Jerry Michaud: Yeah. I guess, as I think about our own portfolio, I would say that, it is not in competition with the debt. We are often asked in combination with some sort of equity transaction, whether it be convertible debt or some sort of bridge to potentially help with modified terms. It is going to extend the runway of our portfolio company and get them to some sort of reflection point. So it is definitely not in competition with us at all relative to our own portfolio. As we are seeing new transactions come into the market and this is, we talked about the top of the funnel really being quite robust right now, we are seeing, I think, a reality check from the equity markets. I think during 2023, they went out to the debt market on many occasions and unfortunately found out that there was not enough support from the equity holders to get the venture debt market excited about a lot of companies that were actually doing pretty well but just did not have the liquidity that gave us meaning us the debt market comfort.
So I think we are starting to see some of that now where they are coming back to the market with some of their portfolio companies where they are making a realistic attempt to provide significant liquidity and asking the venture debt market to provide some additional debt financing and so we are starting to see those opportunities. It is a bit of a green shoot thing. We did not see much of that in 2023 at all. So we are starting to feel better and I hope that has come across, about the top of our funnel. But as Dan mentioned, because of everything that has taken place with a lot of these companies over the last year, just trying to understand how to underwrite them at this point, if market conditions for the company and whatever their strategy is, still is consistent with what we saw before, that is taking a little bit longer.
So in terms of funding activity, that could take a little bit longer, be a little bit slower, but we are definitely seeing improvement in both more equity capital coming in for new companies if they realistically want to access venture debt.
Paul Johnson: Got it. I appreciate it. That is a very helpful detail. That is all for me. Thanks.
Operator: Thank you. Our next question is coming from Christopher Nolan with Ladenburg Thalmann. Please proceed with your question.
Christopher Nolan: Hi. To follow up, excuse me, I joined the conference late. To follow up on Paul’s line of questioning, are you seeing more deal flow from tech companies which are looking to reach out debt financing from another BDC?
Dan Devorsetz: So this is Dan Devorsetz, Chris. That is a common use of proceeds for venture debt is refinances and different markets, they are used for different reasons. But primarily when we are looking at potentially replacing another lender, we want to make sure that we are not refinancing a problem account. It would — it — just replacing debt-for-debt is not a good use of our funds, but if it is a natural progression from a smaller lender to a larger lender where you are both replacing debt for providing growth capital as well, oftentimes with additional equity, that is the types of opportunities we do look at. There are deals coming to market where it is a straight swap and that is usually a bad sign that the existing lender does not want to re-up and those are situations where we would avoid.
Christopher Nolan: And also, I guess, as a follow-up question. The venture debt market, at least as it pertains to BDC, seems to be really bifurcated. You have some of the larger players who seem to have real pricing power and lower costs of capital. They are just getting better deal flow in general. How are you guys competing with that? I mean, do you offer lower rates? Do you offer easy terms and conditions? I mean, because it seems like there is a real separation between some of the larger players and a lot of the others.
Jerry Michaud: No. Essentially, there is really only one larger player, but I think basically the market is relative to BDCs is pretty much a set market. I think we can compete — we certainly can compete with any venture lender relative to price. Size becomes an issue, obviously. We don’t want — we are doing transactions that are just too large of a percentage of our own portfolio. We actually pay very close attention to our top 10 investments in the portfolio at all times to see where we are. Our ability to raise capital, as Dan Trolio mentioned earlier, has actually been pretty good in a really difficult market. We did a follow-on equity round last year in a difficult market and we have been using our ATM to continually raise capital.
