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Investments | 9 Months Ended
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Sep. 30, 2022
Schedule Of Investments [Abstract] |
Investments | 4. Investments Control and Affiliate Investments As required by the 1940 Act, the Company classifies its investments by level of control. “Control investments” are defined in the 1940 Act as investments in those companies that the Company is deemed to “control”. Under the 1940 Act, the Company is generally deemed to “control” a company in which it has invested if it owns 25% or more of the voting securities of such company or has greater than 50% representation on its board. “Affiliate investments” are investments in those companies that are “affiliated companies” of the Company, as defined in the 1940 Act, which are not control investments. The Company is deemed to be an “affiliate” of a company in which it has invested if it owns 5% or more, but generally less than 25%, of the voting securities of such company. “Non-control/non-affiliate investments” are investments that are neither control investments nor affiliate investments. For purposes of determining the classification of its investments, the Company has included consideration of any voting securities or board appointment rights held by the Adviser Funds. The following table summarizes the Company’s realized gains and losses and changes in unrealized appreciation and depreciation on control and affiliate investments for the three and nine months ended September 30, 2022 and 2021.
(in thousands) |  |  |  |  |  |  | Three Months Ended September 30, 2022 |  |  | Nine Months Ended September 30, 2022 |
Portfolio Company(1) |  | Type |  | Fair Value as of September 30, 2022 |  |  | Interest Income |  |  | Fee Income |  |  | Net Change in Unrealized Appreciation (Depreciation) |  |  | Realized Gain (Loss) |  |  | Interest Income |  |  | Fee Income |  |  | Net Change in Unrealized Appreciation (Depreciation) |  |  | Realized Gain (Loss) |
Control Investments |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Coronado Aesthetics, LLC |  | Control |  | $ | 400 |  |  | $ | — |  |  | $ | — |  |  | $ | (22 | ) |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | (165 | ) |  | $ | — |
Gibraltar Business Capital, LLC |  | Control |  |  | 37,662 |  |  |  | 853 |  |  |  | 18 |  |  |  | (1,423 | ) |  |  | — |  |  |  | 2,531 |  |  |  | 51 |  |  |  | (6,228 | ) |  |  | — |
Hercules Adviser LLC |  | Control |  |  | 33,945 |  |  |  | 154 |  |  |  | — |  |  |  | (1,236 | ) |  |  | — |  |  |  | 393 |  |  |  | — |  |  |  | 9,955 |  |  |  | — |
Tectura Corporation |  | Control |  |  | 8,318 |  |  |  | 174 |  |  |  | — |  |  |  | 110 |  |  |  | — |  |  |  | 516 |  |  |  | — |  |  |  | 49 |  |  |  | — |
Total Control Investments |  | $ | 80,325 |  |  | $ | 1,181 |  |  | $ | 18 |  |  | $ | (2,571 | ) |  | $ | — |  |  | $ | 3,440 |  |  | $ | 51 |  |  | $ | 3,611 |  |  | $ | — |
Affiliate Investments |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Black Crow AI, Inc.(2) |  | Affiliate |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | (120 | ) |  | $ | 3,772 |
Pineapple Energy LLC(2) |  | Affiliate |  |  | — |  |  |  | 81 |  |  |  | — |  |  |  | 4,631 |  |  |  | (2,014 | ) |  |  | 1,204 |  |  |  | — |  |  |  | 4,209 |  |  |  | (2,014 | )
Total Affiliate Investments |  | $ | — |  |  | $ | 81 |  |  | $ | — |  |  | $ | 4,631 |  |  | $ | (2,014 | ) |  | $ | 1,204 |  |  | $ | — |  |  | $ | 4,089 |  |  | $ | 1,758 |
Total Control & Affiliate Investments |  | $ | 80,325 |  |  | $ | 1,262 |  |  | $ | 18 |  |  | $ | 2,060 |  |  | $ | (2,014 | ) |  | $ | 4,644 |  |  | $ | 51 |  |  | $ | 7,700 |  |  | $ | 1,758 |
