Venture Lending & Leasing VII, Inc. - FORM 10-Q

Attached files

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EX-32.2 - VLL7INC 10Q EXHIBIT 32.2 033115 - Venture Lending & Leasing VII, Inc.	vll710q33115ex322.htm
EX-32.1 - VLL7INC 10Q EXHIBIT 32.1 033115 - Venture Lending & Leasing VII, Inc.	vll710q33115ex321.htm
EX-31.1 - VLL7INC 10Q EXHIBIT 31.1 033115 - Venture Lending & Leasing VII, Inc.	vll710q33115ex311.htm
EX-31.2 - VLL7INC 10Q EXHIBIT 31.2 033115 - Venture Lending & Leasing VII, Inc.	vll710q33115ex312.htm

FORM 10-Q

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549



[X]	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2015



[ ]	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ___________ to ______________

Commission file number 814-00969

Venture Lending & Leasing VII, Inc.

(Exact Name of Registrant as specified in its charter)



Maryland	45-5589518
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

104 La Mesa Drive, Suite 102	Portola Valley, CA 94028
(Address of principal executive offices)	(Zip Code)

(650) 234-4300

(Registrant's telephone number, including area code)

Indicate by check mark whether the registrant (1) filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [x] No [ ]

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes [ ] No [ ]

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definition of “large accelerated filer”, “accelerated filer”, and "smaller reporting company” in Rule 12b-2 of the Exchange Act.



Large accelerated filer [ ]	Accelerated filer [ ]	Non-accelerated filer [x]	Smaller reporting company [ ]

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes [ ] No [x]

Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date:



Class		Outstanding as of May 14, 2015
Common Stock, $.001 par value		100,000

VENTURE LENDING & LEASING VII, INC.

INDEX



PART I — FINANCIAL INFORMATION

Item 1.	Financial Statements

	Condensed Statements of Assets and Liabilities (Unaudited)
	As of March 31, 2015 and December 31, 2014

	Condensed Statements of Operations (Unaudited)
	For the three months ended March 31, 2015 and 2014

	Condensed Statements of Changes in Net Assets (Unaudited)
	For the three months ended March 31, 2015 and 2014

	Condensed Statements of Cash Flows (Unaudited)
	For the three months ended March 31, 2015 and 2014

	Notes to Condensed Financial Statements (Unaudited)

Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations

Item 3.	Quantitative and Qualitative Disclosures About Market Risk

Item 4.	Controls and Procedures

PART II — OTHER INFORMATION

Item 1.	Legal Proceedings

Item 1A.	Risk Factors

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds

Item 3.	Defaults Upon Senior Securities

Item 4.	Mine Safety Issues

Item 5.	Other Information

Item 6.	Exhibits

SIGNATURES

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

VENTURE LENDING & LEASING VII, INC.

CONDENSED STATEMENTS OF ASSETS AND LIABILITIES (UNAUDITED)

AS OF MARCH 31, 2015 AND DECEMBER 31, 2014



	March 31, 2015			December 31, 2014
ASSETS
Loans, at estimated fair value
(Cost of $322,946,951 and $270,658,436)	$	319,553,172		$	266,992,654
Other investment (cost of $1,891,127 and $2,074,139)	1,230,767			1,959,919
Cash and cash equivalents	24,791,826			7,329,177
Other assets	6,203,764			5,441,702

Total assets	351,779,529			281,723,452

LIABILITIES
Borrowings under debt facility	144,000,000			115,000,000
Accrued management fees	2,198,622			2,254,307
Accounts payable and other accrued liabilities	1,057,479			973,637

Total liabilities	147,256,101			118,227,944

NET ASSETS	$	204,523,428		$	163,495,508

Analysis of Net Assets:

Capital paid in on shares of capital stock	$	225,925,000		$	187,425,000
Return of capital distributions	(19,558,270		)	(19,558,270		)
Accumulated deficit	(1,843,302		)	(4,371,222		)
Net assets (equivalent to $2,045.23 and $1,634.96 per share based on 100,000 shares of capital stock outstanding - See Note 5)	$	204,523,428		$	163,495,508

See notes to condensed financial statements.

VENTURE LENDING & LEASING VII, INC.

CONDENSED STATEMENTS OF OPERATIONS (UNAUDITED)

FOR THE THREE MONTHS ENDED MARCH 31, 2015 AND 2014



	For the Three Months Ended March 31, 2015			For the Three Months Ended March 31, 2014


INVESTMENT INCOME:
Interest on loans	$	13,772,513		$	5,370,830
Other interest and other income	107,991			125
Total investment income	13,880,504			5,370,955

EXPENSES:
Management fees	2,198,622			2,343,750
Interest expense	1,425,549			507,646
Banking and professional fees	83,139			46,619
Other operating expenses	24,081			13,318
Total expenses	3,731,391			2,911,333
Net investment income	10,149,113			2,459,622

Net realized loss from investments	(1,016,588		)	(1,317,886		)
Net change in unrealized gain from investments	272,003			1,155,590
Net change in unrealized loss from hedging activities	(546,140		)	(33,674		)
Net realized and change in unrealized loss from investments and hedging activities	(1,290,725		)	(195,970		)

Net increase in net assets resulting from operations	$	8,858,388		$	2,263,652
Net increase in net assets resulting from operations per share	$	88.58		$	22.64
Weighted average shares outstanding	100,000			100,000

See notes to condensed financial statements.

VENTURE LENDING & LEASING VII, INC.

CONDENSED STATEMENTS OF CHANGES IN NET ASSETS (UNAUDITED)

FOR THE THREE MONTHS ENDED MARCH 31, 2015 AND 2014



	For the Three Months Ended March 31, 2015			For the Three Months Ended March 31, 2014
Net increase in net assets resulting from operations:
Net investment income	$	10,149,113		$	2,459,622
Net realized loss from investments	(1,016,588		)	(1,317,886		)
Net change in unrealized gain from investments	272,003			1,155,590
Net change in unrealized loss from hedging activities	(546,140		)	(33,674		)

Net increase in net assets resulting from operations	8,858,388			2,263,652

Distributions of income to shareholder	(6,330,468		)	(1,141,736		)
Return of capital to shareholder	—			(1,882,374		)
Contributions from shareholder	38,500,000			2,000,000
Increase (decrease) in capital transactions	32,169,532			(1,024,110		)

Total increase	41,027,920			1,239,542

Net assets
Beginning of period	163,495,508			85,768,515

End of period	$	204,523,428		$	87,008,057

See notes to condensed financial statements.

VENTURE LENDING & LEASING VII, INC.

CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED)

FOR THE THREE MONTHS ENDED MARCH 31, 2015 AND 2014



	For the Three Months Ended March 31, 2015			For the Three Months Ended March 31, 2014
CASH FLOWS FROM OPERATING ACTIVITIES:
Net increase in net assets resulting from operations	$	8,858,388		$	2,263,652
Adjustments to reconcile net increase in net assets resulting from operations to net cash used in operating activities:
Net realized loss from investments	1,016,588			1,317,886
Net change in unrealized gain from investments	(272,003		)	(1,155,590		)
Net change in unrealized loss from hedging activities	546,140			33,674
Amortization of deferred costs related to borrowing facility	354,834			151,798
Net increase in other assets	(932,861		)	(570,692		)
Net increase in accounts payable, other accrued liabilities, and accrued management fees	28,156			333,041
Origination of loans	(83,962,500		)	(31,750,000		)
Principal payments on loans	30,381,154			8,162,256
Acquisition of equity securities	(6,054,224		)	(2,954,762		)
Net cash used in operating activities	(50,036,328		)	(24,168,737		)
CASH FLOWS FROM FINANCING ACTIVITIES:
Cash distributions to shareholder	—			—
Contributions from shareholder	38,500,000			2,000,000
Borrowings under debt facility	29,000,000			33,000,000
Repayment of debt facility	—			—
Payment of bank facility fees and costs	(1,023		)	(117,000		)
Net cash provided by financing activities	67,498,977			34,883,000
Net increase in cash and cash equivalents	17,462,649			10,714,263
CASH AND CASH EQUIVALENTS:
Beginning of period	7,329,177			6,380,162
End of period	$	24,791,826		$	17,094,425
SUPPLEMENTAL DISCLOSURES:
CASH PAID DURING THE PERIOD:
Interest	$	988,879		$	147,362
NON-CASH ACTIVITIES:
Distributions of equity securities to shareholder	$	6,330,468		$	2,885,414
Receipt of equity securities as repayment of loans	$	276,244		$	69,348

See notes to condensed financial statements.

VENTURE LENDING & LEASING VII, INC.

NOTES TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED)


1.	ORGANIZATION AND OPERATIONS OF THE FUND

Venture Lending & Leasing VII, Inc. (the “Fund”), was incorporated in Maryland on June 21, 2012 as a non-diversified closed-end management investment company electing status as a business development company (“BDC”) under the Investment Company Act of 1940, as amended ("1940 Act") and is managed by Westech Investment Advisors, LLC, (“Manager” or “Management”). The Fund will be dissolved on December 31, 2022 unless an election is made to dissolve earlier by the Board of Directors of the Fund (the "Board"). One hundred percent of the stock of the Fund is held by Venture Lending & Leasing VII, LLC (the “Company”). Prior to commencing its operations on December 18, 2012, the Fund had no operations other than the sale to the Company of 100,000 shares of common stock, $0.001 par value for $25,000 in July 2012. This issuance of stock was a requirement in order to apply for a finance lender's license from the California Commissioner of Corporations, which was obtained on September 20, 2012.

In the Manager's opinion, the accompanying financial statements include all adjustments (consisting only of normal recurring adjustments) necessary for a fair presentation of financial position and results of operations for interim periods. Certain information and note disclosures normally included in audited annual financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been omitted; however, the Fund believes that the disclosures made are adequate to make the information presented not misleading. The interim results for the three months ended March 31, 2015 are not necessarily indicative of what the results would be for a full year. It is suggested that these financial statements be read in conjunction with the financial statements and the notes included in the Fund's Annual Report on Form 10-K for the year ended December 31, 2014.


