Firsthand Technology Value Fund Announces Fiscal Year Financial Results, NAV of $0.18 Per Share
Firsthand Technology Value Fund, Inc. (SVVC) announces financial results for 2023, with net assets of $1.3 million, or $0.18 per share, a significant decrease from 2022. The portfolio includes public and private securities valued at $8.7 million. The Valuation Committee adjusted fair values of private companies, and the Fund entered into a fee waiver agreement with its investment adviser, waiving future management fees.
Negative
Significant decrease in net assets from 2022 to 2023
Net realized and unrealized losses on investments of $30.4 million for the year
The reported financial results of Firsthand Technology Value Fund, Inc. indicate a significant decrease in net assets from $30.6 million to $1.3 million within one fiscal year. This drastic reduction, from $4.44 to $0.18 per share, suggests a substantial decline in the value of the Fund's investments. The valuation of the portfolio at $8.7 million, contrasted with a high liability of $7.55 million, shows a tight net asset position, which could be alarming to investors considering the liquidity and solvency of the Fund.
The fee waiver agreement with Firsthand Capital Management, Inc. is a strategic move to alleviate financial pressure on the Fund by reducing management fees. However, the stipulation of recoupment suggests that these fees could be reclaimed in the future, potentially affecting long-term financial stability. The net investment income of $1.1 million, despite a fee waiver, may not sufficiently compensate for the reported net losses of $30.4 million on investments, indicating a challenging year for the Fund and its stakeholders.
The adjustments made by the Valuation Committee reflect a reevaluation of the Fund's private company holdings, which is a common practice in venture capital to align book values with market realities. However, the reported net realized and unrealized losses of approximately $30.4 million underscore the volatility and risk inherent in venture capital investments, particularly in the technology and cleantech sectors.
The Fund's strategy of working closely with portfolio companies to improve performance and explore exit opportunities is a proactive approach to managing venture investments. Nevertheless, the efficacy of these efforts may be contingent on market conditions and the individual performance of portfolio companies. The Fund's future prospects will likely depend on its ability to navigate these challenges and capitalize on successful exits or follow-on investments.
The performance of the Fund needs to be contextualized within the broader market environment, especially considering the impact of changes in market multiples within certain sectors. The technology and cleantech sectors have historically been subject to rapid shifts in investor sentiment and market dynamics. The Fund's ability to adjust its portfolio valuation in response to these shifts is critical, but it also reflects the uncertainties faced by investors in these markets.
While the Fund's current position may seem precarious, it is essential to evaluate the long-term potential of its holdings. The technology and cleantech industries are known for their disruptive potential and high growth prospects. The Fund's future returns will hinge on the commercial success of its portfolio companies and market conditions that favor its investment thesis.
03/28/2024 - 05:35 PM
SAN JOSE, Calif., March 28, 2024 (GLOBE NEWSWIRE) -- Firsthand Technology Value Fund, Inc. (OTCQB: SVVC) (the “Fund”), a publicly traded venture capital fund that invests in technology and cleantech companies, announced today its financial results for the fiscal year ended December 31, 2023.
As of December 31, 2023, the Fund’s net assets were approximately $1.3 million , or $0.18 per share, compared with net assets of approximately $30.6 million , or $4.44 per share as of December 31, 2022. As of December 31, 2023, the Fund’s portfolio included public and private securities valued at approximately $8.7 million , or $1.27 per share, which includes approximately $0.01 per share in cash and cash equivalents.
Portfolio Summary (as of 12/31/23)
Investment Fair Value 1, Fair Value per Share 1,2 Equity/Debt Investments $8.66 million $1.26 Cash/Cash Equivalents $0.07 million $0.01 Other Assets $0.07 million $ 0.01 Total Assets $8.81 million $1.28 Total Liabilities $7.55 million $ 1.10 Net Assets $1.26 million $ 0.18 1 Numbers may not sum due to rounding. 2 Total shares outstanding: 6,893,056.
During the fourth quarter of 2023, the Valuation Committee, which was composed of two directors, adjusted the fair values of the private companies in our portfolio. In arriving at these determinations and consistent with the Fund’s valuation procedures, and ASC 820, the Valuation Committee took into account information from an independent valuation firm and considered many factors, including the performance of the portfolio companies, recent transactions in the companies’ securities, as well as the impact of changes in market multiples within certain sectors.
