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Investments
 12 Months Ended
Dec. 31, 2023
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 years ended December 31, 2023, 2022, and 2021.
(in thousands)For the Year Ended December 31, 2023
Portfolio Company(1)
TypeFair Value as of
December 31, 2023		Interest IncomeFee IncomeNet Change in Unrealized Appreciation (Depreciation) Realized Gain (Loss)
Control Investments
Coronado Aesthetics, LLCControl$262 $— $— $(57)$— 
Gibraltar Acquisition LLC (3)
Control62,512 3,344 95 9,656 — 
Hercules Adviser LLC (4)
Control40,713 608 — 9,560 — 
Tectura CorporationControl11,517 690 — 3,475 — 
Total Control Investments$115,004 $4,642 $95 $22,634 $— 
(in thousands)  For the Year Ended December 31, 2022
Portfolio Company(1)
TypeFair Value as of
December 31, 2022		Interest IncomeFee IncomeNet Change in Unrealized Appreciation (Depreciation) Realized Gain (Loss)
Control Investments
Coronado Aesthetics, LLCControl$319 $— $— $(246)$— 
Gibraltar Business Capital, LLCControl36,944 3,385 68 (6,968)— 
Hercules Adviser LLCControl31,153 546 — 7,163 — 
Tectura CorporationControl8,042 690 — (227)— 
Total Control Investments$76,458 $4,621 $68 $(278)$— 
Affiliate Investments
Black Crow AI, Inc.(2)
Affiliate$— $— $— $(120)$3,772 
Pineapple Energy LLC(2)
Affiliate— 1,204 — 4,209 (2,014)
Total Affiliate Investments$— $1,204 $— $4,089 $1,758 
Total Control & Affiliate Investments$76,458 $5,825 $68 $3,811 $1,758 
(in thousands)  For the Year Ended December 31, 2021
Portfolio Company(1)
TypeFair Value as of
December 31, 2021		Interest
Income		Fee IncomeNet Change in Unrealized Appreciation (Depreciation) Realized Gain (Loss)
Control Investments
Coronado Aesthetics, LLCControl$565 $— $— $315 $— 
Gibraltar Business Capital, LLCControl43,830 3,178 54 (14,616)— 
Hercules Adviser LLCControl20,840 141 — 11,955 — 
Tectura CorporationControl8,269 690 5 (331)— 
Total Control Investments$73,504 $4,009 $59 $(2,677)$— 
Affiliate Investments
Black Crow AI, Inc.Affiliate$1,120 $— $— $1,905 $— 
Pineapple Energy LLCAffiliate8,338 10 — (282)— 
Solar Spectrum Holdings LLC (p.k.a. Sungevity, Inc.)Affiliate— — — 62,183 (62,143)
Total Affiliate Investments$9,458 $10 $— $63,806 $(62,143)
Total Control & Affiliate Investments$82,962 $4,019 $59 $61,129 $(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 December 31, 2023, December 31, 2022, and December 31, 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 were no longer affiliates as defined under the 1940 Act.
(3)Gibraltar Acquisition LLC is a wholly-owned subsidiary, which is the holding company for their wholly-owned affiliated portfolio companies, Gibraltar Business Capital, LLC and Gibraltar Equipment Finance, LLC. The subsidiary has no significant assets or liabilities, other than their equity and debt investments and equity interest in Gibraltar Business Capital, LLC and Gibraltar Equipment Finance, LLC, respectively.
(4)Hercules Adviser LLC is owned by Hercules Capital Management LLC and presented with Hercules Partner Holdings, LLC which are both wholly owned by the Company. Please refer to “Note 1” for additional disclosure.
Portfolio Composition
The following table shows the fair value of the Company’s portfolio of investments by asset class as of December 31, 2023 and December 31, 2022:
(in thousands)December 31, 2023December 31, 2022
Investments at
Fair Value		Percentage of
Total Portfolio 		Investments at
Fair Value		Percentage of
Total Portfolio
Senior Secured Debt$2,987,577 92.0 %$2,741,388 92.5 %
Unsecured Debt69,722 2.2 %54,056 1.8 %
Preferred Stock53,038 1.6 %41,488 1.4 %
Common Stock99,132 3.1 %92,484 3.1 %
Warrants33,969 1.0 %30,646 1.1 %
Investment Funds & Vehicles4,608 0.1 %3,893 0.1 %
Total$3,248,046 100.0 %$2,963,955 100.0 %
A summary of the Company’s investment portfolio, at value, by geographic location as of December 31, 2023 and December 31, 2022 is shown as follows:
(in thousands)December 31, 2023December 31, 2022
Investments at
Fair Value		Percentage of
Total Portfolio 		Investments at
Fair Value		Percentage of
Total Portfolio
United States$2,861,615 88.1 %$2,670,520 90.1 %
United Kingdom222,136 6.9 %171,629 5.8 %
Netherlands89,995 2.8 %88,915 3.0 %
Israel52,868 1.6 %9,052 0.3 %
Canada15,730 0.5 %19,472 0.7 %
Denmark4,173 0.1 %— 0.0 %
Germany1,144 0.0 %990 0.0 %
Other385 0.0 %573 0.0 %
Ireland— 0.0 %2,804 0.1 %
Total$3,248,046 100.0 %$2,963,955 100.0 %
The following table shows the fair value of the Company’s portfolio by industry sector as of December 31, 2023 and December 31, 2022:
(in thousands)December 31, 2023December 31, 2022
 Investments at
Fair Value		Percentage of
Total Portfolio 		Investments at
Fair Value		Percentage of
Total Portfolio
Drug Discovery & Development$1,257,699 38.7 %$1,150,707 38.8 %
Software764,985 23.6 %798,264 26.9 %