2.	SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Accounting

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires Management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Cash and Cash Equivalents

Cash and cash equivalents consist of cash on hand and money market mutual funds with maturities of 90 days or less. Money market mutual funds held as cash equivalents are valued at their most recently traded net asset value.

Interest Income

Interest income on loans is recognized using the effective interest method including amounts from the amortization of discounts attributable to equity securities received as part of the loan transaction. Additionally, fees received as part of the transaction are added to the loan discount and amortized over the life of the loan.

Valuation Procedures

The Fund accounts for loans at fair value in accordance with the “Valuation Methods” below. All valuations are determined under the direction of the Manager, in accordance with this Policy.

The Fund's loans are valued in connection with the issuance of its periodic financial statements, the issuance or repurchase of the Fund's shares at a price equivalent to the current net asset value per share, and at such other times as

required by law. On a quarterly basis, Management submits to the Board a "Valuation Report", which details the rationale for the valuation of investments.

As of March 31, 2015 and December 31, 2014, the financial statements include nonmarketable investments of $319.6 million and $267.0 million, respectively (or approximately 91% and 95% of total assets, respectively), with fair values determined by the Manager in the absence of readily determinable market values. Because of the inherent uncertainty of these valuations, estimated fair values of such investments may differ significantly from the values that would have been used had a ready market for the securities existed, and the differences could be material. Below is the information used by the Manager in making these estimates.

Loans

The Fund defines fair value as the price that would be received to sell an asset or paid to lower a liability in an orderly transaction between market participants at the measurement date. There is no secondary market for the loans made by the Fund to borrowers, hence Management determines fair value based on hypothetical markets. Venture loans are generally held to maturity and are recorded at estimated fair value. The determination of fair value is based on a number of factors including the amount for which an investment could be exchanged in a current sale, which assumes an orderly disposition over a reasonable period other than in a forced sale. Management considers the fact that no ready market exists for substantially all of the investments held by the Fund. Management determines whether to adjust the estimated fair value of a loan based on a number of factors including but not limited to the borrower's payment history, available cash and “burn rate,” revenues, net income or loss, the likelihood that the borrower will be able to secure additional financing in the future, as well as an evaluation of the general interest rate environment. The amount of any valuation adjustment considers liquidation analysis and is determined based upon a credit analysis of the borrower and an analysis of the expected recovery from the borrower, including consideration of factors such as the nature and quality of the Fund's security interests in collateral, the estimated value of the Fund's collateral, the size of the loan, and the estimated time that will elapse before the Fund achieves a recovery. Management has evaluated these factors and has concluded that the effect of deterioration in the quality of the underlying collateral, increase in the size of the loan and increase in the estimated time to recovery would have the effect of lowering the value of the current portfolio of loans.

Non-accrual Loans

The Fund's policy is to place a loan on non-accrual status when the loan stops performing and Management deems that it is unlikely that the loan will return to performing status. When a loan is placed on non-accrual status, all interest previously accrued but not collected is reversed for the quarter in which the loan was placed on non-accrual status. Any uncollected interest related to quarters prior to when the loan was placed on non-accrual status is added to the principal balance, and the aggregate balance of the principal and interest is evaluated in accordance with the policy for valuation of loans in determining Management's best estimate of fair value. Interest received by the Fund on non-accrual loans will be recorded on a cash basis.

If a borrower of a non-accrual loan resumes making regular payments and Management deems that the borrower has sufficient resources that it is unlikely the loan will return to non-accrual status, the loan is re-classified back to accrual or performing status. Interest that would have been accrued during the non-accrual status will be added back to the remaining payment schedule, and thus changing the effective interest rate.

As of March 31, 2015, loans with a cost basis of $4.6 million and a fair value of $1.4 million were classified as non-accrual. As of December 31, 2014 loans with a cost basis of $5.2 million and a fair value of $2.0 million were classified as non-accrual.

Warrants and Stock

Warrants and stock that are received in connection with loan transactions generally will be assigned a fair value at the time of acquisition. These securities are then distributed by the Fund to the Company at the assigned value. Warrants are valued based on a modified Black-Scholes option pricing model which takes into account underlying stock value, expected term, volatility, and risk-free interest rate, among other factors.

Underlying asset value is estimated based on information available, including information regarding recent rounds of funding of the portfolio company, or the publicly-quoted stock price at the end of the financial reporting period for warrants for comparable publicly-quoted securities.

Volatility, or the amount of uncertainty or risk about the size of the changes in the warrant price, is based on an index of publicly traded companies grouped by industry and which are similar in nature to the underlying portfolio companies issuing the warrant (“Industry Index”). The volatility assumption for each Industry Index is based on the average volatility for individual public companies within the portfolio company's industry for a period of time approximating the expected life of the warrants. A hypothetical increase in the estimated initial term of the warrants used in the modified Black-Scholes option pricing model would have the effect of increasing the value of the warrants.

The remaining expected lives of warrants are based on historical experience of the average life of the warrants, as warrants are often exercised in the event of acquisitions, mergers, or initial public offerings and terminated due to events such as bankruptcies, restructuring activities, or additional financings. These events cause the expected term to be less than the remaining contractual term of the warrants. For the three months ended March 31, 2015 and March 31, 2014, the Fund assumed the average duration of a warrant is 3.5 years and 3 years, respectively. The effect of a hypothetical increase in the estimated initial term of the warrants used in the modified Black-Scholes option pricing model would have the effect of increasing the value of the warrants.

The risk-free interest rate is derived from the constant maturity tables issued by the U.S. Treasury Department. The effect of a hypothetical increase in the estimated risk-free rate used in the modified Black-Scholes option pricing model would have the effect of increasing the value of the warrants.

On an annual basis, the Fund engages an independent valuation company to provide valuation assistance to value the warrants which are received as part of loan consideration. These warrants are distributed to the Fund's shareholder immediately upon receipt. This independent third party evaluates the Fund's valuation methodology and assumptions for reasonableness from the perspective of a market participant. The independent third party also calculates certain inputs used such as volatility and risk-free rate. Upon the receipt of such data, a sample test is performed to ensure the accuracy of the independent calculations and that the source of data is reliable and consistent with the way in which the calculations were made in prior periods. Such inputs are entered into the database with a second review to ensure the accuracy of the input information. All calculations of warrant values are performed by one employee and reviewed by a second employee. The inputs of the modified Black-Scholes option pricing model are reevaluated every quarter.

Other Assets and Liabilities

Other Assets include costs incurred in conjunction with borrowings under the Fund's debt facility and are stated at initial cost with the exception of the interest rate cap which is marked to market. The costs are amortized over the term of the facility.

As of March 31, 2015 and December 31, 2014, based on borrowing rates available to the Fund, which are Level 2 inputs, the estimated fair values of the borrowings under the debt facility were $144.0 million and $115.0 million, respectively.

Commitment Fees

Unearned income and commitment fees on loans are recognized in Interest on Loans using the effective interest method over the term of the loan. Commitment fees are carried as liabilities when received for commitments upon which no draws have been made. When the first draw is made, the fee is treated as unearned income and is recognized as described above. If a draw is never made, the forfeited commitment fee less any applicable legal costs becomes recognized as other income after the commitment expires.

Interest Rate Cap Agreements

Interest rate caps are primarily valued on the basis of the future expected interest rates on the notional principal balance remaining which is comparable to what a prospective acquirer would pay on the measurement date. Valuation pricing models consider inputs such as forward rates, anticipated interest rate volatility relating to the reference rate, as well as time value and other factors underlying cap instruments. The contracts are recorded at fair value in Other Investment in the Condensed Statements of Assets and Liabilities. The changes in fair value are recorded in the Net change in unrealized gain (loss) from hedging activities in the Condensed Statements of Operations. The quarterly interest received on the interest rate cap contracts, if any, is recorded in Net realized and change in unrealized gain (loss) from hedging activities in the Condensed Statements of Operations.

Deferred Bank Fees

Through March 31, 2015, the deferred bank fees and costs associated with the debt facility have been capitalized and will be allocated over the estimated life of the facility, which currently is through October 2017. The amortization of these costs is recorded as interest expense in the Condensed Statements of Operations (see Note 6).

Recent Accounting Pronouncements

In April 2015, the Financial Accounting Standards Board (“FASB”) issued ASU 2015-03 Interest-Imputation of Interest, Simplifying the Presentation of Debt Issuance Costs, which changes the presentation of debt issuance costs in financial statements. Under the ASU, an entity presents such costs in the balance sheet as a direct deduction from the related debt liability rather than as an asset. Amortization of the costs is reported as interest expense. The amended guidance is effective for the Fund’s interim and annual periods beginning on January 1, 2016. Management does not expect the adoption of this guidance to significantly impact the Fund’s financial position or results of operations.

Tax Status

The Fund has elected to be treated as a Regulated Investment Company ("RIC") under Subchapter M of the Internal Revenue Code (the "Code") and operates in a manner so as to qualify for the tax treatment applicable to RICs.

In order to qualify for favorable tax treatment as a RIC, the Fund is required to distribute annually to its sole shareholder at least 90% of its investment company taxable income, as defined by the Code. To avoid federal excise taxes, the Fund must distribute annually at least 98% of its ordinary income and 98.2% of net capital gains from the current year and any undistributed ordinary income and net capital gains from the preceding years. The Fund, at its discretion, may carry forward taxable income in excess of calendar year distributions and pay a 4% excise tax on this income. If the Fund chooses to do so, all other things being equal, this would increase expenses and reduce the amount available to be distributed to the sole shareholder. The Fund will accrue excise tax on estimated undistributed taxable income as required.