(in thousands) |  |  |  |  |  |  | Three Months Ended September 30, 2021 |  |  | Nine Months Ended September 30, 2021 |
Portfolio Company(1) |  | Type |  | Fair Value as of September 30, 2021 |  |  | Interest Income |  |  | Fee Income |  |  | Net Change in Unrealized Appreciation (Depreciation) |  |  | Realized Gain (Loss) |  |  | Interest Income |  |  | Fee Income |  |  | Net Change in Unrealized Appreciation (Depreciation) |  |  | Realized Gain (Loss) |
Control Investments |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Gibraltar Business Capital, LLC |  | Control |  | $ | 40,737 |  |  | $ | 853 |  |  | $ | 15 |  |  | $ | (3,475 | ) |  | $ | — |  |  | $ | 2,325 |  |  | $ | 38 |  |  | $ | (17,690 | ) |  | $ | — |
Hercules Adviser LLC |  | Control |  |  | 16,804 |  |  |  | 45 |  |  |  | — |  |  |  | (219 | ) |  |  | — |  |  |  | 59 |  |  |  | — |  |  |  | 10,669 |  |  |  | — |
Tectura Corporation |  | Control |  |  | 8,294 |  |  |  | 174 |  |  |  | 5 |  |  |  | (80 | ) |  |  | — |  |  |  | 516 |  |  |  | 5 |  |  |  | (306 | ) |  |  | — |
Total Control Investments |  | $ | 65,835 |  |  | $ | 1,072 |  |  | $ | 20 |  |  | $ | (3,774 | ) |  | $ | — |  |  | $ | 2,900 |  |  | $ | 43 |  |  | $ | (7,327 | ) |  | $ | — |
Affiliate Investments |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Black Crow AI, Inc. |  | Affiliate |  | $ | 1,243 |  |  | $ | — |  |  | $ | — |  |  | $ | (66 | ) |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | 2,028 |  |  | $ | — |
Pineapple Energy LLC |  | Affiliate |  |  | 8,469 |  |  |  | 1 |  |  |  | — |  |  |  | (52 | ) |  |  | — |  |  |  | 3 |  |  |  | — |  |  |  | 9 |  |  |  | — |
Solar Spectrum Holdings LLC (p.k.a. Sungevity, Inc.) |  | Affiliate |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 62,183 |  |  |  | (62,143 | )
Total Affiliate Investments |  | $ | 9,712 |  |  | $ | 1 |  |  | $ | — |  |  | $ | (118 | ) |  | $ | — |  |  | $ | 3 |  |  | $ | — |  |  | $ | 64,220 |  |  | $ | (62,143 | )
Total Control & Affiliate Investments |  | $ | 75,547 |  |  | $ | 1,073 |  |  | $ | 20 |  |  | $ | (3,892 | ) |  | $ | — |  |  | $ | 2,903 |  |  | $ | 43 |  |  | $ | 56,893 |  |  | $ | (62,143 | )
(1) In accordance with Rules 3-09, 4-08(g), and Rule 10-01(b)(1) of Regulation S-X, (“Rule 3-09”, “Rule 4-08(g)”, and “Rule 10-01(b)(1)”, respectively), the Company must determine if its unconsolidated subsidiaries are considered “significant subsidiaries”. As of September 30, 2022 and September 30, 2021, there were no unconsolidated subsidiaries that are considered “significant subsidiaries”. (2) As of September 30, 2022, Black Crow AI, Inc. and Pineapple Energy LLC are no longer affiliates as defined under the 1940 Act. Portfolio Composition The following table shows the fair value of the Company’s portfolio of investments by asset class as of September 30, 2022 and December 31, 2021:
| September 30, 2022 |  |  | December 31, 2021 |
(in thousands) | Investments at Fair Value |  |  | Percentage of Total Portfolio |  |  | Investments at Fair Value |  |  | Percentage of Total Portfolio |
Senior Secured Debt | $ | 2,607,006 |  |  |  | 92.3 | % |  | $ | 2,156,709 |  |  |  | 88.6 | %
Unsecured Debt |  | 54,393 |  |  |  | 1.9 | % |  |  | 52,890 |  |  |  | 2.2 | %
Preferred Stock |  | 41,038 |  |  |  | 1.4 | % |  |  | 69,439 |  |  |  | 2.8 | %
Common Stock |  | 93,096 |  |  |  | 3.3 | % |  |  | 115,271 |  |  |  | 4.7 | %
Warrants |  | 27,159 |  |  |  | 1.0 | % |  |  | 38,399 |  |  |  | 1.6 | %
Investment Funds & Vehicles |  | 3,046 |  |  |  | 0.1 | % |  |  | 1,814 |  |  |  | 0.1 | %
Total | $ | 2,825,738 |  |  |  | 100.0 | % |  | $ | 2,434,522 |  |  |  | 100.0 | %
