UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

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

For the quarterly period ended September 30, 2019

[  ] 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)

Securities registered pursuant to Section 12(b) of the Act: None

Indicate by check mark whether the registrant (1) has 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 every Interactive Data File required to be submitted 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 such files). Yes [x]   No [ ]

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

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

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act [ ]

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 November 13, 2019
Common Stock, $0.001 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 September 30, 2019 and December 31, 2018
	Condensed Statements of Operations (Unaudited)
	For the three and nine months ended September 30, 2019 and 2018
	Condensed Statements of Changes in Net Assets (Unaudited)
	For the three and nine months ended September 30, 2019 and 2018
	Condensed Statements of Cash Flows (Unaudited)
	For the nine months ended September 30, 2019 and 2018
	Condensed Schedules of Investments (Unaudited)
	As of September 30, 2019 and December 31, 2018
	Condensed Schedules of Open Swap Contract (Unaudited)
	As of September 30, 2019 and December 31, 2018
	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 Disclosures
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 SEPTEMBER 30, 2019 AND DECEMBER 31, 2018

	September 30, 2019			December 31, 2018
ASSETS
Loans, at estimated fair value
(cost of $124,769,595 and $233,935,818)	$	104,630,949		$	210,722,764
Derivative asset - interest rate swap	12,537			352,121
Cash and cash equivalents	58,442			2,839,766
Dividend and interest receivables	1,074,759			2,352,345
Other assets	654,987			822,885
Total assets	106,431,674			217,089,881
LIABILITIES
Borrowings under debt facility	32,340,000			87,500,000
Accrued management fees	665,198			1,356,812
Accounts payable and other accrued liabilities	168,841			434,646
Total liabilities	33,174,039			89,291,458
NET ASSETS	$	73,257,635		$	127,798,423
Analysis of Net Assets:
Capital paid in on shares of capital stock	$	322,645,000		$	322,645,000
Net unrealized depreciation on investments	(20,126,109		)	(22,860,933		)
Distribution in excess of net investment income	(229,261,256		)	(171,985,644		)
Net assets (equivalent to $732.58 and $1,277.98 per share based on 100,000 shares of capital stock outstanding - See Note 5 and Note 10)	$	73,257,635		$	127,798,423

See notes to condensed financial statements.

3

VENTURE LENDING & LEASING VII, INC.

CONDENSED STATEMENTS OF OPERATIONS (UNAUDITED)

FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2019 AND 2018

	For the Three Months Ended September 30, 2019			For the Three Months Ended September 30, 2018			For the Nine Months Ended September 30, 2019			For the Nine Months Ended September 30, 2018
INVESTMENT INCOME:
Interest on loans	$	3,410,395		$	15,401,733		$	19,373,049		$	39,671,406
Other interest and other income	4,802			34,627			38,644			105,599
Total investment income	3,415,197			15,436,360			19,411,693			39,777,005
EXPENSES:
Management fees	665,198			1,583,504			2,549,160			5,688,123
Interest expense	568,727			1,762,200			2,395,784			4,812,706
Banking and professional fees	58,324			129,600			352,667			348,145
Other operating expenses	63,619			41,195			137,425			102,669
Total expenses	1,355,868			3,516,499			5,435,036			10,951,643
Net investment income	2,059,329			11,919,861			13,976,657			28,825,362
Net realized loss from loans	(9,784,311		)	(1,515,103		)	(10,211,702		)	(3,471,501		)
Net realized gain (loss) from derivative instruments	40,506			32,738			179,933			(89,558		)
Net change in unrealized gain (loss) from loans	6,645,649			(2,018,472		)	3,074,407			(3,218,511		)
Net change in unrealized gain (loss) from derivative instruments	(14,791		)	28,457			(339,583		)	569,323
Net realized and change in unrealized loss from loans and derivative instruments	(3,112,947		)	(3,472,380		)	(7,296,945		)	(6,210,247		)
Net increase (decrease) in net assets resulting from operations	$	(1,053,618	)	$	8,447,481		$	6,679,712		$	22,615,115
Amounts per common share:
Net increase (decrease) in net assets resulting from operations per share	$	(10.54	)	$	84.47		$	66.80		$	226.15
Weighted average shares outstanding	100,000			100,000			100,000			100,000

See notes to condensed financial statements.

4

VENTURE LENDING & LEASING VII, INC.

CONDENSED STATEMENTS OF CHANGES IN NET ASSETS (UNAUDITED)

FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2019 AND 2018

	Common Stock
	Shares	Par Value		Additional Paid-in Capital		Total Distributable Earnings (Loss)			Net Assets
Balance at June 30, 2018	100,000	$	100	$	322,644,900	$	(142,602,694	)	$	180,042,306
Net increase (decrease) in net assets resulting from operations	—	—		—		8,447,481			8,447,481
Distributions of income to shareholder	—	—		—		(10,437,495		)	(10,437,495		)
Return of capital to shareholder	—	—		—		(40,457,535		)	(40,457,535		)
Balance at September 30, 2018	100,000	$	100	$	322,644,900	$	(185,050,243	)	$	137,594,757
Balance at June 30, 2019	100,000	$	100	$	322,644,900	$	(240,547,597	)	$	82,097,403
Net increase in net assets resulting from operations	—	—		—		(1,053,618		)	(1,053,618		)
Distributions of income to shareholder	—	—		—		—			—
Return of capital to shareholder	—	—		—		(7,786,150		)	(7,786,150		)
Balance at September 30, 2019	100,000	$	100	$	322,644,900	$	(249,387,365	)	$	73,257,635
Balance at December 31, 2017	100,000	$	100	$	321,024,900	$	(108,367,983	)	$	212,657,017
Net increase in net assets resulting from operations	—	—		—		22,615,115			22,615,115
Distributions of income to shareholder	—	—		—		(25,264,302		)	(25,264,302		)
Return of capital to shareholder	—	—		—		(74,033,073		)	(74,033,073		)
Contributions from shareholder	—	—		1,620,000		—			1,620,000
Balance at September 30, 2018	100,000	$	100	$	322,644,900	$	(185,050,243	)	$	137,594,757
Balance at December 31, 2018	100,000	$	100	$	322,644,900	$	(194,846,577	)	$	127,798,423
Net increase in net assets resulting from operations	—	—		—		6,679,712			6,679,712
Distributions of income to shareholder	—	—		—		(3,944,888		)	(3,944,888		)
Return of capital to shareholder	—	—		—		(57,275,612		)	(57,275,612		)
Balance at September 30, 2019	100,000	$	100	$	322,644,900	$	(249,387,365	)	$	73,257,635

See notes to condensed financial statements.

5

VENTURE LENDING & LEASING VII, INC.

CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED)

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2019 AND 2018

	For the Nine Months Ended September 30, 2019			For the Nine Months Ended September 30, 2018
CASH FLOWS FROM OPERATING ACTIVITIES:
Net increase in net assets resulting from operations	$	6,679,712		$	22,615,115
Adjustments to reconcile net increase in net assets resulting from operations to net cash provided by operating activities:
Net realized loss from loans	10,211,702			3,471,501
Net realized (gain) loss from derivative instruments	(179,933		)	89,558
Net change in unrealized (gain) loss from loans	(3,074,407		)	3,218,511
Net change in unrealized (gain) loss from derivative instruments	339,583			(569,323		)
Amortization of deferred costs related to borrowing facility	280,778			280,778
Net decrease in dividend and interest receivables	1,277,586			1,116,674
Net (increase) decrease in other assets	(112,879		)	1,103,091
Net decrease in accounts payable, other accrued liabilities and accrued management fees	(957,418		)	(247,026		)
Origination of loans	—			(51,000,000		)
Principal payments on loans	93,984,019			119,630,419
Acquisition of equity securities	—			(1,389,939		)
Net cash provided by operating activities	108,448,743			98,319,359
CASH FLOWS FROM FINANCING ACTIVITIES:
Cash distributions to shareholder	(56,250,000		)	(96,600,000		)
Contributions from shareholder	—			1,620,000
Borrowings under debt facility	17,500,000			29,400,000
Repayments of borrowings under debt facility	(72,660,000		)	(37,000,000		)
Payments made for interest rate swap	—			(122,829		)
Payments received from interest rate swap	179,933			33,271
Net cash used in financing activities	(111,230,067		)	(102,669,558		)
Net decrease in cash and cash equivalents	(2,781,324		)	(4,350,199		)
CASH AND CASH EQUIVALENTS:
Beginning of period	2,839,766			4,931,102
End of period	$	58,442		$	580,903
SUPPLEMENTAL DISCLOSURES:
CASH PAID DURING THE PERIOD:
Interest - Debt facility	$	2,282,308		$	4,496,474
NON-CASH OPERATING AND FINANCING ACTIVITIES:
Distributions of equity securities and convertible loan to shareholder	$	4,970,501		$	2,697,376
Receipt of equity securities and convertible loan as repayment of loans	$	4,970,501		$	1,307,437

See notes to condensed financial statements.

6

VENTURE LENDING & LEASING VII, INC.

CONDENSED SCHEDULES OF INVESTMENTS (UNAUDITED)

AS OF SEPTEMBER 30, 2019

As of September 30, 2019, all loans were valued using significant unobservable inputs and were made to non-affiliates. Additionally, all loans were pledged as collateral as part of the debt facility.

Industry	Borrower	Percent of Net Assets	Collateral	Interest Rate	End of Term Payment	Principal	Cost	Fair Value	Maturity Date
Computers & Storage
	Canary Connect, Inc.		Senior Secured	12.8%		$710,722	$609,634	$609,634	12/1/2020
	HyperGrid, Inc.		Senior Secured	11.5%		140,341	139,553	139,553	12/1/2019
	Rigetti & Co., Inc.		Senior Secured	9.0%	2.80%	516,890	513,892	513,892	1/1/2020
Computers & Storage Total		1.7%				$1,367,953	$1,263,079	$1,263,079
Internet
	Amino Payments, Inc.		Senior Secured	10.8%		$476,939	$444,954	$444,954	9/1/2021
	Bitfinder, Inc.		Senior Secured	10.5%		213,770	210,691	210,691	9/1/2020
	Bombfell, Inc.		Senior Secured	11.0%		723,459	712,319	712,319	10/1/2021
	Cowboy Analytics, LLC		Senior Secured	5.5%		259,030	148,047	81,410	*
	CustomMade, Inc.		Senior Secured	11.0%		1,374,552	703,776	703,776	*
	Digital Caddies, Inc.**		Senior Secured	18.0%		989,068	987,584	—	*
	Giddy Apps, Inc.		Senior Secured	11.5%		1,240,498	986,954	—	*
	Leading ED, Inc.		Senior Secured	10.0%		175,000	76	—	*
	Playstudios, Inc.		Senior Secured	10.0%		665,810	653,301	653,301	3/1/2021
	Relay Network, LLC		Senior Secured	8.0%	4.4%	453,642	445,519	445,519	9/1/2020
	Relay Network, LLC		Senior Secured	8.0%	4.4%	453,689	450,530	450,530	9/1/2020
	Relay Network, LLC Subtotal					907,331	896,049	896,049
	Spot.IM, Ltd.** ^		Senior Secured	12.5%		56,684	55,998	55,998	12/1/2019
	Spot.IM, Ltd.** ^		Senior Secured	12.5%		73,658	72,868	72,868	5/1/2020
	Spot.IM, Ltd.** ^		Senior Secured	11.8%		73,204	71,595	71,595	5/1/2020
	Spot.IM, Ltd.** ^ Subtotal					203,546	200,461	200,461
	Tango Card, Inc.		Senior Secured	12.0%		747,320	740,237	740,237	11/1/2020
	Wristcam Inc.**^		Senior Secured	11.0%		4,019,193	3,277,267	1,097,665	*
	YouDocs Beauty, Inc.		Senior Secured	11.0%		1,350,000	1,192,024	1,192,024	*
Internet Total		9.5%				$13,345,516	$11,153,740	$6,932,887
Medical Devices
	Anutra Medical, Inc.		Senior Secured	10.0%		$41,562	$40,858	$40,858	12/1/2019
	AxioMed, Inc.		Unsecured	0%		14,238	14,238	—	*
	Renovia, Inc.		Senior Secured	11.0%		325,973	320,215	320,215	6/1/2020

7

Industry	Borrower	Percent of Net Assets	Collateral	Interest Rate	End of Term Payment	Principal	Cost	Fair Value	Maturity Date
	Renovia, Inc.		Senior Secured	11.0%		495,823	492,293	492,293	11/1/2020
	Renovia, Inc. Subtotal					821,796	812,508	812,508
Medical Devices Total		1.2%				$877,596	$867,604	$853,366
Other Healthcare
	4G Clinical LLC		Senior Secured	11.0%		$360,637	$354,426	$354,426	7/1/2020
	Clover Health Investments Corporation		Senior Secured	11.3%		9,884,849	9,884,849	9,884,849	10/1/2022
	Clover Health Investments Corporation		Senior Secured	11.0%		16,069,842	16,069,842	16,069,842	3/1/2022
	Clover Health Investment Corporation Subtotal					25,954,691	25,954,691	25,954,691
	MD Revolution, Inc.		Senior Secured	12.5%		274,949	272,136	141,689	3/1/2020
	mPharma Data, Inc.** ^		Senior Secured	10.0%		170,157	166,575	166,575	11/1/2020
	mPharma Data, Inc.** ^		Senior Secured	10.0%		215,224	213,425	213,425	3/1/2021
	mPharma Data, Inc.** ^ Subtotal					385,381	380,000	380,000
	Myolex, Inc.		Senior Secured	18.0%		762,531	726,537	238,967	*
	Physician Software Systems, LLC		Senior Secured	18.0%		164,677	148,042	—	*
	Sparta Software Corporation		Senior Secured	10.0%	2.5%	60,454	59,276	59,276	6/1/2020
	Wellist, Inc.		Senior Secured	12.3%		22,599	22,517	22,517	12/1/2019
Other Healthcare Total		37.1%				$27,985,919	$27,917,625	$27,151,566
Other Technology
	BloomLife, Inc.		Senior Secured	12.0%		$77,395	$76,159	$76,159	4/1/2020
	Consumer Physics, Inc.** ^		Senior Secured	11.0%		822,718	775,766	717,292	4/1/2021
	ETN Media, Inc.		Senior Secured	11.5%		340,489	237,457	221,737	*
	Flo Water, Inc.		Senior Secured	11.5%		101,038	98,449	98,449	5/1/2020
	Gap Year Global, Inc.		Senior Secured	18.0%		90,768	86,359	—	*
	Heartwork, Inc.		Senior Secured	18.0%		—	371,981	73,494	*
	Hint, Inc.		Senior Secured	11.0%		1,564,708	1,504,049	1,504,049	3/1/2021
	Hint, Inc.		Senior Secured	11.0%		1,878,934	1,878,934	1,878,934	7/1/2021
	Hint, Inc. Subtotal					3,443,642	3,382,983	3,382,983
	June Life, Inc.		Senior Secured	11.8%		255,612	252,921	252,921	3/1/2020
	June Life, Inc.		Senior Secured	11.8%		255,644	254,368	254,368	3/1/2020
	June Life, Inc. Subtotal					511,256	507,289	507,289
	LanzaTech New Zealand Ltd.		Senior Secured	13.0%		700,155	684,801	684,801	3/1/2020
	LanzaTech New Zealand Ltd.		Senior Secured	13.0%		1,356,059	1,345,719	1,345,719	9/1/2020
	LanzaTech New Zealand Ltd.		Senior Secured	13.3%		1,578,243	1,566,627	1,566,627	3/1/2021
	LanzaTech New Zealand Ltd. Subtotal					3,634,457	3,597,147	3,597,147
	MobyFox, Inc.		Senior Secured	4.0%		500,000	193,300	18,900	*