Dividends from net investment income and distributions from net realized capital gains are determined in accordance with U.S. federal income tax regulations, which may differ from those amounts determined in accordance with accounting principles generally accepted in the United States of America ("GAAP"). These book/tax differences are either temporary or permanent in nature. To the extent these differences are permanent, they are charged or credited to paid-in-capital or accumulated net realized gain (loss), as appropriate, in the period that the differences arise. Temporary and permanent differences are primarily attributable to differences in the tax treatment of certain loans and

the tax characterization of income and non-deductible expenses. These differences are generally determined in conjunction with the preparation of the Fund's annual RIC tax return.

Book and tax basis differences relating to shareholder dividends and distributions and other permanent book and tax differences are reclassified among the Fund's capital accounts. In addition, the character of income and gains to be distributed is determined in accordance with income tax regulations that may differ from GAAP.

The Fund may pay distributions in excess of its taxable net investment income. This excess would be a tax-free return of capital in the period and reduce the shareholder's tax basis in its shares. The cumulative amount is disclosed on the Condensed Statements of Assets and Liabilities as return of capital distributions. Cumulative return of capital distributions were $19.6 million as of March 31, 2015 and December 31, 2014, respectively. As of March 31, 2015, the Fund had no uncertain tax positions.

The Fund's tax years open to examination by major jurisdictions are 2012 and forward.


3.	SUMMARY OF INVESTMENTS

Loans generally are made to borrowers pursuant to commitments whereby the Fund agrees to finance assets and provide working capital up to a specified amount for the term of the commitment, upon the terms and subject to the conditions specified by such commitment. As of March 31, 2015, the Fund's investments in loans were primarily to companies based within the United States and were diversified among borrowers in the industry segments shown below. The percentage of net assets that each industry group represents is shown with the industry totals below (the sum of the percentages does not equal 100 percent because the percentages are based on net assets as opposed to total loans). All loans are senior to unsecured creditors except where indicated.

The Fund defines fair value as the price that would be received to sell an asset or paid to settle a liability in an orderly transaction between market participants at the measurement date; that is, an exit price. The exit price assumes the asset or liability was exchanged in an orderly transaction; it was not a forced liquidation or distressed sale.

Loan balances are summarized by borrower. Typically a borrower's balance will be composed of several loans drawn under a commitment made by the Fund with the interest rate on each loan fixed at the time each loan is funded. Each loan drawn under a commitment may have a different maturity date and amount. For the three months ended March 31, 2015 and 2014, the weighted-average interest rate on performing loans was 18.29% and 15.92%, respectively. This rate is inclusive of both cash and non-cash interest income. For the three months ended March 31, 2015 and 2014, the weighted-average interest rate on the cash portion of the interest income was 11.15% and 12.17%, respectively. Interest is calculated using the effective interest method, and rates earned by the Fund will fluctuate based on many factors including early payoffs, volatility of values ascribed to warrants and new loans funded during the period.

The risk profile of a loan changes when events occur that impact the credit analysis of the borrower and loan as described in our loan accounting policy. Such changes result in the fair value being adjusted from par value of the individual loan. Where the risk profile is consistent with the original underwriting, which is primarily the case for this loan portfolio, the par value of the loan will approximate fair value.

All loans as of March 31, 2015 were to non-affiliates and consisted of the following:



	Percentage of	Estimated Fair Value		Par Value		Final
Borrower	Net Assets	3/31/2015		3/31/2015		Maturity Date
Computers & Storage
Canary Connect, Inc.		$	5,639,435	$	5,639,435	12/1/2018
Clustrix, Inc.		1,928,409		1,928,409		5/1/2017



Connected Data, Inc.		1,662,315		1,662,315		5/1/2017
D-Wave Systems, Inc.		1,466,442		1,466,442		2/1/2017
Electric Objects, Inc.		458,598		458,598		12/1/2018
Gridstore, Inc.		1,295,818		1,295,818		6/1/2017
Vidcie, Inc.		342,550		342,550		12/1/2015
Subtotal:	6.3%	$	12,793,567	$	12,793,567

Enterprise Networking
Apprion, Inc.		$	445,253	$	445,253	4/1/2016
Splashtop, Inc.		951,322		951,322		5/1/2016
Subtotal:	0.7%	$	1,396,575	$	1,396,575

Internet
Behalf, Inc.		$	1,351,438	$	1,351,438	5/1/2017
Betaworks, LLC.		9,124,405		9,124,405		7/1/2018
Better Doctor, Inc.		258,195		258,195		6/1/2016
Bonobos, Inc.		6,352,039		6,352,039		7/1/2018
Change.org, Inc.		1,708,354		1,708,354		11/1/2016
CustomMade, Inc.		1,561,376		1,561,376		5/1/2017
Desti, Inc.		38,984		43,284		*
Digital Caddies, Inc.		—		872,257		*
Dinner Lab, Inc.		446,720		446,720		9/1/2017
Eloquii Design, Inc.		1,828,340		1,828,340		9/1/2018
FanDuel, Inc.		1,223,376		1,223,376		9/1/2016
Fast Labs, Inc.		332,522		332,522		3/1/2017
FlipTop, Inc.		454,812		454,812		2/1/2018
Flowplay, Inc.		1,862,548		1,862,548		12/1/2017
FLYR, Inc.		287,556		287,556		6/1/2018
Giddy Apps, Inc.		944,997		944,997		12/1/2017
Giveforward, Inc.		554,654		554,654		7/1/2017
Glide, Inc.		2,718,405		2,718,405		6/1/2018
Good Eggs, Inc.		257,656		257,656		6/1/2016
Grovo Learning, Inc.		5,396,199		5,396,199		6/1/2018
Inside Vault, Inc.		395,261		395,261		5/1/2017
Jet.com, Inc.		4,291,781		4,291,781		6/1/2018
JewelScent, Inc.		425,597		425,597		12/1/2017
Jun Group, LLC		641,940		641,940		2/1/2017
Kitsy Lane, Inc.		191,585		191,585		12/1/2016
Kiwi Crate, Inc.		936,167		936,167		4/1/2018
Komli Media, Inc.		326,691		326,691		9/1/2015
LocalResponse, Inc.		267,963		267,963		3/1/2016
Madison Reed, Inc.		1,417,473		1,417,473		6/1/2018
Manicube, Inc.		651,002		651,002		2/1/2018
MediaSpike, Inc.		51,693		176,693		*
MeetMe, Inc.		1,100,712		1,100,712		4/1/2016
Minno, Inc.		1,601,177		1,601,177		3/1/2018
Monetate, Inc.		2,745,167		2,745,167		6/1/2018



Move Loot, Inc.		1,174,275		1,174,275		12/1/2017
Osix Corp.		74,709		74,709		10/1/2016
Piryx, Inc.		751,686		921,686		*
Pixalate, Inc.		786,695		786,695		6/1/2017
Placester, Inc.		1,386,509		1,386,509		12/1/2017
Playstudios, Inc.		2,268,871		2,268,871		6/1/2018
Pleying, Inc.		165,252		165,252		12/1/2016
Primary Kids, Inc.		442,000		442,000		3/1/2018
Quantcast Corp.		4,990,060		4,990,060		4/1/2017
Quri, Inc.		1,924,853		1,924,853		6/1/2018
Radius Intelligence, Inc.		1,625,219		1,625,219		10/1/2017
Relay Network, LLC		913,367		913,367		3/1/2018
Retail Innovation Group		1,383,243		1,383,243		7/1/2016
The SavvySource For Parents, Inc.		164,563		164,563		12/1/2016
Schooltube, Inc.		—		108,222		*
ServiceMarketplace, Inc.		205,926		205,926		7/1/2017
Session M, Inc.		1,399,583		1,399,583		2/1/2017
Smart Lunches, Inc.		134,005		134,005		6/1/2016
Sociable Labs, Inc.		266,736		266,736		7/1/2016
The Black Tux, Inc.		725,101		725,101		2/1/2018
Weddington Way, Inc.		2,063,631		2,063,631		6/1/2018
WHI, Inc.		1,721,578		1,721,578		7/1/2017
YouDocs Beauty, Inc.		971,998		1,171,998		5/1/2018
Subtotal:	37.8%	$	77,286,645	$	78,766,424

Medical Devices
AxioMed, Inc.		$	14,238	$	1,560,238	*
Blockade Medical, LLC		468,213		468,213		9/1/2017
Cayenne Medical, Inc.		4,458,373		4,458,373		12/1/2017
Medina Medical, Inc.		1,836,807		1,836,807		4/1/2018
MyoScience, Inc.		9,336,102		9,336,102		7/1/2018
Subtotal:	7.9%	$	16,113,733	$	17,659,733

Other Healthcare
Cogito Health, Inc.		$	465,226	$	465,226	4/1/2017
Health Integrated, Inc.		1,913,481		1,913,481		10/1/2017
HealthEquityLabs, Inc.		932,835		932,835		6/1/2018
Mulberry Health, Inc.		4,483,759		4,483,759		12/1/2017
Physician Software Systems, LLC		450,191		450,191		7/1/2017
Practice Fusion, Inc.		12,937,698		12,937,698		3/1/2018
Project Healthy Living, Inc.		2,607,148		2,607,148		12/1/2017
Seven Bridges Genomics, Inc.		1,772,556		1,772,556		3/1/2018
Urgent Care Centers of New England, Inc.		2,363,144		2,363,144		4/1/2018
Subtotal:	13.7%	$	27,926,038	$	27,926,038


