,788792,634*
Stay Alfred, Inc.Senior Secured18.0%10,932,3688,846,7331,262,774*
Verishop, Inc.Senior Secured12.0%2,472,0542,437,5502,437,55012/1/2023
Verishop, Inc.Senior Secured12.0%2,471,1192,366,9342,366,93412/1/2023
Verishop, Inc. Subtotal4,943,1734,804,4844,804,484
Internet Total18.3%$ 44,283,491$ 40,106,877$ 29,138,188
Medical Devices
Ablacon, Inc.Senior Secured11.0%$ 2,256,537$ 2,168,757$ 2,168,7573/1/2023
Ablacon, Inc.Senior Secured11.0%2,257,3682,224,5082,224,5083/1/2023
Ablacon, Inc. Subtotal4,513,9054,393,2654,393,265
Anutra Medical, Inc.Senior Secured12.0%188,448182,138182,13810/1/2022
CytoVale, Inc.Senior Secured12.0%494,475470,113470,11310/1/2023
CytoVale, Inc.Senior Secured12.0%304,420301,225301,2257/1/2022
CytoVale, Inc.Senior Secured12.0%362,240358,640358,6406/1/2022
CytoVale, Inc.Senior Secured12.0%306,253296,276296,2763/1/2022
CytoVale, Inc.Senior Secured12.0%494,687485,502485,50211/1/2023
CytoVale, Inc. Subtotal1,962,0751,911,7561,911,756
eXo Imaging, Inc.Senior Secured11.8%1,978,8161,837,4271,837,4279/1/2023
eXo Imaging, Inc.Senior Secured11.8%1,974,5411,930,9651,930,9659/1/2023
eXo Imaging, Inc. Subtotal3,953,3573,768,3923,768,392
Medrobotics Corporation, Inc.Senior Secured18.0%10,000,0008,793,5643,275,462*
15

IndustryBorrowerPercent of Net Assets (a)CollateralInterest Rate
 (b)		End of Term Payment
 (c)		PrincipalCostFair ValueFinal Maturity Date
RadiAction Ltd. ** ^Senior Secured11.5%361,800354,634354,63410/1/2021
RadiAction Ltd. ** ^Senior Secured11.5%562,882557,426557,4264/1/2022
RadiAction Ltd. ** ^ Subtotal924,682912,060912,060
Renovia, Inc.Senior Secured10.5%7,869,7907,157,6437,157,6431/1/2023
Medical Devices Total13.5%$ 29,412,257$ 27,118,818$ 21,600,716
Other Healthcare
Caredox, Inc.Senior Secured11.8%$ 775,417$ 762,534$ 762,5347/1/2022
Clover Health Investments CorporationSenior Secured11.0%9,033,5468,792,0108,792,0103/1/2022
Clover Health Investments CorporationSenior Secured11.3%6,428,8436,428,8436,428,84310/1/2022
Clover Health Investments Corporation Subtotal15,462,38915,220,85315,220,853
Emerald Cloud Lab, Inc.Senior Secured11.8%1,052,8991,011,5491,011,54912/1/2021
GoForward, Inc.Senior Secured11.5%3,094,9713,004,8383,004,8386/1/2024
GoForward, Inc.Senior Secured11.5%6,181,2385,735,5735,735,5739/1/2023
GoForward, Inc. Subtotal9,276,2098,740,4118,740,411
Grin, Inc.Senior Secured12.0%494,743484,898484,8981/1/2024
Grin, Inc.Senior Secured12.0%989,140944,177944,17710/1/2023
Grin, Inc. Subtotal1,483,8831,429,0751,429,075
Hello Heart Inc.Senior Secured10.8%255,287251,669251,6697/1/2021
Hello Heart Inc.Senior Secured10.8%540,088536,623536,62310/1/2021
Hello Heart Inc.Senior Secured11.0%932,214919,531919,5314/1/2023
Hello Heart Inc.Senior Secured11.0%742,816730,145730,14511/1/2023
Hello Heart Inc.Senior Secured11.0%1,164,9391,115,8291,115,8294/1/2023
Hello Heart Inc. Subtotal3,635,3443,553,7973,553,797
HumanAPI, Inc.Senior Secured11.8%1,129,7471,086,2101,086,21010/1/2022
HumanAPI, Inc.Senior Secured11.8%421,960416,785416,7851/1/2023
HumanAPI, Inc. Subtotal1,551,7071,502,9951,502,995
mPharma Data, Inc. ** ^Senior Secured10.0%38,14038,07138,0713/1/2021
mPharma Data, Inc. ** ^Senior Secured10.0%1,082,6901,071,0901,071,09011/1/2021
mPharma Data, Inc. ** ^ Subtotal1,120,8301,109,1611,109,161
Myolex, Inc.Senior Secured18.0%762,531726,537211,873*
Naked Biome, Inc.Senior Secured18.0%523,049419,422-*
Robin Care, Inc.Senior Secured11.5%438,538414,825414,82512/1/2021
Sparta Software CorporationSenior Secured11.5%2.2%304,794297,802297,8025/1/2022
Therapydia, Inc.Senior Secured11.5%216,666213,232213,2321/1/2023
Therapydia, Inc.Senior Secured12.5%1.7%106,892106,892106,8926/1/2023
Therapydia, Inc.Senior Secured11.5%177,330169,271169,2718/1/2022
Therapydia, Inc.Senior Secured12.0%1.7%97,82292,39492,3943/1/2023
Therapydia, Inc.Senior Secured11.5%208,955205,760205,76012/1/2022
Therapydia, Inc. Subtotal807,665787,549787,549
Other Healthcare Total21.9%$ 37,195,255$ 35,976,510$ 35,042,424
16

IndustryBorrowerPercent of Net Assets (a)CollateralInterest Rate
 (b)		End of Term Payment
 (c)		PrincipalCostFair ValueFinal Maturity Date
Other Technology
Abiquo Group, Inc. ** ^Senior Secured12.0%$ 128,914$ 126,753$ 126,7537/1/2021
Aclima, Inc.Senior Secured11.9%1,089,7541,004,0901,004,0904/1/2022
Aclima, Inc.Senior Secured12.0%1,979,8081,731,8991,731,89910/1/2023
Aclima, Inc. Subtotal3,069,5622,735,9892,735,989
Antitoxin Technologies Inc. ** ^Senior Secured11.5%361,110344,164344,1649/1/2022
Apollo Flight Research Inc.Senior Secured11.0%210,893207,995207,9951/1/2023
Apollo Flight Research Inc.Senior Secured11.0%313,128304,774304,7746/1/2022
Apollo Flight Research Inc. Subtotal524,021512,769512,769
ATeam Army, Inc.Senior Secured12.0%1,165,1341,109,8421,109,8424/1/2023
Beanfields, PBCSenior Secured12.5%789,585759,532759,5323/1/2023
Beanfields, PBCSenior Secured12.5%564,609553,012553,0123/1/2023
Beanfields, PBC Subtotal1,354,1941,312,5441,312,544
Benson Hill Bio, Inc.Senior Secured12.5%9,883,7939,205,3149,205,3145/1/2024
Brightside Benefit, Inc.Senior Secured12.1%464,870446,579446,5799/1/2022
Brightside Benefit, Inc.Senior Secured12.4%774,623764,814764,8143/1/2023
Brightside Benefit, Inc. Subtotal1,239,4931,211,3931,211,393
BW Industries, Inc.Senior Secured11.8%1,770,8731,642,1821,642,1825/1/2023
BW Industries, Inc.Senior Secured11.8%1,823,1721,792,5121,792,5126/1/2023
BW Industries, Inc. Subtotal3,594,0453,434,6943,434,694
Consumer Physics, Inc. ** ^Senior Secured11.0%538,240527,610490,31112/1/2021
DOSH Holdings, Inc.Senior Secured0.0%700,000514,745514,745*
Eguana Technologies, Inc. ** ^Senior Secured12.5%924,922892,458892,4582/1/2022
Finiks, Inc.Senior Secured2.7%667,50027,11544,731*
Fitplan, Inc. ** ^Senior Secured12.5%1,226,8701,086,3251,058,116*
Flo Water, Inc.Senior Secured11.4%170,441168,913168,9135/1/2021
Flo Water, Inc.Senior Secured11.8%1,978,5921,884,5441,884,54412/1/2023
Flo Water, Inc. Subtotal2,149,0332,053,4572,053,457
Gap Year Global, Inc.Senior Secured18.0%90,76886,359-*
Heartwork, Inc.Senior Secured18.0%379,462371,98127,353*
Higher Ground Education, Inc.Senior Secured12.5%481,455473,834473,8348/1/2023
Higher Ground Education, Inc.Senior Secured12.5%442,838436,301436,3015/1/2023
Higher Ground Education, Inc.Senior Secured12.5%1,289,0101,270,8611,270,8614/1/2023
Higher Ground Education, Inc.Senior Secured12.5%1,946,8041,865,6411,865,6411/1/2023
Higher Ground Education, Inc. Subtotal4,160,1074,046,6374,046,637
Hint, Inc.Senior Secured11.0%278,952276,573276,5733/1/2021
Hint, Inc.Senior Secured12.0%4,944,9814,446,6554,446,6556/1/2023
Hint, Inc.Senior Secured11.0%727,671706,141706,1418/1/2021
Hint, Inc.Senior Secured11.0%639,224639,224639,2247/1/2021
Hint, Inc. Subtotal6,590,8286,068,5936,068,593
Jiko Group, Inc.Senior Secured12.0%3,463,6863,318,0653,318,0656/1/2023
Kogniz, Inc.Senior Secured12.8%220,052203,327203,3273/1/2022
17

