Fidus Investment Corporation (FDUS): Business Model Canvas [10-2024 Updated]

Unlock the secrets behind the success of Fidus Investment Corporation (FDUS) as we delve into its Business Model Canvas. Discover how this investment firm leverages key partnerships and expert management to provide high-yield opportunities for a diverse clientele. From individual investors to institutional players, FDUS crafts personalized strategies that stand out in the competitive financial landscape. Explore the intricate components that drive its operations and revenue streams below.

Fidus Investment Corporation (FDUS) - Business Model: Key Partnerships

Relationships with portfolio companies

Fidus Investment Corporation maintains a diverse portfolio comprising 85 active portfolio companies as of September 30, 2024. The fair value of its investment portfolio totals approximately $1,090.7 million, with investments primarily in first lien debt, second lien debt, subordinated debt, and equity. The company invested $274.2 million in debt and equity during the nine months ended September 30, 2024, and received proceeds from sales and repayments amounting to $154.1 million during the same period.

Investment Type	Fair Value ($ million)	Percentage of Total Investments
First Lien Debt	696.3	63.9%
Second Lien Debt	113.9	10.4%
Subordinated Debt	149.2	13.7%
Equity	123.5	11.3%
Total	1,090.7	100.0%

Collaborations with financial institutions

Fidus Investment Corporation collaborates with various financial institutions to optimize its capital structure and investment strategy. As of September 30, 2024, the company had $170.5 million in SBA debentures, which are crucial for funding a portion of its investment purchases. The interest on these debentures is payable semiannually.

Additionally, the company has a Credit Facility with borrowings of approximately $38.9 million as of September 30, 2024. This facility is secured by a first-priority security interest in all of Fidus's assets, excluding those of its SBIC subsidiaries. The Credit Facility allows for enhanced liquidity and supports the company’s investment activities.

Financial Institution Collaboration	Amount ($ million)	Interest Rate
SBA Debentures	170.5	Various rates
Credit Facility	38.9	Variable rate

Partnerships with investment advisors

Fidus Investment Corporation has established partnerships with investment advisors, notably Fidus Investment Advisors, LLC, which provides investment advisory services under a formal agreement. The investment advisor receives a base management fee and an incentive fee based on performance.

For the nine months ended September 30, 2024, the total expenses related to investment advisory fees were approximately 11.5% of average net assets. This fee structure ensures that the advisors are incentivized to maximize returns for shareholders.

Fee Type	Amount ($ million)	Percentage of Average Net Assets
Base Management Fee	Variable	11.5%
Incentive Fee	Variable	3.2%

Fidus Investment Corporation (FDUS) - Business Model: Key Activities

Investment management and analysis

Fidus Investment Corporation actively manages an investment portfolio that totaled $1,090.7 million in fair value as of September 30, 2024. The portfolio consisted of 85 active portfolio companies and five companies that have sold their underlying operations. During the nine months ended September 30, 2024, the company invested $274.2 million in debt and equity investments across eleven new portfolio companies.

Investment Type	Amount Invested (2024)	Percentage of Total Investments	Fair Value (2024)
First Lien Debt	$212.5 million	77.5%	$696.3 million
Second Lien Debt	$33.3 million	12.1%	$113.9 million
Subordinated Debt	$12.5 million	4.6%	$149.2 million
Equity	$15.9 million	5.8%	$123.5 million
Total	$274.2 million	100%	$1,090.7 million

Portfolio monitoring and reporting

Fidus ensures continuous monitoring of its investment portfolio. The company reported proceeds from sales or repayments of investments totaling $154.1 million for the nine months ended September 30, 2024. This included principal, return of capital dividends, and net realized gains and losses from the exit of six portfolio companies during the same period.

Risk assessment and compliance

Risk assessment is integral to Fidus's operations. The portfolio consists of 49 portfolio companies with debt investments bearing interest at a variable rate, representing 73.2% of the debt investment portfolio on a fair value basis. The company has established processes for compliance with regulations, ensuring that all investments are managed in accordance with applicable laws and guidelines to mitigate credit, market, and liquidity risks.