Other Technology



21e6, LLC		$	11,825,686	$	11,825,686	8/1/2017
AltspaceVR, Inc.		707,373		707,373		8/1/2017
Automatic Labs, Inc.		679,826		679,826		12/1/2016
Beeline Bikes, Inc.		124,805		124,805		6/1/2017
Daylight Solutions, Inc.		1,834,141		1,834,141		8/1/2017
Ecologic Brands, Inc.		575,483		575,483		6/1/2017
General Assembly, Inc.		10,760,401		10,760,401		2/1/2019
ICON Aircraft, Inc.		9,155,707		9,155,707		10/1/2018
InsideTrack, Inc.		1,260,839		1,260,839		9/1/2017
Lumo BodyTech, Inc.		1,186,681		1,186,681		12/1/2017
Mark One Lifestyle, Inc.		2,351,480		2,351,480		12/1/2017
Neuehouse, LLC		3,727,334		3,727,334		7/1/2017
Nw Frontier Foods, Inc.		317,717		317,717		8/1/2018
nWay, Inc.		1,303,691		1,303,691		3/1/2018
Pinnacle Engines, Inc.		1,129,770		1,129,770		12/1/2017
PLAE, Inc.		424,554		424,554		6/1/2017
Planet Labs, Inc.		23,392,295		23,392,295		3/1/2019
Prana Holdings, Inc.		3,811,300		3,811,300		7/1/2016
Scoot Networks, Inc.		377,431		377,431		3/1/2017
Securiforest S.L.		2,783,874		2,783,874		12/1/2017
Skully Helmets, Inc.		217,647		217,647		7/1/2017
Sproutling, Inc.		655,767		655,767		9/1/2017
Stratos Technologies, Inc.		441,323		441,323		8/1/2017
Tribogenics, Inc.		375,924		375,924		9/1/2016
VentureBeat, Inc.		1,152,921		1,152,921		11/1/2017
Virtuix Holdings, Inc.		938,032		938,032		9/1/2017
Subtotal:	39.8%	$	81,512,002	$	81,512,002

Security
Agari Data, Inc.		$	999,703	$	999,703	9/1/2017
Guardian Analytics, Inc.		6,651,174		6,651,174		6/1/2018
Uplogix, Inc.		1,015,741		1,015,741		5/1/2017
Venafi, Inc.		3,406,919		3,406,919		6/1/2017
Subtotal:	5.9%	$	12,073,537	$	12,073,537

Software
3Scale, Inc.		$	674,190	$	674,190	9/1/2017
Apportable, Inc.		751,949		751,949		3/1/2017
Atigeo, LLC.		2,810,298		2,810,298		9/1/2017
Beanstock Media, Inc.		1,340,196		1,340,196		12/1/2018
Beep, Inc.		473,565		473,565		12/1/2017
BlazeMeter, Inc.		904,527		904,527		1/1/2018
Bounce Exchange, Inc.		3,432,925		3,432,925		6/1/2018
Brightpearl, Inc.		388,535		388,535		6/1/2016
ClearPath, Inc.		234,065		234,065		5/1/2016
Clypd, Inc.		505,095		505,095		11/1/2016
DocSend, Inc.		573,014		573,014		6/1/2018



DropThought, Inc.		425,303		425,303		12/1/2016
eCommera, Inc.		6,395,643		6,395,643		1/1/2018
ElasticBeam		580,403		580,403		2/1/2018
Encoding.com, Inc.		457,087		457,087		11/1/2016
Mconcierge System, Inc.		1,156,274		1,156,274		2/1/2018
MediaPlatform, Inc.		469,711		469,711		9/1/2016
Mintigo, Inc.		1,363,714		1,363,714		1/1/2018
Nectar Holdings, Inc.		1,128,261		1,128,261		12/1/2017
Norse Corporation		5,197,010		5,197,010		12/1/2017
OrderGroove, Inc.		806,682		806,682		12/1/2017
Palantir Technologies, Inc.		5,710,926		5,710,926		4/1/2016
SCVNGR, Inc.		1,600,861		1,600,861		10/1/2016
SnapLogic, Inc.		1,586,208		1,586,208		7/1/2016
Soldsie, Inc.		917,435		917,435		11/1/2018
SoundHound, Inc.		3,256,049		3,256,049		5/1/2017
StreetLight Data, Inc.		574,319		574,319		4/1/2017
Takipi, Inc.		1,898,673		1,898,673		3/1/2018
Top Hat Monocle Corp.		549,150		549,150		7/1/2016
Unify Square, Inc.		4,682,376		4,682,376		12/1/2016
Viewpost Holdings, LLC.		13,694,458		13,694,458		5/1/2018
Vuemix, Inc.		285,568		285,568		9/1/2017
Workspot, Inc.		145,058		145,058		9/1/2016
ZeroTurnaround USA, Inc.		5,212,424		5,212,424		12/1/2018
Subtotal:	34.3%	$	70,181,952	$	70,181,952

Technology Services
Akademos, Inc.		$	824,042	$	824,042	6/1/2017
Amped, Inc.		1,374,774		1,374,774		11/1/2017
BandPage, Inc.		1,840,584		1,840,584		12/1/2017
BidPal, Inc.		525,513		525,513		4/1/2016
Blazent, Inc.		489,429		489,429		5/1/2016
Blue Technologies Limited		642,629		642,629		6/1/2017
BountyJobs, Inc.		447,334		447,334		10/1/2017
Callisto Media, Inc.		498,867		498,867		9/1/2016
Classy, Inc.		1,631,120		1,631,120		3/1/2018
FSA Store, Inc.		2,562,420		2,562,420		9/1/2018
Getable, Inc.		443,227		443,227		8/1/2017
Grassroots Unwired, Inc.		62,751		62,751		8/1/2016
Maxi Mobility, Inc.		133,738		133,738		7/1/2016
Rated People, Ltd.		417,823		557,823		*
Stackstorm, Inc.		263,507		263,507		8/1/2017
TiqIQ, Inc.		232,604		232,604		7/1/2017
Subtotal:	6.0%	$	12,390,362	$	12,530,362

Wireless
Clementine Labs, Inc.		$	213,102	$	213,102	3/1/2017
Flint Mobile, Inc.		1,560,345		1,560,345		3/1/2018



GPShopper, LLC		439,764		439,764		7/1/2017
InfoReach, Inc.		391,765		391,765		3/1/2017
Karma Technology Holdings, Inc.		475,162		475,162		11/1/2017
Receivd, Inc.		154,957		382,957		*
SpiderCloud Wireless, Inc.		4,643,666		4,643,666		7/1/2017
Subtotal:	3.8%	$	7,878,761	$	8,106,761


Total (Cost of $322,946,951):	156.2%	$	319,553,172	$	322,946,951

*As of March 31, 2015, loans with a cost basis of $4.6 million and a fair value of $1.4 million were classified as non-accrual.

All loans as of December 31, 2014 were to non-affiliates and consisted of the following:



	Percentage of	Estimated Fair Value		Par Value		Final
Borrower	Net Assets	12/31/2014		12/31/2014		Maturity Date
Carrier Networking
Treq Labs, Inc.		$	1,823,279	$	1,823,279	*
Subtotal:	1.1%	$	1,823,279	$	1,823,279

Computers & Storage
Clustrix, Inc.		$	2,134,611	$	2,134,611	5/1/2017
Connected Data, Inc.		1,881,044		1,881,044		5/1/2017
D-Wave Systems, Inc.		1,598,859		1,598,859		2/1/2017
Electric Objects, Inc.		451,430		451,430		12/1/2018
Gridstore, Inc.		1,413,836		1,413,836		6/1/2017
Vidcie, Inc.		431,642		431,642		12/1/2015
Subtotal:	4.9%	$	7,911,422	$	7,911,422

Enterprise Networking
Apprion, Inc.		$	534,558	$	534,558	4/1/2016
Splashtop, Inc.		1,127,792		1,127,792		5/1/2016
Subtotal:	1.0%	$	1,662,350	$	1,662,350

Internet
Behalf, Inc.		$	1,488,729	$	1,488,729	5/1/2017
Better Doctor, Inc.		304,363		304,363		6/1/2016
Bonobos, Inc.		6,262,457		6,262,457		7/1/2018
Change.org, Inc.		1,923,173		1,923,173		11/1/2016
CustomMade, Inc.		1,713,379		1,713,379		5/1/2017
Desti, Inc.		38,984		43,284		*
Digital Caddies, Inc.		854,469		854,469		6/1/2017
Dinner Lab, Inc.		438,917		438,917		9/1/2017
Eloquii Design, Inc.		420,483		420,483		10/1/2017
FanDuel, Inc.		1,400,975		1,400,975		9/1/2016
Fast Labs, Inc.		373,488		373,488		3/1/2017