A summary of the Company’s investment portfolio, at value, by geographic location as of September 30, 2022 and December 31, 2021 is shown as follows:
| September 30, 2022 |  |  | December 31, 2021 |
(in thousands) | Investments at Fair Value |  |  | Percentage of Total Portfolio |  |  | Investments at Fair Value |  |  | Percentage of Total Portfolio |
United States | $ | 2,545,973 |  |  |  | 90.1 | % |  | $ | 2,138,184 |  |  |  | 87.8 | %
United Kingdom |  | 158,491 |  |  |  | 5.6 | % |  |  | 169,407 |  |  |  | 7.0 | %
Netherlands |  | 88,174 |  |  |  | 3.1 | % |  |  | 82,925 |  |  |  | 3.4 | %
Canada |  | 19,373 |  |  |  | 0.7 | % |  |  | 27,673 |  |  |  | 1.1 | %
Israel |  | 9,005 |  |  |  | 0.3 | % |  |  | 8,980 |  |  |  | 0.4 | %
Ireland |  | 3,313 |  |  |  | 0.1 | % |  |  | 5,459 |  |  |  | 0.2 | %
Germany |  | 924 |  |  |  | 0.1 | % |  |  | 1,894 |  |  |  | 0.1 | %
Other |  | 485 |  |  |  | 0.0 | % |  |  | — |  |  |  | 0.0 | %
Total | $ | 2,825,738 |  |  |  | 100.0 | % |  | $ | 2,434,522 |  |  |  | 100.0 | %
The following table shows the fair value of the Company’s portfolio by industry sector as of September 30, 2022 and December 31, 2021:
(in thousands) | September 30, 2022 |  |  | December 31, 2021 |
| Investments at Fair Value |  |  | Percentage of Total Portfolio |  |  | Investments at Fair Value |  |  | Percentage of Total Portfolio |
Drug Discovery & Development | $ | 1,091,827 |  |  |  | 38.6 | % |  | $ | 967,383 |  |  |  | 39.7 | %
Software |  | 680,216 |  |  |  | 24.1 | % |  |  | 585,622 |  |  |  | 24.1 | %
Internet Consumer & Business Services |  | 489,968 |  |  |  | 17.3 | % |  |  | 395,506 |  |  |  | 16.3 | %
Healthcare Services, Other |  | 203,599 |  |  |  | 7.2 | % |  |  | 121,003 |  |  |  | 5.0 | %
Communications & Networking |  | 101,094 |  |  |  | 3.6 | % |  |  | 105,490 |  |  |  | 4.3 | %
Diversified Financial Services |  | 72,061 |  |  |  | 2.5 | % |  |  | 65,073 |  |  |  | 2.7 | %
Information Services |  | 59,735 |  |  |  | 2.1 | % |  |  | 74,417 |  |  |  | 3.1 | %
Manufacturing Technology |  | 43,892 |  |  |  | 1.6 | % |  |  | 14,995 |  |  |  | 0.6 | %
Consumer & Business Products |  | 25,497 |  |  |  | 0.9 | % |  |  | 28,099 |  |  |  | 1.2 | %
Semiconductors |  | 20,621 |  |  |  | 0.7 | % |  |  | 22,498 |  |  |  | 0.9 | %
Medical Devices & Equipment |  | 17,421 |  |  |  | 0.6 | % |  |  | 12,612 |  |  |  | 0.5 | %
Sustainable and Renewable Technology |  | 15,683 |  |  |  | 0.6 | % |  |  | 39,387 |  |  |  | 1.6 | %
Electronics & Computer Hardware |  | 2,498 |  |  |  | 0.1 | % |  |  | 1,040 |  |  |  | 0.0 | %
Surgical Devices |  | 1,536 |  |  |  | 0.1 | % |  |  | 1,029 |  |  |  | 0.0 | %
Drug Delivery |  | 90 |  |  |  | 0.0 | % |  |  | 368 |  |  |  | 0.0 | %
Total | $ | 2,825,738 |  |  |  | 100.0 | % |  | $ | 2,434,522 |  |  |  | 100.0 | %
No single portfolio investment represents more than 10% of the fair value of the Company’s total investments as of September 30, 2022 or December 31, 2021. Concentrations of Credit Risk The Company’s customers are primarily privately held companies and public companies which are active in the “Drug Discovery & Development", "Software”, “Internet Consumer & Business Services”, “Healthcare Services, Other”, and “Communications & Networking" sectors. These sectors are characterized by high margins, high growth rates, consolidation and product and market extension opportunities. Value for companies in these sectors is often vested in intangible assets and intellectual property. Industry and sector concentrations vary as new loans are recorded and loans are paid off. Loan revenue, consisting of interest, fees, and recognition of gains on equity and warrant or other equity interests, can fluctuate materially when a loan is paid off or a related warrant