Fidus Investment Corporation (FDUS) - Business Model: Key Resources

Capital from equity and debt financing

As of September 30, 2024, Fidus Investment Corporation reported total net assets of $658.8 million. The company had cash and cash equivalents amounting to $54.4 million. During the nine months ended September 30, 2024, Fidus made cash payments of $75.8 million for operating activities, which included funding investments totaling $274.2 million. The company repaid $35.0 million of SBA debentures during the same period.

The company generates capital through various financing activities, including public offerings, SBA debentures, and a Credit Facility. The ATM Program was established with a maximum offering price of $300 million. For the nine months ended September 30, 2024, proceeds from common stock offerings, net of expenses, totaled $66.3 million.

Experienced investment management team

Fidus Investment Corporation's investment management team is integral to its operations. The team is led by experienced professionals with a strong track record in investment management. The expertise of this team enables the company to effectively evaluate and manage its investment portfolio, which as of September 30, 2024, included a mix of first lien debt (63.9%), second lien debt (10.4%), subordinated debt (13.7%), equity (11.3%), and warrants (0.7%).

Robust analytical tools and software

Fidus Investment Corporation employs advanced analytical tools and software to assess its investment portfolio and make informed decisions. These tools facilitate effective risk management and performance tracking. The company’s portfolio at fair value was reported at $1.09 billion as of September 30, 2024, with a cost basis of $957.9 million. The weighted average yield of the company’s debt investments is calculated before the payment of all fees and expenses, indicating a structured approach to investment analysis.

Key Resource	Details	Financial Data
Capital from equity and debt financing	Total net assets	$658.8 million
Cash and cash equivalents	As of September 30, 2024	$54.4 million
Investments funded	During nine months ended September 30, 2024	$274.2 million
Proceeds from common stock offerings	Net of expenses	$66.3 million
Experienced investment management team	Portfolio composition	First Lien Debt: 63.9% Second Lien Debt: 10.4% Subordinated Debt: 13.7% Equity: 11.3% Warrants: 0.7%
Robust analytical tools and software	Portfolio at fair value	$1.09 billion

Fidus Investment Corporation (FDUS) - Business Model: Value Propositions

High-yield investment opportunities

Fidus Investment Corporation offers high-yield investment opportunities primarily through its diverse portfolio of debt and equity investments. As of September 30, 2024, the weighted average yield on its debt investments was reported at 13.8%, showing a slight decrease from 14.2% at the end of 2023. The company invested $274.2 million in various debt and equity investments during the nine months ended September 30, 2024.

Diversification across various sectors

Fidus maintains a diversified investment strategy across multiple sectors, enhancing risk-adjusted returns. As of September 30, 2024, the fair value of its investment portfolio totaled $1,090.7 million, comprising 85 active portfolio companies. The portfolio is diversified into first lien debt (63.9%), second lien debt (10.4%), subordinated debt (13.7%), and equity (11.3%).

Investment Type	Fair Value ($ millions)	Percentage of Total Investments
First Lien Debt	696.3	63.9%
Second Lien Debt	113.9	10.4%
Subordinated Debt	149.2	13.7%
Equity	123.5	11.3%
Total	1,090.7	100%

Expert management of investments

The management team at Fidus Investment Corporation employs an expert approach to managing its investment portfolio. The net increase in net assets resulting from operations was $60.7 million for the nine months ended September 30, 2024. The company has a solid track record of generating investment income, with net investment income per share of $1.74 for the nine months.

Financial Metric	Value
Net Investment Income ($ millions)	55.99
Net Increase in Net Assets ($ millions)	60.70
Net Investment Income per Share	1.74
Dividends Declared per Share	1.81

Fidus Investment Corporation (FDUS) - Business Model: Customer Relationships

Regular updates and performance reports

Fidus Investment Corporation (FDUS) maintains a commitment to providing regular updates and performance reports to its investors. As of September 30, 2024, Fidus reported a net increase in net assets resulting from operations of $60.7 million compared to $50.7 million for the same period in 2023. The company also experienced a total investment income of $91.5 million for the nine months ended September 30, 2024, up from $80.4 million in the previous year.

