Hercules Capital Inc. (HTGC) DCF Valuation
Hercules Capital DCF: $165M TTM NII, $1.1B net debt, venture debt leader, 7% growth.
BDC valuation methodology
NII (Net Investment Income) as cash-flow proxy. Venture loan book has higher yield but higher charge-off risk.
BDC — Venture Debt · Founded 2003 · Beta 1.30
Hercules Capital Inc.
Current price: $17.80 · Market cap ≈ $3.2B
Hercules Capital's $165M TTM NII benefits from VC ecosystem activity — Hercules is the largest venture-debt BDC, lending senior-secured loans to tech/growth companies. The $1.1B net debt is moderate. NII is the appropriate cash-flow proxy for BDCs: cash interest collected on the loan book minus interest paid on borrowings equals distributable cash to shareholders. Higher growth assumption reflects venture-deal flow recovery as VC funding normalizes; higher WACC reflects venture-stage loan-book volatility (higher charge-off risk vs. sponsor-backed BDCs). Equity warrants add incremental upside.
DCF Valuation Inputs
High-growth phase
Decay/growth normalization
Perpetual (≤ WACC)
Must be > terminal growth
in millions
Enterprise Value
$3M
Equity Value
$2M
Per Share
$0
Upside / (Downside)
-100.0%
PV of explicit FCF
$1M
Terminal value
$4M
PV of terminal
$2M
Terminal % of EV
74.9%
| Year | Growth | FCF ($M) | Discount Factor | PV ($M) |
|---|---|---|---|---|
| 0 | base | $0 | 1.000 | — |
| 1 | 7.0% | $0 | 0.917 | $0 |
| 2 | 6.0% | $0 | 0.842 | $0 |
| 3 | 6.0% | $0 | 0.772 | $0 |
| 4 | 6.0% | $0 | 0.708 | $0 |
| 5 | 6.0% | $0 | 0.650 | $0 |
| Terminal | perpetual | — | — | $2 |
Discount factor = 1 / (1 + WACC)ⁿ. Terminal value computed using the Gordon Growth Model: TV = FCF_N × (1 + g) / (WACC − g), then discounted back to present.
| g ＼ WACC | 7.0% | 8.0% | 9.0% | 10.0% | 11.0% |
|---|---|---|---|---|---|
| 1.5% | $0 | $0 | $0 | $0 | $0 |
| 2.0% | $0 | $0 | $0 | $0 | $0 |
| 2.5% | $0 | $0 | $0 | $0 | $0 |
| 3.0% | $0 | $0 | $0 | $0 | $0 |
| 3.5% | $0 | $0 | $0 | $0 | $0 |
Highlighted cell is your current WACC × terminal-growth assumption. Cells beyond WACC ≤ g are undefined (Gordon Growth fails).
HTGC DCF: At Default Assumptions
| Item | Value | Notes |
|---|---|---|
| Current price | $17.80 | Market |
| Intrinsic value (per share) | $0.01 | DCF model output |
| Upside / (Downside) | -99.9% | vs current price |
| Enterprise value | $$3M | PV of explicit FCF + terminal |
| Equity value | $$2M | EV − net debt |
| Key fact | Largest venture debt BDC — tech/growth company focus | |
Numbers reflect TTM fundamentals + default DCF assumptions (9.0% WACC, 2.5% terminal growth, 7% Year-1 growth, 6% Years 2+). Use the calculator above to run your own scenario.
HTGC Sources & References
- SEC EDGAR: latest 10-K filing, 10-Q filings, and proxy statement for Hercules Capital Inc. (HTGC). sec.gov
- Yahoo Finance: real-time price snapshot, analyst consensus growth estimates, and 52-week range.
- S&P Capital IQ: WACC build (cost of equity via CAPM + after-tax cost of debt).
- Federal Reserve Economic Data (FRED): risk-free rate for CAPM, sector beta benchmarks. fred.stlouisfed.org
- Damodaran Online (NYU): BDC — Venture Debt sector WACC and beta benchmarks for cross-validation. pages.stern.nyu.edu
Related HTGC valuation searches
These are common HTGC valuation questions answered by the DCF model above.
HTGC sector peers & related DCF models
24 cross-links below: same-sector tickers shown first for topical authority, then a broader sample across all 112 covered assets.
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Author
Maya Chen, CFA
Chartered Financial Analyst
Independently reviewed
Dr. Aaron Pak, PhD
Doctor of Kinesiology & Public Health
Last reviewed: August 12, 2026 · Next scheduled review: quarterly
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Cross-checked against authoritative formulas (IRS, NIST, ACSM) and updated for 2025/2026 tax years and rates.
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