Effective September 30, 2023, the Fund has entered into a fee waiver agreement with its investment adviser, Firsthand Capital Management, Inc. (“FCM”). Pursuant to the terms of this agreement, FCM has agreed to (1) waive future accruals of the base management fee starting October 1, 2023, through December 31, 2024, with future recoupment to the extent permitted by the Investment Management Agreement between the Fund and FCM, and (2) waive $2.5 million of base management fee that has been accrued but unpaid as of September 30, 2023, subject to recoupment to the extent permitted under the fee waiver agreement.
For the year ended December 31, 2023, the Fund reported a total investment income of approximately $0.1 million . After fees and expenses, including the aforementioned fee waiver, the Fund reported net investment income of approximately $1.1 million . The Fund reported net realized and unrealized losses on investments of approximately $30.4 million for the year.
Throughout the fourth quarter, the Fund continued its efforts to manage its portfolio prudently, including working with its portfolio companies and their management teams to seek to enhance performance and uncover potential exit opportunities.
About Firsthand Technology Value Fund www.firsthandtvf.com
The Fund is a non-diversified, closed-end investment company that elected to be treated as a business development company under the Investment Company Act of 1940. The Fund’s investment objective is to seek long-term growth of capital. Under normal circumstances, the Fund will invest at least 80% of its total assets for investment purposes in technology and cleantech companies. An investment in the Fund involves substantial risks, some of which are highlighted below. Please see the Fund’s public filings for more information about fees, expenses and risk. Past investment results do not provide any assurances about future results.
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS: This press release contains "forward-looking statements" as defined under the U.S. federal securities laws. Generally, the words "believe," "expect," "intend," "estimate," "anticipate," "project," "will," and similar expressions identify forward-looking statements, which generally are not historical in nature. Forward-looking statements are subject to certain risks and uncertainties that could cause actual results to materially differ from the Fund’s historical experience and its present expectations or projections indicated in any forward-looking statement. These risks include, but are not limited to, changes in economic and political conditions, regulatory and legal changes, technology and cleantech industry risk, valuation risk, non-diversification risk, interest rate risk, tax risk, and other risks discussed in the Fund’s filings with the SEC. You should not place undue reliance on forward-looking statements, which speak only as of the date they are made. The Fund undertakes no obligation to publicly update or revise any forward-looking statements made herein. There is no assurance that the Fund’s investment objectives will be attained. We acknowledge that, notwithstanding the foregoing, the safe harbor for forward-looking statements under the Private Securities Litigation Reform Act of 1995 does not apply to investment companies such as us.
Contact:
Phil Mosakowski
What are the net assets of Firsthand Technology Value Fund, Inc. (SVVC) as of December 31, 2023?
The net assets of Firsthand Technology Value Fund, Inc. (SVVC) as of December 31, 2023, were approximately $1.3 million, or $0.18 per share.
What is the total investment income reported by Firsthand Technology Value Fund, Inc. (SVVC) for the year ended December 31, 2023?
The total investment income reported by Firsthand Technology Value Fund, Inc. (SVVC) for the year ended December 31, 2023, was approximately $0.1 million.
What was the total net investment income reported by Firsthand Technology Value Fund, Inc. (SVVC) for the year ended December 31, 2023, after fees and expenses?
The total net investment income reported by Firsthand Technology Value Fund, Inc. (SVVC) for the year ended December 31, 2023, after fees and expenses, including the fee waiver, was approximately $1.1 million.
What were the net realized and unrealized losses on investments reported by Firsthand Technology Value Fund, Inc. (SVVC) for the year ended December 31, 2023?
The net realized and unrealized losses on investments reported by Firsthand Technology Value Fund, Inc. (SVVC) for the year ended December 31, 2023, were approximately $30.4 million.
What agreement did Firsthand Technology Value Fund, Inc. (SVVC) enter into with its investment adviser effective September 30, 2023?
Firsthand Technology Value Fund, Inc. (SVVC) entered into a fee waiver agreement with its investment adviser effective September 30, 2023, waiving future management fees.