Performance Metrics	2024	2023
Net Increase in Net Assets	$60.7 million	$50.7 million
Total Investment Income	$91.5 million	$80.4 million
Dividends Declared per Share	$1.81	$2.08
Net Asset Value per Share	$19.42	$19.28

Personalized investment strategies

Fidus adopts a strategy of personalized investment strategies tailored to the specific needs of its clients. The weighted average yield on debt investments as of September 30, 2024, was 13.8%, compared to 14.2% at the end of 2023. This reflects the company’s ability to adapt its investment approach based on market conditions and client objectives.

Investment Strategy Metrics	September 30, 2024	December 31, 2023
Weighted Average Yield on Debt Investments	13.8%	14.2%
Average Active Portfolio Company Investment	$12.6 million	$11.6 million
Number of Active Portfolio Companies	85	81

Dedicated client service teams

Fidus emphasizes the importance of dedicated client service teams to enhance customer relationships. As of September 30, 2024, FDUS had a total of 33,914,652 shares outstanding, reflecting a robust engagement strategy with its investors. The company’s total net assets were reported at $658.8 million.

Client Service Metrics	September 30, 2024	December 31, 2023
Total Shares Outstanding	33,914,652	30,438,979
Total Net Assets	$658.8 million	$589.5 million
Dividends Declared	$1.81 per share	$2.08 per share

Fidus Investment Corporation (FDUS) - Business Model: Channels

Direct investor communications

Fidus Investment Corporation employs various direct communication strategies to engage with its investors. As of September 30, 2024, the company had a total of 33,914,652 shares outstanding. The average net assets for the nine months ended September 30, 2024, were approximately $625.8 million. Furthermore, the net investment income per share for the same period was $1.74. The company declared dividends amounting to $1.81 per share.

Financial advisor networks

Fidus leverages financial advisor networks to expand its reach among potential investors. The company has utilized an at-the-market (ATM) offering program, which was increased to allow up to $300 million in shares to be sold. Cumulatively, as of September 30, 2024, Fidus raised $184.97 million in gross proceeds through this program.

Period	Shares Sold	Gross Proceeds ($)	Net Proceeds ($)
Q1 2024	987,170	19,408	19,180
Q2 2024	1,691,336	33,489	33,031
Q3 2024	714,995	14,304	14,089
Total 2024	3,393,501	67,201	66,300

Online investment platforms

Fidus Investment Corporation also utilizes online investment platforms to enhance accessibility for investors. The company's investment portfolio as of September 30, 2024, had a fair value totaling $1,090.7 million. The weighted average yield on debt investments was reported at 13.8%. The total purchases of debt and equity investments over the nine months ended September 30, 2024, amounted to $274.2 million. Additionally, Fidus has made significant investments across various sectors, with notable percentage allocations in first lien debt (63.9%) and equity (11.3%).

Investment Type	Fair Value ($ million)	Percentage of Total Investments
First Lien Debt	696.3	63.9%
Second Lien Debt	113.9	10.4%
Subordinated Debt	149.2	13.7%
Equity	123.5	11.3%
Warrants	7.8	0.7%

Fidus Investment Corporation (FDUS) - Business Model: Customer Segments

Individual accredited investors

Fidus Investment Corporation targets individual accredited investors who typically possess a net worth exceeding $1 million, excluding their primary residence. As of September 30, 2024, the net asset value (NAV) per common share was $19.42, with total net assets amounting to $658.76 million. Individual investors often seek higher yields available through Fidus’s investment offerings, which include secured debt and equity positions in private companies.

Institutional investors

Institutional investors represent a crucial customer segment for Fidus, encompassing pension funds, insurance companies, and mutual funds. These investors generally have substantial capital to allocate and are drawn to the company's structured investments in private debt and equity. Fidus raised approximately $67.20 million in gross proceeds from share offerings for the nine months ending September 30, 2024, indicating strong institutional interest. The weighted average yield on debt investments was reported at 13.8% as of September 30, 2024, making it an attractive option for institutional portfolios.

Family offices and wealth management firms

Family offices and wealth management firms are also significant segments for Fidus Investment Corporation. These entities manage the wealth of high-net-worth families, seeking diversified investment strategies that include private equity and debt. Fidus's portfolio composition includes 85 active portfolio companies, with a fair value of $1.09 billion, which is appealing to family offices looking for robust investment opportunities. The company aims to provide tailored investment solutions that align with the specific goals of these firms, often emphasizing risk-adjusted returns over traditional market investments.