8

Industry	Borrower	Percent of Net Assets	Collateral	Interest Rate	End of Term Payment	Principal	Cost	Fair Value	Maturity Date
	Neuehouse, LLC		Senior Secured	12.0%		1,750,000	1,300,077	1,300,077	*
	Noteleaf, Inc.		Senior Secured	11.0%		643,564	636,732	636,732	9/1/2020
	nWay, Inc.		Senior Secured	11.0%		448,134	5,803	261,977	*
	PDQ Enterprises LLC**		Senior Secured	11.0%		1,914,608	1,894,509	1,894,509	2/1/2021
	PLAE, Inc.		Senior Secured	9.0%	3.2%	755,123	744,189	744,189	12/1/2020
	Plenty Unlimited, Inc.		Senior Secured	9.0%	11.7%	787,132	770,846	770,846	1/1/2021
	Plenty Unlimited, Inc.		Senior Secured	9.0%	9.4%	836,949	830,128	830,128	3/1/2021
	Plenty Unlimited, Inc.		Senior Secured	9.0%	11.7%	2,367,643	2,299,402	2,299,402	9/1/2021
	Plenty Unlimited, Inc. Subtotal					3,991,724	3,900,376	3,900,376
	SkyKick, Inc.		Senior Secured	10.5%		487,215	479,416	479,416	6/1/2020
	SkyKick, Inc.		Senior Secured	10.5%		230,569	228,818	228,818	10/1/2020
	SkyKick, Inc.		Senior Secured	10.5%		247,277	245,210	245,210	11/1/2020
	SkyKick, Inc. Subtotal					965,061	953,444	953,444
	TAE Technologies, Inc.		Senior Secured	12.5%		6,288,918	6,128,847	6,128,847	3/1/2021
	TAE Technologies, Inc.		Senior Secured	12.5%		1,651,352	1,632,277	1,632,277	4/1/2021
	TAE Technologies, Inc. Subtotal					7,940,270	7,761,124	7,761,124
	VentureBeat, Inc.		Senior Secured	12.0%		825,775	632,039	212,595	*
	Virtuix Holdings, Inc.		Senior Secured	11.0%		270,341	266,409	266,409	7/1/2020
Other Technology Total		36.3%				$29,026,363	$27,421,592	$26,624,882
Security
	Nok Nok Labs, Inc.		Senior Secured	12.5%		$343,062	$319,482	$319,482	12/1/2020
	ThinAir Labs, Inc.		Senior Secured	18.0%		1,128,607	1,105,396	—	*
Security Total		0.4%				$1,471,669	$1,424,878	$319,482
Semiconductors & Equipment
	ETA Compute, Inc.		Senior Secured	10.3%		$9,313	$9,287	$9,287	10/1/2019
	ETA Compute, Inc.		Senior Secured	10.5%		98,372	97,845	97,845.00	8/1/2020
Semiconductors & Equipment Total		0.1%				$107,685	$107,132	$107,132
Software
	Aptible, Inc.		Senior Secured	11.8%		$137,280	$135,121	$135,121	2/1/2021
	Bloomboard, Inc.		Senior Secured	11.5%		2,507,253	1,801,360	1,684,258	*
	BlueCart, Inc.		Senior Secured	12.5%		69,366	68,863	68,863	1/1/2020
	BlueCart, Inc.		Senior Secured	12.8%		34,774	34,664	34,664	1/1/2020
	BlueCart, Inc. Subtotal					104,140	103,527	103,527
	DealPath, Inc.		Senior Secured	11.0%		1,081,260	1,062,128	1,062,128	5/1/2021
	DemystData Limited		Senior Secured	11.8%		292,836	286,075	286,075	5/1/2020

9

Industry	Borrower	Percent of Net Assets	Collateral	Interest Rate	End of Term Payment	Principal	Cost	Fair Value	Maturity Date
	DemystData Limited		Senior Secured	11.8%		181,261	180,029	180,029	7/1/2020
	DemystData Limited Subtotal					474,097	466,104	466,104
	Drift Marketplace, Inc.		Senior Secured	11.0%		41,330	40,757	40,757	3/1/2020
	Drift Marketplace, Inc.		Senior Secured	11.0%		55,108	54,918	54,918	3/1/2020
	Drift Marketplace, Inc.		Senior Secured	11.0%		41,508	41,359	41,359	3/1/2020
	Drift Marketplace, Inc. Subtotal					137,946	137,034	137,034
	Due, Inc.		Senior Secured	0%		1,350,000	101,519	—	*
	Estify, Inc.		Senior Secured	11.5%		730,698	723,423	341,682	11/1/2020
	FieldAware US, Inc.		Senior Secured	11.0%		7,616,117	7,177,946	3,586,007	*
	Gearbox Software, LLC		Senior Secured	11.0%		1,286,483	1,243,770	1,243,770	9/1/2020
	Gearbox Software, LLC		Senior Secured	11.0%		992,210	987,691	987,691	11/1/2020
	Gearbox Software, LLC		Senior Secured	11.0%		1,566,072	1,558,321	1,558,321	3/1/2021
	Gearbox Software, LLC Subtotal					3,844,765	3,789,782	3,789,782
	GoFormz, Inc.		Senior Secured	12.0%		766,526	718,484	718,484	11/1/2020
	HealthPrize Technologies, LLC		Senior Secured	12.0%		28,205	28,010	28,010	12/1/2019
	Highfive Technologies, Inc.		Senior Secured	11.5%		3,577,379	3,446,398	3,446,398	10/1/2021
	Invoice2Go, Inc.		Senior Secured	11.8%		327,944	319,147	319,147	6/1/2020
	Invoice2Go, Inc.		Senior Secured	11.8%		1,064,625	1,042,552	1,042,552	4/1/2021
	Invoice2Go, Inc.		Senior Secured	11.8%		1,064,751	1,064,751	1,064,751	4/1/2021
	Invoice2Go, Inc.		Senior Secured	11.8%		912,748	912,748	912,748	4/1/2021
	Invoice2Go, Inc. Subtotal					3,370,068	3,339,198	3,339,198
	JethroData, Inc.** ^		Senior Secured	18.0%		704,868	681,877	327,328	*
	Metarail, Inc.		Senior Secured	12.0%		652,522	625,558	261,904	6/1/2022
	Mines.io, Inc.** ^		Senior Secured	12.0%		181,641	177,330	177,330	7/1/2020
	Mintigo, Inc.** ^		Senior Secured	10.0%		135,438	133,520	133,520	4/1/2020
	Mintigo, Inc.** ^		Senior Secured	10.0%		191,112	190,134	190,134	7/1/2020
	Mintigo, Inc.** ^		Senior Secured	10.0%		320,308	317,484	317,484	7/1/2021
	Mintigo, Inc.** ^ Subtotal					646,858	641,138	641,138
	Swrve, Inc.		Senior Secured	11.8%		1,238,593	1,166,886	1,166,886	11/1/2020
	The/Studio Technologies, Inc.		Senior Secured	11.0%		244,485	237,740	237,740	6/1/2020
	Truss Technology Corporation		Senior Secured	2.2%		2,000,000	238,275	—	*
	Unmetric, Inc.		Senior Secured	11.5%		69,506	68,480	68,480	2/1/2020
	VenueNext, Inc.		Senior Secured	11.0%		436,871	427,359	427,359	5/1/2020
	Viewpost Holdings, LLC.		Senior Secured	11.5%		11,000,000	10,380,283	3,703,119	*
	Vuemix, Inc.		Senior Secured	11.3%		124,180	121,385	121,385	11/1/2020

10

Industry	Borrower	Percent of Net Assets	Collateral	Interest Rate	End of Term Payment	Principal	Cost		Fair Value	Maturity Date
	Xeeva, Inc.		Senior Secured	12.0%		891,960	887,234		887,234	7/1/2020
Software Total		36.7%				$43,917,218	$38,683,579		$26,857,636
Technology Services
	AirHelp, Inc.		Senior Secured	10.0%		$361,110	$356,125		$356,125	5/1/2020
	AirHelp, Inc.		Senior Secured	10.0%		223,876	222,624		222,624	7/1/2020
	AirHelp, Inc.		Senior Secured	10.0%		287,924	285,749		285,749	10/1/2020
	AirHelp, Inc. Subtotal					872,910	864,498		864,498
	Akademos, Inc.		Junior Secured	13.5%	1.5%	413,836	390,306		390,306	8/1/2020
	Blazent, Inc.		Senior Secured	12.0%		1,666,887	1,339,715		682,415	*
	Blue Technologies Limited** ^		Senior Secured	11.0%		266,039	263,986		263,986	4/1/2020
	Callisto Media, Inc.		Senior Secured	10.0%		1,285,592	1,277,397		1,277,397	6/1/2020
	Callisto Media, Inc.		Senior Secured	10.0%		677,238	674,544		674,544	9/1/2020
	Callisto Media, Inc.		Senior Secured	10.0%		836,205	832,123		832,123	12/1/2020
	Callisto Media, Inc.		Senior Secured	10.0%		991,240	985,501		985,501	3/1/2021
	Callisto Media, Inc. Subtotal					3,790,275	3,769,565		3,769,565
	Dolly, Inc.		Senior Secured	12.0%		629,678	614,364		614,364	5/1/2021
	Fluxx Labs		Senior Secured	11.8%		225,094	224,856		224,856	12/1/2019
	PayJoy, Inc.**		Senior Secured	10.0%		781,224	753,394		753,394	8/1/2021
	TrueFacet, Inc.		Senior Secured	10.9%		946,610	897,959		145,812	*
	Zeel Networks, Inc.		Senior Secured	11.0%		363,867	358,883		358,883	8/1/2020
	Zeel Networks, Inc.		Senior Secured	11.0%		181,937	181,069		181,069	8/1/2020
	Zeel Networks, Inc.		Senior Secured	11.0%		181,947	180,944		180,944	8/1/2020
	Zeel Networks, Inc. Subtotal					727,751	720,896		720,896
Technology Services Total		11.5%				$10,320,304	$	9,839,539	$8,430,092
Wireless
	Juvo Mobile, Inc.**		Senior Secured	11.0%		$74,147	$73,962		$73,962	1/1/2020
	Juvo Mobile, Inc.**		Senior Secured	11.0%		92,265	91,954		91,954	2/1/2020
	Juvo Mobile, Inc.** Subtotal					166,412	165,916		165,916
	Nextivity, Inc.		Senior Secured	12.0%		3,408,991	3,408,784		3,408,784	6/1/2021
	Nextivity, Inc.		Senior Secured	12.0%		930,010	930,010		930,010	6/1/2021
	Nextivity, Inc. Subtotal					4,339,001	4,338,794		4,338,794
	Parallel Wireless, Inc.		Senior Secured	11.8%		901,410	893,486		893,486	4/1/2020
	Parallel Wireless, Inc.		Senior Secured	11.8%		697,032	692,631		692,631	10/1/2020
	Parallel Wireless, Inc. Subtotal					1,598,442	1,586,117		1,586,117
Wireless Total		8.3%				$6,103,855	$6,090,827		$6,090,827
Grand Total		142.8%				134,524,078	124,769,595		104,630,949

11

* As of September 30, 2019, loans with a cost basis of $34.7 million and a fair value of $15.5 million were classified as non-accrual. These loans have been accelerated from their original maturity and are due in their entirety. During the period for which these loans have been on non-accrual status, no interest income has been recognized.

** Indicates assets that the Fund deems “non-qualifying assets.” As of September 30, 2019, 6.3% of the Fund’s total assets represented non-qualifying assets. Under Section 55(a) of the 1940 Act, the Fund is prohibited from acquiring any additional non-qualifying assets unless, at the time of acquisition, certain specified qualifying assets (e.g., securities issued by an "eligible portfolio company," as defined in Section 2(a)(46)) represent at least 70% of its total assets at the time of acquisition of any additional non-qualifying assets. As part of this calculation, the numerator consists of the value of the Fund's investments in all eligible portfolio companies and the denominator consists of total assets less those assets described in Section 55(a)(7) of the 1940 Act.

^ Entity is not domiciled in the United States and does not have its principal place of business in the United States.

(a) The percentage of net assets that each industry group represents is shown with the industry totals (the sum of the percentages does not equal 100% because the percentages are based on net assets as opposed to total loans).

The interest rate is the designated annual interest rate exclusive of any original issue discount, fees or end of term payment. The end of term payments are contractually due on the maturity date and are in addition to the interest rate shown. End of term payments are the percentage of the final payment divided by the original loan amount and are amortized over the full term of the loan.

See notes to condensed financial statement.

12

VENTURE LENDING & LEASING VII, INC.

CONDENSED SCHEDULES OF INVESTMENTS (UNAUDITED)

AS OF DECEMBER 31, 2018

As of December 31, 2018, all loans were valued using significant unobservable inputs and were made to non-affiliates. Additionally, all loans were pledged as collateral as part of the debt facility.