IndustryBorrowerPercent of Net Assets (a)CollateralInterest Rate
 (b)		End of Term Payment
 (c)		PrincipalCostFair ValueFinal Maturity Date
Lambda School, Inc.Senior Secured11.3%2,474,4032,474,4032,474,4038/1/2023
Lambda School, Inc.Senior Secured11.3%4,948,0414,701,5744,701,5747/1/2023
Lambda School, Inc. Subtotal7,422,4447,175,9777,175,977
LanzaTech New Zealand Ltd.Senior Secured13.3%285,170284,714284,7143/1/2021
Make School, Inc.Senior Secured11.3%291,677287,406287,4068/1/2021
Neuehouse, LLCSenior Secured12.0%1,750,0001,292,7651,292,765*
Nevada Nanotech Systems, Inc.Senior Secured12.0%222,226217,658217,6586/1/2021
NewGlobe Schools, Inc. ** ^Senior Secured12.5%2,769,7252,695,0802,695,0808/1/2022
NewGlobe Schools, Inc. ** ^Senior Secured12.5%3,459,8033,315,5713,315,5718/1/2023
NewGlobe Schools, Inc. ** ^ Subtotal6,229,5286,010,6516,010,651
Northern Quinoa Production Corporation ** ^Senior Secured10.7%6,010,5275,771,2605,352,65912/1/2022
Noteleaf, Inc.Senior Secured12.5%2,277,1242,161,7611,028,982*
Opya, Inc.Senior Secured12.0%1,188,0911,155,3771,155,37711/1/2023
Ozy Media, Inc.Senior Secured12.8%2,470,5102,383,7822,383,7826/1/2023
PDQ Enterprises LLC **Senior Secured11.0%240,964240,531240,5312/1/2021
Percepto, Inc.Senior Secured12.2%1,799,3361,721,5481,721,5484/1/2023
Pitzi, Ltd. ** ^Senior Secured12.0%482,870376,812376,81211/1/2023
Pitzi, Ltd. ** ^Senior Secured12.0%1,483,7271,435,7411,435,7414/1/2024
Pitzi, Ltd. ** ^ Subtotal1,966,5971,812,5531,812,553
Plant Prefab, Inc.Senior Secured11.0%1,045,516999,473999,4738/1/2022
Platform Science, Inc.Senior Secured12.0%623,171601,043601,0432/1/2022
Plenty Unlimited, Inc.Senior Secured9.0%11.7%159,868159,505159,5051/1/2021
Plenty Unlimited, Inc.Senior Secured9.0%9.4%217,703217,280217,2803/1/2021
Plenty Unlimited, Inc.Senior Secured9.0%11.7%1,103,7381,089,4661,089,4669/1/2021
Plenty Unlimited, Inc. Subtotal1,481,3091,466,2511,466,251
Plethora, Inc.Senior Secured11.2%2,272,5872,152,8672,152,8677/1/2022
Romaine Empire, Inc.Senior Secured12.3%5,454,0205,227,5395,227,5397/1/2023
Saltbox, Inc.Senior Secured12.3%423,968408,719408,7196/1/2023
SMS OPCO LLCSenior Secured8.0%36,87518,12518,125*
Strong Arm Technologies, Inc.Senior Secured12.0%209,338207,281207,2815/1/2021
Sustainable Living Partners, LLCSenior Secured12.5%4,479,9843,999,1163,999,1168/1/2023
Terramera, Inc. ** ^Senior Secured12.0%275,821272,706272,7064/1/2021
Terramera, Inc. ** ^Senior Secured12.0%137,941137,444137,4444/1/2021
Terramera, Inc. ** ^ Subtotal413,762410,150410,150
Theatro Labs, Inc.Senior Secured12.0%888,982873,903873,9038/1/2022
UniEnergy Technologies LLCSenior Secured12.3%1,351,2341,309,132874,137*
Veev Group, Inc.Senior Secured12.5%1,235,4191,122,4261,122,4266/1/2023
Veev Group, Inc.Senior Secured12.5%3,707,0383,648,3653,648,3656/1/2023
Veev Group, Inc.Senior Secured12.5%432,783424,481424,48112/1/2021
Veev Group, Inc. Subtotal5,375,2405,195,2725,195,272
Velo Holdings LimitedSenior Secured12.0%2,471,7202,252,2481,985,209*
Virtuix Holdings, Inc.Senior Secured12.3%141,134139,438117,0494/1/2022
18

IndustryBorrowerPercent of Net Assets (a)CollateralInterest Rate
 (b)		End of Term Payment
 (c)		PrincipalCostFair ValueFinal Maturity Date
Welcome Tech, Inc.Senior Secured10.5%578,778545,308545,3085/1/2022
Wheels Labs, Inc.Senior Secured12.5%3,115,6123,051,1983,051,1988/1/2022
Wine Plum, Inc.Senior Secured12.5%723,778701,625701,6259/1/2022
Other Technology Total60.4%$ 105,672,936$ 99,264,805$ 96,510,123
Security
Axonius, Inc.Senior Secured12.0%$ 164,208$ 161,820$ 161,8209/1/2021
Karamba Security Ltd. ** ^Senior Secured12.0%942,140893,736893,7366/1/2022
Nok Nok Labs, Inc.Senior Secured12.5%540,071533,246533,2466/1/2022
Safetrust Holdings, Inc.Senior Secured12.5%249,930186,010186,0108/1/2021
Security Total1.1%$ 1,896,349$ 1,774,812$ 1,774,812
Semiconductors & Equipment
ETA Compute, Inc.Senior Secured12.0%$ 596,190$ 585,915$ 585,91511/1/2021
Innophase, Inc.Senior Secured11.8%665,278662,301662,3016/1/2021
Innophase, Inc.Senior Secured11.8%1,551,4101,537,2721,537,2726/1/2021
Innophase, Inc. Subtotal2,216,6882,199,5732,199,573
Semiconductors & Equipment Total1.8%$ 2,812,878$ 2,785,488$ 2,785,488
Software
Aptible, Inc.Senior Secured11.8%$ 17,356$ 17,308$ 17,3082/1/2021
ArborMetrix, Inc.Senior Secured12.5%741,595721,872721,8729/1/2023
ArborMetrix, Inc.Senior Secured11.5%577,973577,973577,9736/1/2022
ArborMetrix, Inc.Senior Secured12.5%1,482,0311,424,9941,424,9949/1/2023
ArborMetrix, Inc.Senior Secured11.5%2,022,1001,976,6701,976,6706/1/2022
ArborMetrix, Inc. Subtotal4,823,6994,701,5094,701,509
Blockdaemon, Inc.Senior Secured11.3%156,750153,047153,0476/1/2022
Blockdaemon, Inc.Senior Secured11.3%72,91670,54370,5438/1/2021
Blockdaemon, Inc. Subtotal229,666223,590223,590
Bloomboard, Inc.Senior Secured11.5%2,542,0241,225,6051,132,676*
Canary Technologies CorporationSenior Secured11.5%247,338234,633234,6336/1/2023
Censia Inc.Senior Secured11.0%751,876723,062723,06210/1/2022
Cloudleaf, Inc.Senior Secured12.0%1,445,0651,360,2601,360,2608/1/2023
Cloudleaf, Inc.Senior Secured12.0%739,000724,597724,5979/1/2024
Cloudleaf, Inc.Senior Secured12.0%302,692297,928297,9289/1/2021
Cloudleaf, Inc. Subtotal2,486,7572,382,7852,382,785
DealPath, Inc.Senior Secured11.0%289,086287,577287,5775/1/2021
Dynamics, Inc.Senior Secured12.5%2,208,8112,106,7032,106,7038/1/2021
Eskalera, Inc.Senior Secured10.5%902,496877,642877,6423/1/2023
Estify, Inc.Senior Secured18.0%842,819737,672154,458*
Fortress IQ, Inc.Senior Secured11.3%253,904249,744249,74411/1/2021
GoFormz, Inc.Senior Secured12.0%232,837229,478229,4786/1/2021
19