Fingi, Inc.		275,000		352,718		6/1/2018
FlipTop, Inc.		232,721		232,721		6/1/2017
Flowplay, Inc.		1,844,659		1,844,659		12/1/2017
Giddy Apps, Inc.		938,861		938,861		12/1/2017
Giveforward, Inc.		474,588		474,588		7/1/2017
Good Eggs, Inc.		303,029		303,029		6/1/2016
Grovo Learning, Inc.		876,425		876,425		3/1/2017
Inside Vault, Inc.		437,370		437,370		5/1/2017
Jet.com, Inc.		4,236,457		4,236,457		6/1/2018
Jun Group, LLC		710,184		710,184		2/1/2017
Kitsy Lane, Inc.		193,730		193,730		12/1/2016
Kiwi Crate, Inc.		1,042,522		1,042,522		7/1/2017
Komli Media, Inc.		481,032		481,032		9/1/2015
LocalResponse, Inc.		341,958		341,958		3/1/2016
MassDrop, Inc.		358,248		358,248		9/1/2017
MediaSpike, Inc.		207,440		207,440		12/1/2016
MeetMe, Inc.		1,322,995		1,322,995		4/1/2016
Minno, Inc.		1,588,734		1,588,734		3/1/2018
Modasuite, Inc.		1,256,711		1,256,711		7/1/2016
Monetate, Inc.		2,709,485		2,709,485		6/1/2018
Moveline Group, Inc.		—		929,799		*
Move Loot, Inc.		1,164,741		1,164,741		12/1/2017
Osix Corp.		84,394		84,394		10/1/2016
Piryx, Inc.		936,796		936,796		6/1/2017
Pixalate, Inc.		866,894		866,894		6/1/2017
Placester, Inc.		1,376,279		1,376,279		12/1/2017
Playstudios, Inc.		2,282,184		2,282,184		6/1/2018
Pleying, Inc.		184,031		184,031		12/1/2016
Quantcast Corp.		5,472,720		5,472,720		4/1/2017
Quri, Inc.		1,906,998		1,906,998		6/1/2018
Radius Intelligence, Inc.		1,608,479		1,608,479		10/1/2017
Retail Innovation Group, Inc.		1,611,875		1,611,875		7/1/2016
The SavvySource For Parents, Inc.		182,972		182,972		12/1/2016
Schooltube, Inc.		68,222		108,222		*
ServiceMarketplace, Inc.		215,178		215,178		7/1/2017
Session M, Inc.		1,557,014		1,557,014		2/1/2017
Smart Lunches, Inc.		155,505		155,505		6/1/2016
Sociable Labs, Inc.		313,361		313,361		7/1/2016
The Black Tux, Inc.		722,390		722,390		2/1/2018
Waluzi, Inc.		79,987		79,987		8/1/2016
Weddington Way, Inc.		815,644		815,644		11/1/2016
WHI, Inc.		1,877,385		1,877,385		7/1/2017
YouDocs Beauty, Inc.		961,655		1,161,655		5/1/2018
Subtotal:	36.4%	$	59,496,270	$	60,748,087

Medical Devices



AxioMed, Inc.		$	23,748	$	1,569,748	*
Blockade Medical, LLC		463,868		463,868		9/1/2017
Cayenne Medical, Inc.		4,765,638		4,765,638		12/1/2017
Medina Medical, Inc.		1,342,232		1,342,232		4/1/2018
MyoScience, Inc.		9,248,111		9,248,111		7/1/2018
Subtotal:	9.7%	$	15,843,597	$	17,389,597

Other Healthcare
Cogito Health, Inc.		$	512,736	$	512,736	4/1/2017
Health Integrated, Inc.		2,089,102		2,089,102		10/1/2017
HealthEquityLabs, Inc.		927,690		927,690		6/1/2018
Mulberry Health, Inc.		4,812,610		4,812,610		12/1/2017
Physician Software Systems, LLC		476,037		476,037		7/1/2017
Practice Fusion, Inc.		13,522,062		13,522,062		3/1/2018
Project Healthy Living, Inc.		2,699,693		2,699,693		12/1/2017
Urgent Care Centers of New England, Inc.		2,349,955		2,349,955		4/1/2018
ZocDoc, Inc.		4,517,666		4,517,666		6/1/2017
Subtotal:	19.5%	$	31,907,551	$	31,907,551

Other Technology
21e6, LLC		$	12,754,495	$	12,754,495	8/1/2017
AltspaceVR, Inc.		726,336		726,336		8/1/2017
Automatic Labs, Inc.		766,320		766,320		12/1/2016
Beeline Bikes, Inc.		135,592		135,592		6/1/2017
Daylight Solutions, Inc.		1,875,367		1,875,367		8/1/2017
Ecologic Brands, Inc.		635,944		635,944		6/1/2017
General Assembly, Inc.		1,956,427		1,956,427		12/1/2016
ICON Aircraft, Inc.		9,046,100		9,046,100		10/1/2018
InsideTrack, Inc.		1,304,294		1,304,294		9/1/2017
Lumo BodyTech, Inc.		1,179,641		1,179,641		12/1/2017
Mark One Lifestyle, Inc.		2,327,663		2,327,663		12/1/2017
Neuehouse, LLC		3,997,428		3,997,428		7/1/2017
nWay, Inc.		1,361,505		1,361,505		3/1/2018
Pinnacle Engines, Inc.		1,161,448		1,161,448		12/1/2017
PLAE, Inc.		462,689		462,689		6/1/2017
Planet Labs, Inc.		11,674,345		11,674,345		11/1/2018
Prana Holdings, Inc.		4,514,012		4,514,012		7/1/2016
Protean Payment, Inc.		446,605		446,605		8/1/2017
Scoot Networks, Inc.		414,974		414,974		3/1/2017
Skully Helmets, Inc.		227,456		227,456		7/1/2017
Sproutling, Inc.		709,251		709,251		9/1/2017
Tribogenics, Inc.		430,847		430,847		9/1/2016
VentureBeat, Inc.		1,140,899		1,140,899		11/1/2017
Virtuix Holdings, Inc.		929,532		929,532		9/1/2017
Subtotal:	36.8%	$	60,179,170	$	60,179,170

Security



Agari Data, Inc.		$	1,082,097	$	1,082,097	9/1/2017
Guardian Analytics, Inc.		5,653,494		5,653,494		6/1/2018
Uplogix, Inc.		1,057,957		1,057,957		5/1/2017
Venafi, Inc.		3,709,903		3,709,903		6/1/2017
Voltage Security, Inc.		2,369,626		2,369,626		9/1/2017
Subtotal:	8.5%	$	13,873,077	$	13,873,077

Software
3Scale, Inc.		$	712,931	$	712,931	9/1/2017
Apportable, Inc.		835,072		835,072		3/1/2017
Atigeo, LLC.		2,784,801		2,784,801		9/1/2017
Beanstock Media, Inc.		1,336,495		1,336,495		12/1/2018
Beep, Inc.		466,604		466,604		12/1/2017
BlazeMeter, Inc.		699,151		699,151		10/1/2017
Bounce Exchange, Inc.		3,399,331		3,399,331		6/1/2018
Brightpearl, Inc.		457,337		457,337		6/1/2016
ClearPath, Inc.		275,217		275,217		5/1/2016
Clypd, Inc.		571,745		571,745		11/1/2016
Dataium, LLC		162,472		354,472		7/1/2016
DropThought, Inc.		477,668		477,668		12/1/2016
eCommera, Inc.		6,820,441		6,820,441		1/1/2018
Encoding.com, Inc.		524,900		524,900		11/1/2016
Mconcierge System, Inc.		927,859		927,859		8/1/2017
MediaPlatform, Inc.		563,199		563,199		9/1/2016
Mintigo, Inc.		1,427,018		1,427,018		1/1/2018
Nectar Holdings, Inc.		1,171,556		1,171,556		12/1/2017
Norse Corporation		5,121,965		5,121,965		12/1/2017
OrderGroove, Inc.		878,707		878,707		12/1/2016
Palantir Technologies, Inc.		6,892,406		6,892,406		4/1/2016
Renasar Technologies, Inc.		673,602		673,602		12/1/2017
SCVNGR, Inc.		1,821,982		1,821,982		10/1/2016
SnapLogic, Inc.		1,648,742		1,648,742		7/1/2016
SoundHound, Inc.		3,640,099		3,640,099		5/1/2017
StreetLight Data, Inc.		635,179		635,179		4/1/2017
Takipi, Inc.		913,474		913,474		12/1/2017
Top Hat Monocle Corp.		640,324		640,324		7/1/2016
Unify Square, Inc.		4,625,899		4,625,899		12/1/2016
Vuemix, Inc.		283,722		283,722		9/1/2017
Workspot, Inc.		164,807		164,807		9/1/2016
ZeroTurnaround USA, Inc.		5,181,807		5,181,807		12/1/2018
Subtotal:	34.7%	$	56,736,512	$	56,928,512

Technology Services
Akademos, Inc.		$	890,914	$	890,914	6/1/2017
Amped, Inc.		1,431,563		1,431,563		11/1/2017
BandPage, Inc.		1,821,940		1,821,940		12/1/2017
BidPal, Inc.		623,702		623,702		4/1/2016



Blazent, Inc.		583,639		583,639		5/1/2016
Blue Technologies Limited		700,984		700,984		6/1/2017
BountyJobs, Inc.		464,789		464,789		10/1/2017
Callisto Media, Inc.		576,716		576,716		9/1/2016
FSA Store, Inc.		1,220,757		122,075		9/1/2017
Getable, Inc.		450,873		450,873		8/1/2017
Grassroots Unwired, Inc.		73,323		73,323		8/1/2016
Maxi Mobility, Inc.		154,981		154,981		7/1/2016
Rated People, Ltd.		643,625		643,625		12/1/2016
Stackstorm, Inc.		267,700		267,700		8/1/2017
TiqIQ, Inc.		244,011		244,011		7/1/2017
Subtotal:	6.2%	$	10,149,517	$	10,149,517

Wireless
AppStack, Inc.		$	—	$	295,965	*
Clementine Labs, Inc.		235,375		235,375		3/1/2017
Flint Mobile, Inc.		1,530,510		1,530,510		3/1/2018
GPShopper, LLC		477,262		477,262		7/1/2017
InfoReach, Inc.		431,000		431,000		3/1/2017
Receivd, Inc.		40,459		420,459		*
SpiderCloud Wireless, Inc.		4,695,303		4,695,303		7/1/2017
Subtotal:	4.5%	$	7,409,909	$	8,085,874

Total (Cost of $270,658,436):	163.3%	$	266,992,654	$	270,658,436

*As of December 31, 2014, loans with a cost basis of $5.2 million and a fair value of $2.0 million were classified as non-accrual.

The Fund provides asset-based financing primarily to start-up and emerging growth venture-capital-backed companies. These loans are generally secured by assets of the borrowers. As a result, the Fund is subject to general credit risk associated with such companies. As of March 31, 2015 and December 31, 2014, the Fund had unexpired unfunded commitments to borrowers of $223.8 million and $161.2 million , respectively.

