Note 4 – Investments

Control and Affiliate Investments

The Company classifies its investment portfolio by level of affiliation and control in accordance with the requirements of the 1940 Act. As defined in the 1940 Act, investee companies are deemed as affiliated investments when a company or individual possesses, or has the right to acquire within 60 days or less, beneficial ownership of 5.0% or more of the outstanding voting securities of an investee company. Control investments are those where the investor has the ability or power to exercise a controlling influence over the management or policies of an investee company. Control is generally deemed to exist when a company or individual possesses, or has the right to acquire within 60 days or less, beneficial ownership of more than 25.0% of the outstanding voting securities of an investee company, or maintains greater than 50.0% representation on the investee company's board of directors.

The Company’s affiliate and control investments as of September 30, 2025, along with the transactions during the nine months ended September 30, 2025, are as follows (in thousands):


			For the Nine Months Ended September 30, 2025
Portfolio Company		Investment Description	Investment Income Earned 2025		Fair Value as of December 31, 2024		Gross Additions(1)		Gross Reductions(2)			Net Realized Gain (Loss)			Net Change in Unrealized Gain (Loss)			Fair Value as of September 30, 2025(3)
Affiliate Investments
	Debt Investments
	Gynesonics, Inc. - Senior Secured	SOFR+8.75%, 8.00% ceiling, 5.00% ETP, due 11/30/2026	$	902	$	27,217	$	-	$	(26,235	)	$	-		$	(982	)	$	-
	Total Debt Investments			902		27,217		-		(26,235	)		-			(982	)		-

	Equity Investments
	Coginiti Corp	Common Stock		-		-		-		-			-			-			-
	Gynesonics, Inc.	Series A-2 Preferred Stock		-		25,000		-		(25,000	)		-			-			-
		Series A-1 Preferred Stock		-		12,355		-		(12,355	)		9,255			(9,255	)		-
	Total Equity Investments			-		37,355		-		(37,355	)		9,255			(9,255	)		-

	Warrants
	Coginiti Corp	Common Stock		-		-		-		-			-			-			-
	Gynesonics, Inc.	Success fee		-		-		-		-			(312	)		312			-
	Total Warrants			-		-		-		-			(312	)		312			-
Total Affiliate Investments			$	902	$	64,572	$	-	$	(63,590	)	$	8,943		$	(9,925	)	$	-

Control Investments
	Equity Investments
	Pivot3, Inc.	100% Equity Interest		-		1,198		-		-			-			(4	)		1,194
	Runway-Cadma I LLC	50% Equity Interest		-		5,742		6,683		-			-			430			12,855
	Total Equity Investments			-		6,940		6,683		-			-			426			14,049
Total Control Investments			$	-	$	6,940	$	6,683	$	-		$	-		$	426		$	14,049

(1)

Gross additions include increases in the cost basis of investments resulting from fundings, PIK interest, accretion of OID and ETP, the exchange of one or more existing investments for one or more new investments and the movement of an investment between categories.

(2)

Gross reductions include decreases in the basis of investments resulting from principal collections related to investment repayments or sales, the exchange of one or more existing investments for one or more new investments and the movement of an investment between categories.

(3)

All affiliate and control investments, which as of September 30, 2025, represented 2.87% of the Company’s net assets, may be deemed to be restricted securities under the Securities Act, and were valued at fair value as determined in good faith by the Company’s Board of Directors.

The Company’s affiliate and control investments as of December 31, 2024, along with the transactions during the year ended December 31, 2024, are as follows (in thousands):


			For the Year Ended December 31, 2024
Portfolio Company		Investment Description	Investment Income Earned 2024		Fair Value as of December 31, 2023		Gross Additions(1)		Gross Reductions(2)		Net Realized Gain (Loss)		Net Change in Unrealized Gain (Loss)			Fair Value as of December 31, 2024(3)
Affiliate Investments
	Debt Investments
	Gynesonics, Inc. - Senior Secured	SOFR+8.75%, 8.00% ceiling, 5.00% ETP, due 11/30/2026	$	2,419	$	23,586	$	337	$	-	$	-	$	3,294		$	27,217
	Total Debt Investments			2,419		23,586		337		-		-		3,294			27,217

	Equity Investments
	Coginiti Corp	Common Stock		-		856		-		-		-		(856	)		-
	Gynesonics, Inc.	Series A-2 Preferred Stock		-		21,461		-		-		-		3,539			25,000
		Series A-1 Preferred Stock		-		4,577		-		-		-		7,778			12,355
	Total Equity Investments			-		26,894		-		-		-		10,461			37,355