Consumer & Business Services525,973 16.2 %439,384 14.8 %
Healthcare Services, Other300,079 9.3 %198,763 6.7 %
Communications & Networking29,400 0.9 %101,833 3.5 %
Diversified Financial Services114,722 3.5 %68,569 2.3 %
Information Services126,605 3.9 %60,759 2.1 %
Biotechnology Tools48,381 1.5 %32,825 1.1 %
Manufacturing Technology11,006 0.3 %46,109 1.6 %
Medical Devices & Equipment22,096 0.7 %1,834 0.1 %
Electronics & Computer Hardware20,324 0.6 %21,517 0.7 %
Media/Content/Info12,704 0.4 %35 0.0 %
Sustainable and Renewable Technology9,581 0.3 %15,486 0.5 %
Consumer & Business Products2,589 0.1 %2,821 0.1 %
Semiconductors1,205 0.0 %21,921 0.7 %
Surgical Devices676 0.0 %3,038 0.1 %
Drug Delivery21 0.0 %90 0.0 %
Total$3,248,046 100.0 %$2,963,955 100.0 %
No single portfolio investment represents more than 10% of the fair value of the Company’s total investments as of December 31, 2023 or December 31, 2022.
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”, “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 December 31, 2023 and December 31, 2022, the Company’s ten largest portfolio companies represented approximately 29.7% and 29.0% of the total fair value of the Company’s investments in portfolio companies, respectively. As of December 31, 2023 and December 31, 2022, the Company had five and eight portfolio companies, respectively, that represented 5% or more of the Company’s net assets. As of December 31, 2023, the Company had five equity investments representing approximately 56.5% 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, 2022, the Company had four equity investments which represented approximately 39.8% 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. The Company's investments were collateralized as follows as of December 31, 2023 and December 31, 2022:
Percentage of debt investments (at fair value), as of
December 31, 2023December 31, 2022
Senior Secured First Lien
All assets including intellectual property52.3 %42.0 %
All assets with negative pledge on intellectual property24.0 %26.1 %
“Last-out” with security interest in all of the assets12.5 %11.6 %
Total senior secured first lien position88.8 %79.7 %
Second lien8.9 %18.4 %
Unsecured2.3 %1.9 %
Total debt investments at fair value100.0 %100.0 %
Derivative Instruments
The Company enters into forward currency contracts from time to time to help mitigate the impact that an adverse change in foreign exchange rates would have on the value of the Company’s investments denominated in foreign currencies. The following is a summary of the fair value and location of the Company’s derivative instruments in the Consolidated Statements of Assets and Liabilities held as of December 31, 2023 and December 31, 2022:
(in thousands)Fair Value
Derivative InstrumentStatement LocationDecember 31, 2023December 31, 2022
Foreign currency forward contractAccounts payable and accrued liabilities$766 $— 
Total$766 $— 
Net realized and unrealized gains and losses on derivative instruments recorded by the Company during the years ended December 31, 2023 and December 31, 2022 are in the following locations in the Consolidated Statements of Operations:
(in thousands)Year Ended December 31,
Derivative InstrumentStatement Location20232022
Foreign currency forward contractNet realized gain (loss) - Non-control / Non-affiliate investments$— $— 
Foreign currency forward contractNet change in unrealized appreciation (depreciation) - Non-control / Non-affiliate investments(766)— 
Total$(766)$— 
Investment Income
The Company’s investment portfolio generates interest, fee, and dividend income. The composition of the Company’s interest income and fee income is as follows:
(in thousands)Year Ended December 31,
202320222021
Contractual interest income$351,883 $249,375 $200,682 
Exit fee interest income45,747 32,063 37,494 
PIK interest income24,670 20,455 11,210 
Dividend income1,400 — — 
Other investment income (1)
10,725 5,365 3,974 
Total interest and dividend income$434,425 $307,258 $253,360 
Recurring fee income$8,835 $7,834 $7,458 
Fee income - expired commitments1,695 1,502 3,031 
Accelerated fee income - early repayments15,713 5,094 17,127 
Total fee income$26,243 $14,430 $27,616 
(1)Other interest income includes OID interest income and interest recorded on other assets.
As of December 31, 2023 and 2022, unamortized capitalized fee income was recorded as follows:
(in millions)As of December 31,
20232022
Offset against debt investment cost$32.9 $43.1 
Deferred obligation contingent on funding or other milestone9.4 10.9 
Total Unamortized Fee Income$42.3 $54.0 
As of December 31, 2023 and 2022, loan exit fees receivable were recorded as follows:
(in millions)As of December 31,
20232022
Included within debt investment cost$35.9 $32.5 
Deferred receivable related to expired commitments4.3 5.0 
Total Exit Fees Receivable$40.2 $37.5