Valuation Hierarchy

Under the FASB Accounting Standards Codification (ASC) 820-10, the Fund categorizes its fair value measurements according to a three-level hierarchy. The hierarchy prioritizes the inputs used by the Fund's valuation techniques. A level is assigned to each fair value measurement based on the lowest level input that is significant to the fair value measurement in its entirety. The three levels of the fair value hierarchy are defined as follows:



Level 1		Unadjusted quoted prices for identical assets or liabilities in active markets that are accessible at the measurement date.
Level 2		Prices or valuations based on observable inputs other than quoted prices in active markets for identical assets and liabilities.
Level 3		Prices or valuations that require inputs that are both significant to the fair value measurement and unobservable.

Transfer of investments between levels of the fair value hierarchy is recorded on the actual date of the event or change in circumstances that caused the transfer. There were no transfers in and out of Level 1, 2, and 3 during the period ended March 31, 2015.

The Fund's cash equivalents were valued at the traded net asset value of the money market mutual fund. As a result, these measurements are classified as Level 1. The Fund's investments in the interest rate cap are based on quotes

from the market makers and therefore, are classified as Level 2. The Fund uses estimated exit values when determining the value of its investments. Because loan transactions are individually negotiated and unique, and there is no market in which these assets trade, the inputs for these assets, which are discussed in the Valuation Methods listed above, are classified as Level 3.

The following tables provide quantitative information about the Fund's Level 3 fair value measurements of its investments as of March 31, 2015 and December 31, 2014. In addition to the techniques and inputs noted in the tables below, the Fund may also use other valuation techniques and methodologies when determining its fair value measurements. The below tables are not intended to be all-inclusive, but rather provide information on significant.

Level 3 inputs as they relate to the Fund's fair value measurements.



Level 3 Debt disclosure

Investment Type - Level 3	Fair Value at		Valuation Techniques/		Weighted
Debt Investments	3/31/2015		Methodologies	Unobservable Input	Average

Computers and Storage	$	12,793,567	Hypothetical market analysis	Hypothetical market coupon rate	16%

Enterprise Networking	$	1,396,575	Hypothetical market analysis	Hypothetical market coupon rate	17%

Internet	$	77,286,645	Hypothetical market analysis	Hypothetical market coupon rate	17%
			Liquidation	Investment Collateral	$0 - $751,686

Medical Device	$	16,113,733	Hypothetical market analysis	Hypothetical market coupon rate	15%
			Liquidation	Investment Collateral	$14,238

Other Healthcare	$	27,926,038	Hypothetical market analysis	Hypothetical market coupon rate	15%

Other Technology	$	81,512,002	Hypothetical market analysis	Hypothetical market coupon rate	15%

Security	$	12,073,537	Hypothetical market analysis	Hypothetical market coupon rate	15%

Software	$	70,181,952	Hypothetical market analysis	Hypothetical market coupon rate	16%

Technology Services	$	12,390,362	Hypothetical market analysis	Hypothetical market coupon rate	16%
			Liquidation	Investment Collateral	$417,823

Wireless	$	7,878,761	Hypothetical market analysis	Hypothetical market coupon rate	16%

			Liquidation	Investment Collateral	$154,957
	$	319,553,172



Investment Type - Level 3	Fair Value at		Valuation Techniques/		Weighted
Debt Investments	12/31/2014		Methodologies	Unobservable Input	Average/Range

Carrier Networking	$	1,823,279	Liquidation	Investment Collateral	$1,823,279

Computers and Storage	$	7,911,422	Hypothetical market analysis	Hypothetical market coupon rate	19%

Enterprise Networking	$	1,662,350	Hypothetical market analysis	Hypothetical market coupon rate	17%

Internet	$	59,496,270	Hypothetical market analysis	Hypothetical market coupon rate	15%
			Liquidation	Investment Collateral	$0 - $68,222

Medical Device	$	15,843,597	Hypothetical market analysis	Hypothetical market coupon rate	14%
			Liquidation	Investment Collateral	$23,748

Other Healthcare	$	31,907,551	Hypothetical market analysis	Hypothetical market coupon rate	14%

Other Technology	$	60,179,170	Hypothetical market analysis	Hypothetical market coupon rate	14%

Security	$	13,873,077	Hypothetical market analysis	Hypothetical market coupon rate	15%

Software	$	56,736,512	Hypothetical market analysis	Hypothetical market coupon rate	13%

Technology Services	$	10,149,517	Hypothetical market analysis	Hypothetical market coupon rate	17%

Wireless	$	7,409,909	Hypothetical market analysis	Hypothetical market coupon rate	15%
			Liquidation	Investment Collateral	$0 - $40,459
	$	266,992,654

The following table presents the balances of assets as of March 31, 2015 and December 31, 2014 measured at fair value on a recurring basis:



As of March 31, 2015	Level 1		Level 2		Level 3		Total
ASSETS:
Loans*	$	—	$	—	$	319,553,172	$	319,553,172
Interest rate cap	—		1,230,767		—		1,230,767
Cash equivalents	24,791,826		—		—		24,791,826
Total	$	24,791,826	$	1,230,767	$	319,553,172	$	345,575,765



As of December 31, 2014	Level 1		Level 2		Level 3		Total
ASSETS:
Loans*	$	—	$	—	$	266,992,654	$	266,992,654
Interest rate cap	—		1,959,919		—		1,959,919
Cash equivalents	7,329,177		—		—		7,329,177
Total	$	7,329,177	$	1,959,919	$	266,992,654	$	276,281,750

*For a detailed listing of borrowers comprising this amount, please refer to Note 3, Summary of Investments.

The following table provides a summary of changes in Level 3 assets measured at fair value on a recurring basis:



	For the Three Months Ended March 31, 2015
	For the Three Months Ended March 31, 2015
	Loans			Warrants			Convertible Note
Beginning balance	$	266,992,654		$	—		$	—
Acquisitions and originations	83,962,500			6,080,468			250,000
Principal reductions	(30,657,397		)	—			—

Distribution to shareholder	—			(6,080,468		)	(250,000		)
Net change in unrealized gain from investments	272,003			—			—
Net realized loss from investments	(1,016,588		)	—			—
Ending balance	$	319,553,172		$	—		$	—
Net change in unrealized loss on investments relating to investments still held at March 31, 2015	$	(1,223,479	)



	For the Three Months Ended March 31, 2014
	For the Three Months Ended March 31, 2014
	Loans			Warrants
Beginning balance	$	122,392,255		$	—
Acquisitions and originations	31,750,000			3,024,110
Principal reductions	(8,231,605		)
Distribution to shareholder				(3,024,110		)
Net change in unrealized gain from investments	1,155,590			—
Net realized loss from investments	(1,317,886		)	—
Ending balance	$	145,748,354		$	—
Net change in unrealized loss on investments relating to investments still held at March 31, 2014	$	(115,000	)


4.	EARNINGS PER SHARE

Basic earnings per share are computed by dividing net increase (decrease) in net assets resulting from operations by the weighted average common shares outstanding. Diluted earnings per share are computed by dividing net increase(decrease) in net assets resulting from operations by the weighted average common shares outstanding, including the dilutive effects of potential common shares (e.g., stock options). The Fund held no instruments that would be potential common shares; thus, reported basic and diluted earnings per share are the same.


5.	CAPITAL STOCK

As of March 31, 2015 and December 31, 2014, there were 10,000,000 shares of $0.001 par value common stock authorized, and 100,000 shares issued and outstanding. Total committed capital of the Company, as of March 31, 2015 and December 31, 2014, was $375.0 million, respectively. Total contributed capital to the Company through March 31, 2015 and December 31, 2014 was $253.1 million and $206.3 million, of which $225.9 million and $187.4 million were contributed to the Fund, respectively.

The chart below shows the distributions of the Fund for the three months ended March 31, 2015 and 2014.



	For the Three Months Ended March 31, 2015		For the Three Months Ended March 31, 2014
Cash distributions	$	—	$	—
Distributions of equity securities	6,330,468		3,024,110

Total distributions to shareholder	$	6,330,468	$	3,024,110

Final classification of the distributions as either a return of capital or a distribution of income is an annual determination made at the end of each year dependent upon the Fund's current year and cumulative earnings and profits.

6. DEBT FACILITY

The Fund has entered into a syndicated loan agreement led by Wells Fargo, N.A. and Union Bank, N.A. that established a secured revolving loan facility in an initial amount of up to $125,000,000 and in November 2014, increased the borrowing availability thereunder to $255,000,000. Borrowings by the Fund are collateralized by the property and other assets of the Fund. Loans under the facility may be, at the option of the Fund, either Reference Rate or LIBOR loans. The Fund will pay interest on its borrowings and will also pay a fee on the unused portion of the facility.

The facility terminates on October 18, 2017, but can be accelerated in the event of default, such as failure by the Fund to make timely interest or principal payments. As of March 31, 2015 and December 31, 2014, $144.0 million and $115.0 million was outstanding under the facility, respectively.

Borrowings under the facility are collateralized by receivables under loans advanced by the Fund with assignment to the financial institution, plus other assets of the Fund. Such borrowings will bear interest at an annual rate of either LIBOR plus 2.75% or the Reference Rate plus 1.75%. The Fund pays an unused line fee of 0.50% of the total unused commitment amount on a quarterly basis.

Bank fees and other costs of $2.7 million were incurred in connection with the facility. The bank fees and other costs incurred have been capitalized and are amortized to interest expense on a straight line basis over the expected life of the facility. As of March 31, 2015, the remaining unamortized fees and costs of $1.8 million are being amortized over the expected life of the facility (October 2017).

The facility is revolving and as such does not have a specified repayment schedule, although advances are secured by the assets of the Fund and thus repayments will be required as assets decline. The facility contains various covenants including financial covenants related to: (i) minimum debt service coverage ratio, (ii) interest coverage ratio, (iii) maximum loan loss reserves, and (iv) unfunded commitment ratio. There are also various restrictive covenants, including limitations on (i) the incurrence of liens, (ii) consolidations, mergers and asset sales, and (iii) capital expenditures. As of March 31, 2015, Management believes that the Fund was in compliance with these covenants.