IndustryBorrowerPercent of Net Assets (a)CollateralInterest Rate
 (b)		End of Term Payment
 (c)		PrincipalCostFair ValueFinal Maturity Date
ICX Media, Inc.Senior Secured12.5%247,171242,814242,8147/1/2023
ICX Media, Inc.Senior Secured12.5%240,098236,153236,1535/1/2023
ICX Media, Inc.Senior Secured12.5%298,886285,701285,7015/1/2022
ICX Media, Inc. Subtotal786,155764,668764,668
Invoice2Go, Inc.Senior Secured11.8%240,887239,594239,5944/1/2021
Invoice2Go, Inc.Senior Secured11.8%206,485206,485206,4854/1/2021
Invoice2Go, Inc.Senior Secured12.0%989,150806,149806,1493/1/2024
Invoice2Go, Inc.Senior Secured12.0%988,822957,755957,7556/1/2023
Invoice2Go, Inc.Senior Secured12.0%902,702892,679892,6793/1/2023
Invoice2Go, Inc.Senior Secured12.0%783,778776,169776,16911/1/2022
Invoice2Go, Inc.Senior Secured12.0%660,026654,481654,4817/1/2022
Invoice2Go, Inc.Senior Secured12.0%531,244498,925498,9253/1/2022
Invoice2Go, Inc.Senior Secured11.8%240,892240,892240,8924/1/2021
Invoice2Go, Inc.Senior Secured12.0%989,486944,616944,6166/1/2024
Invoice2Go, Inc. Subtotal6,533,4726,217,7456,217,745
Ipolipo, Inc.Senior Secured12.0%2,066,1991,943,1951,476,8366/1/2022
Lucideus, Inc.Senior Secured12.0%436,842411,722411,7222/1/2023
Medable, Inc.Senior Secured12.0%1,746,9921,657,4971,657,4972/1/2023
Medable, Inc.Senior Secured12.0%873,608862,217862,2172/1/2023
Medable, Inc. Subtotal2,620,6002,519,7142,519,714
Metarail, Inc.Senior Secured12.0%735,278723,738487,3827/1/2023
Metawave CorporationSenior Secured12.0%608,751595,704595,7047/1/2022
Migo Money, Inc. ** ^Senior Secured12.5%266,341266,341266,3413/1/2022
Migo Money, Inc. ** ^Senior Secured12.3%324,019313,653313,65312/1/2021
Migo Money, Inc. ** ^ Subtotal590,360579,994579,994
OrderGroove, Inc.Senior Secured12.0%4,755,4734,424,6624,424,6624/1/2024
Owl Cameras, Inc.Senior Secured18.0%605,050310,170308,414*
PlushCare, Inc.Senior Secured11.8%595,693579,013579,0135/1/2022
PlushCare, Inc.Senior Secured11.8%447,140441,429441,4295/1/2022
PlushCare, Inc. Subtotal1,042,8331,020,4421,020,442
Resilio, Inc.Senior Secured12.8%46,85146,85146,8515/1/2021
Resilio, Inc.Senior Secured12.8%28,40727,43127,4313/1/2021
Resilio, Inc. Subtotal75,25874,28274,282
Splitwise, Inc.Senior Secured12.3%407,224393,458393,45812/1/2022
Swivel, Inc.Senior Secured12.0%173,702173,702173,70210/1/2022
Swivel, Inc.Senior Secured12.0%159,432152,178152,1788/1/2022
Swivel, Inc. Subtotal333,134325,880325,880
Trendalytics Innovation Labs, Inc.Senior Secured12.8%189,070177,064156,1406/1/2022
Truthset, Inc.Senior Secured10.5%327,294308,736308,7362/1/2023
Truthset, Inc.Senior Secured10.5%360,505360,505360,5055/1/2023
Truthset, Inc. Subtotal687,799669,241669,241
VenueNext, Inc.Senior Secured-1,016,143938,226751,086*
Venuetize, Inc.Senior Secured12.3%130,209123,167123,1674/1/2022
20

IndustryBorrowerPercent of Net Assets (a)CollateralInterest Rate
 (b)		End of Term Payment
 (c)		PrincipalCostFair ValueFinal Maturity Date
Workspot, Inc.Senior Secured12.0%518,863493,458493,4588/1/2022
Workspot, Inc.Senior Secured12.0%246,296239,558239,5589/1/2021
Workspot, Inc.Senior Secured12.0%565,294555,453555,45310/1/2022
Workspot, Inc. Subtotal1,330,4531,288,4691,288,469
Software Total22.5%$ 40,778,972$ 37,498,849$ 35,910,171
Technology Services
Blazent, Inc.Senior Secured12.0%$ 1,464,421$ 989,830$ 768,564*
CloudIQ Ltd. ** ^Senior Secured12.0%1,156,7201,108,942906,97412/1/2021
Dolly, Inc.Senior Secured12.1%530,265514,590514,5905/1/2021
Klar Holdings Limited ** ^Senior Secured14.2%4.0%248,885235,790235,7907/1/2023
Klar Holdings Limited ** ^Senior Secured12.5%188,627161,586161,58610/1/2022
Klar Holdings Limited ** ^ Subtotal437,512397,376397,376
Leap Services, Inc.Senior Secured12.0%314,353305,005305,0056/1/2022
Lifit, Inc. ** ^Senior Secured12.0%345,793329,478329,4788/1/2022
Lifit, Inc. ** ^Senior Secured12.0%376,772371,984371,98410/1/2022
Lifit, Inc. ** ^ Subtotal722,565701,462701,462
Loansnap Holdings Inc. **Senior Secured11.0%2,236,5562,118,2341,913,39412/1/2022
PayJoy, Inc. **Senior Secured10.0%288,795284,794284,7948/1/2021
Relimetrics, Inc.Senior Secured11.3%173,675169,806169,8061/1/2022
Riffyn, Inc.Senior Secured11.5%110,635110,147110,1476/1/2021
Riffyn, Inc.Senior Secured11.5%112,218111,492111,4923/1/2021
Riffyn, Inc. Subtotal222,853221,639221,639
Solugen, Inc.Senior Secured11.0%1,054,7061,038,1031,038,1031/1/2023
Solugen, Inc.Senior Secured11.0%2,107,9612,007,7142,007,7141/1/2023
Solugen, Inc.Senior Secured11.0%1,054,1891,041,2501,041,2501/1/2023
Solugen, Inc. Subtotal4,216,8564,087,0674,087,067
Thrive Financial, Inc. **Senior Secured11.5%752,761724,585724,58510/1/2022
Thrive Financial, Inc. **Senior Secured9.3%247,981247,981247,98111/1/2023
Thrive Financial, Inc. ** Subtotal1,000,742972,566972,566
TrueFacet, Inc.Senior Secured18.0%871,610839,387-*
Zeel Networks, Inc.Senior Secured11.0%2,531,1822,468,8192,283,5643/1/2022
Technology Services Total8.5%$ 16,168,105$ 15,179,517$ 13,526,801
Wireless
AirVine Scientific, Inc.Senior Secured12.0%$ 90,366$ 86,490$ 86,4909/1/2022
AirVine Scientific, Inc.Senior Secured12.0%90,42988,72888,7289/1/2022
AirVine Scientific, Inc. Subtotal180,795175,218175,218
Parallel Wireless, Inc.Senior Secured11.8%6,428,7366,168,6416,168,6416/1/2023
Parallel Wireless, Inc.Senior Secured11.8%3,215,5753,162,4053,162,4059/1/2023
Parallel Wireless, Inc.Senior Secured11.8%3,215,1163,164,7643,164,7648/1/2023
Parallel Wireless, Inc. Subtotal12,859,42712,495,81012,495,810
Wireless Total7.9%$ 13,040,222$ 12,671,028$ 12,671,028
Grand Total165.7%$ 307,719,689$ 288,221,039$ 264,629,798
        
21


* As of December 31, 2020, loans with a cost basis of $37.3 million and a fair value of $16.2 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, 2020, 10.8% 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 fair 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, 2020, all loans were made to non-affiliates.




See notes to condensed financial statements (unaudited).
22

VENTURE LENDING & LEASING VIII, INC.

CONDENSED SCHEDULES OF DERIVATIVE INSTRUMENTS (UNAUDITED)
AS OF JUNE 30, 2021 AND DECEMBER 31, 2020

AS OF JUNE 30, 2021
Description and terms of payments to be received from another partyDescription and terms of payments to be paid to another partyCounterpartyMaturity DateNotional AmountFair ValueUpfront payments / receiptsUnrealized appreciation / (depreciation) (a)
Interest Rate Collar
Floating interest rate of USD-LIBOR-BBA with cap rate of 1.00% to be received monthlyFloating interest rate of USD-LIBOR-BBA with floor interest rate 0.215%, to be paid monthlyMUFG Union Bank, N.A.1/11/2023$42,000,000 $(41,351)$— $(41,351)
Total$42,000,000 $(41,351)$— $(41,351)
AS OF DECEMBER 31, 2020
Description and terms of payments to be received from another partyDescription and terms of payments to be paid to another partyCounterpartyMaturity Date Notional AmountFair ValueUpfront payments / receiptsUnrealized appreciation / (depreciation) (a)
Interest Rate Swap and Floor
Floating interest rate of USD-LIBOR-BBA with cap rate of 1.00% to be received monthlyFloating interest rate of USD-LIBOR-BBA with floor interest rate 0.215%, to be paid monthlyMUFG Union Bank, N.A.1/11/2023$65,000,000 $(61,242)$— $(61,242)
Total$65,000,000 $(61,242)$— $(61,242)

(a) 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.