Industry	Borrower	Percent of Net Assets (a)	Collateral	Interest Rate	End of Term Payment	Principal		Cost		Fair Value		Maturity Date
Biotechnology
	Phylagen, Inc.		Senior Secured	12.0%		$	59,449	$	58,346	$	58,346	7/1/2019
	Phylagen, Inc.		Senior Secured	12.0%		122,508		121,178		121,178		3/1/2020
Biotechnology Total		0.1%				$	181,957	$	179,524	$	179,524
Computers and Storage
	Canary Connect, Inc.		Senior Secured	12.8%		$	1,085,881	$	861,061	$	861,061	12/1/2020
	HyperGrid, Inc.		Senior Secured	11.5%		537,952		528,364		528,364		12/1/2019
	Rigetti & Co., Inc.		Senior Secured	9.0%	2.8%	48,635		48,504		48,504		1/1/2019
	Rigetti & Co., Inc.		Senior Secured	9.0%	2.8%	1,432,659		1,410,884		1,410,884		1/1/2020
	Rigetti & Co., Inc. Subtotal					1,481,294		1,459,388		1,459,388
Computers and Storage Total		2.2%				$	3,105,127	$	2,848,813	$	2,848,813
Internet
	Amino Payments, Inc.		Senior Secured	9.0%	4.1%	$	126,953	$	125,274	$	125,274	3/1/2021
	Amino Payments, Inc.		Senior Secured	9.0%	5.2%	256,492		246,252		246,252		3/1/2021
	Amino Payments, Inc.		Senior Secured	9.0%	4.4%	254,592		251,329		251,329		3/1/2021
	Amino Payments, Inc. Subtotal					638,037		622,855		622,855
	Apartment List, Inc.		Senior Secured	11.0%		506,854		497,685		497,685		11/1/2019
	Bitfinder, Inc.		Senior Secured	10.5%		360,053		351,451		351,451		9/1/2020
	Bombfell, Inc.		Senior Secured	11.0%		421,445		405,621		405,621		1/1/2021
	Bombfell, Inc.		Senior Secured	11.0%		465,802		460,262		460,262		4/1/2021
	Bombfell, Inc. Subtotal					887,247		865,883		865,883
	CapLinked, Inc.		Senior Secured	12.8%		9,565		9,550		9,550		1/1/2019
	Cowboy Analytics, LLC		Senior Secured	5.5%		259,030		165,147		121,412		*
	CustomMade, Inc.		Senior Secured	11.0%		1,374,552		697,026		697,026		*
	Deja Mi, Inc.		Senior Secured	0%		100,000		803,288		11,300		*
	Digital Caddies, Inc.**		Senior Secured	18.0%		989,068		987,584		—		*
	DreamCloud Holdings, LLC		Senior Secured	11.8%		172,846		163,907		163,907		8/1/2020
	DreamCloud Holdings, LLC		Senior Secured	11.8%		471,111		438,773		438,773		6/1/2020
	DreamCloud Holdings, LLC Subtotal					643,957		602,680		602,680
	Giddy Apps, Inc.		Senior Secured	11.5%		1,240,498		999,454		—		*

13

Industry	Borrower	Percent of Net Assets (a)	Collateral	Interest Rate	End of Term Payment	Principal		Cost		Fair Value		Maturity Date
	Glide, Inc.** ^		Senior Secured	11.0%		4,369,958		4,050,096		691,014		*
	Honk Technologies, Inc.		Senior Secured	11.5%		595,641		589,925		589,925		5/1/2020
	Honk Technologies, Inc.		Senior Secured	11.5%		645,595		633,385		633,385		12/1/2019
	Honk Technologies, Inc. Subtotal					1,241,236		1,223,310		1,223,310
	Leading ED, Inc.		Senior Secured	10.0%		175,000		76		—		*
	Playstudios, Inc.		Senior Secured	10.0%		963,077		936,909		936,909		3/1/2021
	Radius Intelligence, Inc.		Senior Secured	8.0%	9.2%	7,421,159		7,126,941		6,151,429		10/1/2021
	Relay Network, LLC		Senior Secured	8.0%	4.4%	732,924		711,759		711,759		9/1/2020
	Relay Network, LLC		Senior Secured	8.0%	4.4%	733,049		724,776		724,776		9/1/2020
	Relay Network, LLC Subtotal					1,465,973		1,436,535		1,436,535
	Spot.IM, Ltd.** ^		Senior Secured	11.8%		149,016		142,655		142,655		5/1/2020
	Spot.IM, Ltd.** ^		Senior Secured	12.5%		149,520		146,386		146,386		5/1/2020
	Spot.IM, Ltd.** ^		Senior Secured	12.5%		216,500		208,266		208,266		12/1/2019
	Spot.IM, Ltd.** ^ Subtotal					515,036		497,307		497,307
	Super Home, Inc.		Senior Secured	11.3%		27,989		27,681		27,681		3/1/2019
	Tango Card, Inc.		Senior Secured	12.0%		1,175,591		1,158,103		1,158,103		11/1/2020
	Thrive Market, Inc.		Senior Secured	12.0%		757,323		753,587		753,587		9/1/2019
	Thrive Market, Inc.		Senior Secured	12.0%		1,514,559		1,493,078		1,493,078		9/1/2019
	Thrive Market, Inc. Subtotal					2,271,882		2,246,665		2,246,665
	Traackr, Inc.		Senior Secured	11.8%		18,941		18,860		18,860		1/1/2019
	Traackr, Inc.		Senior Secured	11.8%		37,334		37,179		37,179		4/1/2019
	Traackr, Inc. Subtotal					56,275		56,039		56,039
	YouDocs Beauty, Inc.		Senior Secured	11.0%		1,350,000		1,192,024		1,192,024		*
Internet Total		15.2%				$	28,042,037	$	26,554,289	$	19,396,858
Medical Devices
	Anutra Medical, Inc.		Senior Secured	10.0%		$	177,487	$	168,853	$	168,853	12/1/2019
	AxioMed, Inc.		Unsecured	0%		14,238		14,238		—		*
	Renovia, Inc.		Senior Secured	11.0%		626,245		605,734		605,734		6/1/2020
	Renovia, Inc.		Senior Secured	11.0%		782,699		773,934		773,934		11/1/2020
	Renovia, Inc. Subtotal					1,408,944		1,379,668		1,379,668
Medical Devices Total		1.2%				$	1,600,669	$	1,562,759	$	1,548,521
Other Healthcare
	4G Clinical LLC		Senior Secured	11.0%		$	658,240	$	638,103	$	638,103	7/1/2020
	Caredox, Inc.		Senior Secured	11.3%		28,241		28,158		28,158		1/1/2019
	Clover Health Investment Corporation		Senior Secured	11.3%		9,894,125		9,894,125		9,894,125		10/1/2022

14

Industry	Borrower	Percent of Net Assets (a)	Collateral	Interest Rate	End of Term Payment	Principal		Cost		Fair Value		Maturity Date
	Clover Health Investment Corporation		Senior Secured	11.0%		18,462,733		18,462,733		18,462,733		3/1/2022
	Clover Health Investment Corporation Subtotal					28,356,858		28,356,858		28,356,858
	Hello Doctor, Ltd.** ^		Senior Secured	12.5%		19,830		19,492		19,492		3/1/2019
	Lean Labs, Inc.		Senior Secured	12.0%		43,111		42,446		42,446		4/1/2019
	MD Revolution, Inc.		Senior Secured	12.5%		656,438		641,456		641,456		3/1/2020
	mPharma Data, Inc.** ^		Senior Secured	10.0%		269,554		260,665		260,665		11/1/2020
	mPharma Data, Inc.** ^		Senior Secured	10.0%		311,364		307,587		307,587		3/1/2021
	mPharma Data, Inc.** ^ Subtotal					580,918		568,252		568,252
	Myolex, Inc.		Senior Secured	18.0%		762,531		726,537		238,967		*
	Physician Software Systems, LLC		Senior Secured	18.0%		164,677		148,042		—		*
	Project Healthy Living, Inc.		Senior Secured	11.0%		602,739		589,774		589,774		9/1/2019
	Sparta Software Corporation		Senior Secured	10.0%	2.5%	112,015		108,064		108,064		6/1/2020
	Trio Health Advisory Group, Inc.		Senior Secured	11.5%		75,208		74,744		74,744		2/1/2019
	Wellist, Inc.		Senior Secured	12.3%		22,599		22,260		22,260		3/1/2019
	Wellist, Inc.		Senior Secured	12.3%		86,406		85,410		85,410		12/1/2019
	Wellist, Inc. Subtotal					109,005		107,670		107,670
Other Healthcare Total		24.6%				$	32,169,811	$	32,049,596	$	31,413,984
Other Technology
	AltSchool, PBC		Senior Secured	11.0%		$	3,813,807	$	3,599,923	$	3,599,923	6/1/2020
	AltSchool, PBC		Senior Secured	11.0%		14,859,433		14,750,254		14,750,254		6/1/2021
	AltSchool, PBC Subtotal					18,673,240		18,350,177		18,350,177
	BloomLife, Inc.		Senior Secured	12.0%		169,302		163,710		163,710		4/1/2020
	CommunityCo, LLC		Senior Secured	12.0%		33,846		33,266		33,266		3/1/2019
	Consumer Physics, Inc.** ^		Senior Secured	11.0%		1,089,914		1,062,742		908,852		8/1/2019
	Ensyn Corporation		Senior Secured	12.3%		573,230		565,857		565,857		6/1/2019
	Ensyn Corporation		Senior Secured	12.3%		1,024,930		1,017,211		1,017,211		11/1/2019
	Ensyn Corporation Subtotal					1,598,160		1,583,068		1,583,068
	ETN Media, Inc.		Senior Secured	11.5%		211,603		206,043		173,058		7/1/2020
	ETN Media, Inc.		Senior Secured	11.5%		211,748		209,434		175,905		7/1/2020
	ETN Media, Inc. Subtotal					423,351		415,477		348,963
	Flo Water, Inc.		Senior Secured	11.5%		205,832		195,612		195,612		5/1/2020
	FMTwo Game, Inc.		Senior Secured	4.0%		500,000		193,300		18,900		*
	Gap Year Global, Inc.		Senior Secured	18.0%		90,768		86,359		—		*
	Greats Brand, Inc.		Senior Secured	11.0%		63,960		61,945		61,945		7/1/2019
	Greats Brand, Inc.		Senior Secured	11.0%		107,205		106,216		106,216		12/1/2019

15

Industry	Borrower	Percent of Net Assets (a)	Collateral	Interest Rate	End of Term Payment	Principal	Cost	Fair Value	Maturity Date
	Greats Brand, Inc. Subtotal					171,165	168,161	168,161
	Heartwork, Inc.		Senior Secured	11.0%		465,983	436,474	281,506	9/1/2020
	Hint, Inc.		Senior Secured	11.0%		2,255,803	2,130,280	2,130,280	3/1/2021
	Hint, Inc.		Senior Secured	11.0%		2,474,151	2,474,151	2,474,151	7/1/2021
	Hint, Inc. Subtotal					4,729,954	4,604,431	4,604,431
	ICON Aircraft, Inc.		Senior Secured	10.0%		719,616	714,154	714,154	5/1/2019
	June Life, Inc.		Senior Secured	11.8%		611,965	597,587	597,587	3/1/2020
	June Life, Inc.		Senior Secured	11.8%		612,139	605,287	605,287	3/1/2020
	June Life, Inc. Subtotal					1,224,104	1,202,874	1,202,874
	LanzaTech New Zealand Ltd.		Senior Secured	13.0%		1,669,064	1,588,287	1,588,287	3/1/2020
	LanzaTech New Zealand Ltd.		Senior Secured	13.3%		2,257,809	2,233,790	2,233,790	3/1/2021
	LanzaTech New Zealand Ltd.		Senior Secured	13.0%		2,264,030	2,235,397	2,235,397	9/1/2020
	LanzaTech New Zealand Ltd. Subtotal					6,190,903	6,057,474	6,057,474
	Neuehouse, LLC		Senior Secured	12.0%		1,750,000	1,323,215	1,323,215	*
	Noteleaf, Inc.		Senior Secured	11.0%		1,081,842	1,062,771	1,062,771	9/1/2020
	nWay, Inc.		Senior Secured	11.0%		810,035	603,373	433,309	*
	PDQ Enterprises LLC**		Senior Secured	11.0%		2,814,193	2,770,652	2,770,652	2/1/2021
	PLAE, Inc.		Senior Secured	9.0%	3.2%	1,135,076	1,110,298	1,110,298	12/1/2020
	Planet Labs, Inc.		Senior Secured	11.0%		1,700,417	1,694,856	1,694,856	3/1/2019
	Planet Labs, Inc.		Senior Secured	11.0%		12,362,729	11,937,236	11,937,236	11/1/2021
	Planet Labs, Inc.		Senior Secured	11.0%		12,375,336	12,375,336	12,375,336	8/1/2022
	Planet Labs, Inc. Subtotal					26,438,482	26,007,428	26,007,428
	Plenty Unlimited, Inc.		Senior Secured	9.0%	11.7%	1,120,932	1,087,343	1,087,343	1/1/2021
	Plenty Unlimited, Inc.		Senior Secured	9.0%	9.4%	1,166,482	1,153,018	1,153,018	3/1/2021
	Plenty Unlimited, Inc.		Senior Secured	9.0%	11.7%	3,040,235	2,925,880	2,925,880	9/1/2021
	Plenty Unlimited, Inc. Subtotal					5,327,649	5,166,241	5,166,241
	Plethora, Inc.		Senior Secured	9.0%	4.3%	149,605	149,118	149,118	3/1/2019
	Plethora, Inc.		Senior Secured	9.0%	4.3%	225,218	223,515	223,515	3/1/2019
	Plethora, Inc. Subtotal					374,823	372,633	372,633
	Rosco & Benedetto Co, Inc.		Senior Secured	11.0%		122,323	119,832	119,832	9/1/2019
	SkyKick, Inc.		Senior Secured	10.5%		375,566	370,957	370,957	10/1/2020
	SkyKick, Inc.		Senior Secured	10.5%		391,035	385,892	385,892	11/1/2020
	SkyKick, Inc.		Senior Secured	10.5%		937,688	909,812	909,812	6/1/2020
	SkyKick, Inc. Subtotal					1,704,289	1,666,661	1,666,661
	TAE Technologies, Inc.		Senior Secured	12.5%		2,327,066	2,288,844	2,288,844	4/1/2021