The following is the summary of the outstanding facility draws as of March 31, 2015:



Roll-Over Date	Amount		Maturity Date	Floating Interest Rate
February 24, 2015	$	20,000,000	5/26/2015*	3.02%
March 5, 2015	$	115,000,000	5/26/2015*	3.02%
March 30, 2015	$	9,000,000	5/26/2015*	2.98%
TOTAL OUTSTANDING	$	144,000,000

* Management intends to roll the outstanding amount for a 90-day LIBOR loan, maturing on August 26, 2015.

7. INTEREST RATE CAP AGREEMENT

The Fund entered into an interest rate cap transactions with Union Bank, N.A. with a notional principal amount of $101 million, to cap floating interest rates at 0.7%. The purpose of the interest rate cap agreement is to protect the Fund against rising interest rates. The Fund continues to adjust the notional principal amount as the outstanding balance under the debt facility changes. As of March 31, 2015, the notional principal amount was $101 million. The Fund paid upfront fees of $2.1 million which are amortized on a straight line basis over the life of the instrument and receives from the counterparty, payment of interest amounts above the 0.7% cap based on 90-day LIBOR. Payments, if necessary are made quarterly and will terminate on November 7, 2017.

As of March 31, 2015 and December 31, 2014, the fair value of the Fund's derivative financial instruments was as follows:

Asset Derivatives

March 31, 2015

December 31, 2014

Derivatives Not Designated as Hedging Instruments:

Balance Sheet Location

Fair Value

Balance Sheet Location

Fair Value

Interest rate cap agreement

Other Investment

1,230,767

Other Investment

1,959,919

As of March 31, 2015 and March 31, 2014 , the derivative financial instruments had the following effect on the Condensed Statements of Operations:



Derivatives Not Designated as Hedging Instruments:	Location of Loss Recognized	For the Three Months Ended March 31, 2015			For the Three Months Ended March 31, 2014
Interest rate cap agreement	Net change in unrealized loss from hedging activities	$	(546,140	)	$	(33,674	)

8. FINANCIAL HIGHLIGHTS

GAAP requires disclosure of financial highlights of the Fund for the periods presented, the three months ended March 31, 2015 and 2014. The total rate of return is defined as the return based on the change in value during the period of a theoretical investment made at the beginning of the period. The total rate of return assumes a constant rate of return for the Fund during the period reported and weights each cash flow by the amount of time held in the Fund. This required methodology differs from an internal rate of return.

The ratios of expenses and net investment income (loss) to average net assets, calculated below, are annualized and are computed based upon the aggregate weighted average net assets of the Fund for the periods presented. Net investment income (loss) is inclusive of all investment income net of expenses, and excludes realized or unrealized gains and losses.

Beginning and ending net asset values per share are based on the beginning and ending number of shares outstanding. Other per share information is calculated based upon the aggregate weighted average net assets of the Fund for the periods presented.

The following per share data and ratios have been derived from the information provided in the financial statements.



	For the Three Months Ended March 31, 2015			For the Three Months Ended March 31, 2014

Total return **	4.97		%	2.64		%

Per share amounts:
Net asset value, beginning of period	$	1,634.96		$	857.69
Net investment income	101.49			24.60
Net realized loss from investments and Net change in unrealized gain from investments and Net change in unrealized loss from hedging activities	(12.91		)	(1.96		)
Net increase in net assets from operations	88.58			22.64
Distributions of income to shareholder	(63.31		)	(11.41		)
Return of capital to shareholder	—			(18.82		)
Contributions from shareholder	385.00			20.00

Net asset value, end of period	$	2,045.23		$	870.10

Net assets, end of period	$	204,523,428		$	87,008,057

Ratios to average net assets:

Expenses*	8.18		%	13.53		%
Net investment income*	22.24		%	11.43		%
* Annualized
** Total return amounts presented above are not annualized.

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

In addition to the historical information contained herein, the information in this Quarterly Report on Form 10-Q contains certain “forward-looking statements” within the meaning of the securities laws. These forward-looking statements reflect the current view of Venture Lending & Leasing VII, Inc. (the “Fund”) with respect to future events and financial performance and are subject to a number of risks and uncertainties, many of which are beyond the Fund's control. All statements, other than statements of historical facts included in this report, regarding the strategy, future operations, financial position, estimated revenues, projected costs, prospects, plans and objectives of the Fund are forward-looking statements. When used in this report, the words “will”, “believe”, “anticipate”, “intend”, “estimate”, “expect”, “project” and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words. All forward-looking statements speak only as of the date of this report. The Fund does not undertake any obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise.

The reader of this Quarterly Report should understand that all such forward-looking statements are subject to various uncertainties and risks that could affect their outcome. The Fund's actual results could differ materially from those suggested by such forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, variances in the actual versus projected growth in assets, return on assets, loan losses, expenses, rates charged on loans and earned on securities investments and competition. This entire Quarterly Report should be read to put such forward-looking statements in context and to gain a more complete understanding of the uncertainties and risks involved in the Fund's business.

Overview

The Fund is 100% owned by Venture Lending & Leasing VII, LLC (the “Company”). The Fund's shares of Common Stock, at $0.001 par value, were sold to its sole shareholder, the Company, under a stock purchase agreement. The Fund has issued 100,000 of the Fund's 10,000,000 authorized shares. The Company may make additional capital contributions to the Fund.

The Fund is a financial services company primarily providing financing and advisory services to a variety of carefully selected venture-backed companies primarily located throughout the United States with a focus on growth-oriented companies. The Fund's portfolio is expected to become more diversified and consists of companies in the communications, information services, media, and technology, including software and technology-enabled business services, bio-technology, and medical devices industry sectors, among others. The Fund's capital is generally used by its portfolio companies to finance acquisitions of fixed assets and/or for working capital. On December 18, 2012, the Fund completed its first closing of capital contributions, made its first investments, and became 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 elected to be treated for federal income tax purposes as a Regulated Investment Company (“RIC”) under the Internal Revenue Code (the "Code") and has made the RIC election with the filing of its federal corporate income tax return for 2013. Pursuant to this election, the Fund generally will not have to pay corporate-level taxes on any income it distributes to the Company as dividends, allowing the Company to substantially reduce or eliminate its corporate-level tax liability.

The Fund will seek to meet the ongoing requirements, including the diversification requirements, to qualify as a RIC under the Code. If the Fund fails to meet these requirements, it would be taxed as an ordinary corporation on its taxable income for that year (even if that income were distributed to the Company) and all distributions out of its earnings and profits would be taxable to the Members of the Company as ordinary income; thus, such income would be subject to a double layer of tax. There is no assurance that the Fund will meet the ongoing requirements to qualify as a RIC for tax purposes.

The Fund's investment objective is to achieve superior risk adjusted investment returns. The Fund seeks to achieve its investment objective by providing debt financing to portfolio companies. Since inception, the Fund's investing activities have focused primarily on private debt securities. The Fund generally receives warrants to acquire equity securities in connection with its portfolio investments. The Fund generally distributes these warrants

to its shareholder upon receipt. The Fund also has guidelines for the percentages of total assets which will be invested in different types of assets.

The portfolio investments of the Fund consist of debt financing to venture-capital backed companies. The borrower's ability to repay its loans may be adversely impacted by a number of factors, and as a result, the loan may not fully be repaid. Furthermore, the Fund's security interest in any collateral over the borrower's assets may be insufficient to make up any shortfall in payments.

Transactions with Venture Lending & Leasing VI, Inc. (“Fund VI”)

The Manager also serves as investment manager for Fund VI. The Fund's Board determined that so long as Fund VI had capital available to invest in loan transactions with final maturities earlier than December 31, 2020 (the date on which Fund VI will be dissolved), the Fund would invest in each portfolio company in which Fund VI invested (“Investments”). The amount of each Investment was allocated 50% to the Fund and 50% to Fund VI through June 28, 2014. As of June 28, 2014, Fund VI is now no longer permitted to enter into new commitments to borrowers; however, Fund VI will be permitted to fund existing commitments.

To the extent that clients, other than Fund VI, advised by the Manager (but in which the Manager has no proprietary interest) invest in opportunities available to the Fund, the Manager will allocate such opportunities among the Fund and such other clients in a manner deemed fair and equitable considering all of the circumstances in accordance with procedures approved by the Fund's Board (including a majority of the disinterested directors).

Critical Accounting Policies

The Manager has identified the most critical accounting estimates upon which the financial statements depend and determined the critical accounting estimates by considering accounting policies that involve the most complex or subjective decisions or assessments. The two critical accounting policies relate to the valuation of loans and treatment of non-accrual loans.

Loans are held at fair value as determined by Management, in accordance with the valuation methods described in the valuation of loans section of Note 2 in the Fund's financial statements (Summary of Significant Accounting Policies). Critical factors in determining the fair value of a loan include payment history, collateral position, financial strength of the borrower, prospects for the borrower raising future equity rounds, likelihood of sale or acquisition of the borrower, and length of expected holding period of the loan, as well as an evaluation of the general interest rate environment. The actual value of the loans may differ from Management's estimates, which would affect net income as well as assets.

Results of Operations - For the Three Months Ended March 31, 2015 and 2014

Total investment income for the three months ended March 31, 2015 and 2014 was $13.9 million and $5.4 million, respectively which primarily consisted of interest on the venture loans outstanding. The remaining income consisted of interest and dividends on the temporary investment of cash and forfeited commitment fees. The income was primarily driven by the level of average loans outstanding for the three months ended March 31, 2015 and 2014 of $284.5 million and $135.0 million, respectively.