See notes to condensed financial statements (unaudited).
23


VENTURE LENDING & LEASING VIII, INC.

NOTES TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED)
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 (“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 its 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.  
In the Manager’s opinion, the accompanying condensed interim financial statements (hereafter referred to as “financial statements”) include all adjustments (consisting only of normal recurring adjustments) necessary for a fair presentation of financial position and results of operations for interim periods. Certain information and note disclosures normally included in audited annual financial statements prepared in accordance with United States Generally Accepted Accounting Principles (“U.S. GAAP”) have been omitted; however, the Fund believes that the disclosures made are adequate to make the information presented not misleading. The interim results for the three and six months ended June 30, 2021 are not necessarily indicative of what the results would be for a full year. These financial statements should be read in conjunction with the financial statements and the notes included in the Fund’s Annual Report on Form 10-K for the year ended December 31, 2020.
2.    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Accounting and Use of Estimates
The preparation of financial statements in conformity with 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 period information has been reclassified to conform to the current year presentation.
24

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 June 30, 2021, the Fund held 4,862,822 units in the Blackrock Treasury Trust Institutional Fund valued at $1 per unit at a yield of 0.01%, which represented 4.28% of the net assets of the Fund. Within cash and cash equivalents, as of December 31, 2020, the Fund held 8,751,396 units in the Blackrock Treasury Trust Institutional Fund valued at $1 per unit at a yield of 0.02%, which represented 5.48% 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 accretion of discount on loans 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 or losses on the sale of loans are computed using the difference between the amortized cost and the sales proceeds. Realized losses on loan 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 June 30, 2021 and December 31, 2020, the financial statements included nonmarketable investments of $194.3 million and $264.6 million, respectively, (or 95.7% and 95.1% 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.

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 loan investments made by the Fund into 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 fair 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 fair value of the current portfolio of loans.

25

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 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 June 30, 2021, loans with a cost basis of $31.2 million and a fair value of $13.8 million were classified as non-accrual. As of December 31, 2020, loans with a cost basis of $37.3 million and a fair value of $16.2 million were classified as non-accrual.

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 fair 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 June 30, 2021 and December 31, 2020, the Fund assumed the average duration of a warrant was 4.0 years. 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 fair 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.

26

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 fair value of the warrants.
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 values 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 Condensed Statements of Assets and Liabilities and are being amortized over the estimated life of the facility, which currently matures on August 26, 2023. The amortization of these costs is recorded as interest expense in the Condensed Statements of Operations.

Derivative Instruments

The Fund uses derivative instruments to manage its exposure to changes in interest rates on expected borrowings under its debt facility, as the Fund originates fixed rate loans (see Note 8).

Derivative instruments are primarily valued on the basis of quotes obtained from banks, brokers and dealers and adjusted for counterparty risk and the optionality of the interest rate floor. The valuation of the derivative instruments also considers the future expected interest rates on the notional principal balance 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 derivative 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. A contract is recorded at gross fair value in either derivative asset or derivative liability in the Condensed Statements of Assets and Liabilities, depending on whether the fair value of the contract 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 Condensed Statements of Operations and the quarterly interest received or paid on the derivative instruments, if any, is recorded in net realized gain (loss) from derivative instruments in the Condensed Statements of Operations.

The interest rate collar contract is contractually scheduled to terminate on January 11, 2023.

27


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 June 30, 2021, 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 Condensed Schedules of Investments. All loans are senior to unsecured creditors and other secured creditors, unless as indicated in the Condensed 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 loan 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 Condensed 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.

The tables below show the weighted-average interest rate of the performing loans and all loans.

Performing LoansFor the Three Months Ended June 30, 2021For the Three Months Ended June 30, 2020
Weighted-Average Interest Rate - Cash 13.95%12.66%
Weighted-Average Interest Rate- Non-Cash3.51%2.95%
Weighted-Average Interest Rate17.46%15.61%
All LoansFor the Three Months Ended June 30, 2021For the Three Months Ended June 30, 2020
Weighted-Average Interest Rate - Cash13.74%12.15%
Weighted-Average Interest Rate- Non-Cash3.28%2.84%
Weighted-Average Interest Rate17.02%14.99%
Performing Loans  For the Six Months Ended June 30, 2021 For the Six Months Ended June 30, 2020
Weighted-Average Interest Rate - Cash13.31%13.52%
Weighted-Average Interest Rate- Non-Cash3.39%3.18%
Weighted-Average Interest Rate16.70%16.70%
All Loans  For the Six Months Ended June 30, 2021 For the Six Months Ended June 30, 2020
Weighted-Average Interest Rate - Cash13.01%13.06%
Weighted-Average Interest Rate- Non-Cash3.23%3.08%
Weighted-Average Interest Rate16.24%16.14%
28


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 period.
    
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 June 30, 2021 and December 31, 2020 were pledged as collateral for the debt facility, and the Fund’s borrowings are generally collateralized by all assets of the Fund. As of June 30, 2021 and December 31, 2020, the Fund had unexpired unfunded commitments to borrowers of $5.1 million and $22.3 million, respectively.
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 six months ended June 30, 2021 and 2020.

The Fund’s cash equivalents were valued at the traded net asset value of the money market fund. As a result, these measurements are classified as Level 1. The Fund’s derivative instruments are based on quotes from the market makers that derive fair values from market data, and therefore, are classified as Level 2. The Fund’s borrowings under the debt facility are also classified as Level 2, because the carrying values of the borrowings were based on rates that are observable at commonly quoted intervals, which are Level 2 inputs, and that approximate fair values. The Fund’s loan investments are individually negotiated and unique, and because there is little to no market in which these assets trade, the inputs for these assets are valued using estimated exit values. As a result, the Fund’s loan investments are 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 June 30, 2021 and December 31, 2020. 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.
29

Investment Type - Level 3
Loan Investments Fair Values at
June 30, 2021		Valuation Techniques / MethodologiesUnobservable Inputs
Weighted Averages (a) / Amounts or Ranges
Biotechnology$5,538,704 Hypothetical market analysisHypothetical market coupon rate14% (14% - 15%)
Income approachExpected amount and timing of cash flow payments$0*
Discount Rate
0%*
Computers and Storage10,388,862Hypothetical market analysisHypothetical market coupon rate14% (14% - 15%)
Internet23,801,845Hypothetical market analysisHypothetical market coupon rate15% (11% - 25%)
Income approachExpected amount and timing of cash flow payments$3,215,189
($0 - $3,336,163)
Discount rate0%
(0% - 1%)
Medical Devices18,569,783Hypothetical market analysisHypothetical market coupon rate18% (13% - 24%)
Income approachExpected amount and timing of cash flow payments$12,630,052*
Discount rate1%*
Other Healthcare15,139,142Hypothetical market analysisHypothetical market coupon rate15% (12% - 22%)
Income approachExpected amount and timing of cash flow payments$1,250,945*
Discount rate1%*
Other Technology77,160,609Hypothetical market analysisHypothetical market coupon rate16% (14% - 22%)
Income approachExpected amount and timing of cash flow payments$1,978,865
($0 - $2,787,929)
Discount rate1%
(0% - 1%)
30

Investment Type - Level 3
Loan Investments Fair Values at
June 30, 2021		Valuation Techniques / MethodologiesUnobservable Inputs
Weighted Averages (a) / Amounts or Ranges
Security1,105,462Hypothetical market analysisHypothetical market coupon rate20% (14% - 99%)
Income approachExpected amount and timing of cash flow payments$689,443*
Discount rate1%*
Semiconductors and Equipment276,653Hypothetical market analysisHypothetical market coupon rate16%*
Software25,599,985Hypothetical market analysisHypothetical market coupon rate16% (13% - 23%)
Income approachExpected amount and timing of cash flow payments$1,798,391
($867,235 - $2,852,899)
Discount rate1%
(0% - 1%)
Technology Services5,809,542Hypothetical market analysisHypothetical market coupon rate15% (13% - 23%)
Income approachExpected amount and timing of cash flow payments$2,260,058
($58,216 - $2,801,338)
Discount rate1%
(0% - 1%)
Wireless10,942,624Hypothetical market analysisHypothetical market coupon rate14% (14% - 16%)
Total Loan investments$194,333,211 

(a)The weighted average hypothetical market coupon rates were calculated using the fair value of the loans.
* There is only one loan within the industry.