or equity interest is sold. Revenue recognition in any given year can be highly concentrated among several portfolio companies. As of September 30, 2022 and December 31, 2021, the Company’s ten largest portfolio companies represented approximately 30.1% and 30.5% of the total fair value of the Company’s investments in portfolio companies, respectively. As of September 30, 2022 and December 31, 2021, the Company had eight and six portfolio companies, respectively, that represented 5% or more of the Company’s net assets. As of September 30, 2022, the Company had three equity investments representing approximately 36.6% of the total fair value of the Company’s equity investments, and each represented 5% or more of the total fair value of the Company’s equity investments. As of December 31, 2021, the Company had six equity investments which represented approximately 49.6% of the total fair value of the Company’s equity investments, and each represented 5% or more of the total fair value of such investments. Investment Collateral In the majority of cases, the Company collateralizes its investments by obtaining a first priority security interest in a portfolio company’s assets, which may include its intellectual property. In other cases, the Company may obtain a negative pledge covering a company’s intellectual property. As of September 30, 2022, approximately 77.4% of the Company’s debt investments at fair value were in a senior secured first lien position, with 40.2% secured by a first priority security in all of the assets of the portfolio company, including its intellectual property, 27.9% secured by a first priority security in all of the assets of the portfolio company and the portfolio company was prohibited from pledging or encumbering its intellectual property, and 9.3% of the Company’s debt investments at fair value were in a first lien “last-out” senior secured position with a security interest in all of the assets of the portfolio company, whereby the “last-out” loans will be subordinated to the “first-out” portion of the unitranche loan in a liquidation, sale or other disposition. Another 20.6% of the Company’s debt investments at fair value were secured by a second priority security interest in the portfolio company’s assets, and 2.0% were unsecured. As of December 31, 2021, approximately 77.0% of the Company’s debt investments at fair value were in a senior secured first lien position, with 37.5% secured by a first priority security in all of the assets of the portfolio company, including its intellectual property, 31.6% secured by a first priority security in all of the assets of the portfolio company and the portfolio company was prohibited from pledging or encumbering its intellectual property and 7.9% of the Company’s debt investments at fair value were in a first lien “last-out” senior secured position with security interest in all of the assets of the portfolio company, whereby the “last-out” loans will be subordinated to the “first-out” portion of the unitranche loan in a liquidation, sale or other disposition. Another 20.6% of the Company’s debt investments at fair value were secured by a second priority security interest in the portfolio company’s assets, and 2.4% were unsecured.

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- Definition The entire disclosure for investment holdings. This includes the information required in the supplementary schedule applicable to management investment companies listing holdings of unaffiliated investments. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 946 -SubTopic 320 -URI https://asc.fasb.org/subtopic&trid=2324412 + Details
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