Christopher Nolan: Okay. And then I saw in queue that for Evelo, you also marked down your equity positions. Do these pipe transactions, should we expect further write-downs in equity from your perspective or do you think insiders stepping up will stabilize your equity investment?
Rob Pomeroy: Yes. I think we actually have a note in our queue that we filed a subsequent event that we believe that we will be marking down the equity in the fourth quarter as well.
Christopher Nolan: Okay. I guess a final question, were there any new non-accrual investments in the fourth quarter?
Rob Pomeroy: So from the third quarter, there were a couple of different names, and you can see them on the schedule investments, the names that are on non-accrual, and they were new names. One name dropped off, and a couple names did get tagged as non-accrual for the quarter, Avalo being one of them and Robin being another.
Christopher Nolan: Yes, I’m asking for the fourth quarter to date.
Rob Pomeroy: Oh, fourth quarter to date. No.
Christopher Nolan: Okay. That’s it for me. Thank you.
Operator: Thank you. [Operator Instructions] Next question comes on the line of Ryan Lynch with KBW. Please go ahead.
Ryan Lynch: Hey, good morning. Following up on Bryce’s questions on NextCar and Nexii, I don’t want to necessarily lump these investments together, because they’re two different situations. But I had kind of similar questions on both of those. Number one, I believe you said they’re both continue to be funded – internally funded. I guess, what does that mean? Because I would assume that both of these are still negative cash flowing businesses. So I would just love to hear what exactly that means. And then also what drove the decline in fair values for these businesses, because it sounds like the way you describe them both and again, I know, they’re different companies, but kind of the way you describe them both is that the fundamentals of the business seem to be doing fine or maybe as expected.
But the exit opportunities have certainly deteriorated just given market dynamics. So was the weakness in the potential of kind of overall exit markets the driver of the decline in valuation or was something else moving that lower this quarter?
Rob Pomeroy: Yes, honestly, it is a little bit exit markets and opportunities to fund the growth that would otherwise might be available to them. So in other words, they are operating. Okay. They’re – again, the investors continue to support the companies to a degree, but really outside capital is needed in some form or shape, meaning a public offering, an M&A or a large venture capital or crossover fund, I think in probably both of these cases. And so they’re working – that’s where they’re spending a lot of their time right now. It’s on trying to find that right exit opportunity in a market where exit opportunities are really difficult. And so they’re getting funded, because the investors see that there is value in the company and the potential for a positive exit still certainly exists.
But I think this isn’t just – these two companies, I think across the venture capital community, most companies really are spending an inordinate amount of time figuring out fundraising strategies. I think we provided some data on venture capital fundraising in the third quarter, again, it was down fairly significantly. Part of the issue is that many of the companies that were funded in 2020, 2021, certainly the first half of 2022, the valuation of those companies is – in this market, they’re significantly overvalued. And so it’s hard to bring in new investment or attract new investment in that kind of scenario. So where there may be operationally growth opportunities, it’s difficult to take advantage of those when capital is so constrained.
Ryan Lynch: Right.
Jerry Michaud: And so to get – maybe to get to the last part of your question, so not knowing when those markets are going to turn, we have to be – as we’re looking at our debt investment, we have to be very sober about what happens if those markets continue to be as tight as they are meaning exit markets and VC flows. We have to be very sober about how we value these assets.