31


Investment Type - Level 3
Loan Investments Fair Values at
December 31, 2020		Valuation Techniques / MethodologiesUnobservable Inputs
Weighted Averages (a) / Amounts or Ranges
Biotechnology$6,365,901 Hypothetical market analysisHypothetical market coupon rate15% (14% - 15%)
Income approachExpected amount and timing of cash flow payments

Discount rate
$0*


0%*
Computers and Storage9,304,146 Hypothetical market analysisHypothetical market coupon rate14% (14% - 15%)
Internet29,138,188 Hypothetical market analysisHypothetical market coupon rate15% (12% - 25%)
Income approachExpected amount and timing of cash flow payments$1,794,082
 ($7,500 - $2,712,777)
Discount rate1%
(0% - 1% )
Medical Devices21,600,716 Hypothetical market analysisHypothetical market coupon rate16% (13% - 18%)
Income approachExpected amount and timing of cash flow payments$10,329,931*
Discount rate1%*
Other Healthcare35,042,424 Hypothetical market analysisHypothetical market coupon rate14% (12% - 24%)
Income approachExpected amount and timing of cash flow payments$1,250,945
($0 - $1,250,945)
Discount rate1%
(0% - 1%)
Other Technology96,510,123 Hypothetical market analysisHypothetical market coupon rate16% (12% - 25%)
Income approachExpected amount and timing of cash flow payments$4,127,179
($0 - $6,715,723)
Discount rate1%
(0% - 1%)
Security1,774,812 Hypothetical market analysisHypothetical market coupon rate25% (14% - 99%)
32

Investment Type - Level 3
Loan Investments Fair Values at
December 31, 2020		Valuation Techniques / MethodologiesUnobservable Inputs
Weighted Averages (a) / Amounts or Ranges
Semiconductors and Equipment2,785,488 Hypothetical market analysisHypothetical market coupon rate15% (14% - 16%)
Software35,910,171 Hypothetical market analysisHypothetical market coupon rate16% (13% - 26%)
Income approachExpected amount and timing of cash flow payments$1,891,347
($208,725 - $2,999,116)
Discount rate1%
(1% - 2%)
Technology Services13,526,801 Hypothetical market analysisHypothetical market coupon rate15% (14% - 23%)
Income approachExpected amount and timing of cash flow payments$2,403,939
 ($0 - $2,967,108)
Discount rate1%
(0% - 1%)
Wireless12,671,028 Hypothetical market analysisHypothetical market coupon rate14% (14% - 16%)
Total loan investments$264,629,798 
(a)The weighted average hypothetical market coupon rates were calculated using the fair value of the loans.
* There is only one loan within the industry.
    
The following tables present the balances of assets and liabilities as of June 30, 2021 and December 31, 2020 measured at fair value on a recurring basis:

As of June 30, 2021
ASSETS:Level 1Level 2Level 3Total
Loans*$— $— $194,333,211 $194,333,211 
Cash equivalents4,862,822 — — 4,862,822 
Total assets$4,862,822 $— $194,333,211 $199,196,033 
LIABILITIES:Level 1Level 2Level 3Total
Borrowings under debt facility$— $87,500,000 $— $87,500,000 
Derivative liability— 41,351 — 41,351 
Total liabilities$— $87,541,351 $— $87,541,351 

* For a detailed listing of borrowers comprising this amount, please refer to the Condensed Schedules of Investments.

33


As of December 31, 2020
ASSETS:Level 1Level 2Level 3Total
Loans†$— $— $264,629,798 $264,629,798 
Cash equivalents8,751,396 — — 8,751,396 
Total assets$8,751,396 $— $264,629,798 $273,381,194 
LIABILITIES:Level 1Level 2Level 3Total
Borrowings under debt facility$— $115,500,000 $— $115,500,000 
Derivative liability— 61,242 — 61,242 
Total liabilities$— $115,561,242 $— $115,561,242 

† For a detailed listing of borrowers comprising this amount, please refer to the Condensed 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 Three Months Ended June 30, 2021
Loans Warrants
Beginning balance$239,607,716 $— 
Acquisitions and originations— 179,266 
Principal reductions (42,991,117)— 
Proceeds from sale of loan(1,425,000)— 
Accretion of discount on loans(1,801,894)— 
Distributions to shareholder— (179,266)
Net change in unrealized gain (loss) from loans2,677,914 — 
Net realized loss from loans(1,734,408)— 
Ending balance$194,333,211 $— 
Net change in unrealized gain (loss) from loans relating to loans still held at June 30, 2021$342,349 

  For the Six Months Ended June 30, 2021
LoansWarrants
Beginning balance$264,629,798 $— 
Acquisitions and originations1,500,000 719,904 
Principal reductions(70,767,128)— 
Proceeds from sale of loan(1,425,000)— 
Accretion of discount on loans(3,726,073)— 
Distributions to shareholder— (719,904)
Net change in unrealized gain (loss) from loans5,964,893 — 
Net realized loss from loans(1,843,279)— 
Ending balance$194,333,211 $— 
Net change in unrealized gain (loss) from loans relating to loans still held at June 30, 2021$3,067,358 
34


For the Three Months Ended June 30, 2020 (a)
LoansConvertible LoanWarrants
Beginning balance$363,541,670 $— $— 
Acquisitions and originations15,333,333 175,547 1,001,030 
Principal reductions(28,168,459)— — 
Accretion of discounts(2,518,607)— — 
Distributions to shareholder— (175,547)(1,001,030)
Net change in unrealized gain (loss) from loans638,199 — — 
Net realized loss from loans(546,608)— — 
Ending balance$348,279,528 $— $— 
Net change in unrealized gain (loss) from loans relating to loans still held at June 30, 2020$31,575 
(a) Certain prior period information has been disclosed to conform to current presentation.
For the Six Months Ended June 30, 2020 (a)
LoansConvertible LoanStockWarrants
Beginning balance$371,955,824 $— $— $— 
Acquisitions and originations74,716,667 175,547 9,000 5,470,643 
Principal reductions(78,676,048)— — — 
Accretion of discount on loans(5,529,565)— — — 
Distributions to shareholder— (175,547)(9,000)(5,470,643)
Net change in unrealized gain (loss) from loans(13,205,864)— — — 
Net realized loss from loans(981,486)— — — 
Ending balance$348,279,528 $— $— $— 
Net change in unrealized gain (loss) from loans relating to loans still held at June 30, 2020$(13,809,337)
(a) Certain prior period information has been disclosed to conform to current presentation.
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.

35

5.    CAPITAL STOCK
As of both June 30, 2021 and December 31, 2020, 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 June 30, 2021 and December 31, 2020, was $423.6 million. Total contributed capital to the Company through June 30, 2021 and December 31, 2020 was $415.2 million, of which $352.1 million was contributed to the Fund.

The chart below shows the distributions of the Fund for the six months ended June 30, 2021 and 2020.

   For the Six Months Ended June 30, 2021 For the Six Months Ended June 30, 2020
Cash distributions$63,100,000 $38,500,000 
Distributions of equity securities719,904 5,655,190 
Total distributions to shareholder$63,819,904 $44,155,190 

Final classification of the distributions as either a return of capital or a distribution of income is an annual determination made at the end of each year dependent upon the Fund’s current year and cumulative earnings and profits.
6.  DEBT FACILITY
On April 5, 2016, the Fund established a secured, syndicated revolving loan facility in an initial amount 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. From 2017, the Fund continued to permanently reduce its commitment to reflect the needs of the Fund. On August 26, 2020 the Loan Agreement was further amended and the facility size further decreased to $180.0 million. The term of the facility was extended under the latest amendment and is now expected to terminate on August 26, 2023, but can be accelerated in the event of default, such as failure by the Fund to make timely interest or principal payments.

The Fund further reduced the debt facility in the ordinary course of business and the debt facility commitment as of June 30, 2021 was $110.0 million. On July 14, 2021 the Fund notified its lenders of its intention to permanently reduce its aggregate commitments to $95.0 million effective July 21, 2021 (as described in Note 12. Subsequent Events).

Effective from March 31, 2021, the facility size automatically and permanently reduces on the last business day of each quarter by an amount equal to the 10% multiplied by the facility size as of December 31, 2020, or $15.0 million; provided that from and after January 1, 2021, any optional reductions to the facility will reduce, dollar for dollar, the next scheduled reduction amount.

The Fund is permitted to borrow in any amounts so long as its asset coverage ratio, as defined in the 1940 Act, is at least 200% after giving effect to such borrowings. As of June 30, 2021 and December 31, 2020, the Fund’s asset coverage ratio was 229% and 238%, respectively.

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 June 30, 2021, the Fund’s outstanding borrowings were LIBOR Market Index Rate Loans.

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 at, pursuant to the election of the Fund, an annual rate of either (i) Reference Rate plus 1.75%, (ii) LIBOR plus 2.75% or (iii) LIBOR Market Index Rate plus
36

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 June 30, 2021 and December 31, 2020, $87.5 million and $115.5 million were outstanding under the facility, respectively.
    