16

Industry	Borrower	Percent of Net Assets (a)	Collateral	Interest Rate	End of Term Payment	Principal		Cost		Fair Value		Maturity Date
	TAE Technologies, Inc.		Senior Secured	12.5%		9,019,608		8,689,345		8,689,345		3/1/2021
	TAE Technologies, Inc. Subtotal					11,346,674		10,978,189		10,978,189
	Theatro Labs, Inc.		Senior Secured	11.0%		238,897		237,912		237,912		3/1/2019
	VentureBeat, Inc.		Senior Secured	12.0%		825,775		706,637		287,194		*
	Virtuix Holdings, Inc.		Senior Secured	11.0%		493,447		480,680		480,680		7/1/2020
	Wine Plum, Inc.		Senior Secured	11.0%		163,116		161,937		161,937		9/1/2019
	Wine Plum, Inc.		Senior Secured	11.0%		163,078		162,089		162,089		9/1/2019
	Wine Plum, Inc.		Senior Secured	11.0%		325,940		321,469		321,469		9/1/2019
	Wine Plum, Inc. Subtotal					652,134		645,495		645,495
Other Technology Total		68.3%				$	91,401,777	$	88,519,296	$	87,293,658
Security
	Guardian Analytics, Inc.		Senior Secured	11.5%		$	491,579	$	487,165	$	487,165	2/1/2019
	Nok Nok Labs, Inc.		Senior Secured	12.5%		524,603		470,577		470,577		12/1/2020
	ThinAir Labs, Inc.		Senior Secured	18.0%		1,128,607		1,105,396		—		*
Security Total		0.8%				$	2,144,789	$	2,063,138	$	957,742
Semiconductors and Equipment
	ETA Compute, Inc.		Senior Secured	10.3%		$	89,662	$	88,268	$	88,268	10/1/2019
	ETA Compute, Inc.		Senior Secured	10.5%		172,132		170,545		170,545		8/1/2020
Semiconductors and Equipment Total		0.2%				$	261,794	$	258,813	$	258,813
Software
	Apptimize, Inc.		Senior Secured	10.5%		$	55,593	$	55,467	$	55,467	3/1/2019
	Aptible, Inc.		Senior Secured	11.8%		201,258		196,606		196,606		2/1/2021
	Bloomboard, Inc.		Senior Secured	18.0%		2,017,197		2,001,360		751,755		*
	BlueCart, Inc.		Senior Secured	12.8%		107,832		106,891		106,891		1/1/2020
	BlueCart, Inc.		Senior Secured	12.5%		215,283		211,017		211,017		1/1/2020
	BlueCart, Inc. Subtotal					323,115		317,908		317,908
	DealPath, Inc.		Senior Secured	11.0%		1,415,432		1,378,303		1,378,303		5/1/2021
	DemystData Limited		Senior Secured	11.8%		329,961		325,960		325,960		7/1/2020
	DemystData Limited		Senior Secured	11.8%		596,110		569,404		569,404		5/1/2020
	DemystData Limited Subtotal					926,071		895,364		895,364
	Drift Marketplace, Inc.		Senior Secured	11.0%		99,217		96,154		96,154		3/1/2020
	Drift Marketplace, Inc.		Senior Secured	11.0%		99,469		98,666		98,666		3/1/2020
	Drift Marketplace, Inc.		Senior Secured	11.0%		132,298		131,274		131,274		3/1/2020
	Drift Marketplace, Inc. Subtotal					330,984		326,094		326,094
	Due, Inc.		Senior Secured	0%		1,350,000		101,519		—		*

17

Industry	Borrower	Percent of Net Assets (a)	Collateral	Interest Rate	End of Term Payment	Principal	Cost	Fair Value	Maturity Date
	Estify, Inc.		Senior Secured	11.5%		842,819	825,560	825,560	11/1/2020
	FieldAware US, Inc.		Senior Secured	11.0%		7,429,570	7,392,583	7,392,583	8/1/2021
	Gearbox Software, LLC		Senior Secured	11.0%		1,566,288	1,555,056	1,555,056	11/1/2020
	Gearbox Software, LLC		Senior Secured	11.0%		2,162,999	2,044,974	2,044,974	9/1/2020
	Gearbox Software, LLC		Senior Secured	11.0%		2,257,770	2,241,559	2,241,559	3/1/2021
	Gearbox Software, LLC Subtotal					5,987,057	5,841,589	5,841,589
	GoFormz, Inc.		Senior Secured	12.0%		979,727	944,903	944,903	11/1/2020
	HealthPrize Technologies, LLC		Senior Secured	12.0%		107,920	105,559	105,559	12/1/2019
	Highfive Technologies, Inc.		Senior Secured	11.5%		3,956,592	3,823,051	3,823,051	10/1/2021
	IntelinAir, Inc.		Senior Secured	11.5%		27,659	26,308	26,308	6/1/2019
	IntelinAir, Inc.		Senior Secured	11.5%		27,660	27,660	27,660	6/1/2019
	IntelinAir, Inc. Subtotal					55,319	53,968	53,968
	Interset Software, Inc.** ^		Senior Secured	9.0%	4.5%	448,295	443,235	443,235	10/1/2019
	Interset Software, Inc.** ^		Senior Secured	9.0%	4.5%	551,146	538,064	538,064	10/1/2020
	Interset Software, Inc.** ^ Subtotal					999,441	981,299	981,299
	Invoice2Go, Inc.		Senior Secured	11.8%		628,200	597,161	597,161	6/1/2020
	Invoice2Go, Inc.		Senior Secured	11.8%		1,289,405	1,289,405	1,289,405	4/1/2021
	Invoice2Go, Inc.		Senior Secured	11.8%		1,503,796	1,459,544	1,459,544	4/1/2021
	Invoice2Go, Inc.		Senior Secured	11.8%		1,504,063	1,504,063	1,504,063	4/1/2021
	Invoice2Go, Inc. Subtotal					4,925,464	4,850,173	4,850,173
	JethroData, Inc.** ^		Senior Secured	11.0%		879,868	856,877	410,091	*
	Libre Wireless Technologies, Inc.		Senior Secured	12.0%		232,701	225,633	225,633	1/23/2019
	Metarail, Inc.		Senior Secured	12.0%		709,600	662,513	662,513	10/1/2021
	Metric Insights, Inc.		Senior Secured	11.0%		254,237	251,932	251,932	7/1/2019
	Mines.io, Inc.** ^		Senior Secured	12.0%		330,361	316,502	316,502	7/1/2020
	Mintigo, Inc.** ^		Senior Secured	10.0%		298,378	289,605	289,605	4/1/2020
	Mintigo, Inc.** ^		Senior Secured	10.0%		350,038	346,830	346,830	7/1/2020
	Mintigo, Inc.** ^		Senior Secured	10.0%		435,345	430,085	430,085	7/1/2021
	Mintigo, Inc.** ^ Subtotal					1,083,761	1,066,520	1,066,520
	Norse Networks, Inc.		Senior Secured	11.5%		3,500,000	3,445,429	—	*
	PowerInbox, Inc.** ^		Senior Secured	11.0%		234,838	230,952	230,952	6/1/2020
	Swrve, Inc.		Senior Secured	11.8%		1,941,569	1,768,745	1,768,745	11/1/2020
	The/Studio Technologies, Inc.		Senior Secured	11.0%		469,694	445,810	445,810	6/1/2020
	Truss Technology Corporation		Senior Secured	2.2%		2,000,000	238,275	—	*
	Unmetric, Inc.		Senior Secured	11.5%		186,526	179,841	179,841	2/1/2020

18

Industry	Borrower	Percent of Net Assets (a)	Collateral	Interest Rate	End of Term Payment	Principal		Cost		Fair Value		Maturity Date
	VenueNext, Inc.		Senior Secured	11.0%		891,554		853,816		853,816		5/1/2020
	Viewpost Holdings, LLC.		Senior Secured	11.5%		11,000,000		10,596,459		3,919,295		*
	Vuemix, Inc.		Senior Secured	11.3%		195,818		188,931		188,931		11/1/2020
	Workspot, Inc.		Senior Secured	12.0%		56,659		56,124		56,124		2/1/2019
	Xeeva, Inc.		Senior Secured	12.0%		1,599,279		1,584,229		1,584,229		7/1/2020
Software Total		32.0%				$	57,470,024	$	53,059,894	$	40,901,116
Technology Services
	AirHelp, Inc.		Senior Secured	10.0%		$	410,079	$	405,975	$	405,975	7/1/2020
	AirHelp, Inc.		Senior Secured	10.0%		469,819		464,081		464,081		10/1/2020
	AirHelp, Inc.		Senior Secured	10.0%		739,708		719,727		719,727		5/1/2020
	AirHelp, Inc. Subtotal					1,619,606		1,589,783		1,589,783
	Akademos, Inc.		Junior Secured	13.5%	1.5%	704,351		638,122		638,122		8/1/2020
	Blazent, Inc.		Senior Secured	12.0%		2,213,823		2,053,644		1,787,994		*
	Blue Technologies Limited** ^		Senior Secured	11.0%		674,934		660,668		660,668		4/1/2020
	Callisto Media, Inc.		Senior Secured	10.0%		991,416		980,731		980,731		3/1/2021
	Callisto Media, Inc.		Senior Secured	10.0%		991,359		982,309		982,309		12/1/2020
	Callisto Media, Inc.		Senior Secured	10.0%		991,300		983,910		983,910		9/1/2020
	Callisto Media, Inc.		Senior Secured	10.0%		2,478,096		2,448,577		2,448,577		6/1/2020
	Callisto Media, Inc. Subtotal					5,452,171		5,395,527		5,395,527
	Dolly, Inc.		Senior Secured	12.0%		659,639		641,672		345,572		12/1/2020
	Fluxx Labs		Senior Secured	11.8%		1,237,737		1,233,824		1,233,824		12/1/2019
	FSA Store, Inc.		Senior Secured	10.0%		1,733,072		1,662,701		1,662,701		12/1/2020
	PayJoy, Inc.**		Senior Secured	12.0%		37,420		37,045		37,045		4/1/2019
	PayJoy, Inc.**		Senior Secured	12.0%		73,378		73,026		73,026		8/1/2019
	PayJoy, Inc.**		Senior Secured	10.0%		991,020		941,035		941,035		8/1/2021
	PayJoy, Inc.** Subtotal					1,101,818		1,051,106		1,051,106
	Sixup PBC, Inc.**		Senior Secured	12.0%		138,941		137,308		137,308		6/1/2019
	TrueFacet, Inc.		Senior Secured	11.0%		207,942		205,781		124,495		3/1/2021
	TrueFacet, Inc.		Senior Secured	11.3%		228,041		225,453		136,397		6/1/2021
	TrueFacet, Inc.		Senior Secured	10.5%		475,650		465,480		281,611		8/1/2020
	TrueFacet, Inc. Subtotal					911,633		896,714		542,503
	Zeel Networks, Inc.		Senior Secured	11.0%		317,776		314,761		314,761		8/1/2020
	Zeel Networks, Inc.		Senior Secured	11.0%		317,744		315,135		315,135		8/1/2020
	Zeel Networks, Inc.		Senior Secured	11.0%		635,468		620,548		620,548		8/1/2020
	Zeel Networks, Inc. Subtotal					1,270,988		1,250,444		1,250,444
Technology Services Total		12.8%				$	17,718,713	$	17,211,513	$	16,295,552

19

Industry	Borrower	Percent of Net Assets (a)	Collateral	Interest Rate	End of Term Payment	Principal		Cost		Fair Value		Maturity Date
Wireless
	Juvo Mobile, Inc.**		Senior Secured	11.0%		$	163,085	$	159,967	$	159,967	9/1/2019
	Juvo Mobile, Inc.**		Senior Secured	11.0%		231,371		229,785		229,785		1/1/2020
	Juvo Mobile, Inc.**		Senior Secured	11.0%		248,067		246,012		246,012		2/1/2020
	Juvo Mobile, Inc.** Subtotal					642,523		635,764		635,764
	Nextivity, Inc.		Senior Secured	12.0%		1,272,655		1,272,655		1,272,655		6/1/2021
	Nextivity, Inc.		Senior Secured	12.0%		4,664,416		4,664,024		4,664,024		6/1/2021
	Nextivity, Inc. Subtotal					5,937,071		5,936,679		5,936,679
	Parallel Wireless, Inc.		Senior Secured	11.8%		1,130,176		1,118,659		1,118,659		10/1/2020
	Parallel Wireless, Inc.		Senior Secured	11.8%		1,973,157		1,937,081		1,937,081		4/1/2020
	Parallel Wireless, Inc. Subtotal					3,103,333		3,055,740		3,055,740
Wireless Total		7.5%				$	9,682,927	$	9,628,183	$	9,628,183
Grand Total		164.9%				$	243,779,625	$	233,935,818	$	210,722,764

* As of December 31, 2018, loans with a cost basis of $33.1 million and a fair value of $11.9 million were classified as non-accrual. These loans have been accelerated from their original maturity and are due in their entirety. During the period for which these loans have been on non-accrual status, no interest income has been recognized.

** Indicates assets that the Fund deems “non-qualifying assets.” As of December 31, 2018, 5.1% of the Fund’s total assets represented non-qualifying assets. Under Section 55(a) of the 1940 Act, the Fund is prohibited from acquiring any additional non-qualifying assets unless, at the time of acquisition, certain specified qualifying assets (e.g., securities issued by an "eligible portfolio company," as defined in Section 2(a)(46)) represent at least 70% of its total assets. As part of this calculation, the numerator consists of the value of the Fund's investments in all eligible portfolio companies and the denominator consists of total assets less those assets described in Section 55(a)(7) of the 1940 Act.

^ Entity is not domiciled in the United States and does not have its principal place of business in the United States.

(a) The percentage of net assets that each industry group represents is shown with the industry totals (the sum of the percentages does not equal 100% because the percentages are based on net assets as opposed to total loans).

The interest rate is the designated annual interest rate exclusive of any original issue discount, fees or end of term payment. The end of term payments are contractually due on the maturity date and are in addition to the interest rate shown. End of term payments are the percentage of the final payment divided by the original loan amount and are amortized over the full term of the loan.

See notes to condensed financial statements.

20

VENTURE LENDING & LEASING VII, INC.

