67 WALL STREET, New York - December 27, 2012 - The Wall Street Transcript has just published its Business Development Companies Report offering a timely review of the sector to serious investors and industry executives. This special feature contains expert industry commentary through in-depth interviews with public company CEOs, Equity Analysts and Money Managers. The full issue is available by calling (212) 952-7433 or via The Wall Street Transcript Online.
Topics covered: Decreased Bank Loan Competition - Low Corporate Credit Default Rate - Consistent BDC Dividend Yield - Stronger Middle Market Loan Origination - BDC Risk/Reward Profile - Private Middle Market Funding
Companies include: Hercules Technology Growth Capital (HTGC) and many others,
In the following excerpt from the Business Development Companies Report, the CEO of Hercules Technology Growth Capital discusses the outlook for his company for investors:
TWST: Start by giving us some history of Hercules.
Mr. Henriquez: I founded the business in December 2003 and its the fifth company that I've started, but the first one from cradle to grave - meaning from concept, the business plans, seed funding, raising it to operations scale, taking it public and all the way to today where we've just surpassing more than $1 billion in total assets as of December 2012. Hercules is the largest publicly listed specialty finance company, or more specifically a business development company, BDC, focused on venture lending. We serve the debt financing needs of the venture capital industry, yet we are an entrepreneurial company at heart.
At the time I started Hercules, the concept didn't quite exist yet. I simply knew that I wanted to create a company that provided two key constituents access to the world of venture capital. The first was the average Joe or the new 99% on the street, for which I wanted to provide the ability to invest in pre-IPO high growth, highly disruptive technology and life sciences companies without having needing to be an institutional investor or limited partner or high net worth individual. By creating Hercules and being a publicly traded company, the average Joe/Mary can now purchase or invest directly in Hercules, thereby creating a conduit or vehicle for the average investor interested in investing in high-growth, pre-IPO or pre-M&A companies.
They now are invested in this ETF-type portfolio of venture-backed portfolio companies, representing companies at different stages of development, geographic regions, industry segments and venture capital sponsors. Hercules could be viewed as a mosaic or collage, if you will, of many VC firms and companies in a diversified portfolio. In short, a mutual fund of private venture-stage companies.
Secondly, I wanted to address the unmet needs of the entrepreneur. I felt that they didn't have an alternative source of capital besides equity capital, or better said, an ability to leverage the venture capital equity dollars they raised with a complimentary source of additional growth capital, such as venture debt or venture lending. Entrepreneurs often had to accept terms that weren't ideal due to the fact that VCs put terms on the table and entrepreneurs were expected to take those terms or nothing. Oftentimes these same entrepreneurs would be seeking $7 million, for example, but the VC needed to invest a minimum of $10 million due to minimum ownership requirements, etc. thereby requiring the entrepreneur to take on additional equity capital dilution than necessary.
So I created Hercules as an alternative but complimentary source of financing that doesn't displace VCs but works closely alongside them to meet the capital needs of deserving companies by extending the runway for them to build their products or services and have a meaningful milestone to raise their next layer of equity growth capital at a higher valuation than the last round...
For more of this interview and many others visit the Wall Street Transcript - a unique service for investors and industry researchers - providing fresh commentary and insight through verbatim interviews with CEOs, portfolio managers and research analysts. This special issue is available by calling (212) 952-7433 or via The Wall Street Transcript Online.