Management fees for the three months ended March 31, 2015 and 2014 were $2.2 million and $2.3 million, respectively. Until December 18, 2014, management fees are calculated as 2.5 percent of the committed capital of the Company. Starting on December 18, 2014, management fees will be calculated as 2.5 percent of the Fund's total assets. Because the total assets of the Fund as of December 31, 2014 were less than the $375.0 million of committed capital of the Company, management fees expense decreased during the period.

Interest expense was $1.4 million and $0.5 million for the three months ended March 31, 2015 and 2014, respectively. Interest expense was comprised of amounts related to interest on debt amounts drawn down, unused line fees and amounts amortized from deferred fees incurred in conjunction with the debt line.

The banking and professional fees were less than $0.1 million and less than $0.1 million for the three months ended March 31, 2015 and 2014, respectively. The banking and professional fees were comprised of legal, audit, banking and other professional fees.

Total other operating expenses were less than $0.1 million for the three months ended March 31, 2015 and 2014.

Net investment income for the three months ended March 31, 2015 and 2014 was $10.1 million and $2.5 million, respectively.

Total net realized loss from investments was $1.0 million and $1.3 million for the three months ended March 31, 2015 and 2014, respectively.

Net change in unrealized gain from investments was $0.3 million and $1.2 million for the three months ended March 31, 2015 and 2014, respectively. The unrealized loss consists of fair market value adjustments to loans and the reversal of fair market value adjustments previously taken against loans now paid off.

Net change in unrealized loss from hedging activities was $0.5 million and less than $0.1 million for the three months ended March 31, 2015 and 2014, respectively. The Fund entered into interest rate cap transactions with Union Bank, N.A. to cap the floating rate liabilities at a fixed rate (see Note 7 in the Fund's financial statements).

Net increase in net assets resulting from operations for the three months ended March 31, 2015 and 2014 was $8.9 million and $2.3 million, respectively. On a per share basis, the net increase in net assets resulting from operations was $88.58 and $22.64 for the three months ended March 31, 2015 and 2014, respectively.

Liquidity and Capital Resources – March 31, 2015 and December 31, 2014

Total capital contributed to the Fund was $225.9 million and $187.4 million as of March 31, 2015 and December 31, 2014, respectively. Committed capital to the Company as of March 31, 2015 and December 31, 2014 was $375.0 million, of which $253.1 million and $206.3 million had been called as of March 31, 2015 and December 31, 2014, respectively. The remaining $121.9 million of committed capital outstanding as of March 31, 2015 is due to expire in December 2017 as the five year anniversary will have passed, at which time no further capital can be called.

The facility terminates on October 18, 2017, but can be accelerated in the event of default, such as failure by the Fund to make timely interest or principal payments. As of March 31, 2015, $144.0 million is outstanding under the facility.

As of March 31, 2015 and December 31, 2014, 7.0% and 2.6%, respectively, of the Fund's assets consisted of cash and cash equivalents. The Fund invested its assets in venture loans during the three months ended March 31, 2015. Amounts disbursed under the Fund's loan commitments totaled approximately $84.0 million during the three months ended March 31, 2015. Net loan amounts outstanding after amortization increased by approximately $52.6 million for the same period. Unexpired, unfunded commitments totaled approximately $223.8 million as of March 31, 2015.



As of	Cumulative Amount Disbursed	Principal Reductions and Fair Market Adjustments	Balance Outstanding - Fair Value	Unexpired Unfunded Commitments
March 31, 2015	$435.0 million	$115.4 million	$319.6 million	$223.8 million
December 31, 2014	$351.0 million	$84.0 million	$267.0 million	$161.2 million

Because venture loans are privately negotiated transactions, investments in these assets are relatively illiquid. It is the Fund's experience that not all unfunded commitments will be used by borrowers.

The Fund will seek to meet the ongoing requirements to qualify for the special pass-through status available to RICs under the Internal Revenue Code, and thus to be relieved of federal income tax on that part of its net investment income and realized capital gains that it distributes to the Company. To qualify as a RIC, the Fund must distribute to the Company for each taxable year at least 90% of its investment company taxable income (consisting generally of net investment income and net short-term capital gain) (“Distribution Requirement”). To the extent that the terms of the Fund's venture loans provide for the receipt by the Fund of additional interest at the end of the loan term or provide for the receipt by the Fund of a purchase price for the asset at the end of the loan term (“residual income”), the Fund would be required to accrue such residual income over the life of the loan, and to include such accrued undistributed income in its gross income for each taxable year even if it receives no portion of such residual income in that year. Thus, in order to meet the Distribution Requirement and avoid payment of income taxes or an excise tax on undistributed income, the Fund may be required in a particular year to distribute as a dividend an amount in excess of the total amount of income it actually receives. Those distributions will be made from the Fund's cash assets, from amounts received through amortization of loans or from borrowed funds.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

The Fund's business activities contain elements of risk. The Fund considers the principal types of market risk to be interest rate risk and credit risk. The Fund considers the management of risk essential to conducting its business and to maintaining profitability. Accordingly, the Fund's risk management procedures are designed to identify and analyze the Fund's risks, to set appropriate policies and limits and to continually monitor these risks and limits by means of reliable administrative and information systems and other policies and programs.

The Fund manages its market risk by maintaining a portfolio that is diverse by industry, size of investment, stage of development, and borrower. The Fund has limited exposure to public market price fluctuations as the Fund primarily invests in private business enterprises and the Fund generally distributes all equity securities upon receipt to the Company.

The Fund's investments are subject to market risk based on several factors, including, but not limited to, the borrower's credit history, available cash, support of the borrower's underlying investors, available liquidity, "burn rate", revenue income, security interest, secondary markets for collateral, the size of the loan, and term of the loan.

The Fund's sensitivity to changes in interest rates is regularly monitored and analyzed by measuring the characteristics of assets and liabilities. The Fund utilizes various methods to assess interest rate risk in terms of the potential effect on interest income net of interest expense, the value of net assets and the value at risk in an effort to ensure that the Fund is insulated from any significant adverse effects from changes in interest rates. At March 31, 2015, the outstanding debt balance was $144.0 million with interest expense based on a weighted average rate of 0.27%, for which the Fund had an interest expense rate cap in place at 0.70% on $101.0 million of outstanding debt, leaving the Fund's maximum exposure to interest rate sensitivity on that balance at 0.43%, which the Manager does not believe is material to the financial statements. Additionally, the Fund has interest rate risk on the $43.0 million uncapped portion of the debt facility. The Fund intends to increase the interest rate cap in the quarter ended June 30, 2015.

Although Management believes that this measure is indicative of the Fund's sensitivity to interest rate changes, it makes estimates to adjust for potential changes in credit quality, size and composition of the balance sheet and other business developments that could affect net income. Accordingly, no assurances can be given that actual results would not differ materially from the potential outcome simulated by these estimates.

Item 4. Controls and Procedures:

Evaluation of Disclosure Controls and Procedures:

As of the end of the period covered by this quarterly report on Form 10-Q, the Fund's chief executive officer and chief financial officer conducted an evaluation of the Fund's disclosure controls and procedures (as defined in Rules 13a-15 and 15d-15 of the Securities Exchange Act of 1934). Based upon this evaluation, the Fund's chief executive officer and chief financial officer concluded that the Fund's disclosure controls and procedures were effective in timely alerting them of any material information relating to the Fund that is required to be disclosed by the Fund in the reports it files or submits under the Securities Exchange Act of 1934.

Changes in Internal Controls:

There were no changes in the Fund's internal controls or in other factors that could materially affect these controls during the period covered by this quarterly report on Form 10-Q.

PART II — OTHER INFORMATION

Item 1. Legal Proceedings

The Fund may become party to certain lawsuits from time to time in the normal course of business. While the

outcome of any legal proceedings cannot at this time be predicted with certainty, the Fund does not expect any such

proceedings will have a material effect upon the Fund's financial condition or results of operation. Management is

not aware of any pending legal proceedings involving the Fund.

Item 1A. Risk Factors

See item 1A - 'Risk Factors' in the Fund's 2014 Annual Report on Form 10-K for a detailed description of the risks attendant to the Fund and its business. There were no material changes to these factors during the three months ended March 31, 2015.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

Prior to the Fund's commencement of operations on December 18, 2012, the Fund sold 100,000 shares to the Fund's sole shareholder, the Company, for $25,000 in July 2012. No other shares of the Fund have been sold; however, the Fund received an additional $225.9 million of paid in capital during the period from December 18, 2012 through March 31, 2015, which is expected to be used to acquire venture loans and fund operations.

Item 3. Defaults Upon Senior Securities

Not applicable.

Item 4. Mine Safety Issues

Not applicable.

Item 5. Other Information

None.

Item 6. Exhibits



Exhibit Number	Description
3(i)	Articles of Incorporation of the Fund as filed with the Maryland Secretary of State on June 21, 2012, incorporated by reference to the Fund's Form 10 filed with the Securities and Exchange Commission on September 19, 2012.
3(ii)	Bylaws of the Fund, incorporated by reference to the Fund's Form 10 filed with the Securities and Exchange Commission on September 19, 2012.
4.1	Form of Purchase Agreement between the Fund and the Company, incorporated by reference to the Fund's Registration Statement on Form 10 filed with the Securities and Exchange Commission on September 19, 2012.
31.1-32.2	Certifications pursuant to The Sarbanes-Oxley Act of 2002.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned duly authorized.

VENTURE LENDING & LEASING VII, INC.

(Registrant)



By:	/s/ Maurice C. Werdegar	By:	/s/ Martin D. Eng
Maurice C. Werdegar		Martin D. Eng
President and Chief Executive Officer		Chief Financial Officer
Date:	May 14, 2015	Date:	May 14, 2015

EXHIBIT INDEX



Exhibit Number	Description
31.1-32.2	Certifications pursuant to The Sarbanes-Oxley Act of 2002.

Venture Lending & Leasing VII, Inc. - FORM 10-Q - May 14, 2015

Attached files

Venture Lending & Leasing VII, Inc. Reports