As of June 30, 2021, the LIBOR rate was as follows:
1-Month LIBOR0.1005%
3-Month LIBOR0.1458%

Bank fees and other costs of $3.8 million incurred in connection with the acquisition and recent extension of the facility have been capitalized and are amortized to interest expense on a straight-line basis over the expected life of the facility. The Fund incurred $1.6 million in bank fees and other costs stemming from the extension of the facility. As of June 30, 2021 and December 31, 2020, there are remaining unamortized fees and costs of $1.2 million and $1.5 million, respectively. The remaining unamortized fees and costs are amortized over the expected life of the facility, which is expected to terminate on August 26, 2023.
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 both June 30, 2021 and December 31, 2020, Management is not aware of instances of non-compliance with financial covenants.
    
The following is the summary of the outstanding facility draws as of June 30, 2021:

AmountMaturity DateAll-In Interest Rate
LIBOR Market Index Rate Loans$87,500,000 August 26, 2023Variable based on 1-month LIBOR Rate
Total Outstanding$87,500,000 

The following is the summary of the outstanding facility draws as of December 31, 2020:

AmountMaturity DateAll-In Interest Rate
LIBOR Market Index Rate Loans$115,500,000 August 26, 2023Variable based on 1-month LIBOR Rate
Total Outstanding$115,500,000 
7. 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. Management Fees of $1.3 million and $2.2 million were recognized as expenses for the three months ended June 30, 2021 and 2020, respectively. Management Fees of $2.8 million and $4.6 million were recognized as expenses for the six months ended June 30, 2021 and 2020, respectively.
37


8. DERIVATIVE INSTRUMENTS

The Fund uses derivative instruments to manage its exposure to changes in interest rates on expected borrowings under its debt facility, as the Fund originates fixed rate loans.

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 facilities which do not match the fixed rate loans it originates. The initial swap instrument under this agreement was a cancellable interest rate swap with a notional amount of $102.0 million. On March 27, 2020, Management elected to exercise the option to cancel this swap effective March 31, 2020.
    
On June 14, 2019, the Fund entered into an interest rate swap and floor instrument 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 interest rate swap instrument terminated on September 11, 2020.

Interest Rate Collar

On April 6, 2020, the Fund entered into an interest rate collar instrument with MUFG Union Bank, N.A., which terminated on September 11, 2020. On September 11, 2020, the Fund entered into another interest rate collar instrument with a termination date of January 11, 2023. As of June 30, 2021, the aggregate notional principal amount of the interest rate collar was $42.0 million, with a cap of 1.000% and floor of 0.215% on a floating rate based upon a 1-month LIBOR rate. The interest rate collar mitigates the Fund’s exposure to interest rate fluctuations on variable rate index of the debt facility. The collar establishes a range where the Fund pays the counterparty if the 1-Month LIBOR rate falls below the established floor rate, and the counterparty will pay the Fund if the 1-Month LIBOR rate exceeds the established cap rate. The interest rate collar settles monthly and payments to or from the counterparty are recorded to net realized gain (loss) from derivative instruments.

The Fund may adjust the total amount hedged in order to remain in compliance with the hedging requirements of the Fund’s debt facility.

The following tables show the Fund’s derivative instruments at fair value on the Fund’s Condensed Statement of Assets and Liabilities as of June 30, 2021 and December 31, 2020:
Derivative Liability
Derivative InstrumentsJune 30, 2021December 31, 2020
Interest rate collar$41,351 $61,242 
    

38

The following table shows the effect of the Fund’s derivative instruments on the Fund’s Condensed Statements of Operations:
For the Three Months Ended June 30,  For the Six Months Ended June 30,
Derivative InstrumentsCondensed Statements of Operations Caption2021202020212020
Cancellable interest rate swap and Interest rate swap and floorNet change in unrealized gain (loss) from derivative instruments$— $286,100 $— $12,832 
Net realized loss from derivative instruments$— $(338,781)$— $(545,320)
Interest rate collarNet change in unrealized gain (loss) from derivative instruments$7,210 $(19,071)$19,891 $(19,071)
Net realized loss from derivative instruments$(13,249)$(10,269)$(25,271)$(10,269)
9. 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 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 June 30, 2021, 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 for federal income tax purposes and the appreciation and depreciation of the investments reported on the Condensed Schedules of Investments and Condensed Statements of Assets and Liabilities.
        
As of June 30, 2021:
AssetCostUnrealized AppreciationUnrealized DepreciationNet Appreciation (Depreciation)
Loans$211,959,559 $484,357 $(18,110,705)$(17,626,348)
Total$211,959,559 $484,357 $(18,110,705)$(17,626,348)
LiabilityCostUnrealized AppreciationUnrealized DepreciationNet Appreciation (Depreciation)
Derivative liability$— $— $41,351 $41,351 
Total$— $— $41,351 $41,351 
39



As of December 31, 2020:
AssetCostUnrealized AppreciationUnrealized DepreciationNet Appreciation (Depreciation)
Loans$288,221,039 $17,616 $(23,608,857)$(23,591,241)
Total$288,221,039 $17,616 $(23,608,857)$(23,591,241)

LiabilityCostUnrealized AppreciationUnrealized DepreciationNet Appreciation (Depreciation)
Derivative liability$— $— $(61,242)$(61,242)
Total$— $— $(61,242)$(61,242)

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. 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. The determination of the tax attributes of the Fund’s distributions is made annually as of the end of the Fund’s taxable year generally based upon its taxable income for the full taxable year and distributions paid for the full taxable year. As a result, a determination made on a quarterly basis may not be representative of the actual tax attributes of the Fund’s distributions for a full taxable year. As of June 30, 2021 the Fund had determined the tax attributes of its distributions taxable year-to-date to be from its current and accumulated earnings and profits.  There is not yet, however, certainty as to what the actual tax attributes of the Fund’s distributions to the shareholders will be by the year-ended December 31, 2021.

The Fund anticipates distributing all distributable earnings by the end of the year. Through June 30, 2021, the Fund had no undistributed earnings. 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 June 30, 2021, the Fund had no uncertain tax positions and no capital loss carryforwards.
10. UNEXPIRED UNFUNDED COMMITMENTS
As of June 30, 2021 and December 31, 2020, the Fund’s unexpired unfunded commitments to borrowers totaled $5.1 million and $22.3 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.
40


The tables below are the Fund’s unexpired unfunded commitments as of June 30, 2021 and December 31, 2020:    
BorrowerIndustryUnexpired Unfunded Commitment as of
June 30, 2021		Expiration Date
eXo Imaging, Inc.Medical Devices$2,000,000 09/30/2021
GoForward, Inc.Other Healthcare3,125,000 07/31/2021
Total$5,125,000 

BorrowerIndustryUnexpired Unfunded Commitment as of December 31, 2020Expiration Date
Aclima, Inc.Other Technology$2,000,000 03/31/2021
eXo Imaging, Inc.Medical Devices2,000,000 09/30/2021
Fetch Robotics, Inc.Computers & Storage2,500,000 06/30/2021
Invoice2Go, Inc.Software13,000,000 03/31/2021
Lukla, Inc.Internet500,000 01/31/2021
Reciprocity, Inc.Software1,950,000 01/31/2021
Residently USA, LLCInternet375,000 03/31/2021
Total$22,325,000 


11. FINANCIAL HIGHLIGHTS

U.S. GAAP requires disclosure of financial highlights of the Fund for the three and six months ended June 30, 2021 and 2020.

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 to average net assets, calculated below, are annualized and are computed based upon the aggregate weighted-average net assets of the Fund for the periods presented. Net investment income is inclusive of all investment income, 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 is calculated based upon the aggregate weighted average net assets of the Fund for the periods presented.
    
The following per share data and ratios have been derived from the information provided in the financial statements:


41


 For the Three Months Ended June 30, 2021For the Three Months Ended June 30, 2020For the Six Months Ended June 30, 2021For the Six Months Ended June 30, 2020
  
Total return **5.85 %4.79 %13.36 %3.18 %
  
Per share amounts: 
Net asset value, beginning of period
$1,363.32 $1,994.90 $1,597.34 $2,065.85 
Net investment income64.86 94.26 135.45 210.69 
Net realized and change in unrealized gain (loss) from loans and derivative instruments9.37 0.11 41.17 (147.49)
Net increase in net assets resulting from operations74.23 94.37 176.62 63.20 
Distributions to shareholder
(301.79)(96.77)(638.20)(441.55)
Contributions from shareholder
— — — 305.00 
Net asset value, end of period$1,135.76 $1,992.50 $1,135.76 $1,992.50 
Net assets, end of period$113,575,675 $199,249,818 $113,575,675 $199,249,818 
Ratios to average net assets: 
  
Expenses*8.83 %7.90 %7.98 %8.46 %
Net investment income*20.09 %18.94 %19.59 %20.99 %
Portfolio turn-over rate 0.69%-%0.65%-%
         Average debt outstanding$99,250,000 $161,750,000 $104,285,714 $168,928,571 
*Annualized
         **Total return amounts presented above are not annualized


12. SUBSEQUENT EVENTS
On July 14, 2021, the Fund notified its lenders of its intention to permanently reduce its aggregate commitments by $15.0 million effective July 21, 2021, reducing the aggregate commitments to $95.0 million.
Other than this, there were no additional subsequent events had occurred that would require adjustment or disclosure in the financial statements.
42

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

In addition to the historical information contained herein, the information in this Quarterly Report on Form 10-Q contains certain “forward-looking statements” within the meaning of the securities laws. These forward-looking statements reflect the current view of the Fund with respect to future events and financial performance and are subject to several risks and uncertainties, many of which are beyond the Fund’s control. All statements, other than statements of historical facts included in this Quarterly Report, regarding the strategy, future operations, financial position, estimated revenues, projected costs, prospects, plans and objectives of the Fund are forward-looking statements. For example, statements in this Form 10-Q regarding the potential future impact of the COVID-19 pandemic on the Fund’s business and results of operations are forward-looking statements. When used in this report, the words “will,” “believe,” “anticipate,” “intend,” “estimate,” “expect,” “project” and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words. All forward-looking statements speak only as of the date of this report. The Fund does not undertake any obligation to update or revise publicly any forward-looking statements, whether resulting from new information, future events or otherwise, except as required by law.