	Warrants
	Coginiti Corp	Common Stock		-		663		-		-		-		(663	)		-
	Gynesonics, Inc.	Success fee		-		313		-		-		-		(313	)		-
	Total Warrants			-		976		-		-		-		(976	)		-
Total Affiliate Investments			$	2,419	$	51,456	$	337	$	-	$	-	$	12,779		$	64,572

Control Investments
	Equity Investments
	Pivot3, Inc.	100% Equity Interest		-		950		-		-		-		248			1,198
	Runway-Cadma I LLC	50% Equity Interest		-		-		5,600		-		-		142			5,742
	Total Equity Investments			-		950		5,600		-		-		390			6,940
Total Control Investments			$	-	$	950	$	5,600	$	-	$	-	$	390		$	6,940

(1)

(2)

Gross reductions include decreases in the basis of investments resulting from principal collections related to investment repayments or sales, the exchange of one or more existing Investments for one or more new investments and the movement of investment between categories.

(3)

All affiliate and control investments, which as of December 31, 2024, represented 13.90% of the Company’s net assets, may be deemed to be restricted securities under the Securities Act, and were valued at fair value as determined in good faith by the Company’s Board of Directors.

Portfolio Composition

The following table shows the fair value of the Company's portfolio of investments by geographic region as of September 30, 2025 and December 31, 2024 (in thousands):


	September 30, 2025					December 31, 2024
Geographic Region	Investments at Fair Value		Percentage of Net Assets			Investments at Fair Value		Percentage of Net Assets
United States
Western United States	$	374,369		76.48	%	$	431,567		83.83	%
Northeastern United States		173,002		35.34			264,780		51.43
Midwestern United States		144,423		29.50			146,963		28.54
Northwestern United States		73,771		15.07			72,414		14.06
South Central United States		41,128		8.40			40,136		7.80
Southeastern United States		21,830		4.46			20,932		4.07
Runway-Cadma I LLC(1)		12,855		2.63			5,742		1.12
Total United States		841,378		171.88			982,534		190.85

Germany		39,885		8.15			34,163		6.64
United Kingdom		32,071		6.55			28,360		5.51
Netherlands		17,539		3.58			17,203		3.34
Canada		15,091		3.08			14,580		2.83
Total	$	945,964		193.24	%	$	1,076,840		209.17	%

(1)

Runway-Cadma I LLC is a joint venture between the Company and Cadma. This entity invests in secured loans to growth-stage companies that have been originated by the Company. See "Note 2 – Summary of Significant Accounting Policies" for further discussion.

Effective June 30, 2025, the Company transitioned from an internal industry classification system to the Global Industry Classification Standard ("GICS"). The following table shows the fair value of the Company's portfolio of investments by GICS industry as of September 30, 2025 (in thousands):


	September 30, 2025
Industry	Investments at Fair Value		Percentage of Net Assets
Application Software	$	224,762		45.91	%
Systems Software		144,684		29.56
Health Care Equipment & Services		122,419		25.01
Commercial & Professional Services		116,424		23.77
Technology Hardware & Equipment		87,645		17.91
Financial Services		81,683		16.69
Insurance		44,979		9.20
Consumer Staples Distribution & Retail		39,885		8.14
Household & Personal Products		39,648		8.09
Media & Entertainment		30,980		6.33
Multi-Sector Holdings(1)		12,855		2.63
Total	$	945,964		193.24	%

(1)

Multi-Sector Holdings consists of the Company's investment in Runway-Cadma I LLC, a joint venture between the Company and Cadma. This entity invests in secured loans to growth-stage companies that have been originated by the Company. See "Note 2 – Summary of Significant Accounting Policies" for further discussion.

The following table shows the fair value of the Company's portfolio of investments by industry as of December 31, 2024 (in thousands):


	December 31, 2024
Industry	Investments at Fair Value		Percentage of Net Assets
Application Software	$	233,431		45.35	%
Healthcare Technology		218,688		42.48
Internet Software and Services		160,104		31.10
Data Processing & Outsourced Services		116,720		22.67
System Software		114,650		22.26
Property & Casualty Insurance		76,911		14.94
Internet & Direct Marketing Retail		50,729		9.86
Human Resource & Employment Services		40,560		7.88
Electronic Equipment & Instruments		40,354		7.84
Healthcare Equipment		15,382		2.98
Multi-Sector Holdings(1)		5,742		1.12
Technology Hardware, Storage & Peripherals		2,910		0.56
Specialized Consumer Services		365		0.07
Advertising		152		0.03
Asset Management & Custody Banks		138		0.03
Biotechnology		4		-
Total	$	1,076,840		209.17	%

(1)

Derivative Financial Instruments

In the normal course of business, the Company may utilize derivative contracts in connection with its investment activities. Investments in derivative contracts are subject to additional risks that can result in a loss of all or part of an investment. The derivative activities and exposure to derivative contracts primarily involve equity price risks. In addition to the primary underlying risk, additional counterparty risk exists due to the potential inability of counterparties to meet the terms of their contracts.

