Financial Condition and Risks - The company may face limitations in operational discretion due to provisions in current and future debt obligations, which could adversely affect financial condition and cash flows [180]. - Adverse developments in credit markets could impair the company's ability to secure future borrowing facilities, impacting growth financing and refinancing options [181]. - The company must maintain at least 70% of total assets in qualifying assets to retain its status as a Business Development Company (BDC), with potential violations leading to forced asset disposals [182]. - Loss of BDC status would subject the company to more regulatory restrictions, significantly decreasing operational flexibility and potentially affecting financial results [183]. - The investment portfolio is recorded at fair value, with most investments classified as Level 3, leading to uncertainty in net asset value due to reliance on management judgment [184]. - The company is obligated to maintain effective internal controls over financial reporting, with potential failures leading to loss of investor confidence and adverse regulatory consequences [185]. - Cybersecurity threats pose significant risks to the company's operations, with potential impacts on financial condition and data integrity [192]. - The company may face substantial financial penalties for breaches of data security and privacy laws, which could result in significant losses and reputational damage [195]. - The financial condition could be negatively affected if principal investments cannot be recovered due to negative pledges or lack of security interests [235]. - Collateral securing loans may decrease in value, impacting the ability to cover losses [236]. - Other creditors may have claims that take priority over the company's senior liens, affecting recovery of investments [237]. - A significant portion of assets securing investments may be in intellectual property, which could lose value if rights are challenged [238]. - The lack of liquidity in investments may hinder the ability to meet investment objectives [244]. - The company may experience unrealized losses on its investment portfolio, which could indicate future realized losses and reduce funds available for distribution [249]. - The company may incur contingent liabilities related to the disposition of its investments, particularly in loans [259]. - The company may not realize gains from equity-related investments, which could decline in value or become illiquid [260]. - The company may not make follow-on investments in portfolio companies, which could impair the value of its portfolio [266]. - The company's common stock may trade below its net asset value per share, limiting its ability to raise additional equity capital [268]. - A downgrade in credit ratings could significantly impact the liquidity and market value of the company's securities [281]. - Concerns over the U.S. debt ceiling and budget deficit have led to credit rating downgrades, potentially increasing interest rates and borrowing costs, which could adversely affect the company's financial performance [282]. - Economic instability in the Eurozone and other regions may pose risks to the company's business, with potential impacts from global macroeconomic events and consumer confidence [283]. - Market conditions may hinder the company's ability to refinance existing debt, which could limit its capacity to make new commitments or fund existing ones [285]. - Supply chain disruptions and inflation could negatively impact the productivity and margin performance of the company's portfolio companies, affecting overall financial results [288]. - Economic slowdowns or recessions may lead to financial losses in the portfolio and a decrease in revenues, net income, and assets [301]. - Inflation has adversely affected the business and financial condition of portfolio companies, increasing costs of labor, energy, and raw materials [304]. - Uncertainty regarding U.S. federal initiatives could negatively impact the business and financial condition of the company [302]. - Changes to U.S. trade policies and tariffs may have a material adverse effect on global economic conditions and the stability of financial markets [303]. - The company is subject to financial market risks, including changes in interest rates and foreign currency exchange rates, which could impact performance [434]. Investment Strategy and Portfolio Risks - The company’s investment strategy includes secured loans and equity investments in venture capital-backed companies, which may lead to conflicts of interest with affiliates [206]. - The advisory fee structure may create incentives for the adviser that are not fully aligned with the interests of the company's stockholders, potentially leading to riskier investments [210]. - The incentive fee arrangement may encourage the adviser to pursue speculative investments, increasing the likelihood of default and higher investment losses [211]. - The company has a concentration of investments in technology and high growth industries, which exposes it to significant risks and potential losses [217]. - The investment strategy focuses on venture capital-backed companies, which are subject to volatility and may require additional capital [224]. - The company does not have fixed guidelines for diversification, leading to potential significant losses if a single investment fails [221]. - The valuation of certain investments is determined by the Board, which may create conflicts of interest due to the involvement of the Adviser's senior investment team [213]. - The company may face challenges in obtaining timely regulatory approvals for its portfolio companies, impacting their operations and financial performance [219]. - The Investment Advisory Agreement was not negotiated at arm's length, potentially resulting in less favorable terms for the company [215]. - The company's portfolio companies may incur debt that ranks equally with or senior to its investments, which could affect recovery in case of insolvency [255]. - The company invests in OID instruments, including PIK loans, which carry risks such as potential borrower defaults and unreliable valuations [253]. - Prepayments of loans could materially impact the company's results of operations and its ability to make stockholder distributions, potentially leading to a decline in share price [254]. - The ability to protect intellectual property rights is crucial for portfolio companies, as failure to do so could harm investment value [233]. - Relationships with portfolio companies may expose the company to confidential information, necessitating non-disclosure agreements [234]. - The company may experience fluctuations in quarterly operating results due to various factors, including competition, economic conditions, and the timing of investment returns [297]. - Future pandemics could adversely impact the venture capital fundraising environment, affecting the ability of portfolio companies to secure additional financing [287]. - The company generally does not hold controlling equity interests in its portfolio companies, limiting its ability to influence management decisions that could affect investment value [251]. - As of December 31, 2024, the company's unfunded commitments totaled 368.0 million, of the debt investments in the portfolio bore interest at floating rates, with interest rate floors of 3.25% or higher [438]. - Floating rate borrowings totaled 70.2 million of investments at fair value denominated in foreign currencies, with no foreign currency hedging transactions in place [442]. - Changes in interest rates could materially affect net investment income, with potential increases in interest income if rates exceed applicable interest-rate floors [439]. Market and Economic Conditions - The company faces risks associated with the rapid evolution of artificial intelligence (AI) and machine learning technologies, which could disrupt markets and increase competition [196]. - The company and its portfolio investments may be exposed to AI-related risks from third-party service providers, potentially leading to unpredictable impacts on business operations [197]. - AI technology relies heavily on large data sets, and inaccuracies in data could materially degrade the effectiveness of AI applications, adversely affecting the company's investments [199]. - Cash balances held by the company and its adviser may exceed federally insured limits, exposing them to risks from adverse developments in the financial services industry [202]. - Access to funding sources could be significantly impaired by liquidity constraints or failures in the financial services industry, affecting the company's operations [203]. - Investor concerns regarding the financial systems could lead to less favorable financing terms, making it more difficult for the company to acquire financing [204]. - The ongoing war between Russia and Ukraine and other geopolitical conflicts could lead to increased market volatility and adversely affect the company's operations and financial condition [284]. - Volatility in capital markets may affect the valuations of the company's investments, making it difficult to sell investments for liquidity if required [296]. - Securities litigation or shareholder activism could negatively impact the company's operations and stock price [274]. - Sales of substantial amounts of common stock could adversely affect the market price of the company's shares [275]. - The market price of the company's common stock may fluctuate significantly due to various factors, including market conditions and operational performance [273]. - Stockholders opting out of the dividend reinvestment plan may experience dilution in their ownership percentage over time [269]. - Cash distributions to stockholders may be reinvested in additional shares, potentially leading to tax liabilities exceeding cash received [271]. - The company may seek to utilize hedging instruments to mitigate exposure to fluctuations in interest rates and foreign currency exchange rates in the future [443]. - Regulatory changes following the 2024 U.S. election may increase competition and affect the company's financial market operations [284].
TriplePoint Venture Growth(TPVG) - 2024 Q4 - Annual Report