The reader of this Quarterly Report should understand that all such forward-looking statements are subject to various uncertainties and risks that could affect their outcome. The Fund’s actual results could differ materially from those suggested by such forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, variances in the actual versus projected growth in assets, return on assets, loan losses, expenses, rates charged on loans and earned on securities investments, competition and macro-economic changes including inflation, interest rate expectations, among other factors including those set forth in the section of this Quarterly Report titled “Risk Factors” and in Item 1A - “Risk Factors” in the Fund’s 2020 Annual Report on Form 10-K. This entire Quarterly Report should be read to put such forward-looking statements in context and to gain a more complete understanding of the uncertainties and risks involved in the Fund’s business.

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 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”), 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.
    
    
43

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.

Transactions with Venture Lending & Leasing VII, Inc. (“Fund VII”) 

The Manager also serves as 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 Securities and Exchange Commission (“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 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 (“Investments”). 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. Effective March 31, 2020, the Fund was no longer permitted to enter new commitments to borrowers. 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.

44

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. 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.

COVID-19’s Impact on Results of Operations and Liquidity & Capital Resources

The slowdown of the global and local economies in 2020 had had an impact on a number of the Fund’s portfolio companies’ business and operations. Due to the increased market volatility, valuation of the Fund’s loan investments contributed to increased unrealized losses from loans for the quarter ended June 30, 2020. At the end of 2020, vaccines were approved for deployment by various government health agencies, resulting in shelter-in-place and quarantine restrictions that have continued to loosen over the first six months of 2021. The recent market stability in addition to the recovering local and global economies, factored into the Fund’s valuation adjustments. For the quarter ended June 30, 2021, the Fund recognized unrealized gains from loans compared to the recognized unrealized losses for the same period in 2020.

45

Although markets have begun to stabilize and economies have begun to recover, uncertainty remains regarding the full extent of the long-term economic impact on the Fund’s business operations, results of operations, and access to liquidity and capital resources. The impact on the Fund will depend on many factors beyond the Fund’s control, including, without limitations, the timing, extent, trajectory, and duration of the pandemic. In addition, the speed of economic recovery may vary across different industries both locally and globally. The Fund is continuing to maintain close communications with its loan portfolio companies to proactively assess and manage potential risks. In addition, Management is continuing to maintain oversight analysis of credits across the Fund’s loan investment portfolio in an attempt to manage the potential credit risk and improve loan performance.

Management is also monitoring the Fund’s continued access to capital resources through periodic and timely communication with the bank syndicate. The Fund believes its existing cash payment streams and access to capital from its debt facility will be sufficient to satisfy its working capital needs, debt repayments, and other liquidity requirements associated with its existing operations.

Results of Operations - For the Three and Six Months Ended June 30, 2021 and 2020

Analysis of Interest Income

Total investment income for the three months ended June 30, 2021 and 2020 was $9.3 million and $13.4 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.

Interest income 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 following table shows the average balance, interest income, and weighted average interest rate for the cash and non-cash portion of interest income for the three months ended June 30, 2021 and 2020.

For the Three Months Ended June 30, 2021For the Three Months Ended June 30, 2020
Average BalanceInterest IncomeWeighted-Ave Int Rate - Cash PortionWeighted-Ave Int Rate - Noncash PortionAverage BalanceInterest IncomeWeighted-Ave Int Rate - Cash PortionWeighted-Ave Int Rate - Noncash Portion
Performing Loans$205,233,546$8,958,59213.95%3.51%$341,133,179$13,310,38012.66%2.95%
All Loans$219,376,759$9,336,91813.74%3.28%$356,233,457$13,346,40012.15%2.84%

Interest income for all loans decreased by $4.0 million, or 30.0%, for the three months ended June 30, 2021 compared to the same period in 2020. The decrease in interest income was due primarily to the decline in the loan investment portfolio as there were no new loans to offset the loans being paid down or paid-off. The average outstanding balances for all loans decreased by $136.9 million, or 38.4% for the three months ended June 30, 2021 compared to the same period in 2020.

Total investment income for the six months ended June 30, 2021 and 2020 was $19.1 million and $29.6 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 following table shows the average balance, interest income, and weighted average interest rate for the cash and non-cash portion of interest income for the six months ended June 30, 2021 and 2020.
46

For the Six Months Ended June 30, 2021For the Six Months Ended June 30, 2020
Average BalanceInterest IncomeWeighted-Ave Int Rate - Cash PortionWeighted-Ave Int Rate - Noncash PortionAverage BalanceInterest IncomeWeighted-Ave Int Rate - Cash PortionWeighted-Ave Int Rate - Noncash Portion
Performing Loans$220,107,230$18,376,177 13.31%3.39%$347,239,335$29,000,475 13.52 %3.18 %
All Loans$234,797,512$19,060,569 13.01%3.23%$359,765,659$29,036,496 13.06 %3.08 %

Interest income for all loans decreased by $10.0 million, or 34.4%, for the six months ended June 30, 2021 compared to the same period in 2020. The decrease in interest income for all loans was primarily due to fewer new loans to offset the loans being paid down or paid-off. The average outstanding for all loans decreased by $125.0 million, or 34.7%.

Analysis of Interest Expense

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 debt facility.

The following table shows the average balance, interest expense and weighted-average interest rate for the three months ended June 30, 2021 and 2020.

For the Three Months Ended June 30, 2021For the Three Months Ended June 30, 2020
Average BalanceInterest ExpenseInt Expense RateAverage BalanceInterest ExpenseInt Expense Rate
Bank Facility$99,250,000 $868,907 3.50 %$161,750,000 $1,547,167 3.83 %

The following table shows the average balance, interest expense and weighted-average interest rate for the six months ended June 30, 2021 and 2020.

For the Six Months Ended June 30, 2021For the Six Months Ended June 30, 2020
Average BalanceInterest ExpenseInt Expense RateAverage BalanceInterest ExpenseInt Expense Rate
Bank Facility$104,285,714 $1,834,893 3.52 %$168,928,571 $3,589,177 4.25 %

Interest expense decreased primarily due to declines in the average outstanding debt and the low interest rate environment.

Analysis of Operating Expense

The following table shows the components of operating expense for three months ended June 30, 2021 and 2020.

For the Three Months Ended June 30, 2021
Operating expense20212020Change
Management fees$1,268,834 $2,223,779 $(954,945)
Banking and professional fees684,422 134,243 550,179 
Other operating expenses29,368 27,565 1,803 
Total operating expense$1,982,624 $2,385,587 $(402,963)

47

Management fees were calculated as 2.5% of the Fund’s total assets and the decreases were due to declines in the Fund’s total assets due primarily to fewer new loan fundings to offset monthly loan payments and early pay downs.

Banking and professional fees increased by $0.6 million, or 409.8%, due to increased legal expenses associated with a workout loan.

Other operating expenses included director fees, custody fees, tax fees and other expenses related to the operations of the Fund.

The following table shows the components of operating expense for six months ended June 30, 2021 and 2020.

For the Six Months Ended June 30, 2021
Operating expense20212020Change
Management fees$2,817,627 $4,559,205 $(1,741,578)
Banking and professional fees803,596 253,297 550,299 
Other operating expenses59,803 95,755 (35,952)
Total operating expense$3,681,026 $4,908,257 $(1,227,231)

Management fees were calculated as 2.5% of the Fund’s total assets and the decreases were due to declines in the Fund’s total assets due primarily to fewer new loan fundings to offset monthly loan payments and early pay downs.

Banking and professional fees increased by $0.6 million, or 217.3%, due to increased legal expenses associated with a workout loan.

Other operating expenses included director fees, custody fees, tax fees and other expenses related to the operations of the Fund.

Realized and Change in Unrealized Gains (Losses)

Net investment income for the three months ended June 30, 2021 and 2020, was $6.5 million and $9.4 million, respectively. Net investment income for the six months ended June 30, 2021 and 2020, was $13.5 million and $21.1 million, respectively.