Customer Segment	Characteristics	Investment Interest	Recent Financial Data
Individual accredited investors	Net worth > $1 million	Higher yields from secured debt and equity	NAV per share: $19.42; Total net assets: $658.76 million
Institutional investors	Pension funds, insurance companies, mutual funds	Structured investments in private debt and equity	Gross proceeds from offerings: $67.20 million; Weighted average yield: 13.8%
Family offices and wealth management firms	Manage wealth of high-net-worth families	Diversified investment strategies, private equity and debt	85 active portfolio companies; Fair value: $1.09 billion

Fidus Investment Corporation (FDUS) - Business Model: Cost Structure

Management fees and performance-based incentives

For the nine months ended September 30, 2024, Fidus Investment Corporation incurred a total base management fee of $14.0 million, up from $12.1 million for the same period in 2023, reflecting a 15.9% increase. The incentive fee for income was $14.1 million, compared to $12.0 million in 2023, marking a 17.7% increase. The capital gains incentive fee amounted to $0.9 million, up from $0.5 million in the previous year, which is an increase of 85.8%.

Operational and administrative expenses

Operational and administrative expenses totaled $52.7 million for the nine months ended September 30, 2024, an increase of $7.1 million or 15.5% from $45.6 million in the prior year. This increase was primarily due to:

• $1.3 million increase in interest and financing expenses.
• $1.9 million net increase in base management fees.
• $2.1 million increase in the income incentive fee due to higher pre-incentive fee net investment income.
• $0.5 million increase in professional fees due to legal, audit, and tax compliance costs.
• $0.7 million increase in income tax provision due to higher taxable income.

Marketing and investor relations costs

Marketing and investor relations expenses are included in the broader category of operational costs. For the nine months ended September 30, 2024, total expenses, before income tax provision, were $52.0 million, reflecting an increase of 14.2% from the previous year.

Expense Category	2024 Amount (in millions)	2023 Amount (in millions)	Change ($ millions)	Percentage Change
Base Management Fee	14.0	12.1	1.9	15.9%
Incentive Fee - Income	14.1	12.0	2.1	17.7%
Incentive Fee - Capital Gains	0.9	0.5	0.4	85.8%
Total Operational Expenses	52.7	45.6	7.1	15.5%

Fidus Investment Corporation (FDUS) - Business Model: Revenue Streams

Interest income from debt investments

The primary source of revenue for Fidus Investment Corporation is interest income derived from its debt investments. As of September 30, 2024, total interest income amounted to $31.9 million, reflecting a significant increase from $28.3 million in the same period of 2023. The weighted average yield on debt investments was reported at 13.8% for 2024, compared to 14.2% in 2023. The total debt investment portfolio had a fair value of approximately $1,090.7 million as of September 30, 2024, consisting of various types of debt, including:

Debt Type	Fair Value ($ millions)	Percentage of Total Investments
First Lien Debt	696.3	63.9%
Second Lien Debt	113.9	10.4%
Subordinated Debt	149.2	13.7%
Total Debt Investments	959.4	88.0%

Dividend income from equity holdings

Fidus also generates revenue through dividend income received from its equity investments. In the nine months ending September 30, 2024, dividend income totaled $2.1 million, compared to $0.9 million for the same period in 2023. This increase is attributed to the growth in equity holdings and improved performance of portfolio companies. The breakdown of dividend income is as follows:

Investment Type	Dividend Income ($ millions)
Affiliate Investments	1.8
Non-Control/Non-Affiliate Investments	0.3
Total Dividend Income	2.1

Management and advisory fees

Fidus earns management and advisory fees from its investment activities. For the nine months ended September 30, 2024, the management fees generated were approximately $5.0 million. This reflects a slight increase compared to $4.6 million in the same period of 2023. The fees are primarily based on the net assets under management and the performance of the investment portfolio. The following table summarizes the fees generated:

Fee Type	Amount ($ millions)
Base Management Fee	4.5
Incentive Fee	0.5
Total Management Fees	5.0

Article updated on 8 Nov 2024

Resources:

1. Fidus Investment Corporation (FDUS) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of Fidus Investment Corporation (FDUS)' financial performance, including balance sheets, income statements, and cash flow statements.
2. SEC Filings – View Fidus Investment Corporation (FDUS)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.