CONDENSED SCHEDULES OF OPEN SWAP CONTRACT (UNAUDITED)

AS OF SEPTEMBER 30, 2019 AND DECEMBER 31, 2018

			AS OF SEPTEMBER 30, 2019
Description and terms of payments to be received from another party	Description and terms of payments to be paid to another party	Counterparty	Maturity Date (a)	Notional Amount		Value		Upfront payments/receipts		Unrealized appreciation/(depreciation) (b)
Cancellable Interest Rate Swap Agreement - Floating interest rate greater of USD-LIBOR-BBA	Fixed interest rate 1.900%, to be paid monthly	MUFG Union Bank, N.A.	12/1/2020	$	31,199,408	$	12,537	$	—	$	12,537
Total				$	31,199,408	$	12,537	$	—	$	12,537

			AS OF DECEMBER 31, 2018
Description and terms of payments to be received from another party	Description and terms of payments to be paid to another party	Counterparty	Maturity Date (a)	Notional Amount		Value		Upfront payments/receipts		Unrealized appreciation/(depreciation) (b)
Cancellable Interest Rate Swap Agreement - Floating interest rate greater of USD-LIBOR-BBA	Fixed interest rate 1.900%, to be paid monthly	MUFG Union Bank, N.A.	12/1/2020	$	67,172,468	$	352,121	$	—	$	352,121
Total				$	67,172,468	$	352,121	$	—	$	352,121

(a) The cancellable interest rate swap agreement includes an option for the Fund to terminate the swap early on June 1, 2020.

(b) The unrealized appreciation/depreciation were valued using prices or valuation based on observable inputs other than quoted price in active markets for identical assets and liabilities. See "Note 3. Fair Value Disclosures" for more information.

See notes to condensed financial statements.

21

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 (the “1940 Act”) and is managed by Westech Investment Advisors, LLC (the “Manager” or “Management”). The Fund will be dissolved on December 31, 2022 unless the Board of Directors (the “Board”) opts to elect early dissolution. 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 to apply for a finance lender’s license from the California Commissioner of Corporations, which was obtained on September 20, 2012.

The Fund’s investment objective is to achieve superior risk-adjusted investment returns and it seeks to achieve that objective by providing debt financing to portfolio companies, most of which are private. The Fund generally receives warrants to acquire equity securities in connection with its portfolio investments and generally distributes these warrants to its shareholder upon receipt, or soon thereafter. The Fund also has guidelines for the percentages of total assets that are invested in different types of assets.

The portfolio investments of the Fund primarily consist of debt financing to early and late stage venture capital-backed technology companies.

In the Manager’s opinion, the accompanying condensed interim financial statements (hereafter referred to as “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 United States Generally Accepted Accounting Principles (“U.S. GAAP”) 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 nine months endedSeptember 30, 2019 are not necessarily indicative of what the results would be for a full year. These financial statements should 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, 2018.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Accounting

The preparation of financial statements in conformity with U.S. GAAP 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. Certain prior year amounts have been reclassified to conform to the current year presentation. As an investment company, the Fund follows accounting and reporting guidance as set forth in Topic 946 (“Financial Services – Investment Companies”) of the Financial Accounting Standards Board’s (“FASB”) Accounting Standards Codification, as amended (“ASC”).

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. Within cash and cash equivalents, as of September 30, 2019, the Fund held 58,442 units in the Blackrock Treasury

22

Trust Institutional Fund valued at $1 per unit at a yield of 2.10%, which represented 0.08% of the net assets of the Fund.

Interest Income

Interest income on loans is recognized on an accrual basis using the effective interest method including amounts resulting from the amortization of equity securities included as additional compensation as part of the loan agreements. Additionally, fees received as part of the transaction are added to the loan discount and amortized over the life of the loan.

Realized Gains and Losses from Loans

Realized gains and losses on the sale of loans are computed using the difference between the original cost and the sales proceed. Realized losses on loan write-offs are recognized when management determines a loan is uncollectible.

Investment 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 the valuation methods.

The Fund’s loans are valued coincident with the issuance of its quarterly 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 and valuation notes, which detail the rationale for the valuation of each investment.

As of September 30, 2019 and December 31, 2018, the financial statements included nonmarketable investments of $104.6 million and $210.7 million, respectively, (or 98.3% and 97.1% of the total assets, respectively), with the 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. Because there is no readily available market price and no secondary market for substantially all of the debt investments made by the Fund in its borrowing portfolio companies, Management determines fair value based on hypothetical markets, and on several factors related to each borrower, 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, and an evaluation of the general interest rate environment. The amount of any valuation adjustment considers the estimated amount and timing of cash payments of principal and interest from the borrower and/or 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 size of the loan, increase in the estimated time to recovery and increase in the hypothetical market coupon rate would have the effect of lowering the value of the current portfolio of loans.

23

Non-Accrual Loans

The Fund’s policy is to classify a loan as non-accrual when the portfolio company is delinquent for three consecutive months on its monthly loan payment, or, in the opinion of Management, either ceases or drastically curtails its operation 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 recognized as interest income if and when the proceeds exceed the book value of the respective loan.

If a borrower of a non-accrual loan resumes making regular payments and Management believes that such borrower has regained the ability to service the loan on a sustainable basis, the loan is reclassified back to accrual or performing status. Interest that would have been accrued during the time a loan was classified as non-accrual will be added back to the remaining payment schedule causing a change in the effective interest rate.

As of September 30, 2019, loanswith a cost basis of $34.7 million and a fair value of $15.5 million were classified as non-accrual. As of December 31, 2018, loanswith a cost basis of $33.1 million and a fair value of $11.9 million were classified as non-accrual.

Warrants and Equity Securities

Warrants and equity securities received in connection with loan transactions are measured at a fair value at the time of acquisition. Warrants are valued based on a modified Black-Scholes option pricing model which considers, among several factors, the underlying stock value, expected term, volatility, and risk-free interest rate. It is anticipated that such securities will be distributed by the Fund to the Company simultaneously with, or shortly following, their acquisition.

The 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 volatility 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. As of September 30, 2019 and December 31, 2018, the Fund assumed the average duration of a warrant is 4.0 and 3.5 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. However, the estimated initial term of the warrants is one factor, of many, used in the valuation of warrants, and by itself does not have a significant impact on the result of operations.

24

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.

The Fund engages an independent valuation company to provide valuation assistance with respect to the warrants received as part of loan consideration, including an evaluation of the Fund’s valuation methodology and the reasonableness of the assumptions used from the perspective of a market participant. The independent valuation company also calculates several of the inputs used, such as volatility and risk-free rate.

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. These costs are amortized over the term of the facility.

As of September 30, 2019 and December 31, 2018, the fair values of Other assets and accrued liabilities are estimated at their carrying values because of the short-term nature of these assets and liabilities.

As of September 30, 2019 and December 31, 2018, the carrying values of the borrowings under the debt facility were $32.3 million and $87.5 million, respectively. The carrying values of the borrowings under the debt facility approximates their fair value based on the borrowing rates available to the Fund.

Commitment Fees

Unearned income and commitment fees on loans are recognized 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.

Deferred Bank Fees

The deferred bank fees and costs associated with the debt facility are included in Other assets in the Condensed Statements of Assets and Liabilities and are being amortized over the estimated life of the facility, which currently matures on October 30, 2020. The amortization of these costs is recorded as Interest expense in the Condensed Statements of Operations.

Cancellable Interest Rate Swap Agreement

The Fund has entered into a cancellable interest rate swap agreement to manage the Fund's exposure to change in interest rates on its expected borrowings under its debt facility, as the Fund originates fixed rate loans (see Note 8). Cancellable interest rate swaps are primarily valued on the basis of quotes obtained from banks, brokers and dealers and adjusted for counterparty risk and the optionality to terminate the swap early. The valuation of the swap agreement also considers 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 swap instruments. The Fund is a party to a master netting arrangement with MUFG Union Bank, N.A., however, the Fund has elected not to offset assets and liabilities under these arrangements for financial statement presentation purposes. The contract is recorded at gross fair value in either Derivative asset - interest rate swap or Derivative liability - interest rate swap in the Condensed Statements of Assets and Liabilities, depending on whether the value of the contract is in favor of the Fund or the counterparty. The changes in fair value are recorded in Net change in unrealized gain (loss) from derivative instruments in the Condensed Statements of Operations and the quarterly interest received or paid on the interest rate swap contract, if any, is recorded in Net realized gain (loss) from derivative instruments in the Condensed Statements of Operations. The interest rate swap agreement is contractually scheduled to terminate on December 1, 2020. The Fund has the option to terminate the swap early on June 1, 2020.

25

3. FAIR VALUE DISCLOSURES

The Fund provides asset-based financing primarily to start-up and emerging growth venture-backed companies pursuant to commitments whereby the Fund agrees to finance assets and provide working or growth capital up to a specified amount for the term of the commitment, upon the terms and subject to the conditions specified by such commitment. Even though these loans are generally secured by the assets of the borrowers, the Fund in most cases is subject to the credit risk of such companies. As of September 30, 2019, 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 in the Condensed Schedules of Investments. All loans are senior to unsecured creditors and other secured creditors, unless as indicated in the Condensed Schedules of Investments.

The Fund defines fair value as the price that would be received to sell an asset or paid to transfer 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. Because there is no readily available market price and no secondary market for substantially all of the debt investments made by the Fund to borrowing portfolio companies, Management determines fair value (or estimated exit value) based on a hypothetical market, and several factors related to each borrower.

Loan balances in the Condensed Schedules of Investments are listed 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 has a different maturity date and amount.

For the three and nine months ended September 30, 2019, the weighted-average interest rate on performing loans was 14.08% and 18.59%, respectively, which was inclusive of both cash and non-cash interest income. For the three and nine months ended September 30, 2019, the weighted-average interest rate on the cash portion of the interest income was 11.88% and 16.16%, respectively. For the three and nine months ended September 30, 2018, the weighted-average interest rate on performing loans was 22.03% and 17.80%, respectively, which was inclusive of both cash and non-cash interest income. For the three and nine months ended September 30, 2018, the weighted-average interest rate on the cash portion of the interest income was 17.57% and 14.33%, respectively.

For the three and nine months ended September 30, 2019, the weighted-average interest rate on all loans was 11.83% and 16.70%, respectively, which was inclusive of both cash and non-cash interest income. For the three and nine months ended September 30, 2019, the weighted-average interest rate on the cash portion of the interest income was 10.45% and 14.52%, respectively. For the threeandnine months ended September 30, 2018, the weighted-average interest rate on all loans was 21.62%and17.28% respectively, which was inclusive of both cash and non-cash interest income. For the threeandnine months ended September 30, 2018, the weighted-average interest rate on the cash portion of the interest income was 17.36% and 13.95%, 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 discussed in the Fund’s loan accounting policy. Such changes result in the fair value adjustments made to the individual loans, which in accordance with U.S. GAAP, would be based on 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. Where the risk profile is consistent with the original underwriting, which is primarily the case for this loan portfolio, the cost basis of the loan often approximates fair value.

All loans as of September 30, 2019 and December 31, 2018 were pledged as collateral for the debt facility, and the Fund’s borrowings are generally collateralized by all assets of the Fund. As of both September 30, 2019 and December 31, 2018, the Fund had no unexpired unfunded commitments to borrowers.

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Valuation Hierarchy

Under the FASB ASC Topic 820 (“Fair Value Measurement”), 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.

Transfers of investments between levels of the fair value hierarchy are 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 three and nine months ended September 30, 2019 and 2018.

The Fund’s cash equivalents were valued at the traded net asset value of the money market fund. As a result, these measurements are classified as Level 1. The Fund’s investments in the interest rate swap are based on quotes from the market makers that derive fair values from market data, and therefore, are classified as Level 2. The Fund’s borrowings under the debt facility are also classified as Level 2, because the carrying values of the borrowings approximate fair value based on rates that are observable at commonly quoted intervals, which are Level 2 inputs. The Fund’s loan transactions are individually negotiated and unique and because there is little to no market in which these assets trade, the inputs for these assets, which are valued using estimated exit values, are classified as Level 3.  

The following tables provide quantitative information about the Fund’s Level 3 fair value measurements of the Fund’s investments by industry as of September 30, 2019 and December 31, 2018. 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.

Investment Type - Level 3
Debt Investments	Fair Values at September 30, 2019		Valuation Techniques / Methodologies	Unobservable Inputs	Weighted Averages (a) / Amounts or Ranges
Computers and Storage	$	1,263,079	Hypothetical market analysis	Hypothetical market coupon rate	25%
Internet	6,932,887		Hypothetical market analysis	Hypothetical market coupon rate	14%
			Income approach	Expected amount and timing of cash flow payments Discount rate	$0 - $2,332,174 0% - 3%
Medical Devices	853,366		Hypothetical market analysis	Hypothetical market coupon rate	14%

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Investment Type - Level 3
Debt Investments	Fair Values at September 30, 2019	Valuation Techniques / Methodologies	Unobservable Inputs	Weighted Averages (a) / Amounts or Ranges
		Income approach	Expected amount and timing of cash flow payments	$0
Other Healthcare	27,151,566	Hypothetical market analysis	Hypothetical market coupon rate	14%
		Income approach	Expected amount and timing of cash flow payments Discount rate	$0 - $926,714 0% - 3%
Other Technology	26,624,882	Hypothetical market analysis	Hypothetical market coupon rate	15%
		Income approach	Expected amount and timing of cash flow payments Discount rate	$0 - $2,787,929 0% - 3%
Security	319,482	Hypothetical market analysis	Hypothetical market coupon rate	24%
		Income approach	Expected amount and timing of cash flow payments	$0
Semiconductors and Equipment	107,132	Hypothetical market analysis	Hypothetical market coupon rate	12%
Software	26,857,636	Hypothetical market analysis	Hypothetical market coupon rate	15%
		Income approach	Expected amount and timing of cash flow payments Discount rate	$0 - $10,100,000 0% - 3%
Technology Services	8,430,092	Hypothetical market analysis	Hypothetical market coupon rate	13%

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Investment Type - Level 3
Debt Investments	Fair Values at September 30, 2019		Valuation Techniques / Methodologies	Unobservable Inputs	Weighted Averages (a) / Amounts or Ranges
			Income approach	Expected amount and timing of cash flow payments Discount rate	$1,265,313 - $1,845,479 3%
Wireless	6,090,827		Hypothetical market analysis	Hypothetical market coupon rate	13%
Total debt investments	$	104,630,949

^(a)The weighted average hypothetical market coupon rates were calculated using the relative fair value of the loans.