Warrants provide exposure and potential gains upon increases in the portfolio company’s equity value. A warrant has a limited life and expires on a certain date. As a warrant’s expiration date approaches, the time value of the warrant will decline. In addition, if the stock underlying the warrant declines in price, the intrinsic value of an "in the money" warrant will decline. Further, if the price of the stock underlying the warrant does not exceed the strike price of the warrant on the expiration date, the warrant will expire worthless. As a result, there is the potential for the entire value of an investment in a warrant to be lost. The Company’s volume of warrant investment activity is closely correlated to its primary senior secured loans to portfolio companies. Counterparty risk exists from the potential failure of an issuer of warrants to settle its exercised warrants. The maximum risk of loss from counterparty risk is the fair value of the contracts and the purchase price of the warrants. The Board of Directors considers the effects of counterparty risk when determining the fair value of its investments in warrants.

For the three and nine months ended September 30, 2025, the Company had a net realized loss of $0.4 million and $1.7 million, respectively, and a net change in unrealized gains of $0.2 million and $1.1 million, respectively, from its investments in warrants. For the three and nine months ended September 30, 2024, the Company had no realized gains or losses and a net change in unrealized gains of $0.9 million and $0.1 million, respectively, from its investments in warrants. Realized gains and losses from warrants are included in the respective control, affiliate, or non-control/non-affiliate "Net realized gain (loss)" on the Consolidated Statements of Operations. Unrealized gains and losses from investments in warrants are included in the respective control, affiliate, or non-control/non-affiliate "Net change in unrealized gain (loss)" on the Consolidated Statements of Operations.

The Company enters into foreign currency forward contracts from time to time to help mitigate the impact that an adverse change in foreign exchange rates would have on the value of the Company's investments denominated in foreign currencies and related interest income. Derivative contracts entered into by the Company are not designated as hedging instruments. Unrealized gain (loss) from the Company's foreign currency forward contracts are recorded within "Net change in unrealized gain (loss) on forward contracts and foreign currency transactions" on the Consolidated Statements of Operations. Realized gain (loss) from the Company's foreign currency forward contracts are recorded within "Net realized gain (loss) on forward contracts and foreign currency transactions" on the Consolidated Statements of Operations.

The following table shows the Company's outstanding foreign currency forward contracts as of September 30, 2025 (in thousands):


Foreign Currency	Counterparty	Maturity Date	Notional Amount to be Sold (£)		Notional Amount to be Purchased ($)			Unrealized Gain (Loss) ($)
Great British Pound (GBP)	Canadian Imperial Bank of Commerce	12/8/2025		384		505			(10	)
Great British Pound (GBP)	Canadian Imperial Bank of Commerce	5/14/2026		21,964		28,873			(630	)
Total							$		(640	)

There were no foreign currency forward contracts as of December 31, 2024.

Offsetting of Derivative Instruments

The Company has derivative instruments that are subject to master netting agreements. These agreements include provisions to offset positions with the same counterparty in the event of default by either party. The Company’s unrealized loss on derivative instruments is reported as "Foreign currency forward contracts" on the Consolidated Statements of Assets and Liabilities. The following table presents the Company’s liabilities related to derivatives by counterparty, net of amounts available for offset under a master netting arrangement and net of any collateral received or pledged by the Company for such assets and liabilities as of September 30, 2025:


Counterparty	Derivative Liabilities Subject to Master Netting Agreement			Derivatives Available for Offset		Non-cash Collateral Pledged		Cash Collateral Pledged		Net Amount of Derivative Liabilities (1)
Canadian Imperial Bank of Commerce	$	(640	)	$	-	$	-	$	-	$	(640	)
Total	$	(640	)	$	-	$	-	$	-	$	(640	)

(1)

Net amount of derivative liabilities represents the net amount due from the Company to the counterparty.

There were no liabilities related to derivatives available for offset as of December 31, 2024.

Runway Growth Finance Corp. 10-Q