Business Context and Reporting Period
This Form 10-Q covers the quarterly period ended September 30, 2016, for GSV Growth Credit Fund Inc. (referred to in the metadata as Runway Growth Finance Corp.). The company is a Maryland corporation formed on August 31, 2015, and is currently classified as a development stage company. As of the reporting date, the company has not commenced investment operations or completed the initial closing of its private offering. Its primary objective is to lend to and invest in middle-market companies in the United States, intending to qualify as a Business Development Company (BDC) and a Regulated Investment Company (RIC).
Key Financial Metrics
| Metric | Value (Sep 30, 2016) | Value (Dec 31, 2015) |
|---|---|---|
| Total Assets | $25,000 | $25,000 |
| Cash and Cash Equivalents | $25,000 | $25,000 |
| Total Liabilities | $0 | $0 |
| Net Assets | $25,000 | $25,000 |
| Net Asset Value (NAV) per Share | $15.00 | $15.00 |
| Shares Outstanding | 1,667 | 1,667 |
| Revenue (Investment Income) | $0 | $0 |
| Operating Expenses | $0 | $0 |
| Net Investment Income | $0 | $0 |
Liquidity and Debt: The company holds $25,000 in cash with no debt, accounts payable, or accrued liabilities. There are no off-balance sheet arrangements.
Material Changes vs. Prior Period
There were no material changes in the company's financial condition or results of operations between December 31, 2015, and September 30, 2016. The company remained in the development stage with no investment activities, no revenue generation, and no operating expenses recorded during the period. The equity structure remained static with 1,667 shares issued to the CEO in October 2015.
Outlook, Risks, and Management Commentary
- Operational Status: The company has not commenced investment activities. It intends to file an election to be treated as a BDC and a RIC upon the receipt of aggregate commitments totaling at least $50 million.
- Cost Structure: Initial organization and operating costs are capped at the greater of $500,000 or 0.50% of total capital commitments. As no external capital commitments have been received, no such costs have been recorded by the company; the Adviser (GSV Growth Credit LLC) bears these costs until external capital is secured.
- Revenue Model: Future revenue is expected to come from interest on debt securities (senior secured and second lien loans) and capital appreciation on warrants/equity. The company plans to invest in high-growth private companies.
- Risks: Key risks include the inability to raise the required $50 million in capital, economic downturns affecting portfolio companies, interest rate volatility, and the speculative nature of private market investments. The company is also subject to regulatory requirements as a BDC and RIC.
- Valuation Policy: Investments will be valued at fair value under ASC Topic 820. Private debt and equity investments will likely be classified as Level 3 assets, requiring significant management judgment and the use of discounted cash flow models or option pricing models.
Investor Verification Checklist
- Verify the status of the private offering and whether the $50 million capital commitment threshold has been met since the filing date.
- Confirm the execution of the Advisory Agreement and Administration Agreement with GSV Growth Credit LLC and its affiliates.
- Monitor the company's ability to qualify and maintain status as a Regulated Investment Company (RIC) to avoid corporate-level taxation.
- Review the timeline for the commencement of investment activities and the deployment of capital.
- Assess the financial stability of the Adviser, as it is currently bearing all organizational costs.