Investment Type - Level 3
Debt Investments	Fair Values at December 31, 2018		Valuation Techniques / Methodologies	Unobservable Inputs	Weighted Averages (a) / Amounts or Ranges
Biotechnology	$	179,524	Hypothetical market analysis	Hypothetical market coupon rate	15%
Computers and Storage	2,848,813		Hypothetical market analysis	Hypothetical market coupon rate	21%
Internet	19,396,858		Hypothetical market analysis	Hypothetical market coupon rate	14%
			Income approach	Expected amount and timing of cash flow payments Discount rate	$0 - $9,329,138 0% - 4%
Medical Devices	1,548,521		Hypothetical market analysis	Hypothetical market coupon rate	14%
			Income approach	Expected amount and timing of cash flow payments	$0
Other Healthcare	31,413,984		Hypothetical market analysis	Hypothetical market coupon rate	14%
			Income approach	Expected amount and timing of cash flow payments Discount rate	$0 - $916,812 0% - 4%
Other Technology	87,293,658		Hypothetical market analysis	Hypothetical market coupon rate	14%

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Investment Type - Level 3
Debt Investments	Fair Values at December 31, 2018		Valuation Techniques / Methodologies	Unobservable Inputs	Weighted Averages (a) / Amounts or Ranges
			Income approach	Expected amount and timing of cash flow payments Discount rate	$0 - $2,787,929 0% - 4%
Security	957,742		Hypothetical market analysis	Hypothetical market coupon rate	21%
			Income approach	Expected amount and timing of cash flow payments	$0
Semiconductors and Equipment	258,813		Hypothetical market analysis	Hypothetical market coupon rate	12%
Software	40,901,116		Hypothetical market analysis	Hypothetical market coupon rate	15%
			Income approach	Expected amount and timing of cash flow payments Discount rate	$0 - $8,994,902 0% - 4%
Technology Services	16,295,552		Hypothetical market analysis	Hypothetical market coupon rate	13%
			Income approach	Expected amount and timing of cash flow payments Discount rate	$751,771 - $2,459,113 4%
Wireless	9,628,183		Hypothetical market analysis	Hypothetical market coupon rate	13%
Total debt investments	$	210,722,764

^(a)The weighted average hypothetical market coupon rates were calculated using the relative fair value of the loans.

The following tables present the balances of assets and liabilities as of September 30, 2019 and December 31, 2018 measured at fair value on a recurring basis:

As of September 30, 2019
ASSETS:	Level 1		Level 2		Level 3		Total
Loans†	$	—	$	—	$	104,630,949	$	104,630,949
Derivative asset - interest rate swap	—		12,537		—		12,537
Cash equivalents	58,442		—		—		58,442
Total assets	$	58,442	$	12,537	$	104,630,949	$	104,701,928
LIABILITIES:	Level 1		Level 2		Level 3		Total
Borrowings under debt facility	$	—	$	32,340,000	$	—	$	32,340,000
Total liabilities	$	—	$	32,340,000	$	—	$	32,340,000

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As of December 31, 2018
ASSETS:	Level 1		Level 2		Level 3		Total
Loans†	$	—	$	—	$	210,722,764	$	210,722,764
Derivative asset - interest rate swap	—		352,121		—		352,121
Cash equivalents	$	2,839,766	—		—		2,839,766
Total assets	$	2,839,766	$	352,121	$	210,722,764	$	213,914,651
LIABILITIES:	Level 1		Level 2		Level 3		Total
Borrowings under debt facility	$	—	$	87,500,000	$	—	$	87,500,000
Total liabilities	$	—	$	87,500,000	$	—	$	87,500,000

†For a detailed listing of borrowers comprising this amount, please refer to the Condensed Schedules of Investments.

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

	For the Three Months Ended September 30, 2019
	Loans			Warrants			Stock			Convertible Loan
Beginning balance	$	124,341,109		$	—		$	—		$	—
Acquisitions and originations	—			80,864			455,286			—
Principal reductions and amortization of discounts	(16,571,498		)	—			—			—
Distributions to shareholder	—			(80,864		)	(455,286		)	—
Net change in unrealized gain (loss) from loans	6,645,649			—			—			—
Net realized loss from loans	(9,784,311		)	—			—			—
Ending balance	$	104,630,949		$	—		$	—		$	—
Net change in unrealized gain (loss) from loans relating to loans still held at September 30, 2019	$	541,710

	For the Nine Months Ended September 30, 2019
	Loans			Warrants			Stock			Convertible Loan
Beginning balance	$	210,722,764		$	—		$	—		$	—
Acquisitions and originations	—			204,462			455,286			4,310,753
Principal reductions and amortization of discounts	(98,954,520		)	—			—			—
Distributions to shareholder	—			(204,462		)	(455,286		)	(4,310,753		)
Net change in unrealized gain (loss) from loans	3,074,407			—			—			—
Net realized loss from loans	(10,211,702		)	—			—			—
Ending balance	$	104,630,949		$	—		$	—		$	—
Net change in unrealized gain (loss) from loans relating to loans still held at September 30, 2019	$	(2,138,523	)

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	For the Three Months Ended September 30, 2018									For the Nine Months Ended September 30, 2018
	Loans			Warrants			Stock			Loans			Warrants			Stock
Beginning balance	$	305,555,613		$	—		$	—		$	325,189,783		$	—		$	—
Acquisitions and originations	—			556,030			339,001			51,000,000			2,269,374			428,002
Principal reductions and amortization of discounts	(53,460,122		)	—			—			(120,937,855		)	(2,269,374		)	(428,002		)
Distributions to shareholder	—			(556,030		)	(339,001		)	—			—			—
Net change in unrealized gain (loss) from loans	(2,018,472		)	—			—			(3,218,511		)	—			—
Net realized loss from loans	(1,515,103		)	—			—			(3,471,501		)	—			—
Ending balance	$	248,561,916		$	—		$	—		$	248,561,916		$	—		$	—
Net change in unrealized gain (loss) from loans relating to loans still held at September 30, 2018	$	(3,643,492	)							$	(6,538,881	)

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 (loss) 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 has no instruments that would be potential common shares; thus, reported basic and diluted earnings (loss) per share are the same.

5. CAPITAL STOCK

As of both September 30, 2019 and December 31, 2018, 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 both September 30, 2019 and December 31, 2018, was $375.0 million. Total contributed capital to the Company through September 30, 2019 and December 31, 2018 was both $375.0 million, of which $322.6 million was contributed to the Fund as of both periods.

The chart below shows the distributions of the Fund for the nine months ended September 30, 2019 and 2018.

	For the Nine Months Ended September 30, 2019		For the Nine Months Ended September 30, 2018
Cash distributions	$	56,250,000	$	96,600,000
Distributions of equity securities and convertible loan	4,970,501		2,697,376
Total distributions to shareholder	$	61,220,501	$	99,297,376

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.

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6. DEBT FACILITY

On July 18, 2013, the Fund established a secured, syndicated revolving loan facility in an initial amount of up to $125.0 million led by Wells Fargo, N.A. and MUFG Union Bank, N.A. In November 2014, the borrowing availability thereunder was increased to $255.0 million. On October 30, 2017, the Fund entered into an agreement with Wells Fargo Bank, N.A., Wells Fargo Securities, LLC, MUFG Union Bank, N.A. and ING Capital, LLC that (i) reduced the size of the facility to $200.0 million and (ii) amended the interest rate options and commitment fee (the "First Amendment"). All of the assets of the Fund collateralize borrowings by the Fund. Loans under the facility may be, at the option of the Fund, a Reference Rate Loan, a LIBOR Loan or a LIBOR Market Index Rate Loan. A Reference Rate Loan is defined as a loan bearing interest at the highest of: (a) the Federal Funds Rate for such day plus one half of one percent (0.50%), (b) the prime rate and (c) LIBOR loan period of one month plus one percent (1%) (“Reference Rate”). A LIBOR Loan is defined as a loan bearing interest at the prevailing LIBOR rate for a period equal to the applicable LIBOR Loan period which appears on the Reuters Screen LIBOR01 Page (or any applicable successor page) at approximately 11:00 a.m. (London time) two (2) business days prior to the first day of the applicable LIBOR Loan period (rounded upward, if necessary, to the nearest 1/100th of 1%) divided by one minus the percentage (expressed as a decimal and rounded upwards, if necessary, to the next higher 1/100th of 1%) which is in effect for such day as prescribed by the Board of Governors of the Federal Reserve System (or any successor) for determining the maximum reserve requirement (including, without limitation, any basic, supplemental or emergency reserves) in respect of eurocurrency liabilities or any similar category of liabilities for a member bank of the Federal Reserve System in New York City (“LIBOR Reserve Percentage”) (“LIBOR”). A LIBOR Market Index Rate Loan is defined as a loan bearing interest, for any day, at a variable rate of interest equal to the one-month LIBOR (“LIBOR Market Index Rate”) based on a minimum deposit of at least $5.0 million for a period equal to one month which appears on the Reuters Screen LIBOR01 Page (or any applicable successor page) at approximately 11:00 a.m. (London time) on such date of determination, or if not a business day, then the immediate preceding business day (rounded upward, if necessary to the nearest 1/100th of 1%). As of September 30, 2019, the Fund’s outstanding borrowings were entirely based on the LIBOR rate. The First Amendment facility terminates on October 30, 2020, but can be accelerated in the event of default, such as failure by the Fund to make timely interest or principal payments.

At its option, the Fund may reduce the lenders’ commitments established in the First Amendment by $5.0 million or more once each calendar month. As of December 31, 2018 the borrowing availability was $90.0 million. Beginning March 29, 2019, the lenders’ commitments automatically and permanently reduce each fiscal quarter by an amount equal to 12.5% of the aggregate amount of such commitments. As of September 30, 2019 the borrowing availability was $33.0 million.

Borrowings under the facility are collateralized by receivables from loans to portfolio companies advanced by the Fund with assignment of such receivables to the financial institution, plus all of the other assets of the Fund. The Fund pays interest on its borrowings and a fee on the unused portion of the facility. Such borrowings, pursuant to the election of the Fund, bear interest at an annual rate of either (i) Reference Rate plus 1.75%, (ii) LIBOR plus 2.75% or (iii) LIBOR Market Index Rate plus 2.75%. When the Fund is using 50% or more of the maximum amount available under the amended loan agreement, the applicable commitment fee is 0.25% of the unused portion of the loan facility; otherwise, the applicable commitment fee is 0.50% of the unused portion. The Fund pays the unused credit line fee quarterly. As of September 30, 2019 and December 31, 2018, $32.3 million and $87.5 million were outstanding under the facility, respectively.

As of September 30, 2019, the LIBOR rate was as follows:

1-Month LIBOR	2.0156%
3-Month LIBOR	2.0851%

Bank fees and other costs of $1.1 million incurred in connection with the acquisition of the facility have been capitalized and are amortized to interest expense on a straight-line basis over the expected life of the facility.  The amortization of bank fees and other costs from the prior facility of $2.7 million was completely amortized by November

33

2017. As of September 30, 2019, the unamortized fees and costs of $0.4 million are being amortized over the expected life of the facility, which is expected to terminate on October 30, 2020.

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.

The following is the summary of the outstanding facility draws as of September 30, 2019:

	Amount		Maturity Date*	All-In Interest Rate**
LIBOR Loan	$	13,000,000	October 16, 2019	4.78%
LIBOR Market Index Rate Loan	19,340,000		Not applicable	Variable based on 1-Month LIBOR rate
Total Outstanding	$	32,340,000

* On October 7, 2019, Management elected to paydown $5.3 million from the LIBOR Market Index Rate Loan. On October 23, 2019, Management elected to paydown $0.7 million from the LIBOR Market Index Rate Loan. On November 11, 2019, Management elected to paydown $5.5 million from LIBOR Market Index Rate Loan. On October 16, 2019, Management elected to roll over $3.0 million to a 1-Month LIBOR Loan maturing on November 18, 2019, within an all-in interest rate of 4.67% and $10.0 million to LIBOR Market Index Rate Loan.

**Inclusive of 2.75% applicable LIBOR margin plus LIBOR rate.

7. MANAGEMENT FEE

As compensation for its services to the Fund, for the two-year period that commenced with the first capital closing, which took place on December 18, 2012, the Manager received a management fee (“Management Fee”) computed and paid at the end of each quarter at an annual rate of 2.5% of the Company’s committed equity capital (regardless of when or if the capital was called) as of the last day of each fiscal quarter. Following this two-year period, starting on December 18, 2014, Management Fees are calculated and paid at the end of each quarter at an annual rate of 2.5% of the Fund’s total assets (including amounts derived from borrowed funds) as of the last day of each quarter. Management Fees of $0.7 million and $1.6 million were recognized as expenses for the three months ended September 30, 2019 and 2018, respectively. Management Fees of $2.5 million and $5.7 million were recognized as expenses for the nine months ended September 30, 2019 and 2018, respectively.

8. CANCELLABLE INTEREST RATE SWAP AGREEMENT

On November 21, 2017, the Fund entered into a cancellable interest rate swap transaction with MUFG Union Bank, N.A. The Fund has entered into a cancellable interest rate swap agreement to manage the Fund's exposure to change in interest rates on its expected borrowings under its debt facility, as the Fund originates fixed rate loans. The Fund may adjust the notional principal amount in order to remain in compliance with the hedging requirements the Fund's debt facility. As of September 30, 2019, the notional principal amount was $31.2 million.

The following table presents the Fund's fair value and its location as of September 30, 2019 and December 31, 2018 in the Fund's condensed statement of assets and liabilities:

34

	September 30, 2019			December 31, 2018
Derivatives:	Location on Condensed Statements of Assets and Liabilities	Fair Value		Location on Condensed Statements of Assets and Liabilities	Fair Value
Interest rate swap agreement	Derivative asset - interest rate swap	$	12,537	Derivative asset - interest rate swap	$	352,121

    The Fund pays a fixed rate of 1.90% and receives from the counterparty a floating rate based upon a 1-Month LIBOR rate. Payments are made monthly. The payments and cancellable interest rate swap agreement are expected to terminate on December 1, 2020. The agreement includes an option for the Fund to terminate the swap early on June 1, 2020. Payments to or from the counterparty are recorded to Net realized gain (loss) from derivative instruments. As of September 30, 2019, the 1-Month LIBOR rate was 2.0156%.