Net realized loss from loans was $1.7 million and $0.5 million for both the three months ended June 30, 2021 and 2020, respectively. Net realized loss from loans was $1.8 million and $1.0 million for both the six months ended June 30, 2021 and 2020, respectively. The primary reason for the losses were non-accrual loan write-offs.
Net realized loss from derivative instruments was less than $0.1 million and $0.3 million for the three months ended June 30, 2021 and 2020, respectively. Net realized loss from derivative instruments was less than $0.1 million and $0.6 million for the six months ended June 30, 2021 and 2020, respectively. The net realized loss from derivative instruments were due to interest payments paid on the interest rate swap and collar as the floating rate dropped below the fixed rate of the swap and the one-month LIBOR rate is below the floor of the collar.

Net change in unrealized gain (loss) from loans was $2.7 million and $0.6 million for the three months ended June 30, 2021 and 2020, respectively. Net change in unrealized gain (loss) from loans was $6.0 million and $(13.2) million for the six months ended June 30, 2021 and 2020, respectively. The net change in unrealized gain (loss) from loans consisted of fair value adjustments taken against loans as a result of an improvement or deterioration in certain portfolio companies’ performance as well as reversal of prior adjustments on realized loan losses.

48

Net change in unrealized gain (loss) from derivative instruments was less than $0.1 million and $0.3 million for the three months ended June 30, 2021 and 2020, respectively. Net change in unrealized gain (loss) from derivative instruments was less than $0.1 million and less than ($0.1) million for the six months ended June 30, 2021 and 2020, respectively. The net change in unrealized gain (loss) from derivative instruments consisted of fair market value adjustments to the interest rate swap and collar. The decline in the net change in unrealized gain for three months ended June 30, 2021 compared to the same period in 2020 was primarily due to the realization of the prior value of the instrument and changes in expectations of the future interest rate environment.

Net increase in net assets resulting from operations for the three months ended June 30, 2021 and 2020, was $7.4 million and $9.4 million, respectively. On a per share basis, the net increase in net assets resulting from operations for the three months ended June 30, 2021 and 2020 was $74.23 and $94.36, respectively.

Net increase in net assets resulting from operations for the six months ended June 30, 2021 and 2020, was $17.7 million and $6.3 million, respectively. On a per share basis, the net increase in net assets resulting from operations for the six months ended June 30, 2021 and 2020 was $176.62 and $63.20, respectively.

Liquidity and Capital Resources – June 30, 2021 and December 31, 2020

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 $352.1 million as of June 30, 2021 and December 31, 2020. As of both June 30, 2021 and December 31, 2020, the Company had subscriptions for capital in the amount of $423.6 million, of which $415.2 million had been called. The remaining $8.5 million has expired and can no longer be called. Per the operating agreement between the Company’s managing member and members of the Company, only 10% of committed capital may be recalled effective March 31, 2021. As a result, the Company has made $42.4 million in recallable distributions to its investors.

The change in cash for the six months ended June 30, 2021 and 2020 was as follows:

  For the Six Months Ended June 30, 2021 For the Six Months Ended June 30, 2020
Net cash provided by operating activities$87,236,697 $24,490,481 
Net cash used in financing activities(91,125,271)(34,555,589)
Net decrease in cash and cash equivalents$(3,888,574)$(10,065,108)

As of June 30, 2021 and December 31, 2020, 4.3% and 5.5%, 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. From 2017, the Fund continued to permanently reduce its commitment to reflect the needs of the Fund. On August 26, 2020 the Loan Agreement was further amended and the facility size further decreased to $180 million. The term of the facility was extended under the latest amendment and now terminates on August 26, 2023, but can be accelerated in the event of default, such as failure by the Fund to make timely interest or principal payments.

The Fund further reduced the debt facility in the ordinary course of business and the debt facility commitment as of June 30, 2021 was $110.0 million. On July 14, 2021 the Fund notified its lenders of its intention to permanently reduce its aggregate commitments to $95.0 million effective July 21, 2021 (as described in Note 12. Subsequent Events).

49

Effective from March 31, 2021, the facility size automatically and permanently reduces on the last business day of each quarter by an amount equal to the 10% multiplied by the facility size as of December 31, 2020, or $15.0 million; provided that from and after January 1, 2021, any optional reductions to the facility will reduce, dollar for dollar, the next scheduled reduction amount.

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.

As of June 30, 2021, $87.5 million was outstanding under the facility.

For the six months ended June 30, 2021, the Fund invested its assets in venture loans. Amounts disbursed under the Fund’s loan commitments were $1.5 million for the six months ended June 30, 2021. Net loan amounts outstanding after amortization and valuation adjustments decreased by $70.3 million for the same period. Unexpired unfunded commitments totaled approximately $5.1 million as of June 30, 2021.

As ofCumulative Amount
Disbursed		Principal
Reductions and Fair
Market Adjustments		Balance
Outstanding - Fair
Value		Unexpired
Unfunded
Commitments
June 30, 2021$937.9 million$743.6 millon$194.3 million$5.1 million
December 31, 2020$936.3 million$671.7 million$264.6 million$22.3 million

The following tables show the unexpired unfunded commitments by portfolio company as of June 30, 2021 and December 31, 2020.

BorrowerIndustryUnexpired Unfunded Commitment as of
June 30, 2021		Expiration Date
eXo Imaging, Inc.Medical Devices$2,000,000 09/30/2021
GoForward, Inc.Other Healthcare3,125,000 07/31/2021
Total$5,125,000 

    
BorrowerIndustryUnexpired Unfunded Commitment as of December 31, 2020Expiration Date
Aclima, Inc.Other Technology$2,000,000 03/31/2021
eXo Imaging, Inc.Medical Devices2,000,000 09/30/2021
Fetch Robotics, Inc.Computers & Storage2,500,000 06/30/2021
Invoice2Go, Inc.Software13,000,000 03/31/2021
Lukla, Inc.Internet500,000 01/31/2021
Reciprocity, Inc.Software1,950,000 01/31/2021
Residently USA, LLCInternet375,000 03/31/2021
Total$22,325,000 


50

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.

As of June 30, 2021, the Fund had a cash balance of $4.9 million and approximately $108.1 million in scheduled loan receivable payments over the next twelve months. Additionally, the Fund has access to the Company’s recallable distributions of $42.4 million and the unused portion of the revolving credit facility. Together, these amounts are sufficient to meet the current commitment backlog and operational expenses of the Fund over the next year.

The Fund is permitted to borrow in any amounts so long as its asset coverage ratio, as defined in the 1940 Act, is at least 200% after giving effect to such borrowings. As of June 30, 2021 and December 31, 2020, the Fund’s asset coverage ratio was 229% and 238%, respectively.

Item 3. 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.


51

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 June 30, 2021, the outstanding debt balance was $87.5 million at a floating interest rate based on the daily 1-month LIBOR rate, for which the Fund has a derivative instrument in place with a cap interest rate of 1.00% on $42.0 million of the notional principal amount and a floor of 0.215%.
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 June 30, 2021. 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 Condensed Statements of Assets and Liabilities as of June 30, 2021, 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 derivative instruments.
 
Effect of Interest Rate Change ByOther Interest and Other Income (Loss)Gain (Loss) from Interest Rate CollarInterest Income (Expense)Total Loss
(0.50)%$(24,314)$(210,000)$87,500 $(146,814)
1%$48,628 $90,300 $(875,000)$(736,072)
2%$97,256 $510,300 $(1,750,000)$(1,142,444)
3%$145,885 $930,300 $(2,625,000)$(1,548,815)
4%$194,513 $1,350,300 $(3,500,000)$(1,955,187)
5%$243,141 $1,770,300 $(4,375,000)$(2,361,559)
Additionally, a change in the interest rate may affect the fair value of the derivative instruments 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 fair value of the derivative instruments while any rate decreases will decrease the fair 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.
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 derivative instruments 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.


52

Item 4.  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 Vice President of Finance, 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 Securities Exchange Act of 1934 (“Exchange Act”). Based upon this evaluation, the Chief Executive Officer and Vice President of Finance 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 Vice President of Finance, as appropriate, to allow timely decisions regarding required disclosures.


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 June 30, 2021 that has materially affected, or is reasonably likely to materially affect, the Fund’s internal control over financial reporting.
53

PART II — OTHER INFORMATION

Item 1.  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 1A. Risk Factors

There have been no material changes to the risk factors reported in the Fund’s 2020 Annual Report on Form 10-K.

Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds

None.

Item 3.  Defaults Upon Senior Securities

Not applicable.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5.  Other Information

None.

54

Item 6.  Exhibits

Exhibit NumberDescription
3(i)
3(ii)
4.1
31.1

31.2

32.1

32.2


55

SIGNATURES

Pursuant to the requirements 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. WerdegarBy:/s/ Jared S. Thear
Maurice C. WerdegarJared S. Thear
Chief Executive OfficerChief Financial Officer
(Principal Executive Officer)(Principal Financial Officer)
Date:August 12, 2021Date:August 12, 2021


56

Venture Lending & Leasing VIII, Inc. Reports