For the three and nine months ended September 30, 2019 and 2018, the interest rate swap had the following effect on the Fund’s Condensed Statements of Operations:

Derivatives:	Location on Condensed Statements of Operations	For the Three Months Ended September 30, 2019			For the Three Months Ended September 30, 2018		For the Nine Months Ended September 30, 2019			For the Nine Months Ended September 30, 2018
Interest rate swap agreement	Net realized gain (loss) from derivative instruments	$	40,506		$	32,738	$	179,933		$	(89,558	)
	Net change in unrealized gain (loss) from derivative instruments	$	(14,791	)	$	28,457	$	(339,583	)	$	569,323

9. 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 to qualify for the tax treatment applicable to RICs. Failing to maintain at least 70% of total assets in “qualifying assets” will result in the loss of BDC status, resulting in losing its favorable tax treatment as a RIC. As of September 30, 2019, the Fund has met the BDC and RIC requirements.

In order to qualify for favorable tax treatment as a RIC, the Fund is required to distribute annually to its 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 its shareholder. The Fund will accrue excise tax on estimated undistributed taxable income as required. Below is a table summarizing the cost (on U.S. GAAP and tax basis) and the appreciation and depreciation of the investments reported on the Condensed Schedules of Investments and Condensed Statements of Assets and Liabilities.

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As of September 30, 2019:

Asset	Cost		Unrealized Appreciation		Unrealized Depreciation			Net Appreciation (Depreciation)			Fair Value
Loans	$	124,769,595	$	256,174	$	(20,394,820	)	$	(20,138,646	)	$	104,630,949
Total	$	124,769,595	$	256,174	$	(20,394,820	)	$	(20,138,646	)	$	104,630,949
Derivative, asset	Cost		Unrealized Appreciation		Unrealized Depreciation			Net Appreciation (Depreciation)			Fair Value
Derivative asset - interest rate swap	$	—	$	12,537	$	—		$	12,537		$	12,537
Total	$	—	$	12,537	$	—		$	12,537		$	12,537

As of December 31, 2018:

Asset	Cost		Unrealized Appreciation		Unrealized Depreciation			Net Appreciation (Depreciation)			Fair Value
Loans	$	233,935,818	$	—	$	(23,213,054	)	$	(23,213,054	)	$	210,722,764
Total	$	233,935,818	$	—	$	(23,213,054	)	$	(23,213,054	)	$	210,722,764
Derivative, asset	Cost		Unrealized Appreciation		Unrealized Depreciation			Net Appreciation (Depreciation)			Fair Value
Derivative asset - interest rate swap	$	—	$	352,121	$	—		$	352,121		$	352,121
Total	$	—	$	352,121	$	—		$	352,121		$	352,121

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 U.S. 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 U.S. GAAP.     

The Fund anticipates distributing all distributable earnings by the end of the year. The Fund had no undistributed earnings through September 30, 2019. 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 Fund’s tax returns remain open for examination by the federal government for a period of three years and California tax authorities for a period of four years from when they are filed. As of September 30, 2019, the Fund had no uncertain tax positions and no capital loss carryforwards.

10.  FINANCIAL HIGHLIGHTS

U.S. GAAP requires disclosure of financial highlights of the Fund for the three and nine months ended September 30, 2019 and 2018.

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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 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 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 September 30, 2019			For the Three Months Ended September 30, 2018			For the Nine Months Ended September 30, 2019			For the Nine Months Ended September 30, 2018
Total return **	(1.35		)%	5.27		%	5.46		%	12.92		%
Per share amounts:
Net asset value, beginning of period	$	820.97		$	1,800.42		$	1,277.98		$	2,126.57
Net investment income	20.59			119.20			139.77			288.25
Net realized and change in unrealized loss from loans and derivative instruments	(31.11		)	(34.73		)	(72.96		)	(62.10		)
Net increase (decrease) in net assets resulting from operations	(10.52		)	84.47			66.81			226.15
Distributions of income to shareholder	—			(104.36		)	(39.45		)	(252.64		)
Return of capital to shareholder	(77.87		)	(404.58		)	(572.76		)	(740.33		)
Contributions from shareholder	—			—			—			16.20
Net asset value, end of period	$	732.58		$	1,375.95		$	732.58		$	1,375.95
Net assets, end of period	$	73,257,635		$	137,594,757		$	73,257,635		$	137,594,757
Ratios to average net assets:
Expenses*	6.96		%	8.58		%	7.00		%	7.66		%
Net investment income*	10.57		%	29.07		%	18.00		%	20.16		%
Portfolio turn-over rate	0		%	0		%	0%			0%
Average debt outstanding	$	38,710,000		$	130,525,000		$	55,234,000		$	124,310,000
*Annualized
**Total return amounts presented above are not annualized

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11. SUBSEQUENT EVENTS

The Fund evaluated subsequent events through the date the financial statements were issued, and determined that no additional subsequent events had occurred that would require accrual or disclosure in the financial statements.

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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 the Fund with respect to future events and financial performance and are subject to several risks and uncertainties, many of which are beyond the Fund’s control. All statements, other than statements of historical facts included in this Quarterly 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 resulting from 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, competition and macro-economic changes including inflation, interest rate expectations, among other factors including those set forth in the section of this Quarterly Report titled “Risk Factors” and in Item 1A - “Risk Factors” in the Fund’s 2018 Annual Report on Form 10-K. 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 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 primarily provides debt financing and advisory services to a variety of carefully selected venture-backed companies that have received equity funding from traditional sources of venture capital equity funding (i.e. a professionally managed venture capital firm), as well as non-traditional sources of venture capital equity funding (e.g. micro VC funds, angel investors and strategic investors) (collectively, “Venture-Backed Companies”), primarily throughout the United States with a focus on growth-oriented companies. Secondarily, the Fund may invest in special situations, which are expected to consist principally of convertible and subordinated debt instruments of public and late-stage private companies. The Fund’s portfolio consists of companies in the communications, information services, media, technology (including software and technology-enabled business services), biotechnology, 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 working capital. On December 18, 2012, the Company completed its first closing of capital contributions and the Fund made its first investment and became a non-diversified, closed-end investment company that elected to be treated as a BDC under the 1940 Act. While the Fund intends to operate as a non-diversified investment company within the meaning of Section 5(b)(2) of the 1940 Act, from time to time the Fund may act as a diversified investment company within the meaning of Section 5(b)(1) of the 1940 Act.

The Fund elected to be treated for federal income tax purposes as a RIC under the Code 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 distributed to its shareholder 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 will be taxed as an ordinary corporation on its taxable income for that year (even if that income is distributed to the Company) and all distributions out of its

39

earnings and profits will be taxable to the members of the Company as ordinary income; thus, such income will 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 and it seeks to achieve that objective by providing debt financing to portfolio companies, most of which are private. The Fund generally receives warrants to acquire equity securities in connection with its portfolio investments and generally distributes these warrants to its shareholder upon receipt, or soon thereafter. The Fund also has guidelines for the percentages of total assets that are invested in different types of assets.

The portfolio investments of the Fund primarily consist of debt financing to Venture-Backed Companies in the technology sector. The borrower’s ability to repay its loans may be adversely impacted by several factors, and as a result, the loan may not be fully 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 VIII, Inc. (“Fund VIII”) 

The Manager also serves as investment manager for Fund VIII. The Fund’s Board of Directors determined that so long as Fund VIII had capital available to invest in loan transactions with final maturities earlier than December 31, 2025 (the date on which Fund VIII will be dissolved), the Fund would invest in each portfolio company in which Fund VIII invested (“Investments”). Initially the amount of each Investment was allocated 50% to the Fund and 50% to Fund VIII, or such other allocations as were determined by the respective fund boards, so long as the Fund had capital available to invest. Effective June 30, 2017, the Fund was no longer permitted to enter new commitments to borrowers; however, the Fund was permitted to fund existing commitments, in which Fund VIII may also be invested. The Fund’s last commitment expired on July 31, 2018. The ability of the Fund to co-invest with Fund VIII, and other clients advised by the Manager, is subject to the conditions (“Conditions”) with which the Funds are currently complying while seeking certain exemptive relief from the Securities and Exchange Commission (“SEC”) from the provisions of Sections 17(d) and 57 of the 1940 Act and Rule 17d-1 thereunder. To the extent that clients, other than Fund VIII, 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 the Conditions.

Critical Accounting Policies, Practices and Estimates

Critical Accounting Policies and Practices are those accounting policies and practices that are both the most important to the portrayal of the Fund’s net assets and results of operations and require the most difficult, subjective or complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain. Critical accounting estimates are accounting estimates where the nature of the estimates is material due to the levels of subjectivity and judgment necessary to account for highly uncertain matters or the susceptibility of such matters to change and the impact of the estimates on net assets or operating performance is material.

In evaluating the most critical accounting policies and estimates, the Manager has identified the estimation of fair value of the Fund’s loan investments as the most critical of the accounting policies and accounting estimates applied to the Fund’s reporting of net assets or operating performance. In accordance with U.S. GAAP, the Fund defines fair value as the price that would be received to sell an asset or paid to transfer 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. There is no readily available market price or secondary market for the loans made by the Fund to borrowers, hence the Manager determines fair value based on a hypothetical market and the estimates are subject to high levels of judgment and uncertainty. The Fund’s loan investments are considered Level 3 fair value measurements in the fair value hierarchy due to the lack of observability over many of the important inputs used in determining fair value.

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Critical judgments and inputs in determining the fair value of a loan include the estimated timing and amount of future cash flows and probability of future payments, based on the assessment of payment history, available cash and “burn rate,” revenues, net income or loss, operating results, financial strength of borrower, prospects for the borrower’s raising future equity rounds, likelihood of sale or acquisition of the borrower, length of expected holding period of the loan, collateral position, the timing and amount of liquidation of collateral for loans that are experiencing significant credit deterioration and, as a result, collection becomes collateral-dependent, as well as an evaluation of the general interest rate environment. Management has evaluated these factors and has concluded that the effect of a deterioration in the quality of the underlying collateral, increase in the size of the loan, increase in the estimated time to recovery, and increase in the hypothetical market coupon rate would have the effect of decreasing the fair value of loan investments. The risk profile of a loan changes when events occur that impact the credit analysis of the borrower and the loan. 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, the par value of the loan often approximates fair value.

The actual value of the loans may differ from Management’s estimates, which would affect net change in net assets resulting from operations as well as assets.

Results of Operations - For the Three and Nine Months EndedSeptember 30, 2019 and 2018

Total investment income for the three months ended September 30, 2019 and 2018 was $3.4 million and $15.4 million, respectively, which primarily consisted of interest on venture loans outstanding. The remaining income consisted of interest and dividends on the temporary investment of cash. The decrease in total investment income was primarily due to the decrease in average outstanding balance of performing loans, calculated using the month-end balances, from $272.3 million for the three months ended September 30, 2018 to $96.8 million for the three months ended September 30, 2019. The weighted-average interest rate on performing loans was 14.08% and 22.03% for the three months ended September 30, 2019 and 2018, respectively. Also for the same periods, the weighted-average interest rate on all loans was 11.83% and 21.62%, 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 year. The weighted-average interest rate on performing loans and all loans decreased primarily due to loan repayments and loan payoffs since the Fund is no longer making new investments.

Total investment income for the nine months ended September 30, 2019 and 2018 was $19.4 million and $39.8 million, respectively, which primarily consisted of interest on venture loans outstanding. The remaining income consisted of interest and dividends on the temporary investment of cash. The decrease in total investment income was primarily due to the decrease in average outstanding balance of performing loans, calculated using the month-end balances, from $294.1 million for the nine months ended September 30, 2018 to $138.3 million for the nine months ended September 30, 2019. The weighted-average interest rate on performing loans was 18.59% and 17.80% for the nine months ended September 30, 2019 and 2018, respectively. Also for the same periods, the weighted-average interest rate on all loans was 16.70% and 17.28% 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 year. The weighted-average interest rate on performing loans and all loans increased primarily due to loan repayments and loan payoffs since the Fund is no longer making new investments.

Management fees for the three months ended September 30, 2019 and 2018 were $0.7 million and $1.6 million, respectively. Management fees were calculated as 2.5% of the Fund’s total assets and decreased for the three months ended September 30, 2019 due to a decrease in the Fund’s total assets.

Management fees for the nine months ended September 30, 2019 and 2018 were $2.5 million and $5.7 million, respectively. Management fees were calculated as 2.5% of the Fund’s total assets and decreased for the nine months ended September 30, 2019 due to a decrease in the Fund’s total assets.

Interest expense was $0.6 million and $1.8 million for the three months ended September 30, 2019 and 2018, respectively. Interest expense was comprised of amounts related to interest on debt amounts drawn down, unused credit line fees and amounts amortized from deferred fees incurred in conjunction with the loan facility. Interest

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expense decreased primarily due to the reduction in average debt outstanding from $130.5 million to $38.7 million for the three months ended September 30, 2018 and 2019, respectively. The impact of the decrease in average debt outstanding during the quarter was partially offset by an increase in interest rate from 5.40% for the three months ended September 30, 2018 to 5.88% for the three months ended September 30, 2019.

Interest expense was $2.4 million and $4.8 million for the nine months ended September 30, 2019 and 2018, respectively. Interest expense was comprised of amounts related to interest on debt amounts drawn down, unused credit line fees and amounts amortized from deferred fees incurred in conjunction with the loan facility. Interest expense decreased primarily due to the reduction in average debt outstanding from $124.3 million to $55.2 million for the nine months ended September 30, 2018 and 2019, respectively. The impact of the decrease in average debt outstanding was partially offset by an increase in interest rate from 5.16% for the nine months ended September 30, 2018 to 5.78% for the nine months ended September 30, 2019.

Banking and professional fees were less than $0.1 million and $0.1 million for three months ended September 30, 2019 and 2018. Banking and professional fees were $0.4 million and $0.3 million for the nine months ended September 30, 2019 and 2018, respectively. The banking and professional fees were comprised of legal, audit, banking and other professional fees. Banking and professional fees increased for the nine months ended September 30, 2019 primarily due to the increase in professional fees.

Other operating expenses were less than $0.1 million for both threemonths ended September 30, 2019 and 2018. Other operating expenses were $0.1 million for both ninemonths ended September 30, 2019 and 2018. These expenses included director fees, custody fees, tax fees and other expenses related to the operations of the Fund.

Net investment income for the three months ended September 30, 2019 and 2018 was $2.1 million and $11.9 million, respectively. Net investment income for the nine months ended September 30, 2019 and 2018 was $14.0 million and $28.8 million, respectively.

Net realized loss from loans was $9.8 million and $1.5 million for the three months ended September 30, 2019 and 2018, respectively. Net realized loss from loans was $10.2 million and $3.5 million for the nine months ended September 30, 2019 and 2018, respectively. The primary reason for the increase was due to loan write offs as the loan portfolio continues to decline.

Net realized gain (loss) from derivative instruments was less than $0.1 million for the both three months ended September 30, 2019 and 2018, respectively. Net realized gain (loss) from derivative instruments was $0.2 million and $(0.1) million for the nine months ended September 30, 2019 and 2018, respectively. This was actual cash received or paid from derivative contracts in the period as a result of actual LIBOR interest rate fluctuation.

Net change in unrealized gain (loss) from loans was $6.6 million and $(2.0) million for the three months ended September 30, 2019 and 2018, respectively. Net change in unrealized gain (loss) from loans was $3.1 million and $(3.2) million for the nine months ended September 30, 2019 and 2018, respectively. The net change in unrealized gain (loss) from loans consisted of fair value adjustments taken against loans as a result of an improvement or deterioration in certain portfolio companies’ performance as well as reversal of prior adjustments on realized loan losses.

Net change in unrealized gain (loss) from derivative instruments was less than $(0.1) millionand less than $0.1 million for the three months ended September 30, 2019 and 2018, respectively. Net change in unrealized gain (loss) from derivative instruments was $(0.3) millionand$0.6 million for the nine months ended September 30, 2019 and 2018, respectively. The net change in unrealized gain (loss) from derivative instruments consisted of fair market value adjustments to the derivative interest rate swap. The decrease was primarily due to the change in expectations of LIBOR interest rates during the periods as well as the realization of some of the prior value of the position.

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Net increase (decrease) in net assets resulting from operations for the three months ended September 30, 2019 and 2018 was $(1.1) million and $8.4 million, respectively. On a per share basis, the net increase in net assets resulting from operations was $(10.54) and $84.47 for the three months ended September 30, 2019 and 2018, respectively.

Net increase (decrease) in net assets resulting from operations for the nine months ended September 30, 2019 and 2018 was $6.7 million and $22.6 million, respectively. On a per share basis, the net increase in net assets resulting from operations was $66.80 and $226.15 for the nine months ended September 30, 2019 and 2018, respectively.

Liquidity and Capital Resources – September 30, 2019 and December 31, 2018

The Fund is owned entirely by the Company. As of both September 30, 2019 and December 31, 2018, the Company had subscriptions for capital in the amount of $375.0 million, of which all had been called and received as of both periods. Total capital contributed to the Fund was $322.6 million as of both September 30, 2019 and December 31, 2018.

The change in cash for the nine months ended September 30, 2019 and 2018 was as follows:

	For the Nine Months Ended September 30, 2019			For the Nine Months Ended September 30, 2018
Net cash provided by operating activities	$	108,448,743		$	98,319,359
Net cash used in financing activities	(111,230,067		)	(102,669,558		)
Net decrease in cash and cash equivalents	$	(2,781,324	)	$	(4,350,199	)

As of September 30, 2019 and December 31, 2018, 0.1% and 1.3%, respectively, of the Fund’s total assets consisted of cash and cash equivalents.

On July 18, 2013, the Fund established a secured, syndicated revolving loan facility in an initial amount of up to $125.0 million led by Wells Fargo, N.A. and MUFG Union Bank, N.A. In November 2014, the borrowing availability thereunder was increased to $255.0 million. All of the assets of the Fund collateralize borrowings by the Fund. The Fund pays interest on its borrowings and a fee on the unused portion of the facility. The facility was renewed and amended on October 30, 2017. The amended facility has a term of three years and terminates on October 30, 2020, but can be accelerated in the event of default, such as failure by the Fund to make timely interest or principal payments. Beginning March 29, 2019, the lenders’ commitments automatically and permanently reduce each fiscal quarter by an amount equal to 12.5% of the aggregate amount of such commitments. As of September 30, 2019 the borrowing availability was $33.0 million. The Fund anticipates continued reduction of the facility as the borrowing base continues to decline. As of September 30, 2019, $32.3 million was outstanding under the facility.

For the nine months ended September 30, 2019, the Fund investments primarily consisted of venture loans. No amounts were disbursed under the Fund’s loan commitments during the nine months ended September 30, 2019. Net loan amounts outstanding after amortization and valuation adjustments decreased by $106.1 million for the same period.

As of	Cumulative Amount Disbursed	Principal Reductions and Fair Market Adjustments	Balance Outstanding - Fair Value	Unexpired Unfunded Commitments
September 30, 2019	$960.2 million	$855.6 million	$104.6 million	$0
December 31, 2018	$960.2 million	$749.5 million	$210.7 million	$0

Because venture loans are privately negotiated transactions, investments in these assets are relatively illiquid.

The Fund seeks to maintain the requirements to qualify for the special pass-through status available to RICs under the Code, and thus to be relieved of federal income tax on that part of its net investment income and realized

43

capital gains that it distributes to its shareholder. To qualify as a RIC, the Fund must distribute to its shareholder 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) (the “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.

As of September 30, 2019, the Fund had cash reserves of less than $0.1 million and approximately $63.1 million in scheduled loan receivable payments over the next twelve months, which together with the Fund’s borrowing capacity, are sufficient to meet the operational expenses of the Fund over the next year, as well as to reduce the debt facility balance, which will continue to decrease as loans are paid off.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

The Fund’s business activities contain various elements of risk, of which Management considers interest rate and credit risk to be the principal types of risks. Because the Fund considers the management of risk essential to conducting its business and to maintaining profitability, 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 distributes all equity investments 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, term of the loan and the ability to exit via initial public offering or merger and acquisition.

The Fund’s exposure to interest rate sensitivity 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 September 30, 2019, the outstanding debt balance was $32.3 million at a weighted average floating interest rate of 2.02%, for which the Fundhad a fixed interest rate swap in place at 1.90% on $31.2 million of the notional principal amount, leaving the Fund with full exposure to interest rate increases on the un-hedged portion of the loan.

Because all of the Fund’s loans impose a fixed interest rate upon funding, changes in short-term interest rates will not directly affect interest income associated with the loan portfolio as of September 30, 2019. However, those changes could have the potential to change the Fund’s ability to originate loan commitments, acquire and renew bank facilities, and engage in other investment activities. Further, changes in short-term interest rates could also affect interest rate expense, realized gain from investments and interest on the Fund’s short-term investments.

Based on the Fund’s Condensed Statements of Assets and Liabilities as of September 30, 2019, the following table shows the approximate annualized increase (decrease) in components of net assets resulting from operations of hypothetical base rate changes in interest rates, assuming no changes in investments, borrowings, cash balances and interest rate swap derivatives.

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Effect of Interest Rate Change By	Other Interest and Other Income (Loss)			Gain (Loss) from Derivative Instruments			Interest Income (Expense)			Total Income (Loss)
(0.50)%	$	(292	)	$	(155,997	)	$	161,700		$	5,411
1%	$	584		$	311,994		$	(323,400	)	$	(10,822	)
2%	$	1,169		$	623,988		$	(646,800	)	$	(21,643	)
3%	$	1,753		$	935,982		$	(970,200	)	$	(32,465	)
4%	$	2,338		$	1,247,976		$	(1,293,600	)	$	(43,286	)
5%	$	2,922		$	1,559,970		$	(1,617,000	)	$	(54,108	)

Additionally, a change in the interest rate may affect the value of the interest rate swap and effect Net change in unrealized gain (loss) from derivative instruments. The amount of any such effect will be contingent upon market expectations for future interest rate changes. Any increases in expected future rates will increase the value of the interest rate swap while any rate decreases will decrease the value.

Although Management believes that the foregoing analysis is indicative of the Fund’s sensitivity to interest rate changes, it does not take into consideration potential changes in the credit market, credit quality, size and composition of the assets in the portfolio. It also does not assume any new fundings to borrowers, repayments from borrowers or defaults on borrowings. Accordingly, no assurances can be given that actual results would not differ materially from the table above.

Because the Fund currently borrows, its net investment income is highly dependent upon the difference between the rate at which it borrows and the rate at which it invests the amounts borrowed. Accordingly, there can be no assurance that a significant change in market interest rates will not have a material adverse effect on the Fund’s investment activities and net investment income. The Fund’s exposure to movement in short-term interest rates stems from the Fund borrowing at a floating interest rate but then making loans with a fixed rate at the time the loans are extended. The Fund, therefore, attempts to limit its interest rate risk by acquiring interest rate swaps to hedge its interest rate exposure.

The Fund is not sensitive to changes in foreign currency exchange rates, commodity prices and other market rates or prices.

Item 4.  Controls and Procedures

Disclosure Controls and Procedures:

At the end of the period covered by this report, the Fund carried out an evaluation under the supervision and with the participation of its Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of the Fund’s disclosure controls and procedures pursuant to Rules 13a-15(b) and 15d-15(b) of the Securities Exchange Act of 1934 (“Exchange Act”). Based upon this evaluation, the Chief Executive Officer and Chief Financial Officer have concluded that the Fund’s disclosure controls and procedures were effective as of the end of the period in ensuring that information required to be disclosed was recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and in providing reasonable assurance that information required to be disclosed by the Fund in such reports is accumulated and communicated to the Fund’s management, including its Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosures.

Changes in Internal Controls:

There have not been any changes in the Fund’s internal control over financial reporting identified in connection with the evaluation required by Rules 13a-15(d) and 15d-15(d) of the Exchange Act that occurred during the Fund’s fiscal quarter ended September 30, 2019 that has materially affected, or is reasonably likely to materially affect, the Fund’s internal control over financial reporting.

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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 now 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. The Fund is not a party to any material legal proceedings.

Item 1A. Risk Factors

The following discussion point should be read in conjunction with Item 1A - “Risk Factors” in the Fund’s 2018 Annual Report on Form 10-K for a detailed description of the risks attendant to the Fund and its business. Except as set forth below, there have been no material changes to the risk factors reported in the Fund’s 2018 Annual Report on Form 10-K.

Brexit Risk. The risk of investing in portfolio companies based out of or related to Europe may be heightened due to the 2016 referendum in which the United Kingdom (“UK”) voted to exit the European Union (“EU”). There is significant uncertainty about how negotiations relating to the UK’s withdrawal will be resolved, as well as the potential consequences and precise timeframe for “Brexit.” On March 29, 2017, the UK formally notified the European Council of its intention to withdraw from the EU and triggered the two-year period set out for withdrawal discussions in the Treaty on European Union. Since then, the EU has extended the Brexit deadline several times to allow the UK parliament to ratify a withdrawal agreement, the result and timing of which remain uncertain. The UK could also, in theory, cancel Brexit if the rest of the EU consents or if there is a second referendum reversing the UK’s withdrawal. If, however, the UK withdraws from the EU without ratifying an agreement, the resulting uncertainty regarding the trading and cross-border investment relationship between the UK and the EU could negatively impact investments across Europe.

Therefore, the ultimate effects of Brexit will depend on agreements the UK negotiates to retain access to EU markets either during a transitional period or more permanently. Brexit could lead to legal and tax uncertainty and potentially divergent national laws and regulations as the UK determines which EU laws to replace or replicate. While it is not possible to determine the precise impact these events may have on the Fund during this period and beyond, the impact on the UK and European economies and the broader global economy could be significant, including increased volatility and illiquidity, and potentially lower economic growth, on markets in the UK, Europe and globally, thereby adversely affecting the value of the Fund’s investments. In addition, if one or more other countries were to exit the EU or abandon the use of the euro as a currency, the value of investments tied to those countries or the euro could decline significantly and unpredictably.

Special risk considerations relating to China. The Fund may invest in portfolio companies that are based in China, have significant operations in China or are otherwise connected to China. Markets in China can be volatile due to uncertain social, economic, regulatory and political factors. The severity and duration of any adverse economic conditions may be driven by governmental or quasi-governmental policies; in particular the imposition of sanctions by outside governments could severely disrupt the Chinese economy and the value of securities tied to it. For example, Fund portfolio companies may be significantly impacted by the ongoing trade disputes between the United States and China that have resulted in the imposition of tariffs by both countries on certain goods entering their respective markets. Among other things, such disputes could prompt a portfolio company to reduce operations in China and/or suffer downward pricing pressure. Additionally, a portfolio company that relies on Chinese investors could experience challenges in securing additional capital investments. Whether these factors are mitigated or exacerbated remains uncertain and will depend, in part, on the outcome of negotiations between the United States and China to resolve their trade disputes.

LIBOR Phase-Out Risk. Many financial instruments, including the Fund’s credit facility and certain of its debt investments, utilize or are permitted to utilize a floating interest rate based on the London Interbank Offered Rate,

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or “LIBOR,” which is the offered rate for short-term Eurodollar deposits between major international banks. Additionally, the Fund has derivative instruments that hedge by converting floating LIBOR based interest rates into fixed rates. On July 27, 2017, the head of the UK’s Financial Conduct Authority announced its intention to phase out the use of LIBOR by the end of 2021. There is thus uncertainty regarding what interest rate benchmark(s) will replace LIBOR in the debt capital markets, and the effect of a transition away from LIBOR on the Fund cannot yet be determined. Management continues to evaluate the Fund’s LIBOR exposure risks, including but not limited to the potential impact on the cost of credit, the Fund’s derivative instruments, the Fund’s holdings, and the extent to which the Fund’s debt investment instruments allow for the utilization of alternative rate(s) in the absence of LIBOR.

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

None.

Item 3.  Defaults Upon Senior Securities

Not applicable.

Item 4. Mine Safety Disclosures

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	Chief Executive Officer (Principal Executive Officer) certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. (Rules 13a -14(a) and 15d-14(a) Certification).
31.2	Chief Financial Officer (Principal Financial Officer) certifications pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. (Rules 13a -14(a) and 15d-14(a) Certification).
32.1	Chief Executive Officer (Principal Executive Officer) certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. (Section 1350 Certification).
32.2	Chief Financial Officer (Principal Financial Officer) certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. (Section 1350 Certification).

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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 thereunto duly authorized.

VENTURE LENDING & LEASING VII, INC.

(Registrant)

By:	/s/ Maurice C. Werdegar	By:	/s/ Judy N. Bornstein
Maurice C. Werdegar		Judy N. Bornstein
Chief Executive Officer		Chief Financial Officer
(Principal Executive Officer)		(Principal Financial Officer)
Date:	November 13, 2019	Date:	November 13, 2019

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